HomeBudget NewsIndia aims for 500 well-financed startups in 5 years with 'Fund of Funds', says DFS secretary

The funds will be directed towards startup growth capital, including modernisation, R&D, IPO readiness, and acquisition financing, areas that traditional banking systems often overlook.

In Budget 2025, Finance Minister Nirmala Sitharaman announced that the government will set up a new Fund of Funds (FoF) with an additional corpus of ₹10,000 crore, following an earlier ₹10,000 crore contribution.

The FoF will further support Alternate Investment Funds (AIFs) for startups that have already secured over ₹91,000 crore in commitments.

The fresh infusion will focus on creating a perpetual revolving corpus for direct investments in startups, aiming to leverage the contributions for a capital pool of ₹20,000 crore to ₹25,000 crore over the next five years, said M Nagaraju, Secretary of the Department of Financial Services, on Monday.

He said gains and losses from the investments made by the fund shall be credited /debited to the corpus. Also, AIFs supported by the FOF shall ensure a multiplier of at least 2x leveraging of the amount contributed by it.

Also read: From credit to classification – Why Budget 2025 is a gamechanger for MSMEs

The initiative aims to support 500 well-funded startups, particularly in traditional and emerging sectors where funding gaps persist, he added.

The funds will be directed towards startup growth capital, including modernisation, R&D, IPO readiness, and acquisition financing, areas that traditional banking systems often overlook.

First Published: Feb 3, 2025 3:21 PM IST

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