India’s Union Cabinet approved a ₹10,000 crore second Startup India Fund of Funds on 14 February 2026. The scheme is not a direct government grant to startups: it backs eligible venture funds, which in turn select and invest in companies. The often-used $1.1 billion figure is a currency conversion, not an amount specified by the official scheme documents.
What is Startup India Fund of Funds 2.0?
Startup India Fund of Funds 2.0 is a government-backed investment scheme with an official corpus of ₹10,000 crore. The Cabinet approved it on 14 February 2026. The government formally brought the scheme into force through a Gazette notification on 13 April, and the Department for Promotion of Industry and Internal Trade (DPIIT) published operational guidelines on 25 April 2026. These are three separate milestones: approval, notification and operating rules.
The official documents state the amount in rupees. They do not specify the exchange-rate date or method behind the $1.1 billion conversion, so that dollar figure should not be treated as a fixed official value. The Cabinet announcement and the Gazette notification state the scheme’s rupee corpus.
Does the government invest directly in startups?
No. This is a fund of funds, not a startup grant programme or a direct government investment vehicle. The scheme contributes capital to eligible SEBI-registered Category I and Category II Alternative Investment Funds (AIFs). Those funds raise money from other investors, conduct their own assessments and invest in startups through equity or equity-linked instruments; the operating guidelines also refer to debt instruments.
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In practical terms, a startup does not apply to the government for a share of the ₹10,000 crore corpus. An eligible AIF applies to participate in the scheme, and the AIF makes investment decisions about companies. Supported AIFs are also expected to mentor and nurture their investees. DPIIT’s operational guidelines describe this fund-mediated structure.
Which startups and funds are priorities?
The Gazette notification identifies four segments for the scheme’s support to AIFs:
- Deep tech: Funds supporting ventures that develop novel solutions to complex problems, typically involving longer research and development cycles and higher costs.
- Smaller AIFs: Micro-VCs supporting early-growth-stage startups.
- Innovative manufacturing: Funds backing technology-driven manufacturing startups.
- Sector- or stage-agnostic funds: Funds that are not restricted to a particular sector or startup stage.
The broader policy aims include strengthening domestic venture capital, supporting long-gestation technologies and capital-intensive sectors, and widening funding beyond major metropolitan areas. The operating rules prioritize SEBI-registered AIFs and DPIIT-recognised startups. That does not mean every startup in a priority field is automatically eligible for investment: companies must attract interest from a participating fund, which makes its own decisions.
How are AIF proposals selected and monitored?
At launch, SIDBI is the implementation agency. DPIIT’s April guidelines say an additional domestic implementation agency is to be selected; they do not name one. The selection and oversight process runs through several bodies:
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- Application and due diligence: AIFs submit proposals to the implementation agency, which conducts due diligence.
- Screening and recommendation: A Venture Capital Investment Committee screens proposals and makes recommendations.
- Sanction: A subcommittee of the implementation agency’s board sanctions proposals.
- Monitoring and review: The implementation agency monitors supported AIFs. DPIIT reviews performance regularly; the guidelines provide for annual reporting and at least half-yearly operational reviews.
What do the investment multipliers mean?
The guidelines set different minimum investment multipliers for supported AIFs, depending on the segment:
| Fund segment | Minimum multiplier |
|---|---|
| Deep tech | 1.5× |
| Smaller AIFs supporting early-growth startups | 2× |
| Technology-driven innovative manufacturing | 1.75× |
| Sector- or stage-agnostic | 2.5× |
These are fund-level operating requirements, not promises that an individual startup will receive a particular amount. The guidelines also set segment-specific parameters for AIF tenure and the maximum scheme contribution to an individual fund; a startup should not infer its prospective cheque size from the multiplier alone.
What did the first Fund of Funds achieve?
In its February 2026 announcement, the government said the first Fund of Funds for Startups had committed its full ₹10,000 crore corpus to 145 AIFs. It also reported that those AIFs invested more than ₹25,500 crore in over 1,370 startups. These are government-reported deployment totals, not independent evidence of investment returns, additional capital caused by the scheme, or economic impact. The Press Information Bureau release also reported more than 2 lakh DPIIT-recognised startups and said 2025 had the highest annual registrations to that point.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What is not yet known about Fund of Funds 2.0?
The official materials establish the scheme’s corpus, priority segments and administrative design. They do not establish actual FoF 2.0 allocations to AIFs, downstream startup investments, realized returns or measured economic impact. The first scheme’s reported deployment figures cannot answer those questions for the second scheme.
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