The Department for Promotion of Industry and Internal Trade (DPIIT) has launched the ₹10,000 crore (approximately $1.2 billion USD) Startup India Fund of Funds 2.0, aimed at enhancing the startup financing ecosystem in India. This fund will not invest directly in startups but will channel investments through registered Alternative Investment Funds (AIFs), which will then invest in DPIIT-recognised startups using equity and debt instruments. The initiative targets deep-tech and early-stage startups, with the government contributing up to 40% of the AIF corpus for deep-tech funds, capped at ₹500 crore (approximately $60 million USD). Other categories include smaller early-stage funds and manufacturing-focused funds, with varying levels of government support.

The selection of AIFs will follow a two-stage process, ensuring rigorous due diligence and recommendations from the Venture Capital Investment Committee (VCIC), which comprises industry leaders and experts. The scheme emphasizes the importance of supporting startups beyond metro regions to foster a more inclusive ecosystem. Monitoring mechanisms will include annual reports and evaluations every five years, ensuring effective use of funds and accountability. Any unutilized funds must earn interest at the prevailing Reserve Bank of India (RBI) repo rate, contributing back to the fund's corpus.