The Union Cabinet on Saturday approved a Rs 10,000 crore Startup India Fund of Funds 2.0, giving a fresh boost to India’s startup ecosystem at a time when funding cycles globally remain cautious. The decision was taken at a Cabinet meeting chaired by Prime Minister Narendra Modi.
The move builds on the original Fund of Funds launched in 2016, but with a sharper focus this time on deep tech, advanced manufacturing, and early-growth ventures.
The Prime Minister also said Cabinet meetings will now be held at Seva Teerth, symbolising India’s journey from historical servitude toward a Viksit Bharat.
Here’s a simple breakdown of what Fund of Funds 2.0 actually means:
1. It’s a Rs 10,000 crore capital pool, but not for direct startup funding
The government will not invest directly in startups.
Instead, the money will flow into SEBI-registered Alternative Investment Funds (AIFs). These funds invest in startups. Startups are picked by fund managers, and the government provides financial support.
2. It builds on Fund of Funds 1.0, which already backed 1,370+ startups
The first Fund of Funds, launched in 2016, also had a Rs 10,000 crore corpus.
That money was committed to 145 AIFs. Together, they invested more than Rs 25,500 crore in over 1,370 startups across sectors, from fintech and agriculture to AI, robotics, healthcare and space technology.
The government says that the phase helped pull in private capital during the early years of Startup India.
3. This time, deep tech gets priority
Fund of Funds 2.0 will focus more sharply on:
- Deep technology
- Tech-driven manufacturing
- High-risk, innovation-heavy sectors
- Early-growth startups that struggle to scale
These are segments where funding is harder to secure because returns take longer.
4. It tries to plug the “patient capital” gap
India’s startup count has jumped from under 500 in 2016 to over 2 lakh DPIIT-recognised startups today. 2025 has seen the highest annual registrations so far.
But as the ecosystem grows, so do funding gaps, especially beyond early seed stages. FoF 2.0 is meant to provide longer-horizon capital in areas where private investors may hesitate.
5. It wants to strengthen Indian venture funds, not just startups
One clear message: build domestic venture capital strength.
The government wants to support smaller and emerging venture funds and reduce overdependence on foreign capital. If successful, the fund could have a multiplier effect, public money crowding in private investment.
6. It’s not just about Bengaluru and Gurugram
This push isn’t meant only for the usual startup addresses.
Officials have made it clear that the funding pipeline should reach beyond the big metro ecosystems. Founders in Tier-2 and Tier-3 cities, who often struggle to access venture networks, are expected to benefit if the capital flows as intended. The larger idea is simple: innovation should not stay limited to a few big cities. It should grow across the country.
7. The bigger goal
This is not only about startup funding.
The government believes FoF 2.0 can help create more skilled jobs and support factories in India. By encouraging deep tech and new-age manufacturing, the hope is to make Indian companies stronger and better able to compete with the rest of the world. It also ties into the larger ambition of positioning India as a serious innovation economy, not just a services market, but a country that builds, designs and scales globally.
In short, Fund of Funds 2.0 is less about flashy announcements and more about deepening the plumbing of India’s venture ecosystem.