What is Startup India 'Fund of Funds 2.0'? Rs 10,000 crore Government boost explained

The Indian government has approved a new Rs 10,000 crore ‘Fund of Funds 2.0’ under the Startup India Mission. The decision came on the first day of AI Impact Summit 2026. Prime Minister Narendra Modi approved Rs 10,000 crore for the establishment of the ‘Fund of Funds 2.0’. The announcement came with an aim to strengthen funding support for startups across India. This is the second edition of the Startup Fund that was launched in 2016.

What Is Startup India Fund of Funds 2.0?

Startup India Fund of Funds Mission 2.0 is a government-backed programme wherein, rather than investing directly in startups, the government will provide capital to domestic venture capital funds. Following that, these funds will then be invested in promising and eligible startups.

The newly launched model by Indian government will help in expanding the venture capital market in India. Additionally, it will allow private sectors to support startups that are having high growth potential. The total corpus for this second round is Rs 10,000 crore.

Background of Fund of Funds 1.0

To recall, the first Startups India Fund of Funds mission was launched in 2016 with support of 145 Alternative Investment Funds (AIF’s). These AIF’s then invested more than Rs 25,000 crore in more than 13,70 startups.

The earlier scheme covered several sectors, including agriculture, artificial intelligence, consumer goods, robotics, clean technology, machine learning, and e-commerce. It not only helped in improving capital, but also helped many early-stage companies to grow.

Focus Areas

The new version – ‘Fund of Funds 2.0’ is more focused on strategy and it aims to support deep tech and manufacturing that are technology-driven. However, these sectors require long development cycles, but it still has significant future demand and long-term value.

Additionally, the government will support and give attention to early growth startups, facing funding challenges. The new scheme will help in reducing the gap by ensuring better access to capital.

Promote Innovation

Another striking aspect of this scheme is to promote innovation in areas that are crucial for India’s economic growth and self-reliance. Startups working in critical sectors will receive priority support.

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Support Beyond Metro Cities

The Indian government is also expanding venture capital beyond metro cities. Fund of Funds 2.0 will encourage investors to look at startups in smaller cities and emerging regions. The approach comes with an aim to create balanced growth across the country.