Fund of Funds for Startups (FFS)

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The Fund of Funds for Startups (FFS) is a government-led initiative that boosts innovation and job creation in India by investing in venture capital funds, which then support startup businesses nationwide.
What are the main aims and objectives?

FFS aims to strengthen India’s startup ecosystem by increasing the amount of capital available for new businesses. The policy targets gaps in early-stage funding, especially for startups unable to access traditional credit or investment. FFS helps:

  • Encourage innovation and entrepreneurship across India, including smaller cities and regions.
  • Mobilize private investment alongside public funds.
  • Promote diversity, supporting women-led and underrepresented entrepreneurs.
  • Enable job creation and economic growth through high-impact startups.
    The initiative supports fast-growing sectors like technology, healthcare, agriculture, and advanced manufacturing.
How does the program work?

The Fund of Funds for Startups (FFS) operates by investing in professionally managed venture capital funds rather than granting direct funding to startups. Managed by the Small Industries Development Bank of India (SIDBI) under the guidance of the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry, the FFS serves as an anchor investor to SEBI-registered Alternative Investment Funds (AIFs)—these are commonly referred to as “daughter funds.” SIDBI issues calls to eligible AIFs, assessing each applicant’s investment track record, fund management capability, and sectoral focus according to government priorities. Only AIFs that meet stringent criteria, including a defined commitment to investing in early-stage Indian startups, are selected.

Once approved, SIDBI commits a portion of the FFS corpus to the selected AIF, but this typically does not exceed 20% of the total fund size in line with government regulations. Critically, each AIF is required to raise at least twice the amount provided by FFS from private and institutional investors. This “multiplier effect” ensures that every rupee of public capital is matched by private sector investment, expanding the pool of funding available to startups nationwide. The eligible AIFs use these combined funds to make equity or equity-linked investments in startups that meet the Department’s definition, such as being registered with the DPIIT, less than 10 years old, and with a turnover of less than ₹100 crore.

Investments span a wide variety of sectors including technology, healthcare, agriculture, and manufacturing, amongst others. Provisions exist to channel funding into enterprises based in Tier-II and Tier-III cities, and to encourage support for women and minority founders, although data on exact allocations may not always be publicly available. SIDBI continuously monitors the deployment of funds, requiring AIFs to report on investments, outcomes, and geographic and demographic spread. Compliance checks are in place to ensure funds are directed as intended and to minimize risk.

FFS also adapts its approach based on stakeholder feedback and external assessments. For example, in response to concerns and suggestions from fund managers, entrepreneurs, and government advisors, SIDBI has streamlined some application processes and introduced periodic assessments. However, it is worth noting that information on specific investment decision processes within AIFs, average ticket sizes per startup, or detailed selection mechanisms for individual companies is not consistently disclosed in the public domain.

What is the overall cost?

FFS has a total authorized corpus of ₹10,000 crore (approx. $1.2 billion USD), funded by the Government of India over two budget cycles (2016–2020; 2020–2025).
 

How was it implemented?

The Fund of Funds for Startups (FFS) was launched in January 2016 as part of the Indian government’s Startup India Action Plan. The program is administered and managed by the Small Industries Development Bank of India (SIDBI) under the direction of the Department for Promotion of Industry and Internal Trade (DPIIT), which is part of the Ministry of Commerce and Industry. SIDBI is responsible for inviting applications from and selecting SEBI-registered Alternative Investment Funds (AIFs) to receive FFS investments. The selection process evaluates the track record, investment thesis, sectoral focus, and compliance measures of each fund, with a view to ensuring that public support flows to capable private sector partners who can effectively invest in and mentor startups.

FFS’s rollout was phased, with funds committed annually according to India’s finance commission cycles. Initial disbursements began in 2016, and by August 2025, SIDBI had committed approximately ₹9,994 crore to 141 AIFs. Over the years, the program has set benchmarks and eligibility norms aimed at boosting inclusion, supporting women entrepreneurs, and ensuring coverage of Tier-II and Tier-III cities, although some details of these implementation targets have not been made public. The FFS model requires that for each rupee invested by the government, supported funds crowd in at least twice as much capital from private and institutional sources.

The government and SIDBI performed periodic reviews and consultations with involved stakeholders, which have led to incremental improvements in process efficiency and reporting requirements. For example, compliance and monitoring frameworks have been updated to improve transparency in investment tracking and the reporting of outcomes. The Ministry of Commerce and Industry and SIDBI have published annual and periodic status reports on FFS’s progress. However, specific information on intra-agency staffing, training for fund managers, or profiles of key advisors has not been published in available official sources.

Key dates in the timeline include the program’s announcement in January 2016, the first round of fund commitments in 2016, and gradual scaling of investments and operational improvements through 2025. A second round of corpus expansion for FFS was announced in 2025, signaling continued government support. 

What impact has been measured?

It has been reported that FFS has played a transformative role in India's startup landscape, catalyzing over ₹81,000 crore (approx. $9.76 billion USD) of capital through multiplier effects in the venture space. As of May 2025, more than 1,173 startups across various sectors (such as healthcare, agriculture, fintech, and manufacturing) have received funding, including ventures in Tier-II and Tier-III cities and those led by women entrepreneurs. FFS-supported AIFs have made investments that have contributed to the emergence of at least 18 unicorns.


 

CURATED BY

Tom Hancock

Research Associate
Global Entrepreneurship Network
United Kingdom