The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, has issued the operational guidelines for the Startup India Fund of Funds 2.0 (FoF 2.0). The guidelines lay down a structured framework to operationalise the ₹10,000 crore corpus through clearly defined mechanisms for fund deployment, governance, and monitoring, with the objective of improving the efficiency of capital flows into India’s startup ecosystem.

The Scheme will be implemented through commitments to SEBI-registered Category I and II Alternative Investment Funds (AIFs), which will invest in DPIIT-recognised startups. This approach is expected to ensure disciplined capital allocation, crowding-in of private investments, and wider access to funding across sectors, stages, and geographies.

The Small Industries Development Bank of India (SIDBI) will act as the initial Implementation Agency and will undertake execution through a structured AIF selection and monitoring process. DPIIT will also onboard an additional Implementation Agency to expand reach, enhance sectoral expertise, and build institutional capacities for managing such schemes.

To address specific gaps in the ecosystem, the operational guidelines introduce a structured segmentation of AIFs into deep tech-focused funds, micro venture capital funds supporting early-growth startups, funds focused on innovative and technology-led manufacturing sectors, and sector- and stage-agnostic funds. Each segment has defined parameters, including corpus thresholds, government contribution limits, tenure, and minimum private capital mobilisation ratios, ensuring that capital is directed towards priority sectors while maintaining market discipline.

The guidelines establish a two-stage selection process for AIFs. The Implementation Agency will undertake initial screening and due diligence, followed by evaluation by a Venture Capital Investment Committee, which will assess proposals based on the track record of the team, fund management capability, and investment strategy. The Committee comprises distinguished leaders from industry, academia, and the innovation ecosystem, including Vallabh Bhansali, Dr. Ashok Jhunjhunwala, Dr. Renu Swarup, Dr. Chintan Vaishnav, and Rajesh Gopinathan, along with representatives from the Implementation Agency, bringing a diverse perspective across deep tech, manufacturing, policy, and venture ecosystems.

Startup India FoF 2.0 is designed to act as a catalyst rather than a direct investor, enabling multiplier effects through private capital participation. The guidelines mandate minimum private capital mobilisation, reinforcing market-led investment discipline. Provision has also been made to allocate a portion of returns towards ecosystem capacity-building initiatives such as mentorship, shared infrastructure, and ecosystem development interventions.

The Scheme provides for co-investments and contributions from Ministries, Departments, and institutional investors in priority sectors. The operational framework also incorporates flexibility to evolve based on implementation experience, ensuring responsiveness to emerging ecosystem needs.

Startup India FoF 2.0, through its structured operational design, is expected to significantly enhance the depth and quality of domestic venture capital, support innovation-driven enterprises, and strengthen India’s position as a leading global startup hub.

Link to the operational guidelines for Startup India FoF 2.0:
https://www.dpiit.gov.in/static/uploads/2026/04/8949d8e0dabf11cb9291b00ec1d1f727.pdf

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Abhishek Dayal/ Abhijith Narayanan/ Ishita Biswas

 

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