Startup India Fund of Funds 2.0 Announced: ₹10,000 Crore Boost for Deep-Tech and Early-Stage Startups

To strengthen the Startup ecosystem of India Government has launched the Startup India Fund of Funds 2.0. This 2.0 version will be backed by the massive ₹10,000 crore corpus. It was announced by the central government and this initiative aims to boost the investments in deep-tech, innovative manufacturing and early-stage startups. This fund will play the important role to enabling startups to access the capital through investment channels and provide the long-term support.

What is Startup India Fund of Funds 2.0?

The Startup India Fund of Funds 2.0 (FoF 2.0) is the upgraded version of the earlier funding scheme which was aimed at to mobilizing venture capital for startups.

Unlike the direct funding under this the government will invest in to the SEBI-registered Alternative Investment Funds (AIFs) which in turn will invest in the different startups.

This second phase also expands the reach and introduces the segmented funding approach and also ensuring that critical sectors set to receive targeted financial support.

The initiative is monitored by the Department for Promotion of Industry and Internal Trade (DPIIT) which function under the Ministry of Commerce & Industry.

Key Objectives of the Scheme

Startup India Fund of Funds 2.0 has been designed with the clear focus to accelerating innovation and economic growth. The major objectives include the,

• To boost the venture capital investment in the India’s startup ecosystem
• Also to supporting the deep-tech and R&D-intensive startups
• Encourage those startup which are mainly technology-driven
• Also to strengthening the early-stage and growth-stage startups

Segmented Structure: Four Key Focus Areas

One of the major important upgrades in FoF 2.0 is its four part segmented structure which will ensures targeted investment.

1. Deep-Tech Startups

Under this first phase it will focuses on those startups which are working on advanced technologies like AI, robotics, quantum computing and biotech. These startups requires the longer R&D period and higher capital.

2. Early-Stage & Micro VC Support

It will targets the small AIFs that will invest in startups which are early growth stages and help them to build products and scale operations.

3. Innovative Manufacturing Startups

Supports the technology-driven manufacturing which is important for India’s push towards the self-reliance (Atmanirbhar Bharat).

4. Sector-Agnostic Investments

It will covers the diverse startups across different sectors and stages and will be ensuring flexibility and broader inclusion.

Operational Flexibility and Funding Mechanism

To address the diverse funding for the different startups the scheme introduced the several operational improvements.

• It will support to larger AIF funds to meet the capital-intensive requirements
• Encouragement of the long-duration investments for startups with the long gestation periods
• Also the flexible guidelines related to different sectors

Implementation and Rollout

The implementation of FoF 2.0 will be led by the Small Industries Development Bank of India (SIDBI) which have also handled the earlier version of the scheme.

Key highlights of implementation that the detailed operational guidelines to be issued soon along with it inclusion of eligibility criteria, fund disbursal, and monitoring mechanisms shall be provided. Also the formation of an empowered committee which will be chaired by DPIIT Secretary.

Question

Q. Which of the following technologies falls under “Deep-Tech Startups”?

1. Artificial Intelligence
2. Robotics
3. Quantum Computing
4. E-commerce

A. 1, 2 and 3 only
B. 2, 3 and 4 only
C. 1 and 4 only
D. All of the above