The Cabinet approved a fund of Rs 10,000 crore for startups, which aims to raise venture capital and support deep-tech institutions.
The government on Saturday announced that it has approved a Fund of Funds worth Rs 10,000 crore, which aims to raise venture capital and support deep tech, technology-based innovative manufacturing startups and primary growth stage ventures. This was the second phase of the Fund of Funds (FOF) scheme under the Startup India initiative. The first phase was established in 2016. FoF 2.0 is designed to maintain the pace of investment in startups, with a larger scope than FFS 1.0. The Union Cabinet chaired by Prime Minister Narendra Modi has approved the setting up of Startup India Fund of Funds 2.0 with a total corpus of Rs 10,000 crore for the purpose of raising venture capital for the country’s startup ecosystem, a government statement said.
What is Startup India Fund of Funds?
The Cabinet on Friday approved the second tranche of the Startup India Fund of Funds scheme. It said the scheme is designed to accelerate the next phase of India’s startup journey by mobilizing long-term domestic capital, strengthening the venture capital ecosystem and supporting innovative-based entrepreneurship across the country. In 2016, the government set up a Rs 10,000 crore Fund of Funds to provide seed capital to startups and enable them to take calculated risks. After the successful implementation of the first phase, the second phase of Rs 10,000 crore was approved in the Union Budget for 2025-26.
Currently there are around 100 unicorn startups. Unicorn refers to a startup valued at US$1 billion or more. Since the launch of Startup India in 2016, the number of government-recognized startups has grown from around 500 to over two lakh currently. More than 49,400 startups were recognized in 2025, the highest number in a single year.
Why was this scheme started
Startup India Fund of Funds 2.0 follows the strong performance of the Fund of Funds for Startups (FFS 1.0), which was launched in 2016 to address the funding gap and boost the domestic venture capital market for startups, the statement said. Under this tranche of the fund, the entire amount of Rs 10,000 crore has been allocated to 145 Alternative Investment Funds (AIFs). These AIFs have invested more than Rs 25,500 crore in more than 1,370 startups across the country in various sectors such as agriculture, AI, robotics, automotive, clean tech, consumer goods and services, e-commerce, education, fintech, food and beverages, healthcare, manufacturing, space technology and biotechnology.
How will this scheme work?
This fund has played an important role in encouraging new entrepreneurs, mobilizing private capital and laying a strong foundation for India’s venture capital ecosystem. While the first phase created an ecosystem, the second phase aims to take Indian innovation to the next level. The new fund will adopt a targeted, segmented financing approach to support deep tech and tech-based innovative manufacturing. It will give priority to significant progress in high tech sectors that require long-term capital. Its main objective will also be to empower early growth phase founders to provide a safety net for new and innovative ideas and reduce early failures due to lack of funds.
Startup boost in every corner of the country
Additionally, it will encourage investment beyond major metros so that innovation flourishes in every corner of the country. It is designed to address the shortage of high-risk capital and strengthen India’s domestic venture capital base, especially smaller funds, to further boost the domestic investment landscape, the statement said. Startup India FoF 2.0 will have an empowered committee to provide guidance and guidelines. Recently, the government has expanded the criteria for recognizing entities as startups by doubling the turnover limit to Rs 200 crore.
