Govt Approves Establishment of Startup India Fund of Funds 2.0 With Corpus of Rs 10,000 Crore

In accordance with a recently issued notification by the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry, the Central Government has approved the establishment of ‘Startup India Fund of Funds 2.0’ with a total corpus of Rs 10,000 crore for boosting the startup ecosystem in the country.

The scheme will now be known as the ‘Startup India Fund of Funds 2.0 (Startup India FoF 2.0)’, with effect from the date of issuance of the said notification. As per the Ministry of Commerce and Industry, investments under the said scheme will primarily be focused on Alternative Investment Funds (AIFs) spread over the 16th and 17th Finance Commission cycles, supporting priority segments, including deep tech startups and early growth stages.

In a similar way to the earlier Fund of Funds for Startups, the Startup India Fund of Funds 2.0 will allow access to venture capital for startups across stages and sectors. It will also help encourage manufacturing based on new ideas, support technologies that take a longer time to develop, and assist smaller venture capital funds that invest in startups at an early stage of growth.

Further, the ministry has stated that the operationalisation of the scheme will be started by the Small Industries Development Bank of India (SIDBI) as the Implementation Agency. In the past, SIDBI has been the implementation agency for several earlier schemes. Consequently, for the Startup India Fund of Funds 2.0, too, SIDBI will play the same role. More domestic implementing agencies will also be chosen.

These agencies will ask Alternative Investment Funds (AIFs) to submit their proposals and thereafter, each proposal will be thoroughly reviewed and examined by a Venture Capital Investment Committee (VCIC), set up by DPIIT and made up of industry experts. After this, they will recommend which ones should receive funding under the scheme.