India finalises 15 funds under $1.05B Startup India fund-of-funds
What's the deal? India's Department for Promotion of Industry and Internal Trade (DPIIT)Dealroom has a profile for this one. Try Dealroom → has finalised 15 Alternative Investment Funds (AIFs) under its Startup India Fund of Funds (FoF) 2.0 scheme, with US$36.7M earmarked for the Small Industries Development Bank of India (SIDBI)Dealroom has a profile for this one. Try Dealroom →. The fund of funds carries a total corpus of US$1.36B (roughly $1.05 billion).
How it works: SIDBI, the scheme's initial implementation agency, will commit capital to SEBI-registered Category I and Category II AIFs, which then invest in DPIIT-recognised startups. The government does not invest in individual startups directly.
What's the endgame? FoF 2.0 is designed to act as a catalyst for private investment rather than a direct investor. Eligible funds fall into four buckets: deep tech, micro venture capital for early-growth startups, technology-led manufacturing, and funds with no sector or stage restriction.
Each category sets rules on fund size, government contribution limits, tenure, and minimum private capital that managers must raise alongside the public money. A portion of returns is earmarked for ecosystem building, including mentorship and shared infrastructure.
Why now? The scheme builds on the first Fund of Funds, which by June 2025 had committed nearly its full US$1.36B to US$19.1M AIFs. Those funds were required to invest at least twice the government commitment in startups, and the structure aims to fill a gap in patient capital for deep tech and early-growth ventures.
Who decides: A two-stage process screens proposals, with a Venture Capital Investment Committee assessing fund managers on track record, capabilities, and strategy. The committee includes Vallabh Bhansali, Ashok Jhunjhunwala, Renu Swarup, Chintan Vaishnav, and Rajesh Gopinathan.
What could go wrong? The 15-fund selection is an early step, and the US$36.7M is an initial deployment, not startup funding. The impact depends on how quickly commitments translate into private fundraising and actual investments.
The signal: State capital is increasingly being used to pull private money into India's startup economy, and the pool may widen further. The Employees' Provident Fund OrganisationDealroom has a profile for this one. Try Dealroom → is weighing a proposal to channel up to 3% of its annual accretions into Category I and II AIFs, including SIDBI's FoF 2.0 — a sign the model is drawing interest from large institutional backers.
Read more: cnbctv18.com
Image credit: Generated with Gemini
