Budget 2025: Rs 10,000 crore fund of funds for startups announced by FM

The government has proposed setting up a new fund of funds for startups with a corpus of Rs 10,000 crore, a move that will boost early-stage investments.

The earlier such fund, launched in 2016 and managed by Small Industries Development Bank of India (Sidbi), has so far deployed more than Rs 11,000 crore in dozens of early-stage venture capital firms, including Stellaris Venture Partners, Blume Ventures and Sorin Investments.

In her budget speech on Saturday, finance minister Nirmala Sitharaman also said the government will explore the possibility of launching a separate fund of funds for companies in the deeptech category "to catalyse the next generation startups". She said the new fund of funds scheme will have “expanded scope”.

In a document addresseing frequently asked questions about budget announcments, the finance ministry noted, "The proposed fund of funds will be sector agnostic and the focus will be on enabling investment to help startups in their growth capital and the objectives will include modernisation, R&D, IPO readiness, IPO anchoring, acquisition financing, etc."

"The proposed fund of of fund will also have focus on women entrpreneurship with 25% of the corpus to be invested in businesses led by women. Also, specific focus will be provided to climate action and sustainability, and 25% of the funds will be mandated to be invested in the area," it added.

Prashanth Prakash, founding partner at Accel India, which has backed companies such as Flipkart, Swiggy and Urban Company, said, "The government is fortifying India's startup ecosystem for exponential growth. A particularly exciting development is the exploration of a deeptech fund of funds, aimed at accelerating advancements in critical technologies such as AI (artificial intelligence), quantum computing and semiconductor research.”

ET had reported earlier that a new fund of funds scheme was in the works that would focus on backing firms specialising in secondary deals.

The government has also proposed to extend the tax holiday benefit under the Startup India scheme to companies incorporated till March 31, 2030. This was earlier valid for startups incorporated till March 31, 2025.

This means startups registered with the department for promotion of industry and internal trade (DPIIT) and meeting certain criteria are eligible for a 100% tax rebate on profits made for a period of three years in a total time frame of 10 years of operations.

However, for startups to be eligible for the tax incentives, their turnover should be less than Rs 100 crore in any of the previous financial years.