Startup India FoF 2.0 Operational Guidelines Issued

The Department for Promotion of Industry and Internal Trade (DPIIT) issued operational guidelines for the Startup India Fund of Funds 2.0 (FoF) notified on April 13, 2026. The guidelines operationalise the Rs.10,000 crore corpus, with the Small Industries Development Bank of India (SIDBI) designated as the Implementation Agency (IA).

Investment in AIFs and Startups:

The FoF will invest through SEBI-registered Category I and II Alternative Investment Funds (AIFs), with aggregate Government FoF contributions capped at 50% of any AIF’s corpus.

The guidelines establish four AIF segments with distinct parameters.

• For deep-tech startups, there is no corpus cap, fund life may extend up to 18 years, FoF contribution is capped at 40% of corpus (maximum ₹500 crore), and a 1.5X investment multiplier applies; the PPM must reference the deep-tech definition under Gazette Notification G.S.R. 108(E) dated 4th February 2026.
• Early-growth stage startups are supported through micro-VCs with corpus up to ₹400 crore, tenure up to 10 years, FoF contribution up to 30% (maximum ₹100 crore), and a 2X multiplier; the PPM must commit 50% of corpus to seed/early-stage funding with per-startup limits of ₹10 crore.
• For manufacturing startups, there is no corpus cap, tenure extends up to 18 years, FoF contribution is limited to 30% (maximum ₹200 crore), and a 1.75X multiplier applies; the PPM must indicate support for Government-defined champion sectors.
• Finally, sector/stage-agnostic AIFs have no corpus cap, tenure up to 12 years, FoF contribution up to 25% (maximum ₹180 crore), and the highest multiplier at 2.5X, with no additional PPM requirements.

The IA’s operational costs are capped at 0.50% per annum of total commitments. Distributions (after 5% for ecosystem capacity-building) are deposited into the Consolidated Fund of India. Unutilised funds accrue interest at the RBI repo rate.

AIFs are selected through a two-stage process: (i) screening by the Venture Capital Investment Committee (VCIC), comprising IA representatives and DPIIT-constituted ecosystem experts; and (ii) final sanction by a sub-committee of the IA’s Board, followed by issuance of a Letter of Intent and execution of a Contribution Agreement.

AIFs must submit annual reports covering fund utilisation, portfolio investments, and NAV. An Empowered Committee chaired by the DPIIT Secretary monitors implementation. Third-party evaluations are mandated every five years.

The FoF also serves as an umbrella framework for co-investments by Ministries, Departments, and institutional investors in specific sectors, with the Empowered Committee recommending co-investment guidelines.

Startup India FoF 2.0 is expected to strengthen the domestic venture capital ecosystem and reinforce India’s position as a global startup hub.