The Central Government has approved the establishment of the Startup India Fund of Funds 2.0 with a total corpus of Rs. 10,000 crore to mobilise venture capital for the country’s startup ecosystem. The scheme, notified by the Ministry of Commerce and Industry through the Department for Promotion of Industry and Internal Trade on April 13, 2026, takes effect from the date of notification, with commitments to alternative investment funds to be spread over the 16th and 17th Finance Commission cycles.
A Wider Venture Capital Push
The notification states that the new fund will extend access to venture capital across stages and sectors, while also placing specific emphasis on innovation-driven manufacturing, long-gestation technologies and smaller venture capital funds focused on early growth-stage startups. It retains the broad structure adopted for the 2016 Fund of Funds for Startups, under which contributions are made to SEBI-registered Alternative Investment Funds for investment in equity and equity-linked instruments of entities recognised as startups by the Central Government.
The scheme also sets out how these investments are expected to move through the system. Alternative Investment Funds will raise money from other investors to meet their target corpus, evaluate startups and deploy capital in tranches over a period of time. After making investments, the supported funds are expected to mentor and nurture the startups in which they invest before exiting or selling those investments.
Four Segments, Broader Scope
The expanded framework divides the scheme into four segments. These include support for deep tech funds working with startups developing novel solutions to complex problems, smaller funds backing early growth-stage startups, funds focused on technology-driven innovative manufacturing in “Make in India” champion sectors, and funds that remain sector or stage agnostic.
The notification says the scheme will build in operational flexibility to match the needs of these categories. This includes backing larger funds in capital-intensive sectors such as deep tech and manufacturing, supporting longer-duration funds suited to startups with extended research and development cycles, allowing higher contribution from the scheme in segments where private capital remains limited, and moderating the investment multiplier to encourage a larger number of funds to participate. It also provides for the scheme to serve as an umbrella framework for co-investment or additional corpus support from ministries, departments and institutional investors in specific domains.
Implementation and Oversight
DPIIT will issue the operational guidelines for the scheme, including segment-wise provisions, eligibility criteria for funds and startups, selection and monitoring processes, reporting requirements, fund disbursal mechanisms and the composition of the investment committee. SIDBI, which served as the implementation agency for the earlier Fund of Funds for Startups, will also act as an implementing agency for Startup India FoF 2.0, while one or more additional domestic agencies are to be selected for the scheme’s rollout.
The notification further provides for a Venture Capital Investment Committee constituted by DPIIT to examine proposals from Alternative Investment Funds after due diligence by the implementing agencies. That committee is to include representation from industry, subject experts and implementing agencies, and is expected to consider funds managed by experienced professionals with proven track records. Monitoring of the scheme will rest with an Empowered Committee chaired by the DPIIT Secretary, with representation from concerned ministries and departments, the National Startup Advisory Council and special invitees from the startup ecosystem. The committee will have the power to amend the notification and operational guidelines for effective implementation within the framework approved by the Cabinet.
The notification also states that distributions from the scheme, including redeemed capital and returns earned, will be deposited back into the Consolidated Fund of India after netting off the use of up to 5 percent of returns for startup ecosystem capacity-building activities such as sensitisation, workshops, mentorship, shared facilities and regulatory support.
