DPIIT has issued operational guidelines for Startup India Fund of Funds 2.0, creating a structured framework to deploy ₹10,000 crore through SEBI-registered AIFs.

The initiative aims to improve capital flow, attract private investment, and strengthen India’s startup ecosystem.

NEW DELHI. 25 April 2026: The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, has issued the operational guidelines for the Startup India Fund of Funds 2.0 (FoF 2.0) on April 2025, 2025. The guidelines lay down a structured framework to operationalise the ₹10,000 crore corpus through clearly defined mechanisms for fund deployment, governance, and monitoring, with the objective of improving the efficiency of capital flows into India’s startup ecosystem.

According to the notification, the Startup India Fund of Funds 2.0 would not invest directly in startups but would participate in the capital of Category I and Category II Alternative Investment Funds (AIF) registered with the Securities and Exchange Board of India (SEBI), which in turn will be investing in equity/equity-linked instruments (and debt instruments) of various startups.

SEBI Registered Funds

The Scheme will be implemented through commitments to SEBI-registered Category I and II Alternative Investment Funds (AIFs), which will invest in DPIIT-recognised startups. This approach is expected to ensure disciplined capital allocation, crowding-in of private investments, and wider access to funding across sectors, stages, and geographies.

SIDBI Implementation Role

The Small Industries Development Bank of India (SIDBI) will act as the initial Implementation Agency and will undertake execution through a structured AIF selection and monitoring process. DPIIT will also onboard an additional Implementation Agency to expand reach, enhance sectoral expertise, and build institutional capacities for managing such schemes.

Ecosystem Funding Gaps

To address specific gaps in the ecosystem, the operational guidelines introduce a structured segmentation of AIFs into deep tech-focused funds, micro venture capital funds supporting early-growth startups, funds focused on innovative and technology-led manufacturing sectors, and sector- and stage-agnostic funds. Each segment has defined parameters, including corpus thresholds, government contribution limits, tenure, and minimum private capital mobilisation ratios, ensuring that capital is directed towards priority sectors while maintaining market discipline.

AIF Selection Process

The guidelines establish a two-stage selection process for AIFs. The Implementation Agency will undertake initial screening and due diligence, followed by evaluation by a Venture Capital Investment Committee, which will assess proposals based on the track record of the team, fund management capability, and investment strategy. The Committee comprises distinguished leaders from industry, academia, and the innovation ecosystem, including Vallabh Bhansali, Dr. Ashok Jhunjhunwala, Dr. Renu Swarup, Dr. Chintan Vaishnav, and Rajesh Gopinathan, along with representatives from the Implementation Agency, bringing a diverse perspective across deep tech, manufacturing, policy, and venture ecosystems.

Catalytic Fund Model

Startup India FoF 2.0 is designed to act as a catalyst rather than a direct investor, enabling multiplier effects through private capital participation. The guidelines mandate minimum private capital mobilisation, reinforcing market-led investment discipline. Provision has also been made to allocate a portion of returns towards ecosystem capacity-building initiatives such as mentorship, shared infrastructure, and ecosystem development interventions.

Priority Sector Support

The Scheme provides for co-investments and contributions from Ministries, Departments, and institutional investors in priority sectors. The operational framework also incorporates flexibility to evolve based on implementation experience, ensuring responsiveness to emerging ecosystem needs.

Startup Ecosystem Growth

Startup India FoF 2.0, through its structured operational design, is expected to significantly enhance the depth and quality of domestic venture capital, support innovation-driven enterprises, and strengthen India’s position as a leading global startup hub.

(Copyright@Ambedkar Chamber of Commerce and Industry™)

DPIIT issues FoF 2.0 guidelines to deploy ₹10,000 crore through AIFs for India’s startup ecosystem.

Operational Guidelines for Startup India Fund of Funds 2.0

1. Principal Features

i. The fund of funds shall be called the Startup India Fund of Funds 2.0 (hereunder referred to as ‘Startup India FoF 2.0’ or ‘the Scheme’).

ii. Small Industries Development Bank of India (SIDBI), as the Implementation Agency (IA) for Fund of Funds 1.0 shall start implementing the Scheme with effect from the date of notification of the Scheme and issuance of its guidelines. Another domestic IA(s) shall be selected by the Department for Promotion of Industry and Internal Trade (hereunder referred to as ‘DPIIT’ or ‘the Department’) in due course to implement the Scheme.

iii. Startup India Fund of Funds 2.0 will have a corpus of Rs. 10,000 crore, with commitments to AIFs spread over the 16th and 17th Finance Commission Cycles.

2. Purpose

The Startup India Fund of Funds 2.0 would not invest directly in startups but would participate in the capital of Category I and Category II Alternative Investment Funds (AIF) registered with Securities and Exchange Board of India (SEBI) which in turn will be investing in equity/equity-linked instruments (and debt instruments) of various startups.

3. Investment in AIFs

i. Startup India Fund of Funds 2.0 shall invest in / contribute to the corpus of Category I and Category II Securities and Exchange Board of India (SEBI) registered AIFs.

ii. The operational parameters for investment in eligible AIFs are categorized as per priority segments of the Scheme. The detailed parameters are placed in Annexure-I. The IA will be responsible for monitoring and ensuring necessary compliance so that investments are channelized for the intended segments and in compliance with the placement memorandum of the AIF.

iii. The IA may also take necessary measures to the extent possible to have representation in the Advisory Board/ Limited Partner Advisory Committees (LPAC) of the AIFs, for ensuring the alignment of support to AIFs with objectives of the Startup India Fund of Funds 2.0.

iv. The total aggregate contribution in a selected AIF from 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 be within the limit of 50% of the corpus of the AIF. The Venture Capital Investment Committee (VCIC) may adopt a lower limit based on the market assessment.

v. The operational and procedural aspects relating to funding to and investment by the AIFs supported under the Scheme will be determined by the IA (through its Board or delegated authority) for efficient functioning of the Scheme.

vi. Further, for selection of AIFs, due consideration should be provided for supporting startups beyond metro regions for widening and deepening support to the startup ecosystem.

4. Investment by AIFs in Startups

i. AIFs selected under the Scheme will utilize funds committed to them under the Startup India Fund of Funds 2.0 (along with the respective segment-wise minimum investment multiplier requirement as mentioned in para 3(ii) and Annexure-I) to fund ‘Startups’ as recognized by DPIIT as per the latest eligibility criteria notified in the Official Gazette by Department for Promotion of Industry and Internal Trade (DPIIT) from time to time.

ii. However, if the amount committed to an entity in whole has not been released by the AIF before the entity ceased to be recognized as a startup, the balance funding can continue thereafter out of the committed amount along with further nurturing of the entity.

iii. The IA would ensure that mechanisms are in place to prevent any potential misuse of funds under the Scheme. This inter-alia may include mandating AIFs to undertake due diligence on beneficiary startups, including disclosure of any other Government support received.

5. Operating Expenses

The operational costs of the IA will be capped at 0.50% per annum of total commitments to AIFs and outstanding (net-off capital redemptions) and will be met out of the corpus of the Scheme. This will be debited to the fund at the beginning of each half year, i.e. April 1st and October 1st.

6. Selection Process for AIFs

The two-stage process for selection of the AIFs is as under:

Stage I – Screening by Venture Capital Investment Committee

i. The IA shall seek proposals from AIFs and conduct due diligence, post which a Venture Capital Investment Committee (VCIC), which will include representation from the ecosystem and the IA, will consider the proposals for screening and recommendation. The VCIC will consist of external experts from the startup ecosystem apart from representatives of the IA. The AIF would make a detailed presentation to the VCIC.

ii. The external experts of the VCIC will be constituted by the DPIIT and may be reviewed from time to time based on market requirements and progress under Startup India Fund of Funds 2.0.

iii. VCIC will consider AIFs managed by experienced professionals with proven track records for funding under the Scheme.

Stage II – Sanction by a sub-committee of the Board of the IA

i. Based on the recommendation of the VCIC, the proposal would be put up to the sub-committee of the Board of the IA for sanction.

ii. Upon sanction, a Letter of Intent will be issued, and a Contribution Agreement will be signed with individual AIFs.

7. Monitoring and Evaluation

i. The AIFs supported under Startup India FoF 2.0 would be monitored by the IA.

ii. Detailed annual report on the utilisation of the Startup India Fund of Funds 2.0 including details on the AIFs invested, details of the companies invested in by the AIFs, Net Asset Value (NAV) of the investments and any other details as determined by the Department in respect of each financial year ending March 31st would be submitted to the Department.

iii. The Department will review operations and performance of the Startup India FoF 2.0 on regular basis as per requirements but at least on a half yearly basis.

iv. The Department will also constitute an ‘Empowered Committee’ (EC) chaired by Secretary, DPIIT, which will monitor implementation and performance of the Scheme and will provide appropriate guidance/directions to the VCIC and the IA.

v. Third-party evaluations by a reputed independent agency will also be ensured by the IA every five years (from the date of operationalization of the Scheme).

8. Co-investments

The Startup India FoF 2.0 shall also be an umbrella framework for co-investment or contribution of additional corpus for specific domains by Ministries/ Departments as well as institutional investors. The EC would recommend the manner and guidelines with respect to undertaking such co-investments within the contours of the scheme as approved by the Cabinet.

9. Other Guidelines

i. The IA to also maintain information with respect to key aspects such as intellectual property rights, equity dilution, and other relevant governance parameters for funding support through AIFs for standardisation, transparency, and prudent capital deployment, for protecting founder interests and aligning investments with the broader intent of the Scheme and startup ecosystem. A framework in this regard will be furnished by the IA to the Department at the earliest.

ii. The Distributions (both capital redeemed and returns earned) from Startup India FoF 2.0, net-off utilisation of up to 5% of returns for capacity building of startup ecosystem, will be deposited back to the Consolidated Fund of India (CFI).

iii. Up to 5% of returns from the Scheme would be earmarked for activities such as sensitization, workshops, capacity building, plug and play shared facilities, mentorship, and regulatory support. The utilization, implementation and operational mechanism of the same would be decided separately by the Department with the recommendation of the Empowered Committee.

iv. Disbursements from DPIIT to the IA will be based on an annual projection basis, as per the anticipated drawdowns submitted for each financial year to DPIIT by the IA.

v. With respect to any funds (by way of release by DPIIT or any distribution on the corpus received by the IA) which remain unutilized temporarily with the IA, the IA shall credit interest on such unutilized funds at the prevailing repo rate (notified by Reserve Bank of India from time to time) annually on March 31st every year. The interest credited shall be added (as return) to the corpus of the Scheme.

vi. Any tax exemption on Startup India Fund of Funds 2.0/interest accrued on it shall be part of the corpus.

vii. The Department may revise these operational guidelines as the need arises on the recommendation of the EC, which shall be empowered to amend the operational guidelines for effective implementation of the Scheme within the broad contours as approved by the Cabinet.

Annexure-I

Parameters	AIFs supporting deep tech startups	Smaller AIFs supporting early-growth stage startups	AIFs supporting tech-driven and innovative manufacturing startups	AIFs supporting sector/stage agnostic startups
Segments	(1)	(2)	(3)	(4)
Upper cap on corpus of eligible AIFs	No cap	AIFs with corpus up to Rs. 400 crore i.e. Micro VCs	No cap	No cap
Upper cap on term/life of AIF	Up to 18 years	Up to 10 years	Up to 18 years	Up to 12 years
Upper cap on contribution to a single AIF	40% of the corpus of the AIF subject to max of Rs. 500 crore.	30% of the corpus of the AIF subject to max of Rs. 100 crore.	30% of the corpus of the AIF subject to max of Rs. 200 crore.	25% of the corpus of the AIF subject to max of Rs. 180 crore.
Minimum mandated investment multiplier	AIFs to invest 1.5X of the amount committed to them under Startup India FoF 2.0.	AIFs to invest 2X of the amount committed to them under Startup India FoF 2.0.	AIFs to invest 1.75X of the amount committed to them under Startup India FoF 2.0.	AIFs to invest 2.5X of the amount committed to them under Startup India FoF 2.0.
Private Placement Memorandum Requirements	Must mention support for ‘Deep Tech Startups’ as defined by DPIIT in point 1(n) of the Gazette Notification G.S.R. 108(E) dated 4th February, 2026 and as may be amended from time to time by the Government.	Must mention that at least 50% of their corpus will be dedicated to seed/early-stage stage funding and that funding of up to Rs. 10 crore per startup will be undertaken.	Must mention supporting tech-driven innovative startups in at least one of the manufacturing-oriented champion sectors (As defined by the Government of India1 and as may be amended from time to time by the Government).	No additional requirements