Finance Minister Nirmala Sitharaman has introduced a new Fund of Funds (FFS) worth Rs 10,000 crore in the Union Budget 2025, reaffirming the government’s commitment to supporting startups and innovation in India.
Boosting Startup Growth in India
The Fund of Funds for Startups (FFS) was first launched in 2016 under the Startup India Action Plan to provide financial assistance to emerging businesses. Instead of directly investing in startups, the FFS channels funds into Alternative Investment Funds (AIFs), also known as daughter funds, which then invest in promising startups.
With this fresh Rs 10,000 crore commitment, the government aims to increase capital access, reduce dependence on foreign funding, and nurture innovation across different sectors.
Impact of the Existing Fund of Funds
The previous Rs 10,000 crore FFS program has already shown significant results:
- Rs 91,000 crore mobilized through 141 AIFs.
- Over 19,900 startups have received investments.
Major startup hubs like Karnataka and Maharashtra secured Rs 4,600 crore and Rs 3,400 crore, respectively.
With over 1.5 lakh recognized startups in the country, the government hopes this new fund will accelerate growth in other emerging regions as well.
How the New Fund Will Work
The Small Industries Development Bank of India (SIDBI) will manage this new Fund of Funds, ensuring that AIFs deploy at least double the capital they receive into startups. This approach will create a multiplier effect, helping early-stage, seed, and growth-stage startups secure critical funding for expansion.
Encouraging Local Innovation
With this fresh infusion of funds, the government aims to:
- Strengthen India’s startup ecosystem.
- Provide capital to promising ventures.
- Reduce dependence on international investors.
- Encourage regional growth and innovation across various states.
This initiative aligns with the broader Startup India vision of making India a global leader in entrepreneurship and technology-driven businesses.
The Rs 10,000 crore Fund of Funds is a major step towards empowering Indian startups. By nurturing innovation, expanding financial access, and fostering entrepreneurship, the government is creating a strong foundation for future business growth in India.
