New Government Fund Aims to Propel 500 Startups to Success

New Delhi, Feb 4 (KNN) In a major push to India’s startup ecosystem, Finance Minister Nirmala Sitharaman announced in the Budget 2025 that the government will infuse an additional Rs 10,000 crore into the Fund of Funds (FoF), doubling down on its earlier contribution.

This move aims to fortify Alternate Investment Funds (AIFs), which have already mobilized over Rs 91,000 crore in commitments.

The new infusion is set to create a perpetual revolving corpus, ensuring sustained financial backing for emerging businesses.

The government envisions leveraging these contributions to generate a capital pool between Rs 20,000 crore and Rs 25,000 crore over the next five years, according to M Nagaraju, Secretary of the Department of Financial Services.

“The gains and losses from the investments made by the fund will be credited or debited to the corpus,” Nagaraju explained, emphasising a self-sustaining mechanism.

Moreover, AIFs receiving support from the FoF will be mandated to maintain a minimum 2x leverage on the government’s contribution, further amplifying the available capital.

This initiative is expected to provide a significant boost to 500 well-funded startups, particularly in both traditional and emerging sectors facing funding challenges.

By targeting areas often overlooked by conventional financial institutions, the fund will cater to critical needs such as modernisation, research and development, IPO preparedness, and acquisition financing.

The move is being hailed as a game-changer for India’s startup landscape, ensuring that promising ventures receive the necessary capital to scale operations.

Industry leaders and investors have welcomed the announcement, viewing it as a progressive step towards fostering innovation and entrepreneurship.

With India continuing to establish itself as a global startup powerhouse, this initiative signals the government’s commitment to nurturing high-potential enterprises.

As the ecosystem matures, this structured financial support is poised to catalyse long-term growth, making India a formidable player in the global innovation economy.

(KNN Bureau)