The Centre has operationalised the Rs 10,000 crore Startup India Fund 2.0, marking a fresh push to support deep tech, innovative manufacturing and early-stage startups through a segmented funding model.
The newly notified scheme will contribute to the corpus of SEBI-registered Alternative Investment Funds (AIFs), which will invest in equity and equity-linked instruments of government-recognised startups. These AIFs will also raise capital from other investors to meet their target corpus.
Fund 2.0 has been designed differently from the earlier Fund of Funds for Startups. While SIDBI, which implemented the first fund, will remain part of the mechanism, the new version allows for more than one implementing agency. The notification says this is also intended to build institutional capacity for managing such schemes. With the notification now issued, the scheme has officially come into force.
The government has identified four startup segments under the fund. The first covers deep tech startups developing novel solutions to complex problems, often involving longer research and development cycles and higher costs. The second targets smaller AIFs backing early growth-stage startups that are still developing a technology, product or service. The third focuses on tech-driven innovative manufacturing startups in champion sectors under the Make in India framework. The fourth will support sector- and stage-agnostic startups.
The scheme will also provide operational flexibility to address the specific needs of these segments. This includes the possibility of supporting larger AIFs in capital-intensive sectors such as deep tech and manufacturing, backing longer-duration funds for startups with extended gestation periods, and allowing higher contribution from the scheme in areas where private capital remains limited and cautious.
Detailed operational guidelines will now be issued by the Department for Promotion of Industry and Internal Trade (DPIIT). These will lay down the segment-wise provisions, eligibility criteria for AIFs and startups, and the selection and monitoring process.
The first Fund of Funds for Startups, launched in 2016 with the same Rs 10,000 crore corpus, has already committed its full amount to 145 AIFs. Those AIFs have invested more than Rs 25,500 crore in over 1,370 startups across sectors.
Also Read: Greenvize Launches Hydrogen Cooktop That Runs on Water
