India Approves Second Startup Fund of Funds with Rs 10,000 Crore Budget

The government on Friday approved the second Startup Fund of Funds (FFS) with an outlay of Rs 10,000 crore for startups in early stages and those involved in deep-tech research. Prime Minister Narendra Modi signed the file for the fund. It was among the first set of decisions taken from his new office Seva Teerth. The second FFS with an outlay of Rs 10,000 crore was announced in the budget for this financial year. It is a continuation of the first FFS announced in 2016 whose Rs 10,000 corpus has been fully utilised. Technology based deep tech start-ups typically take longer to do proof of concept and success. The focus of the new fund will be to make more risk capital available for them. The role of FFS is to catalyze venture capital investments and is operationalized by Small Industries Development Bank of India (SIDBI), which provides capital to Securities and Exchange Board of India ( SEBI )-registered Alternative Investment Funds (AIFs), which in turn invest in startups through equity and equity-linked instruments. As on 31 st December 2025, under the existing FFS scheme the AIFs have invested Rs 25,547 crore in 1,371 selected startups across 29 states and union territories. Earlier this month, the government had changed the recognition framework for startups to further strengthen the Startup India Action Plan by increasing the turnover limit for recognition as a startup to Rs 200 crore from Rs 100 crore in view of the evolving startup ecosystem and the need to support enterprises at different stages of their business lifecycle. The recognition framework also created a new sub-category of “Deep Tech Startup” for entities working on cutting-edge and breakthrough technologies. In view of the long gestation periods, high research and development intensity, and capital-intensive nature of deep technology enterprises, the eligibility criteria for Deep Tech Startup have been expanded, with the age limit extended to 20 years from 10 years from the date of incorporation or registration. The turnover limit for Deeptech startups has been set at Rs 300 crore. The revised framework had also included cooperative societies as eligible entities to promote innovation-driven growth at the grassroots level in agriculture, allied sectors, rural industries and community-based enterprises. The new FFS will be looking beyond equity support for these start-ups which can be in the form of debt or other instruments. The 2025 budget had also announced a FFS for Deep Tech Start-ups to enable patient capital, support disruptive innovations and for funding of larger ticket size. The work of Deep Tech Policy is also in progress.