UPSC Prelims Practice Questions — DPIIT Issues Operational Guidelines for ₹10,000 Crore Startup India Fund of Funds 2.0 to Streamline Capital Deployment
Q1. In the context of the Startup India Fund of Funds 2.0, the term 'Fund of Funds' is most precisely defined as which one of the following?
- A. A fund that commits its corpus to other SEBI-registered investment funds, which in turn invest in startups, rather than investing directly in startups
- B. A fund that invests its entire corpus directly as equity into individual DPIIT-recognised startups
- C. A fund whose sole function is to provide collateral-free guarantees for bank loans extended to startups
- D. A sovereign fund that invests exclusively in foreign venture capital funds to attract overseas startups to India
Q2. As per the implementation architecture laid out for the Startup India Fund of Funds 2.0, how many domestic Implementation Agencies are envisaged to operationalise the scheme?
- A. One
- B. Two
- C. Three
- D. Four
Q3. With reference to how the Fund of Funds channels capital compared with other Startup India instruments, consider the following statements:
1. FoF 2.0 commits capital to SEBI-registered Alternative Investment Funds, whereas the Startup India Seed Fund Scheme (SISFS) provides financial assistance directly to startups through incubators.
2. FoF 2.0, like a venture capital fund, makes direct equity investments exclusively into individual startups selected by the government.
3. The original 2016 Fund of Funds for Startups similarly channelled capital through SEBI-registered AIFs rather than investing directly in startups.
Which of the statements given above is/are correct?
- FoF 2.0 commits capital to SEBI-registered Alternative Investment Funds, whereas the Startup India Seed Fund Scheme (SISFS) provides financial assistance directly to startups through incubators.
- FoF 2.0, like a venture capital fund, makes direct equity investments exclusively into individual startups selected by the government.
- The original 2016 Fund of Funds for Startups similarly channelled capital through SEBI-registered AIFs rather than investing directly in startups.
- A. 1 and 3 only
- B. 1 and 2 only
- C. 2 and 3 only
- D. 1, 2 and 3
Q4. With reference to the investment mechanism of the Startup India Fund of Funds 2.0, consider the following statements:
1. Commitments are made to SEBI-registered Category I Alternative Investment Funds.
2. Commitments are made to SEBI-registered Category II Alternative Investment Funds.
3. Commitments may also be made to SEBI-registered Category III Alternative Investment Funds.
4. The Alternative Investment Funds in turn invest in DPIIT-recognised startups.
Which of the statements given above is/are NOT correct?
- Commitments are made to SEBI-registered Category I Alternative Investment Funds.
- Commitments are made to SEBI-registered Category II Alternative Investment Funds.
- Commitments may also be made to SEBI-registered Category III Alternative Investment Funds.
- The Alternative Investment Funds in turn invest in DPIIT-recognised startups.
- A. 1 and 3
- B. 2 and 4
- C. 1, 2 and 4
- D. 3 only
Q5. With reference to the corpus of the Startup India Fund of Funds 2.0 and its predecessor, consider the following statements:
1. FoF 2.0 has been notified with a corpus of ₹10,000 crore.
2. The corpus of FoF 2.0 is to be deployed across the 16th and 17th Finance Commission cycles.
3. The corpus of FoF 2.0 is double that of the original 2016 Fund of Funds for Startups.
4. The original 2016 Fund of Funds for Startups also had a corpus of ₹10,000 crore.
Which of the statements given above is/are NOT correct?
- FoF 2.0 has been notified with a corpus of ₹10,000 crore.
- The corpus of FoF 2.0 is to be deployed across the 16th and 17th Finance Commission cycles.
- The corpus of FoF 2.0 is double that of the original 2016 Fund of Funds for Startups.
- The original 2016 Fund of Funds for Startups also had a corpus of ₹10,000 crore.
- A. 1 and 2
- B. 2 and 4
- C. 1, 2 and 4
- D. 3 only
Q6. Comparing the original 2016 Fund of Funds for Startups (FFS) with the Fund of Funds 2.0, consider the following statements:
1. The deployment of FoF 2.0 spans the 16th and 17th Finance Commission cycles, whereas the original FFS was spread across the 14th and 15th Finance Commission cycles.
2. FoF 2.0 has been endowed with exactly twice the corpus of the original FFS.
3. Both FoF 2.0 and the original FFS share an identical corpus of ₹10,000 crore.
Which of the statements given above is/are correct?
- The deployment of FoF 2.0 spans the 16th and 17th Finance Commission cycles, whereas the original FFS was spread across the 14th and 15th Finance Commission cycles.
- FoF 2.0 has been endowed with exactly twice the corpus of the original FFS.
- Both FoF 2.0 and the original FFS share an identical corpus of ₹10,000 crore.
- A. 1 and 3 only
- B. 1 and 2 only
- C. 2 and 3 only
- D. 1, 2 and 3
Q7. Both the original 2016 Fund of Funds for Startups and the Fund of Funds 2.0 designate which one of the following as their lead/initial operating (implementation) agency?
- A. Small Industries Development Bank of India (SIDBI)
- B. National Bank for Agriculture and Rural Development (NABARD)
- C. National Credit Guarantee Trustee Company (NCGTC)
- D. Securities and Exchange Board of India (SEBI)
Q8. With reference to the priority segments that distinguish the Fund of Funds 2.0 from its 2016 predecessor, consider the following:
1. Deep-tech startups.
2. Technology-driven and innovative manufacturing startups.
3. Early-growth-stage startups supported through smaller AIFs.
4. Startups that receive direct equity investment made by the Fund itself.
Which of the above is/are correctly identified as a priority focus of FoF 2.0?
- Deep-tech startups.
- Technology-driven and innovative manufacturing startups.
- Early-growth-stage startups supported through smaller AIFs.
- Startups that receive direct equity investment made by the Fund itself.
- A. 1, 2 and 3 only
- B. 1, 2 and 4 only
- C. 2, 3 and 4 only
- D. 1, 2, 3 and 4
Q9. How many flagship schemes does the Government of India implement under the Startup India initiative to support startups across different stages of their business cycle?
- A. Two
- B. Three
- C. Four
- D. Five
Q10. With reference to the eligibility conditions for an entity to be recognised as a startup by DPIIT, consider the following:
1. It must be incorporated as a private limited company, or registered as a partnership firm, or a limited liability partnership.
2. It must be within ten years from the date of its incorporation or registration.
3. Its turnover for any financial year since incorporation must not have exceeded the prescribed threshold.
4. It must have been formed by splitting up or reconstruction of an already existing business.
Which of the above is/are correctly identified as an eligibility condition?
- It must be incorporated as a private limited company, or registered as a partnership firm, or a limited liability partnership.
- It must be within ten years from the date of its incorporation or registration.
- Its turnover for any financial year since incorporation must not have exceeded the prescribed threshold.
- It must have been formed by splitting up or reconstruction of an already existing business.
- A. 1, 2 and 3 only
- B. 1, 3 and 4 only
- C. 2 and 4 only
- D. 1, 2, 3 and 4
Q11. The Fund of Funds for Startups (FFS), which had committed ₹7,980 crore to 99 AIFs as reported for 2023, operates under a two-agency structure in which the monitoring agency (as distinct from the operating agency) is which one of the following?
- A. Department for Promotion of Industry and Internal Trade (DPIIT)
- B. Small Industries Development Bank of India (SIDBI)
- C. NITI Aayog
- D. Securities and Exchange Board of India (SEBI)
Q12. The Startup India Fund of Funds 2.0, for which DPIIT subsequently issued operational guidelines, was approved by which one of the following authorities prior to being notified with its ₹10,000 crore corpus?
- A. The Union Cabinet
- B. The Board of the Securities and Exchange Board of India
- C. The Central Board of the Reserve Bank of India
- D. The Governing Council of NITI Aayog