DPIIT Issues Operational Guidelines for ₹10,000-Crore Startup India Fund of Funds 2.0

Ziraat Times Team Report 

New Delhi, April 25: The Department for Promotion of Industry and Internal Trade under the Ministry of Commerce and Industry has issued detailed operational guidelines for the ₹10,000-crore Startup India Fund of Funds 2.0 (FoF 2.0), aimed at streamlining capital deployment and boosting funding access for startups.

The scheme will be implemented through investments in SEBI-registered Alternative Investment Funds (AIFs), which will in turn invest in DPIIT-recognised startups. Officials said this indirect funding model is designed to ensure disciplined capital allocation, attract private investment, and expand funding access across sectors, stages, and geographies.

The Small Industries Development Bank of India has been designated as the initial implementation agency and will oversee fund deployment through a structured process of selecting and monitoring AIFs. DPIIT will also onboard an additional implementation agency to enhance reach and build institutional capacity.

According to the guidelines, FoF 2.0 will act as a catalytic fund rather than a direct investor, mandating private capital mobilisation to create a multiplier effect in the startup ecosystem. The framework introduces segmentation of AIFs into categories such as deep-tech funds, micro venture capital funds for early-stage startups, funds focused on technology-led manufacturing, and sector-agnostic funds.

Each category will operate under defined parameters, including corpus size, government contribution limits, tenure, and minimum private capital requirements, ensuring targeted and efficient capital deployment.

A two-stage selection mechanism has been outlined for AIFs. The implementation agency will conduct initial screening and due diligence, followed by evaluation by a Venture Capital Investment Committee comprising experts from industry, academia, and the innovation ecosystem. The committee will assess proposals based on fund management capability, track record, and investment strategy.

The guidelines also provide for co-investment opportunities with ministries, departments, and institutional investors in priority sectors, along with provisions to allocate a portion of returns towards ecosystem development initiatives such as mentorship and shared infrastructure.

Officials said the operational framework has been designed with flexibility to adapt to evolving ecosystem needs while maintaining transparency and accountability in fund utilisation.

The Startup India FoF 2.0 is expected to deepen domestic venture capital, support innovation-driven enterprises, and strengthen India’s position as a global startup hub by crowding in private investment and improving access to growth capital.