The Department for Promotion of Industry and Internal Trade (DPIIT) has issued operational guidelines for the Startup India Fund of Funds 2.0, establishing a structured framework to operationalise the Rs 10,000 crore corpus through clearly defined mechanisms for fund deployment, governance and monitoring. The guidelines aim to improve the efficiency of capital flows into India’s startup ecosystem.
The scheme will be implemented through commitments to SEBI-registered Category I and II Alternative Investment Funds, which will invest in DPIIT-recognised startups.
The Small Industries Development Bank of India will act as the initial implementation agency, undertaking execution through a structured AIF selection and monitoring process. DPIIT will also onboard an additional implementation agency to expand reach and enhance sectoral expertise.
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.
Each segment has defined parameters, including corpus thresholds, government contribution limits, tenure and minimum private capital mobilisation ratios.
The guidelines establish a two-stage selection process for AIFs, with the implementation agency conducting initial screening and due diligence, followed by evaluation by a Venture Capital Investment Committee.
The scheme is designed to generate multiplier effects by mandating private capital participation whilst maintaining market-led investment discipline.
The operational framework also incorporates flexibility to evolve based on implementation experience, ensuring responsiveness to emerging ecosystem needs.
The scheme provides for co-investments and contributions from ministries, departments and institutional investors in priority sectors.