Startup Originals Team
The Union Cabinet has approved the ₹10,000 crore Startup India Fund of Funds 2.0, a major policy move aimed at accelerating investment in deeptech, manufacturing, and innovation-led startups across the country. The new fund builds on the success of the earlier Fund of Funds scheme and is expected to strengthen India’s startup and industrial ecosystem.
Big Push for Deeptech and Manufacturing Startups
The Fund of Funds 2.0 is designed to channel capital into sectors that require long-term, patient funding, particularly deeptech, advanced manufacturing, hardware, artificial intelligence, robotics, clean energy, and other technology-intensive areas.
Government officials said these sectors are critical for India’s economic transformation but often struggle to attract early-stage capital due to high risks and longer gestation periods. The new fund aims to bridge this gap by supporting venture capital and alternative investment funds that back such startups.
How the Fund of Funds 2.0 Will Work
Under the scheme, the government will not invest directly in startups. Instead, the ₹10,000 crore corpus will be deployed through SEBI-registered venture capital and alternative investment funds, which will then invest in eligible startups.
This structure is intended to leverage private sector expertise in startup selection and mentoring, while using public capital to crowd in additional private investment. The approach follows the model used under the earlier Startup India Fund of Funds.
Building on Startup India’s First Fund
The original Startup India Fund of Funds played a key role in strengthening India’s startup ecosystem by supporting hundreds of startups through multiple VC funds. The government said the second phase reflects the maturity of the ecosystem and the need to move beyond consumer internet startups toward core technology and manufacturing-led innovation.
Officials noted that Fund of Funds 2.0 will place greater emphasis on startups with strong intellectual property, export potential, and the ability to create high-quality jobs.
Supporting ‘Make in India’ and Atmanirbhar Bharat
The new fund aligns closely with national initiatives such as Make in India and Atmanirbhar Bharat, which aim to boost domestic manufacturing and reduce dependence on imports. By backing deeptech and hardware startups, the government hopes to build indigenous capabilities in strategic sectors.
Industry experts said access to long-term capital is essential for startups working on complex technologies, where product development cycles are longer and capital requirements are higher.
Positive Response From Startup Ecosystem
Startup founders and investors have welcomed the Cabinet’s decision, saying it could unlock funding for areas that have traditionally been underfunded. Many believe the fund will help India compete globally in emerging technologies by supporting companies at critical early stages.
The move is also expected to encourage greater participation from domestic and global investors in India-focused venture funds.
Looking Ahead
With the approval of the ₹10,000 crore Startup India Fund of Funds 2.0, the government has signalled a clear shift toward building a more resilient, technology-driven startup ecosystem. Implementation details, including fund managers and deployment timelines, are expected to be announced in the coming months.
If executed effectively, the new fund could play a key role in shaping the next generation of Indian startups—focused not just on scale, but on innovation, manufacturing strength, and global competitiveness.
