SIDBI Fund of Funds for Startup (FFS) Scheme

As a new MSME owner, getting funding can feel tough; banks need collateral, and investors are hard to reach. The SIDBI Fund of Funds for Startup (FFS) Scheme helps solve this by supporting venture capital funds that invest in startups like yours. It’s a smart way to access funding and mentorship without the usual roadblocks.

What is the SIDBI Fund of Funds Scheme?

The Small Industries Development Bank of India (SIDBI) Fund of Funds for Startup (FSS) Scheme was launched on January 16, 2016, as part of the Government of India's Startup India Action Plan. This scheme was created to support innovation-driven startups by providing funds to Alternative Investment Funds (AIFs) registered with SEBI, which then invest in startups. The scheme targets startups and MSMEs, helping you access much-needed funding and scale your enterprise through professional venture capital partners. The Government initially allocated a corpus of Rs 10,000 crore to this scheme, which has since been expanded to Rs 20,000 crore.

Objectives of the Fund of Funds for Startups

• To support and promote entrepreneurship and innovation in India.
• To facilitate the growth of startups by ensuring access to domestic capital.
• To encourage the development of venture capital and private equity funds focused on MSMEs and startups.
• To create a multiplier effect for government funding through private and institutional investments.

Key Features of the SIDBI Fund of Funds Scheme

• Initial corpus of Rs 10,000 crore, now expanded to Rs 20,000 crore as per the 2025 Budget.
• It invests in SEBI-registered Alternative Investment Funds (AIFs) rather than startups directly.
• Alternative Investment Funds (AIFs) must invest at least twice the committed amount in startups eligible under the Government of India’s startup definition.
• SIDBI operates as a fund manager and oversees the deployment of funds.

Financial Assistance Offered Under the Scheme

Eligibility Criteria for Fund of Funds for Startups

Eligibility

You can benefit under the SIDBI Fund of Funds for Startup (FSS) Scheme if you:

• Are a startup or MSME as defined by the Government of India under the Startup India scheme
• Operate in sectors such as technology, agriculture, healthcare, education, or other innovative areas
• Have a scalable business model with potential for growth and value creation
• Are seeking equity or equity-linked funding (not debt directly from SIDBI)
• Are eligible to receive funding via SEBI-registered Venture Capital Funds (daughter funds)

Non-eligibility

You may not be eligible if you:

• Are looking for direct loans or debt from SIDBI under this scheme
• Operate in sectors not covered by the Startup India framework or AIF investment mandates
• Have a business model that lacks scale or growth potential as assessed by daughter funds
• Are a fund or venture capital firm (since the scheme invests through them)

Documents Required for the Fund of Funds for Startups

• Proof of entity registration as a startup/MSME under the relevant government scheme
• Business plan or pitch deck outlining your startup’s model and scalability
• Registration certificates under Startup India or MSME
• Financial statements (if any) or projections
• Details of promoters and the team
• Any due diligence documents as required by the investing daughter funds

How to Apply for the SIDBI Fund of Funds Scheme

Step 1: Register your startup / MSME under the Startup India or MSME schemes if not already done.

Step 2: Approach SEBI-registered Alternative Investment Funds (AIFs) that have been approved under the SIDBI FFS scheme.

Step 3: Submit your business proposal to these daughter funds for funding consideration.

Step 4: If selected, the daughter fund invests equity or equity-linked funds in your startup as per agreed terms.

Step 5: SIDBI oversees the fund disbursal to the daughter funds, but does not deal directly with you as the startup.

Benefits of the SIDBI Fund of Funds Scheme

• Expanded Access to Capital
  You get access to a pool of funds mobilised by professional venture capital managers, improving your chances of raising growth capital.
• Risk Mitigation
  Since funding is through invested venture capital funds, investment decisions are professionally vetted, lowering your funding risk.
• Supportive Ecosystem
  Being funded by daughter funds often means access to mentorship, market linkages, and business networks.
• Multiplier Effect
  Government funding is leveraged with private capital, increasing total funds available for startups and increasing your opportunity to raise larger investments.
• Alignment with Government Initiatives
  The scheme aligns with other MSME and Startup India benefits, providing you with comprehensive support.

Real-World Examples of the SIDBI Fund of Funds Scheme

• Startups in healthcare supported by Fireside Ventures
• Agritech startups funded through the ASPIRE Fund under SIDBI
• Tech startups backed by Chiratae Ventures and Stellaris Venture Partners

Related Government Support Plans with the SIDBI Fund of Funds Scheme

Final Words

As a new MSME owner, the SIDBI Fund of Funds Scheme is a major opportunity for you to access equity capital indirectly through reputed venture capital funds. It helps you grow by connecting your startup to institutional investors who can provide both money and mentorship. While you don't apply directly to SIDBI, knowing how this scheme works helps you identify and approach the right venture capital funds for your business growth.