Driving the Next Phase of Startup Growth
The newly approved Startup India FoF 2.0 is designed to address funding gaps in critical sectors such as deep technology, tech-driven innovative manufacturing, and early-growth stage startups. By mobilizing patient, long-term capital, the government intends to empower entrepreneurs working on high-impact technologies and globally competitive solutions.
The scheme builds upon the momentum created since the launch of the Startup India initiative in 2016. Over the past decade, India’s startup ecosystem has grown exponentially from fewer than 500 recognized startups to more than 2 lakh DPIIT-recognized ventures. Notably, 2025 recorded the highest-ever annual startup registrations.
According to the official release by the Press Information Bureau (PIB), the new fund is expected to strengthen India’s domestic venture capital base and reduce reliance on foreign capital flows. More details are available on the official PIB portal (www.pib.gov.in).
Building on the Success of FoF 1.0
Startup India FoF 2.0 follows the strong performance of the Fund of Funds for Startups (FFS 1.0), launched in 2016. The first phase had a corpus of ₹10,000 crore, which has been fully committed to 145 Alternative Investment Funds (AIFs).
These AIFs collectively invested over ₹25,500 crore in more than 1,370 startups across diverse sectors including artificial intelligence, robotics, clean technology, fintech, healthcare, manufacturing, agriculture, space technology, and biotechnology.
FFS 1.0 played a catalytic role in nurturing first-time founders and crowding in private capital. It laid a strong foundation for India’s venture capital ecosystem and enabled startups to scale beyond seed funding stages.
Key Focus Areas of FoF 2.0
The second phase introduces a more targeted and segmented funding approach. A significant portion of the corpus will be directed toward deep tech and tech-enabled manufacturing startups that require sustained financial backing due to longer gestation periods.
The scheme also aims to empower early-growth stage founders by providing crucial financial support at a time when many startups struggle to secure capital. By addressing high-risk capital gaps, the fund seeks to reduce early-stage failures caused by funding shortages.
Importantly, FoF 2.0 emphasizes national reach. The government intends to encourage investments beyond major metropolitan hubs so that innovation flourishes in Tier-2 and Tier-3 cities as well.
Strengthening India’s Innovation Agenda
The Startup India Fund of Funds 2.0 aligns with the broader vision of Viksit Bharat @ 2047, which seeks to position India as a developed and innovation-led economy. By supporting startups that build advanced technologies and scalable products, the fund is expected to generate high-quality employment and enhance manufacturing capabilities.
Officials believe the initiative will contribute significantly to economic resilience and self-reliance, particularly in strategic sectors requiring indigenous innovation. Strengthening the domestic venture capital ecosystem is seen as essential to sustaining long-term growth.
Economic Impact and Future Outlook
Experts view FoF 2.0 as a timely intervention, especially as global capital markets remain volatile. By mobilizing domestic capital and supporting smaller venture funds, the scheme is expected to create a multiplier effect across the startup landscape.
With India already emerging as one of the world’s leading startup ecosystems, the new fund is poised to accelerate the country’s journey toward becoming a global innovation hub. The Cabinet’s approval sends a strong signal of continued policy support for entrepreneurs and investors alike.
As India moves toward its centenary of independence, initiatives like Startup India FoF 2.0 could play a defining role in shaping the nation’s economic trajectory and technological leadership.
