" "

FM Nirmala Sitharaman announces new Fund of Funds worth Rs 10,000 crore for startups

author-image
ISN Team
New Update
Nirmala Sitharaman abolishes Angel Tax

Finance Minister Nirmala Sitharaman

During the Union Budget 2025 speech on Saturday (Feb 1, 2025), Finance Minister Nirmala Sitharaman announced a fresh round of the Fund of Funds for Startups (FFS) with a corpus of Rs 10,000 crore, underscoring the government’s determination to bolster innovation and entrepreneurship in India.

The new allocation, revealed during the Union Budget 2025 presentation, builds on the success of the existing FFS, which has already mobilized an investment corpus of nearly Rs 91,000 crore through various Alternative Investment Funds (AIFs).

The government first launched the FFS program in 2016 under the Startup India Action Plan, aiming to provide capital to young companies at early, seed and growth stages. Instead of directly investing in startups, the scheme channels capital to AIFs—often called “daughter funds”—that in turn back promising ventures with equity or equity-linked instruments.

The Small Industries Development Bank of India (SIDBI) manages these allocations, ensuring that AIFs deploy at least twice the capital they receive from FFS into startups.

Advertisment

According to government data, the earlier Rs 10,000 crore FFS commitment has already sparked significant growth: 141 AIFs have attracted Rs 10,913 crore to invest in more than 19,900 startups.

Regions such as Karnataka and Maharashtra have particularly benefited, raising over Rs 4,600 crore and Rs 3,400 crore respectively, fueling an ecosystem that has recognized over 1.5 lakh startups to date. The new Fund of Funds budget is expected to further bolster capital availability, reduce reliance on foreign investments and foster a deeper culture of innovation across Indian states.

Subscribe