Government Releases Detailed Guidelines for Second Tranche of Fund of Funds Scheme for Startups
Government Issues Guidelines for Second Tranche of Rs 10,000 Crore Fund of Funds Scheme for Startups
The Indian government has issued detailed guidelines for the operationalisation of the second tranche of the Rs 10,000 crore fund of funds (FoF) scheme for startups. The guidelines aim to improve the efficiency of capital flows into the country's startup ecosystem.
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 Small Industries Development Bank of India (SIDBI) will act as the initial Implementation Agency, undertaking execution through a structured AIF selection and monitoring process.
The Department for Promotion of Industry and Internal Trade (DPIIT) will onboard an additional implementation agency to expand reach, enhance sectoral expertise, and build institutional capacities for managing such schemes.
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The operational guidelines introduce a structured segmentation of AIFs into four categories: 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.
The Implementation Agency will undertake initial screening and due diligence, followed by evaluation by a Venture Capital Investment Committee. The Committee comprises distinguished leaders from industry, academia, and the innovation ecosystem, including Vallabh Bhansali, Ashok Jhunjhunwala, Renu Swarup, Chintan Vaishnav, and Rajesh Gopinathan, along with representatives from the Implementation Agency.
| Category | Description |
|---|---|
| Deep Tech-Focused Funds | Focus on deep technology startups |
| Micro Venture Capital Funds | Support early-growth startups |
| Funds Focused on Innovative Manufacturing | Focus on innovative and technology-led manufacturing sectors |
| Sector- and Stage-Agnostic Funds | Invest across sectors and stages |
These guidelines are expected to ensure disciplined capital allocation, crowding-in of private investments, and wider access to funding across sectors, stages, and geographies.
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