Sitharaman Announces A Fresh Rs 10,000 Crore Fund Of Funds Scheme To Bolster Startup Investments

Finance Minister Nirmala Sitharaman announced a fresh Rs 10,000 crore Fund of Funds (FFS) for the startups in the Union Budget 2025 on Saturday. 

The Finance Minister said that the existing FFS has already led to the creation of a Rs 91,000 crore of investment corpus for startups by Alternative Investment Funds.

The first Fund of Funds for Start-ups (FFS) was unveiled by the Prime Minister on January 16, 2016 in line with the Start-up India Action Plan. It has approved a corpus of Rs 10,000 crore for contribution to various Alternative Investment Funds (AIFs) registered with SEBI. 

Under FFS, the Scheme does not directly invest in startups, instead provides capital to SEBI-registered AIFs, known as daughter funds, who in turn invest money in growing Indian startups through equity and equity-linked instruments. 

Small Industries Development Bank of India (SIDBI) has been given the mandate of operating this Fund through selection of suitable daughter funds and overseeing the disbursal of committed capital. AIFs supported under FFS are required to invest at least 2 times of the amount committed under FFS in startups.

According to the Sidbi FoF, the FFs shall invest at least twice the contribution out of FFS, in Startups as defined by Government of India under Startup India. The government has committed a whopping Rs 10,913 crore fund to support 141 Alternative Investment Funds (AIFs) under the Fund of Funds for Startups (FFS) scheme. These AIFs, in turn, have invested in 19,992 startups, with a total of 1,120 startups receiving support under the FFS scheme. 

Under the Startup India Mission, the government is constantly trying to support the budding startups and providing them technical and financial aids in different forms. 

Karnataka has an extensive startup ecosystem of 240 startups with the total investment of Rs 4,687 crore followed by Maharashtra of 176 startups with the investment of Rs 3,426 crore.