Context:
The Union Cabinet has approved the Startup India Fund of Funds 2.0 (FoF 2.0) with a corpus of ₹10,000 crore to mobilise venture capital and strengthen India’s startup ecosystem.
Key Terms
- Fund of Funds (FoF): A fund that invests in other funds (e.g., Venture Capital/Alternative Investment Funds) rather than directly in startups.
- Alternative Investment Fund (AIF): Privately pooled investment vehicle regulated by SEBI.
FFS 1.0 vs. FoF 2.0: The Evolution
| Feature | FFS 1.0 (2016) | FoF 2.0 (2026) |
| Strategy | Generalist: Sector/Stage Agnostic. | Segmented: Targeted Priority Sectors. |
| Primary Focus | Ecosystem Creation & Seed Capital. | Deep Tech & Advanced Manufacturing. |
| Geographic Aim | Metro Centric (initial years). | National Outreach (Beyond Tier-1 cities). |
Key Features of the 2026 Framework
- Targeted Support: Prioritizes Deep Tech (AI, Robotics, SpaceTech) and Tech-driven Manufacturing that require long gestation periods.
- Safety Net: Aims to bridge the “High-Risk Capital Gap” to prevent promising early-stage startups from failing due to a lack of follow-on funding.
- Domestic Resilience: Specifically designed to strengthen smaller domestic Venture Capital (VC) funds, reducing the ecosystem’s reliance on foreign capital.
- Implementation Model: Operates indirectly. SIDBI invests in SEBI-registered Alternative Investment Funds (AIFs), which are mandated to invest at least 2x the government’s contribution into startups.
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