New Delhi: The government on Saturday announced the operational guidelines for the Rs 10,000 crore Startup India Fund of Funds 2.0 (FoF 2.0), aiming to streamline capital deployment and improve funding access for startups across sectors and stages.
The Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry has unveiled a comprehensive framework to operationalise the second edition of the Fund of Funds scheme, with a focus on improving the efficiency of capital flows into India’s startup ecosystem.
The guidelines lay out clear mechanisms for fund deployment, governance and monitoring, positioning the scheme as a catalyst for private investment rather than a direct funding route.
Under the framework, investments will be routed through SEBI-registered Category I and II Alternative Investment Funds (AIFs), which will, in turn, invest in DPIIT-recognised startups.
This model is expected to ensure disciplined capital allocation while encouraging greater participation from private investors and expanding funding access across geographies and sectors.
The Small Industries Development Bank of India (SIDBI) has been designated as the initial implementation agency and will oversee execution through a structured process of selecting and monitoring AIFs.
The DPIIT also plans to onboard an additional implementation partner to widen the scheme’s reach, strengthen sector-specific expertise and build institutional capacity.
To address funding gaps in the ecosystem, the guidelines introduce a segmented approach to AIFs, covering deep-tech focused funds, micro venture capital funds for early-stage startups, funds targeting innovation-driven manufacturing sectors, and sector-agnostic funds.
Each category comes with defined parameters such as corpus size, government contribution limits, tenure and minimum private capital mobilisation requirements, ensuring targeted and efficient deployment of funds.
A two-stage selection mechanism has been put in place for AIFs. The implementation agency will conduct initial screening and due diligence, followed by a detailed evaluation by a Venture Capital Investment Committee.
The scheme has been designed to generate multiplier effects by mandating private capital participation and maintaining market-led investment discipline.
It also allows a portion of returns to be channelled into ecosystem development initiatives such as mentorship programmes, shared infrastructure and capacity-building efforts.
(IANS)
