The Union Cabinet, led by Narendra Modi, has given the green light to a major new initiative aimed at strengthening India’s startup ecosystem: the Startup India Fund of Funds 2.0 (FoF 2.0), with a total corpus of ₹10,000 crore. The scheme is designed to mobilise long-term venture capital and fortify the domestic funding landscape for startups nationwide.
Launched under the Startup India initiative, FoF 2.0 builds on the success of the original Fund of Funds for Startups (FFS 1.0), which was launched in 2016 and laid a foundation for the expansion of India’s innovation ecosystem. Since then, the number of government-recognised startups has grown from fewer than 500 to more than 2 lakh registered entities, with a record number of new registrations in 2025, highlighting the rapid expansion of India’s startup landscape.
Why This Matters
❖ Boosting Venture Capital Access: The fund aims to crowd in more private capital into the startup ecosystem by acting as capital support for venture funds that invest in innovative early- and growth-stage companies.
❖ Strengthening the VC Ecosystem: By channeling public capital through Alternative Investment Funds (AIFs) rather than directly into startups, the initiative seeks to enhance the venture capital market’s depth and maturity.
❖ Supporting Innovation and Long-Term Growth: Officials have emphasised that FoF 2.0 will particularly support deep-tech, tech-driven manufacturing, and high-risk, high-impact ventures that need patient capital and longer development timelines — areas where private funding can be harder to secure.
❖ Addressing Funding Gaps: The scheme is expected to help bridge the early- and mid-stage financing gap that often constrains startups before they achieve sustainable scale.
A Broader Push for Innovation-Led Growth
The Fund of Funds 2.0 is part of a larger government push to make India a global leader in innovation and enterprise. By catalysing more VC investment and deepening the domestic capital base, policymakers hope to reduce reliance on foreign funding, expand opportunities beyond major metropolitan hubs, and build a more resilient, inclusive startup ecosystem that delivers economic value and high-quality jobs.
