The government on Saturday issued detailed guidelines for operationalisation of the second tranche of ₹10,000 crore fund of funds (FoF) scheme for startups.
The guidelines include mechanisms for fund deployment, governance and monitoring, with the objective of improving the efficiency of capital flows into India's startup ecosystem, the commerce and industry ministry said.
The scheme will be implemented through commitments to SEBI-registered Category I and II Alternative Investment Funds (AIFs), which will invest in DPIIT-recognised startups.
"This approach is expected to ensure disciplined capital allocation, crowding-in of private investments, and wider access to funding across sectors, stages, and geographies," it said.
The Small Industries Development Bank of India (SIDBI), it said, will act as the initial Implementation Agency and will undertake execution through a structured AIF selection and monitoring process.
The Department for Promotion of Industry and Internal Trade (DPIIT) will also onboard an additional implementation agency to expand reach, enhance sectoral expertise, and build institutional capacities for managing such schemes.
"To address specific gaps in the ecosystem, 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," it said.
The Implementation Agency will undertake initial screening and due diligence, followed by evaluation by a Venture Capital Investment Committee, which will assess proposals based on the track record of the team, fund management capability, and investment strategy.
The Committee comprises distinguished leaders from industry, academia and the innovation ecosystem, including Vallabh Bhansali, Ashok Jhunjhunwala, Renu Swarup, Chintan Vaishnav, and Rajesh Gopinathan, along with representatives from the Implementation Agency.
Published on April 25, 2026