UPSC Prelims Practice Questions — Cabinet approves Startup India Fund of Funds 2.0 to Mobilize Venture Capital for India’s Startup Ecosystem

Q1. Which one of the following institutions has been designated as the initial Implementation Agency for operationalising the Startup India Fund of Funds 2.0 (FoF 2.0)?

  • A. National Credit Guarantee Trustee Company Ltd (NCGTC)
  • B. Small Industries Development Bank of India (SIDBI)
  • C. Securities and Exchange Board of India (SEBI)
  • D. National Bank for Agriculture and Rural Development (NABARD)

Q2. As per the 'A Decade of Startup India' account, the ₹10,000 crore corpus of the original Fund of Funds for Startups (FFS) has been committed to how many Alternative Investment Funds (AIFs)?

  • A. Over 140 AIFs
  • B. Exactly 72 AIFs
  • C. Over 300 AIFs
  • D. Exactly 99 AIFs

Q3. The Fund of Funds for Startups (FFS) is described as the flagship risk-capital initiative under the Startup India Action Plan of which one of the following?

  • A. Department for Promotion of Industry and Internal Trade (DPIIT)
  • B. Ministry of Micro, Small and Medium Enterprises
  • C. Department of Financial Services
  • D. Ministry of Electronics and Information Technology

Q4. With reference to the categorisation of Alternative Investment Funds (AIFs) under the SEBI (AIF) Regulations, 2012, consider the following statements: 1. Category I AIFs include venture capital funds and are the class considered to have positive spillover effects, for which the government or regulator may extend incentives or concessions. 2. Category III AIFs may employ leverage and complex or diverse trading strategies, unlike Category I and Category II AIFs. 3. Unlike Category I and Category II AIFs, Category III AIFs are mandatorily required to be close-ended. Which of the statements given above is/are correct?

  1. Category I AIFs include venture capital funds and are the class considered to have positive spillover effects, for which the government or regulator may extend incentives or concessions.
  2. Category III AIFs may employ leverage and complex or diverse trading strategies, unlike Category I and Category II AIFs.
  3. Unlike Category I and Category II AIFs, Category III AIFs are mandatorily required to be close-ended.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q5. The Alternative Investment Funds through which the Startup India Fund of Funds channels its commitments are registered and regulated under which one of the following?

  • A. SEBI (Alternative Investment Funds) Regulations, 2012
  • B. SEBI (Venture Capital Funds) Regulations, 1996
  • C. SEBI (Mutual Funds) Regulations, 1996
  • D. SEBI (Foreign Portfolio Investors) Regulations, 2019

Q6. Recognition of an entity as a 'startup' by the DPIIT under the Startup India initiative is granted in accordance with the eligibility conditions prescribed under which one of the following?

  • A. G.S.R. Notification 127(E) dated 19 February 2019
  • B. G.S.R. Notification 364(E) dated 11 April 2018
  • C. G.S.R. Notification 501(E) dated 23 May 2017
  • D. G.S.R. Notification 180(E) dated 17 January 2016

Q7. Consider the following schemes/initiatives under Startup India and their descriptions: 1. Startup India Seed Fund Scheme (SISFS) — provides financial assistance to seed-stage startups through incubators. 2. Credit Guarantee Scheme for Startups (CGSS) — enables collateral-free loans to startups, implemented through the National Credit Guarantee Trustee Company (NCGTC). 3. Fund of Funds for Startups (FFS) — makes direct equity investments by SIDBI into individual DPIIT-recognised startups. 4. Startup India initiative — launched by the Government of India in January 2016. Which of the above is/are NOT correctly identified?

  1. Startup India Seed Fund Scheme (SISFS) — provides financial assistance to seed-stage startups through incubators.
  2. Credit Guarantee Scheme for Startups (CGSS) — enables collateral-free loans to startups, implemented through the National Credit Guarantee Trustee Company (NCGTC).
  3. Fund of Funds for Startups (FFS) — makes direct equity investments by SIDBI into individual DPIIT-recognised startups.
  4. Startup India initiative — launched by the Government of India in January 2016.
  • A. 1 and 2
  • B. 3 only
  • C. 3 and 4
  • D. 2 only

Q8. Under the DPIIT operational guidelines for FoF 2.0, which single body has the lead role in evaluating and selecting Alternative Investment Funds after the Implementation Agency completes initial screening and due diligence?

  • A. Venture Capital Investment Committee (VCIC)
  • B. Inter-Ministerial Board for Startups
  • C. SEBI Advisory Committee on Alternative Investment Funds
  • D. Fund Management Committee of SIDBI

Q9. With reference to the implementation architecture of the Startup India Fund of Funds 2.0, consider the following statements: 1. SIDBI has been designated as the initial Implementation Agency. 2. DPIIT is to onboard an additional Implementation Agency to expand reach and sectoral expertise. 3. The ₹10,000 crore corpus is envisaged to be provided over the 16th and 17th Finance Commission cycles. 4. The scheme routes its commitments exclusively into Category III Alternative Investment Funds. Which of the statements given above is/are correctly identified?

  1. SIDBI has been designated as the initial Implementation Agency.
  2. DPIIT is to onboard an additional Implementation Agency to expand reach and sectoral expertise.
  3. The ₹10,000 crore corpus is envisaged to be provided over the 16th and 17th Finance Commission cycles.
  4. The scheme routes its commitments exclusively into Category III Alternative Investment Funds.
  • A. 1 and 2 only
  • B. 1, 2 and 3
  • C. 2, 3 and 4
  • D. 1, 2, 3 and 4

Q10. With reference to the focus and selection framework of FoF 2.0, consider the following statements: 1. Deep tech-focused funds are among the priority AIF segments under the scheme. 2. The Venture Capital Investment Committee evaluates AIF proposals on the basis of the team's track record, fund management capability and investment strategy. 3. Technology-led innovative manufacturing is a designated priority segment for AIF commitments. 4. FoF 2.0 invests directly in DPIIT-recognised startups without routing capital through Alternative Investment Funds. Which of the statements given above is/are correctly identified?

  1. Deep tech-focused funds are among the priority AIF segments under the scheme.
  2. The Venture Capital Investment Committee evaluates AIF proposals on the basis of the team's track record, fund management capability and investment strategy.
  3. Technology-led innovative manufacturing is a designated priority segment for AIF commitments.
  4. FoF 2.0 invests directly in DPIIT-recognised startups without routing capital through Alternative Investment Funds.
  • A. 1, 2 and 3
  • B. 1 and 3 only
  • C. 2 and 4 only
  • D. 1, 2, 3 and 4

Q11. SIDBI, the implementing agency for the Startup India Fund of Funds, was established as the principal financial institution for the promotion, financing and development of which one of the following sectors?

  • A. Micro, Small and Medium Enterprises (MSME) sector
  • B. Agriculture and rural development sector
  • C. Housing finance sector
  • D. Export and import (foreign trade) sector