Big Boost for Startups! Indian Government Unveils Rs 10,000 Crore Venture Capital Push: In a decisive move to strengthen India’s innovation economy, the Union Cabinet chaired by Prime Minister Narendra Modi has approved the establishment of the Startup India Fund of Funds 2.0 (FoF 2.0) with a massive corpus of Rs. 10,000 crore.
The new fund aims to mobilize long-term domestic venture capital and accelerate the next phase of India’s startup growth story.
Driving the Next Phase of Startup India
The government designed Startup India FoF 2.0 to deepen India’s venture capital ecosystem and actively support innovation-led entrepreneurship across the country. Importantly, the scheme builds on nearly a decade of reforms under the Startup India initiative launched in 2016.
Since then, India’s startup ecosystem has expanded dramatically. It has grown from fewer than 500 startups in 2016 to over 2 lakh startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT). Notably, 2025 recorded the highest-ever annual startup registrations, demonstrating sustained entrepreneurial momentum.
Therefore, the new fund arrives at a critical time when startups require patient capital to scale globally competitive technologies.
Building on the Success of Fund of Funds 1.0
Startup India FoF 2.0 follows the strong performance of the Fund of Funds for Startups (FFS 1.0), launched in 2016 to address funding gaps and catalyse domestic venture capital.
Under FFS 1.0:
- The entire Rs. 10,000 crore corpus was committed to 145 Alternative Investment Funds (AIFs).
- These AIFs invested over Rs. 25,500 crore in more than 1,370 startups.
- Investments spanned sectors such as artificial intelligence, robotics, clean tech, fintech, healthcare, space tech, biotechnology, agriculture, and manufacturing.
As a result, FFS 1.0 nurtured first-time founders, attracted private capital, and strengthened India’s venture funding foundation.
Key Features of Startup India Fund of Funds 2.0
While Phase 1 focused on ecosystem building, FoF 2.0 adopts a more targeted and segmented funding approach.
1. Focus on Deep Tech and Innovative Manufacturing
The new fund prioritizes deep tech and technology-driven manufacturing startups. Since these sectors require long gestation periods and high-risk capital, the government will direct patient funding toward breakthrough innovations.
2. Support for Early-Growth Stage Founders
Additionally, FoF 2.0 creates a safety net for early-stage entrepreneurs. By reducing funding constraints, the scheme aims to lower startup failure rates caused by capital shortages.
3. Expanding National Reach
Importantly, the scheme promotes investments beyond major metro cities. Consequently, innovation can flourish in Tier-2 and Tier-3 cities, ensuring inclusive startup growth.
4. Addressing High-Risk Capital Gaps
Furthermore, the fund channels capital into priority sectors critical for self-reliance and economic expansion.
5. Strengthening Domestic Venture Capital
The scheme also supports smaller domestic funds, thereby deepening India’s local venture capital base and reducing dependency on foreign capital.
Boosting India’s Innovation-Led Growth
Startup India Fund of Funds 2.0 is expected to reshape India’s economic trajectory. By supporting startups that develop globally competitive technologies and products, the fund will:
- Strengthen economic resilience
- Enhance manufacturing capabilities
- Generate high-quality employment
- Position India as a global innovation hub
Moreover, the initiative aligns closely with the national vision of Viksit Bharat @ 2047, reinforcing the government’s commitment to entrepreneurship and innovation.
As India continues to rise as one of the world’s largest startup ecosystems, the Rs. 10,000 crore Startup India Fund of Funds 2.0 signals strong policy intent. Consequently, the government not only sustains the startup momentum but also prepares the ecosystem for the next wave of global technological leadership.
