Cabinet approves Rs 10,000 crore Startup India Fund of Funds 2.0 to boost deeptech, manufacturing startups

The Union Cabinet, chaired by the Prime Minister, Narendra Modi, has approved the establishment of the Startup India Fund of Funds 2.0 (FoF 2.0) with a total corpus of Rs 10,000 crore to mobilise venture capital for the country’s startup ecosystem.

The new fund builds on nearly a decade of policy support under the Startup India initiative, launched in 2016. At the time of its launch, India had fewer than 500 recognised startups. Today, the country has over 2 lakh startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT), with 2025 recording the highest ever annual startup registrations.

FoF 2.0 follows the earlier Fund of Funds for Startups (FFS 1.0), which was introduced in 2016 to address structural funding gaps and catalyse domestic venture capital participation. Under FFS 1.0, the entire corpus of Rs 10,000 crore was committed to 145 SEBI-registered Alternative Investment Funds (AIFs).

These AIFs collectively invested more than Rs 25,500 crore in over 1,370 startups across sectors including agriculture, artificial intelligence, robotics, automotive, clean tech, consumer goods and services, e-commerce, education, fintech, food and beverages, healthcare, manufacturing, space tech and biotechnology.

The government said FFS 1.0 played a key role in nurturing first-time founders, crowding in private capital and building the foundations of India’s venture capital ecosystem.

Startup India FoF 2.0 will continue the model of investing in SEBI-registered AIFs, which will in turn deploy capital into startups. However, the second phase is designed with a more targeted and segmented approach.

The fund will prioritise deep tech and technology-driven innovative manufacturing, areas that typically require patient and long-term capital. It will also focus on supporting early-growth stage founders, aiming to reduce startup failures caused by limited access to early-stage funding.

Another key objective is to strengthen India’s domestic venture capital base, particularly smaller funds, and to expand capital access beyond major metro cities. The scheme is intended to address high-risk capital gaps in priority sectors aligned with self-reliance and long-term economic growth.

According to the government, Startup India FoF 2.0 is expected to play a critical role in advancing India’s innovation-led growth agenda. By backing startups developing globally competitive technologies, products and solutions, the fund aims to strengthen economic resilience, boost manufacturing capability, generate high-quality jobs and position India as a global innovation hub.