- Union Cabinet has approved the ₹10,000 crore Startup India Fund of Funds 2.0 (FFS 2.0) to accelerate India’s innovation journey.
About Startup India Fund of Funds 2.0
- Objective: This second phase aims to accelerate startup growth by facilitating long-term domestic capital and addressing funding gaps in high-risk sectors.
- Operating Agency: Small Industries Development Bank of India (SIDBI) serves as the fund’s primary operating agency.
- Operational Model: The initiative follows a “fund of funds” model, in which the government commits capital to SEBI-registered AIFs rather than investing directly in startups.
- Multiplier Effect: These AIFs, known as “daughter funds,” raise additional capital from private investors, creating a financial multiplier effect.
Fund of Funds for Startups (FFS 1.0)
- The original FFS was launched in 2016 to support the Startup India Action Plan.
- FFS 1.0 nurtured first-time founders and attracted private capital to build a strong foundation for India’s venture capital ecosystem.
- It committed its entire corpus to 145 Alternative Investment Funds (AIFs), with investments exceeding ₹25,500 crore in 1,370 startups.
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Key Features:
- Targeted Approach: FoF 2.0 prioritises deep-tech and technology-driven manufacturing sectors that require patient, long-term capital.
- Stage Focus: The initiative targets early-growth stage startups to provide a financial safety net and reduce early-stage failures.
- Regional Inclusivity: The policy aims to democratise funding by promoting venture capital investment in tier-II and tier-III cities.
- Significance: The scheme fosters high-quality job creation and economic resilience, aligning with the national vision of ‘Viksit Bharat 2047’.
Read More > 10 years of Startup India
Source: (HT | PIB)
Frequently Asked Questions
What is Startup India Fund of Funds 2.0 (FFS 2.0)?
Startup India Fund of Funds 2.0 is a ₹10,000 crore government initiative to accelerate startup growth by providing long-term capital through venture funds.
What is the objective of Fund of Funds for Startups 2.0?
The objective of FFS 2.0 is to address funding gaps in high-risk sectors and support long-term growth of Indian startups.
What is the “Fund of Funds” model in Startup India?
The Fund of Funds model involves the government investing in SEBI-registered Alternative Investment Funds (AIFs) instead of directly funding startups.
What are “daughter funds” in the Fund of Funds model?
Daughter funds are SEBI-registered AIFs that receive government capital and raise additional private investment for startups.
Why is the Startup India Fund of Funds 2.0 significant?
FFS 2.0 supports innovation, job creation, and economic resilience aligned with India’s ‘Viksit Bharat 2047’ vision.
