Fund of Funds for Startups
Also called: FFS, SIDBI Fund of Funds · Topic: Factors of Production, Entrepreneurship and Startups · NCERT: Beyond NCERT
Meaning
The Fund of Funds for Startups (FFS) is a government fund of ₹10,000 crore under the Startup India programme, which began on 16 January 2016. SIDBI (Small Industries Development Bank of India) manages it. It is a fund of funds: it does not put money straight into startups. Instead, it invests in venture capital funds registered with SEBI. Venture capital funds are private funds that buy a share in young, fast-growing firms. Those funds then choose which startups to back, on purely business terms. This way, each rupee of public money pulls in private money, and experienced fund managers pick the deals. According to official programme data (2024), 10% of the fund is kept aside for women-led startups.
Example
SIDBI puts part of the FFS money into a SEBI-registered venture fund. Private investors add their own money to the same fund. The fund managers then study many young firms and buy a share in, say, an agritech startup that has a business that can grow. SIDBI never chooses that startup itself.
Don't confuse with
- Self-Reliant India (SRI) Fund: this also works as a fund of funds, but it gives equity to MSMEs, not startups. It is run through NSIC Venture Capital Fund Ltd, with SBI Ventures as its investment manager. SIDBI does not run it.
- Startup India Seed Fund Scheme: a separate scheme of ₹945 crore, started in 2021, that supports very early-stage startup ideas.
Recent developments
- April 2026: The government notified Fund of Funds 2.0 (FFS 2.0). It has its own ₹10,000 crore corpus, separate from the original FFS. Like the first fund, it invests through SEBI-registered venture funds and does not fund startups directly. It targets three groups. The first is deep-tech startups, which build products on new science and take many years to earn money. The second is innovative manufacturing. The third is early-growth-stage startups, which are past the idea stage but still young. This matters because the fund-of-funds model is now aimed at sectors that need patient, long-term capital. Exams may also test that ₹10,000 crore is the size of both funds, and that they are two separate funds.