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Recently, the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, notified certain operational guidelines for Startup India Fund of Funds 2.0 (FoF 2.0).
These guidelines provide a clear framework to operationalize Rs. 10,000 crore corpus by establishing clearly defined mechanisms for fund deployment, governance and monitoring. In this blog post, we shall discuss these guidelines in a detailed manner.
Startup India Fund of Funds 2.0 (FoF 2.0) was notified in April 2026. It is a government initiative with a corpus of Rs. 10,000. This corpus is meant to boost the Indian startup ecosystem by providing capital to the startups.
The FoF 2.0 is managed by the Small Industries Development Bank of India (SIDBI), which is the apex financial institution for the MSME sector. Under this initiative, SIDBI will make investments in SEBI-registered Alternative Investment Funds to support DPIIT-recognized startups.
FoF 2.0 is the second edition of the government's flagship funding initiative. It builds upon the initial Fund of Funds for Startups (FFS 1.0) that was launched a decade ago in 2016. The second edition’s purpose is to further strengthen funding support for Indian startups and propel their growth in the country.
The key operational guidelines for Startup India FoF 2.0 are provided below.:
Under the guidelines, the funds of funds is officially known as the Startup India Fund of Funds 2.0. The implementation agency (IA) for FoF 2.0 is Small Industries Development Bank of India (SIDBI). Another domestic IA(s) shall be selected by DPIIT in due course to implement the Scheme.
The FoF 2.0 has a corpus of Rs. 10,000 for commitments to eligible SEBI AIFs spread across across the 16th and 17th Finance Commission cycles.
FoF 2.0 will not invest in startups in a direct manner. Instead, it will participate in the capital of Category I and Category II SEBI AIFs. These AIFs will in turn invest in equity/equity-linked instruments (and debt instruments) of various startups.
The implementation agency will be responsible for monitoring and ensuring necessary compliance so that the investments are used for the intended purpose.
The implementation agency may also take necessary measures to the extent possible to get representation in the Advisory Board or Limited Partner Advisory Committees (LPAC) of the AIFs. This is to ensure that the support given to AIFs aligns with the goals of the Startup India Fund of Funds 2.0.
The total investment made in a selected AIF by different various Fund of Funds of different Ministries of the Government of India/State Governments [being operated either directly by the Ministries or by implementing agencies operating such fund(s) of funds on behalf of the respective Ministries] will not exceed 50% of the AIF’s total corpus. However, the Venture Capital Investment Committee (VCIC) may set a lower limit on the basis of market conditions.
To ensure efficient functioning of the Scheme, the implementation agency, through its Board/Delegated Authority, will determine the operational and procedural aspects pertaining to funding to and investment by the AIFs supported under the Scheme.
AIFs chosen under the Scheme shall use the funds committed to them under FoF 2.0 to fund DPIIT-recognized startups in accordance with the latest eligibility criteria released in the Official Gazette by Department for Promotion of Industry and Internal Trade (DPIIT) from time to time.
However, where an AIF has already made a commitment to an entity while it was recognized as a startup by DPIIT, but has not fully disbursed the committed amount before such recognition is ceased by DPIIT, the balance funding can continue thereafter out of the committed amount along with further nurturing of the entity.
The IA will ensure that appropriate mechanisms are in place to prevent misuse of funds under the Scheme. This may include requiring AIFs to conduct due diligence on beneficiary startups and disclose any other government support received by them.
The IA will monitor the AIFs supported under Startup India FoF 2.0.
To know more about the operational guidelines, check out the official P-38015/17/2025-STARTUP INDIA (E-212782) notification dated 25.04.2026 on the official website of DPIIT.
Startup India Fund of Funds 2.0 (FoF 2.0) has a corpus of Rs. 10,000 crore, which will be used for investing in SEBI-registered Category I and II Alternative Investment Funds (AIFs), which will subsequently invest in DPIIT-recognized startups. On 25 April 2026, DPIIT notified certain operational guidelines for the FoF 2.0. These operational guidelines lay down a structured framework for the corpus’ operationalization. The responsibility for the scheme’s implementation lies with SIDBI, which is the apex financial institution for the MSMEs in India.
If you need assistance in startup registration, you can get in touch with our consultants at Registrationwala. We will offer you full-fledged assistance throughout the registration process to ensure you obtain DPIIT certification in a smooth and hassle free manner.
Q1. What is the implementation agency for FoF 2.0?
A. Small Industries Development Bank of India (SIDBI) is the implementation agency for FoF 2.0.
Q2. Which AIF categories will receive funding under FoF 2.0 initiative?
A. Category I and Category II AIFs will receive funding under the FoF 2.0 initiative.
Q3. What is the corpus of Startup India FoF 2.0?
A. The FoF 2.0 has a total corpus of Rs. 10,000 crore. The corpus will be used by SIDBI to invest in SEBI-registered Alternative Investment Funds (AIFs), which will then invest in equity/equity-linked instruments (and debt instruments) of various startups in the country.
Q4. When did DPIIT notify the operational guidelines for FoF 2.0?
A. DPIIT notified the operational guidelines for FoF 2.0 on 25 April 2026.
Related News: Government notifies Startup India Fund of Funds 2.0
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