The Government of India has announced a fresh ₹10,000-crore allocation under the Startup India Fund of Funds 2.0, with a strong focus on deep-tech sectors. The move is aimed at boosting innovation in areas such as artificial intelligence, semiconductors, robotics, space technology, and advanced manufacturing.
The new funding push comes at a time when India is trying to build stronger domestic capabilities in critical technologies. Policymakers believe that supporting deep-tech startups will help the country reduce dependence on imports, create high-value jobs, and strengthen long-term economic growth.
What Is Startup India Fund of Funds 2.0
The Startup India Fund of Funds is a government-backed investment programme designed to support startups indirectly through venture capital funds. Instead of investing directly in startups, the government provides capital to SEBI-registered alternative investment funds, which then invest in early-stage companies.
The new Fund of Funds 2.0 comes with a ₹10,000-crore corpus, aimed specifically at deep-tech and high-innovation sectors. This second phase builds on the original Startup India Fund of Funds, which was launched to improve access to capital for startups across India.
Key Highlights of the ₹10,000-Crore Allocation
The new funding round has several major objectives. The government has set aside ₹10,000 crore to support deep-tech startups, with a focus on sectors such as artificial intelligence, semiconductors, robotics, defence technology, quantum computing, and clean energy solutions.
The fund will continue to operate through registered venture capital and alternative investment funds. These funds will invest in startups at different stages, including seed, early, and growth stages. The programme is also expected to encourage private investment, as government backing often attracts additional capital from domestic and global investors.
Why the Focus Is on Deep-Tech Startups
Deep-tech startups work on complex technologies that often require long development cycles and high research spending. These companies usually need more funding and time compared to consumer-focused startups.
The government’s new focus reflects a shift in India’s startup strategy. Instead of only supporting e-commerce, fintech, and service-based startups, policymakers now want to promote innovation in core technologies.
Deep-tech sectors can create high-skill jobs, strengthen national security and strategic industries, reduce reliance on imported technologies, and support long-term economic growth. This shift also aligns with India’s broader push to become a global technology and manufacturing hub.
How the Fund Will Work
The Fund of Funds model does not invest directly into startups. Instead, the process works in multiple stages.
First, the government allocates money to a central fund managed by a designated financial institution. Next, the money is invested in SEBI-registered venture capital funds selected based on their track record, investment strategy, and sector focus. Finally, these venture funds invest in individual startups across sectors.
This structure helps reduce risk for the government, attract private co-investors, and ensure professional fund management. It also allows startups to receive funding from experienced investors rather than directly from government agencies.
Sectors Expected to Benefit the Most
Artificial Intelligence and Machine Learning
Startups working on AI-driven solutions in healthcare, finance, manufacturing, and agriculture are expected to receive strong support.
Semiconductors and Electronics
India is investing heavily in domestic chip manufacturing. Deep-tech startups in chip design, electronics, and hardware could benefit from the new funding.
Space and Defence Technology
Private companies working in satellite technology, launch systems, and defence innovation are also likely to receive investment.
Clean Energy and Climate Tech
Startups focused on battery technology, green hydrogen, electric mobility, and renewable energy solutions are expected to be key beneficiaries.
Quantum Computing and Advanced Materials
Emerging sectors like quantum technologies and advanced materials research are also part of the deep-tech focus.
Impact on India’s Startup Ecosystem
The ₹10,000-crore fund is expected to provide a strong boost to the startup ecosystem, especially in high-technology sectors.
Many deep-tech startups struggle to secure early funding because of long development cycles and higher risks. The new fund could help bridge this gap. It may lead to more funding for early-stage deep-tech startups, increased participation from global venture capital firms, growth in research-driven startups, and expansion of technology-focused incubators and accelerators.
The move could also help India compete with global innovation hubs in the US, Europe, and East Asia.
How It Builds on the First Fund of Funds
The original Startup India Fund of Funds was launched to provide capital support across sectors. It helped channel investments into thousands of startups through venture funds.
However, much of the earlier funding went into sectors such as e-commerce, food delivery, mobility services, fintech, and consumer apps. The new Fund of Funds 2.0 represents a strategic shift toward core technology and research-driven businesses.
Role of Private Investors
Government-backed funds often act as a catalyst for private investment.
When venture funds receive support from a government programme, it increases investor confidence. This can attract additional capital from domestic venture capital firms, global investment funds, corporate venture arms, and family offices.
Experts say every rupee invested through a Fund of Funds structure can attract multiple rupees in private investment.
Challenges Deep-Tech Startups Still Face
While the new fund is a major step forward, deep-tech startups in India still face several challenges.
These include long research and development timelines, high capital requirements, limited access to advanced testing facilities, a shortage of specialized talent in some sectors, and complex regulatory processes.
Industry leaders say funding support must be combined with policy reforms, infrastructure development, and talent programmes.
What This Means for Entrepreneurs
For founders working in deep-tech sectors, the new fund could open up new opportunities.
Startups focused on advanced technologies may find it easier to raise seed and early-stage funding. Venture funds that specialize in deep-tech are also expected to increase their activity.
Entrepreneurs in sectors like AI, robotics, semiconductors, and climate tech could see improved access to capital over the next few years.
India’s Growing Deep-Tech Ecosystem
India’s deep-tech ecosystem has grown steadily in recent years.
The country now has startups working in satellite launches, electric aviation, semiconductor design, AI-driven healthcare, and autonomous systems. Many of these companies are gaining global attention and raising international funding.
The new ₹10,000-crore fund is expected to accelerate this growth.
Long-Term Economic Impact
Deep-tech investments are often linked to long-term economic transformation.
By supporting research-driven startups, the government aims to build domestic technology capabilities, reduce import dependence, increase exports of high-value technology products, and create skilled employment opportunities.
These outcomes could strengthen India’s position in global technology supply chains.
Bottom Line
The ₹10,000-crore Startup India Fund of Funds 2.0 marks a major push toward deep-tech innovation in the country. The programme aims to support startups in areas such as AI, semiconductors, robotics, and clean energy.
By channeling funds through venture capital firms, the initiative is expected to attract private investment and boost research-driven startups.
For India’s startup ecosystem, the new fund signals a clear shift from consumer apps toward core technology and long-term innovation.
Disclaimer: The information presented in this article is intended for general informational purposes only. While every effort is made to ensure accuracy, completeness, and timeliness, data such as prices, market figures, government notifications, weather updates, holiday announcements, and public advisories are subject to change and may vary based on location and official revisions. Readers are strongly encouraged to verify details from relevant official sources before making financial, investment, career, travel, or personal decisions. This publication does not provide financial, investment, legal, or professional advice and shall not be held liable for any losses, damages, or actions taken in reliance on the information provided.
Last Updated on Tuesday, February 17, 2026 11:13 am by Startup Magazine Team
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