Startup India Fund of Funds 2.0: Features, Funding Size and Benefits Explained

Context

The Union Cabinet approved the Startup India Fund of Funds 2.0 (FFS 2.0)

Key Features of FFS 2.0

• Total Corpus: ₹10,000 crore (sanctioned in the Union Budget 2025-26).
• Segmented Funding Approach: Unlike the first phase, FFS 2.0 introduces a targeted strategy for:
  • Deep Tech: High-tech breakthroughs requiring patient, long-term capital (e.g., Quantum Computing, Robotics).
  • Advanced Manufacturing: Supporting tech-driven innovative manufacturing.
  • Early-Growth Stage: Empowering founders with a “safety net” to prevent failure due to lack of early funding.
• Geographical Expansion: A special focus on encouraging investments beyond major metros (tier-II and tier-III cities) to decentralize the startup ecosystem.

About Fund of Funds

• It is a premier initiative of the Department for Promotion of Industry and Internal Trade (DPIIT), functioning as a key driver of the broader Startup India mission.
• Operating Agency:SIDBI (Small Industries Development Bank of India), which oversees the allocation and monitoring of capital.
• The “Fund of Funds” Mechanism: The government does not invest directly in startups. Instead, it provides capital to SEBI-registered Alternative Investment Funds (AIFs), often called “Daughter Funds.”
  • These AIFs then leverage this government contribution to raise further private capital and invest directly in promising startups.
• Strategic Objectives:
  • Boosting Risk Capital: It aims to increase the availability of domestic capital, reducing the ecosystem’s over-reliance on foreign funding.
• Entrepreneurial Strengthening: By providing a stable funding pipeline, it empowers innovators to scale high-risk, high-reward ventures that strengthen the national economy.

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