Budget 2025: ₹10,000 Crore 'Fund of Funds' Announced For Startups Nirmala Sitharaman, the Union finance minister announced today, the introduction of a new 'Fund of Funds' for startups with a fresh contribution of INR 10,000 crore.
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Nirmala Sitharaman, the Union finance minister announced today, the introduction of a new 'Fund of Funds' for startups with a fresh contribution of INR 10,000 crore.
The scheme will provide capital to the Security and Exchange Board of India (SEBI)-registered Alternative Investment Fund (AIFs), also known as daughter funds, who invest money into the startup ecosystem as part of fundraises through equity and equity linked-instruments.
"The renewal of the ₹10,000 crore Fund of Funds and the focus on deep-tech funding will provide much-needed capital to early-stage ventures and India's next wave of innovation. The increased allocation for nuclear and power sectors, alongside massive infrastructure CAPEX, signals that this budget isn't just about the next year—it is about building a globally competitive India by 2047," said Anirudh A. Damani, Managing Partner, Artha Venture Fund.
Sitharaman also said that a 'Fund of Funds' specifically for DeepTech will also be explored, as the new-age technology is growing more influential by the day to the next generation of startups. As part of the 'Ease of Doing Business' (EODB), an extension of the time limit under section 80-IAC for startups was also announced.
"The government's continued commitment to Ease of Doing Business, with measures like reduced withholding tax and policy streamlining, enhances India's attractiveness as an investment destination. The announcement of the new tax bill reinforces a progressive, investment-friendly outlook. As long-term investors in India's digital and entrepreneurial ecosystem, we look forward to backing the next wave of transformative companies shaping the country's future" said Pankaj Makkar, Managing Director, Bertelsmann India Investments (BII).
The initiative is supposed to extend the benefits provided under the section for another five years, with eligibility counted for startups incorporated before the 1st of April, 2030.
"For startups, the government's extension of tax benefits to those incorporated is a crucial step, though more clarity is needed on its implementation. The rationalization of income tax brackets will put more disposable income in the hands of consumers, leading to increased spending—a positive development for startups in the consumer sector and beyond," said Vikram Gupta, Founder and Managing Partner, of IvyCap Ventures.
Earlier in the July 2024 Budget, Sitharaman had announced the abolition of 'Angel Tax' for investors of all classes, aimed at improving the capital flow into the ecosystem. The abolition was welcomed with open arms by investors and startup founders alike.
