DPIIT issues guidelines for Startup India Fund of Fund 2.0 with focus on deep tech, tech-led manufacturing

The central government today issued the operational guidelines for the ₹10,000 crore Startup India Fund of Funds 2.0 (FoF 2.0) with major focus on deep tech, early-growth startups, and innovative and technology-led manufacturing sectors. 

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, the government said. 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, while DPIIT will onboard additional agencies. 

What is the framework of the fund?

"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," the Department for Promotion of Industry and Internal Trade said in a release. 

"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," it said. 

"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," it added. 

The government said 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," it added.  

Government said 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," it added.