The Union Cabinet has approved the Startup India Fund of Funds 2.0 (FoF 2.0) with a corpus of Rs 10,000 crore to catalyse long-term venture capital for deep-tech, advanced manufacturing and early-stage startups, signalling a targeted push to strengthen India’s innovation ecosystem and reduce reliance on foreign capital.
Why FoF 2.0 matters
FoF 2.0 is designed as a strategic intervention to mobilise patient capital for high-risk, high-impact sectors that require longer development cycles and heavier investment than typical digital ventures. By directing resources into venture funds rather than investing directly in startups, the vehicle aims to ensure professional fund management, diversification and broader geographic reach.
Focus areas: deep tech and advanced manufacturing
The fund prioritises deep technology domains — including artificial intelligence, robotics, semiconductor design, biotechnology, aerospace and next-generation industrial solutions — and technology-driven manufacturing. These segments are central to India’s ambitions for technological self-reliance, import substitution and resilient supply chains.
Support under FoF 2.0 is intended to help startups move from prototype and pilot stages to commercial scale, enabling domestic development of critical capabilities and reducing dependence on external suppliers for strategically important technologies.
Continuity with Fund of Funds 1.0
FoF 2.0 builds on the Fund of Funds for Startups (FFS) launched in 2016, which also had an initial government commitment of Rs 10,000 crore and channelled resources through SEBI-registered Alternative Investment Funds (AIFs). Under the first phase, AIFs backed startups across fintech, healthcare, agritech, space tech and clean energy, demonstrating the model’s ability to leverage larger private capital pools.
Supporting early-growth stage founders and wider inclusion
A central aim of the new fund is closing the financing gap faced by early-growth startups in capital-intensive sectors. By crowding in domestic venture capital, FoF 2.0 seeks to ensure promising ideas are funded through riskier development phases rather than being abandoned for lack of capital.
The initiative also emphasises geographic diversification of investment beyond Bengaluru, Mumbai and Delhi, encouraging flows into Tier II and Tier III cities to foster inclusive innovation and broaden the startup base across states and regions.
Strengthening the domestic VC ecosystem
FoF 2.0 is expected to deepen India’s venture capital landscape by supporting smaller domestic funds and attracting private co-investment. Reduced dependence on foreign funding and a stronger local fund ecosystem are seen as essential to building long-term resilience and capacity in the country’s startup financing architecture.
By combining targeted capital with an indirect investment approach, the government aims to accelerate job creation, promote advanced research and manufacturing, and position India as a global hub for innovation as it advances toward a larger digital economy.
