Startup India Fund of Funds 2.0 — ₹10,000 Crore of Government Capital Through AIFs
Government money, one step removed
The first Fund of Funds for Startups (FFS), announced in 2016 with a ₹10,000 crore corpus, is now fully committed to the venture funds it backed. Fund of Funds 2.0 is the second tranche: another ₹10,000 crore, notified by DPIIT on 13 April 2026, with operational guidelines following on 25 April 2026. SIDBI remains the implementing agency and a second domestic agency may be appointed.
The mechanism is unchanged. SIDBI commits capital to SEBI-registered Category I and Category II Alternative Investment Funds. Those funds raise the balance from private investors and invest in startups. The Government's cheque never reaches the startup directly; what reaches it is a term sheet from a fund manager whose corpus is partly public money.
The four priority segments in FoF 2.0
- •Deep-tech startups
- •Early growth-stage startups backed by smaller AIFs (the micro-VC segment)
- •Technology-driven and innovative manufacturing startups
- •Sector- and stage-agnostic startups
What a startup can expect
| Item | Position |
|---|---|
| Instrument | Equity or equity-linked securities, on the fund's own terms |
| Ticket size | Set by the AIF; typically ₹1 crore to ₹25 crore depending on the fund and stage |
| Investment multiplier | Supported AIFs must invest at least the required multiple of their FoF drawdown into startups — 2x under FFS 1.0; segment-wise under FoF 2.0 |
| Governance | Venture Capital Investment Committee of ecosystem veterans; Empowered Committee monitors performance |
Because the fund is judged on the multiplier, FoF-backed managers have a structural reason to deploy into DPIIT-recognised startups rather than sit on capital. That is the real benefit: a larger pool of funds that need to find Indian startups.
Department and gatekeepers
DPIIT sets policy and issued the gazette notification and guidelines. SIDBI screens AIF applications on its Fund Application Portal and commits capital. The investment decision on any individual startup sits entirely with the AIF's own investment committee — SIDBI and DPIIT do not pick startups.
For the startup, and for the fund
Startup
- •DPIIT-recognised
- •Fits the segment mandate of the AIF being approached
- •Investment-ready: audited accounts, clean cap table, defensible valuation
AIF
- •SEBI-registered Category I or II
- •Applies on SIDBI's Fund Application Portal
- •Commits to the segment's private-capital ratio and investment multiplier
What a FoF-backed fund will want in the data room
- •DPIIT recognition certificate; Certificate of Incorporation; MoA/AoA
- •Shareholding pattern and cap table, including ESOP pool and any convertibles
- •Audited financial statements for all years since incorporation; management accounts for the current year
- •Three-to-five-year financial model with assumptions
- •Valuation report from a registered valuer or merchant banker where a priced round is proposed
- •Pitch deck, product documentation, customer contracts and pipeline
- •IP register — patents filed or granted, trademarks, licences
- •Statutory compliance: ROC filings, GST and TDS returns, labour registrations
- •Prior investment agreements and any existing investor rights
Questions founders ask about the Fund of Funds
No. The scheme funds AIFs, not startups. You approach a fund that has drawn FoF capital, and it invests on commercial terms if its committee approves.
No. The AIF invests at a negotiated valuation like any other investor. The public money lowers the fund's cost of capital and raises the number of funds looking for Indian startups; it does not discount your round.
It is fully committed across the AIFs it supported. Those funds continue to invest from their existing corpus, so a startup can still receive FFS-backed money from a fund that has not finished deploying.
Generally not. Equity from a private fund is not government monetary support for the purpose of grant caps such as the ₹50 lakh limit under the IN-SPACe Seed Fund.