To bolster the startup ecosystem in the country and to pull together domestic long-term capital, the Union Cabinet led by Narendra Modi has given its consent to the 10,000 crore Startup India Fund of Funds 2.0 (FFS 2.0). The move is a successor to the so-called first Fund of Funds for Startups (FFS 1.0) which was introduced in 2016 as part of the Startup India program.
The official statement following the meeting of the Cabinet indicated that FFS 2.0 will be used to propel the second step of innovation-led growth in India through strengthening the venture capital ecosystem and entrepreneurship across industries. With the advent of Startup India, the list of government-acknowledged startups increased to more than 2 lakh in 2020 since there used to be less than 500 startups in 2016, which is a significant boost in the innovation sphere.
In FFS 1.0, all the 10,000 crore are invested in 145 Alternative Investment Funds (AIFs). The total investments made by these AIFs are above 25,500 crore in a total of 1,370 startups in various sectors like artificial intelligence, fintech, biotechnology, clean technology, health, agriculture, manufacturing, space technology, and e-commerce among others.
The FFS 2.0 will be based on a more targeted and segmented funding strategy on this momentum. The new stage will be based on deep-tech projects and innovation-based manufacturing, but also promote breakthroughs in high-tech segments that would need patient and long-term capital support.
The government indicated that the initiative will be accompanied by increased influx of private investment, the fostering of first-time founders, and even more so making India a major startup hub in the world.