Budget 2025 Update: Finance Minister Sitharaman Announces ₹10,000 Crore for New Startup Fund of Funds
According to a report by GlobalData, funding for Indian startups declined by 66 per cent between January and November 2023.
Budget 2025 Update: Union Finance Minister Nirmala Sitharaman on Saturday announced that a new ‘Fund of Funds’ for startups will be set up with expanded scope and a fresh corpus of ₹10,000 crore.
In her 8th Budget speech, the Union Finance Minister announced that the Alternative Investment Fund (AIF) for startups has received commitments of over ₹91,000 crore, backed by a government fund of funds of ₹10,000 crore.
A fund of funds (FoF) is different from traditional investment models as it pools resources together and invests in other venture capital or private equity funds, rather than investing directly in individual companies. According to a report by GlobalData, funding for Indian startups declined by 66 per cent between January and November 2023.
During this period, Indian startups raised $6.9 billion across 1,013 venture capital deals. In comparison, startups raised $20.2 billion during the same period in 2022.
Budget 2025 Update: Aatmanirbhar Bharat
Apart from increased funding, startups will also get better access to credit. The Union Finance Minister outlined a plan to offer loans between ₹10 crore and ₹20 crore with a low guarantee fee of just 1 per cent. These loans will target 27 key sectors critical to the success of ‘Aatmanirbhar Bharat’.
Finance Minister Nirmala Sitharaman also said that as a part of this initiative, a deep tech fund of funds will also be explored to catalyse the next generation of startups. Prime Minister Narendra Modi, while reacting to the Union Budget presented by Union Finance Minister Nirmala Sitharaman in Parliament today, said that the document is a milestone in India’s development journey.
Also Read: Union Budget 2025 Updates: Now no Income Tax for Those With Annual Income up to Rs 12 Lakh
