Government of India Startup Funding Support
- surajit bhowmick
- Feb 9
- 3 min read
The budget announcement in 2025 by the Government of India was related to start-ups. This explained the Funds of Funds (FFS) that provide funds to start-ups through Alternate Investment Funds (AIFs). Let us now break this down into simple terms and learn a little more about it.
What is Funds of Funds for Startup (FFS)?
A fund of funds does not invest directly into startups but rather invests into smaller funds, called Alternate Investment Funds (AIFs), which in turn fund the startups.
Launched under the Startup India Initiative, the FFS scheme began in 2016 when the government initially allocated INR 10,000 crore to the fund. Now with the release of the recent Union Budget 2025, another INR 10,000 crore has been announced.
How Fund of Funds will help the Indian start-up firms?
Boosts Early-Stage Startups: Since funds are injected into the startup ecosystem, many early-stage startups can raise funds.
Nurture Innovations: FFS promotes investments in frontiers of the next generation such as AI, quantum computing, semiconductors, and cybersecurity and is going to project India as a world leader in deep tech.
Access to Professional Management: Since the funds are channeled through SEBI-registered AIFs, professional fund managers manage the investments, thus efficiently allocating the capital.
The budget has also added schemes for a first-time female entrepreneur and other SC and ST categories, including a loan worth ₹2 crores to empower more inclusiveness in the start-up ecosystem.
How Are These Funds Distributed?
The FFS is supplemented by the government, which further pools it to be administered by SIDBI. SIDBI screens and collaborates with AIFs, who invest in sector-specific promising start-ups. Funds are allocated as per sectoral focus, hence supporting industries in line with the vision of a self-reliant India like Atmanirbhar Bharat.
How Does It Benefit the General Public?
Job Creation: Each one of us knows how it can help create jobs. More money gives more opportunities and more opportunities attract more requirements on the human brain and skills
Technological advancements: Deep tech startups are actually a source for technological advancements due to support and funding.
Economic growth: A healthy ecosystem of startups directly contributes to economic growth and develops India as the innovation hub in the world.
Inclusivity: Focusing on women and marginalized entrepreneurs makes participation in the economy more diverse and brings social equity.
Important Takeaways and Points of Interest
Deeptech Focus: For 2025, a specific Deeptech Fund of Funds has been created to incentivize startups focused on AI, energy transition, and manufacturing.
Credit Support: Guarantees to startups have been strengthened. Guarantee cover increased to ₹20 crores from ₹10 crores.
Women Entrepreneurs: As much as nearly half of the 1.57 lakh startups identified under Startup India are headed by women, that is a very important step towards gender equality in entrepreneurship.
Monitoring Mechanisms: Experts have demanded better oversight for efficient usage and to avoid misappropriation.
Conclusion
The Funds of Funds for Startups is a visionary initiative taken forward by the Indian government towards fostering innovation, creating jobs, and boosting economic growth. Having doubled its corpus and introduced deep tech-focused initiatives, the FFS is going to be one of the most crucial forces in shaping the very nature of India's startup landscape. Supporting inclusive growth as well as technological advancements, not only benefits the startups but the general public, getting a gateway into a better, more self-reliant India.
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