How to Apply for Fund of Funds for Startups (SIDBI) | IncorpX

Dhanush Prabha

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How to Apply for Fund of Funds for Startups via SIDBI AIF

Reviewed by Industry Experts & Startup Specialists.

Last Updated: 06 Jun 2026, 07:30 AM

Quick Overview

Estimated Cost₹5000

Time Required3 to 12 Months

Total Steps6 Steps

What You'll Need

Documents Required

DPIIT Startup Recognition Certificate (from startupindia.gov.in)
Company incorporation certificate and MOA/AOA
Business plan with financial projections for 3-5 years
Pitch deck (15-20 slides covering problem, solution, market, traction, team, financials)
Audited financial statements (if operational for 1+ years)
Cap table showing current shareholding structure
Product demo, prototype, or evidence of market traction

Tools & Prerequisites

DPIIT recognition portal at startupindia.gov.in for startup certification
Legal counsel for term sheet negotiation and shareholder agreement drafting
Expert for financial projections, valuation, and compliance documentation
CRM or pipeline tracker for managing multiple AIF conversations

The Fund of Funds for Startups (FFS) is a Rs 10,000 crore government fund managed by SIDBI that invests in SEBI-registered Alternative Investment Funds (AIFs), which then invest in eligible startups. As of 2024, FFS has backed 130+ AIFs investing in 900+ startups. To access this funding, your startup needs DPIIT recognition, a compelling pitch, and the ability to connect with FFS-backed AIFs. This guide covers the complete process from DPIIT registration to AIF pitching, term sheet negotiation, and closing the investment.

FFS corpus: Rs 10,000 crore managed by SIDBI under Startup India
Indirect investment: FFS invests in AIFs, AIFs invest in startups
DPIIT recognition: mandatory prerequisite for accessing FFS ecosystem
Investment range: Rs 25 lakh to Rs 25+ crore depending on stage
Timeline: 3-12 months from first pitch to funding

How the Fund of Funds Works

The FFS operates on a fund-of-funds model: SIDBI (the fund manager) invests the government's Rs 10,000 crore corpus into SEBI-registered AIFs (venture capital and private equity funds). These AIFs then combine the SIDBI investment with capital raised from private investors (HNIs, family offices, institutional investors) to create larger investment pools. The AIFs deploy this combined capital into eligible startups through equity investments. This structure ensures professional fund management, private sector co-investment, and market-driven investment decisions.

The FFS was launched in January 2016 as part of the Startup India Action Plan. SIDBI was appointed as the operating agency. The Rs 10,000 crore corpus is deployed over the 14th and 15th Finance Commission periods. SIDBI has committed to 130+ AIFs across all stages and sectors. The FFS catalyzes 3-4x private capital for every rupee invested, creating a total investment pool of Rs 40,000-50,000 crore for Indian startups.

FFS-Backed AIF Categories

Stage	Typical AIF Type	Ticket Size	What They Look For
Seed	Micro VC, Angel Fund	Rs 25 lakh - 2 crore	Team, idea, early validation
Early Stage	Series A VC Fund	Rs 2 crore - 10 crore	Product-market fit, early revenue
Growth	Growth Equity Fund	Rs 10 crore - 50 crore	Revenue growth, unit economics
Social Impact	Impact Fund	Rs 50 lakh - 10 crore	Social/environmental impact + returns

Based on our experience helping 500+ startups raise funding, the biggest misconception about FFS is that SIDBI gives money directly to startups. It does not. You need to pitch to and convince AIF fund managers just like any other VC fundraise. The FFS advantage is that FFS-backed AIFs have committed capital ready to deploy and are actively seeking deal flow. Startups with DPIIT recognition and strong metrics are preferred. Start building relationships with fund managers 3-6 months before you need capital.

Step-by-Step Process

Step 1: Get DPIIT Recognition

Register on startupindia.gov.in and apply for DPIIT recognition. Requirements: incorporated as private limited, LLP, or partnership, not older than 10 years, turnover below Rs 100 crore, and working on innovation. The recognition certificate is issued within 2-5 working days. DPIIT recognition unlocks: FFS ecosystem access, Section 80-IAC tax exemption, self-certification for 9 laws, and fast-tracked patent examination.

Step 2: Prepare Investment-Ready Documentation

Create a professional pitch deck (15-20 slides), detailed financial model (Excel with 3-5 year projections), clean cap table, audited financials (if applicable), and a one-page executive summary. The pitch deck should cover: problem (with data), solution (unique value proposition), market size (TAM/SAM/SOM), business model, traction metrics, competitive landscape, team, financial summary, funding ask, and use of funds. Have the deck reviewed by experienced founders or mentors.

Step 3: Connect with FFS-Backed AIFs

Research and shortlist 10-15 AIFs matching your sector, stage, and ticket size. Use SIDBI's FFS list, Startup India investor directory, and SEBI's AIF database. Reach out through: warm introductions (portfolio founders, mutual connections), Startup India demo days and events, cold emails to fund managers (concise, data-driven), and LinkedIn. Expect a 10-20% response rate on cold outreach. Warm introductions have 50-70% response rates.

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Step 4: Navigate the Investment Process

The typical AIF investment process: initial screening (pitch deck review), founder call (30-60 minutes), detailed presentation, due diligence (financial, legal, technical, market), term sheet issuance, negotiation, and closing. Due diligence takes 4-8 weeks and covers: financial audit, legal compliance review, IP ownership verification, customer reference checks, market validation, and technical assessment. Be prepared with organized documentation to speed up the process.

Step 5: Close the Deal

After term sheet agreement, legal documentation includes: Shareholder Agreement (SHA), Share Subscription Agreement (SSA), and board resolutions. Negotiate key terms: valuation, equity percentage, board seats, anti-dilution protection, liquidation preference, vesting schedule, and investor consent matters. File PAS-3 (return of allotment) with RoC within 15 days of share allotment. Update the cap table and company records. Announce the funding (if agreed with the investor).

FFS Statistics (2024)

Metric	Value
Total FFS Corpus	Rs 10,000 crore
Amount Committed to AIFs	Rs 8,800+ crore
Number of AIFs Backed	130+
Startups Funded	900+
Total Investment Catalyzed	Rs 40,000+ crore
Average Ticket Size	Rs 5-15 crore

Do not approach SIDBI directly for startup funding -- SIDBI invests only in AIFs, not in startups. Many first-time founders waste months trying to contact SIDBI for direct investment. Also, do not share confidential business information without signing an NDA with the AIF. Ensure your cap table is clean (no messy shareholder agreements or unresolved founder disputes) before approaching investors -- cap table issues are the #1 deal killer in due diligence.

Looking for other startup funding options? We can help with Startup India Seed Fund, angel investment structuring, and venture debt.

Explore Funding Options

Startup India Registration -- DPIIT recognition and benefits
Private Limited Company Registration -- incorporate your startup
BHASKAR Platform Registration -- startup networking platform
Stand Up India Loan -- government loan scheme
Producer Company Registration -- for agriculture startups

Summary

Accessing the Rs 10,000 crore Fund of Funds for Startups requires understanding its indirect investment model: SIDBI invests in AIFs, AIFs invest in startups. Get DPIIT recognition first, then identify and pitch to FFS-backed AIFs matching your sector and stage. Investment amounts range from Rs 25 lakh to Rs 25+ crore. The process takes 3-12 months from first pitch to funding. Focus on building relationships with fund managers, maintaining clean financials and cap tables, and demonstrating strong traction metrics. FFS-backed AIFs are actively deploying capital -- be investor-ready when you approach them.

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Frequently Asked Questions

What is the Fund of Funds for Startups (FFS)?

The Fund of Funds for Startups (FFS) is a Rs 10,000 crore government fund managed by SIDBI (Small Industries Development Bank of India) under the Startup India initiative. Launched in 2016, the FFS does not invest directly in startups. Instead, it invests in SEBI-registered Alternative Investment Funds (AIFs) which then invest in startups. As of 2024, FFS has committed Rs 8,800+ crore to 130+ AIFs which have invested in 900+ startups across sectors.

Does SIDBI invest directly in startups?

No. SIDBI manages the FFS corpus but does not invest directly in startups. The FFS invests in SEBI-registered AIFs (venture capital and private equity funds). These AIFs raise additional capital from private investors and then deploy the combined pool into eligible startups. This structure ensures professional fund management and private sector co-investment. Startups must pitch to and negotiate with the AIF fund managers, not SIDBI directly.

What are the eligibility criteria for FFS-backed funding?

Startups must: be a DPIIT-recognized startup (registered on startupindia.gov.in), be incorporated as a private limited company, LLP, or partnership, not be older than 10 years from incorporation, have annual turnover not exceeding Rs 100 crore, and work towards innovation or improvement of products, services, or processes. Sector restrictions: FFS does not fund companies in real estate, gaming, or luxury segments. Individual AIF funds may have additional criteria.

How much funding can a startup get from FFS-backed AIFs?

Investment amounts vary by AIF and stage: seed stage: Rs 25 lakh to Rs 2 crore, early stage: Rs 2 crore to Rs 10 crore, growth stage: Rs 10 crore to Rs 25 crore. Some larger FFS-backed funds invest up to Rs 50 crore in later rounds. The investment is always equity-based (shares in exchange for capital) and not a loan or grant. The AIF becomes a shareholder in the startup and expects returns through eventual exit (IPO, secondary sale, or acquisition).

What is DPIIT Startup Recognition?

DPIIT recognition is a certification issued by the Department for Promotion of Industry and Internal Trade confirming that an entity qualifies as a 'startup' under the Startup India initiative. Benefits: access to FFS-backed funding, tax exemption under Section 80-IAC (3 years out of first 10), self-certification for 6 labour and 3 environmental laws, fast-tracked patent applications, and easier public procurement participation. Apply at startupindia.gov.in.

What sectors does FFS cover?

FFS-backed AIFs invest across all sectors with focus on: technology (SaaS, AI/ML, fintech, edtech, healthtech), deep tech (biotech, cleantech, spacetech), consumer (D2C, marketplace, media), agritech (farm-to-fork, precision agriculture), social impact (affordable healthcare, education, financial inclusion), and manufacturing (advanced materials, EV, IoT). Excluded: real estate, gaming/gambling, luxury, and political activities. Each AIF has a specific sector thesis.

How long does the funding process take?

Timeline from first pitch to money in bank: initial screening: 2-4 weeks, detailed due diligence: 4-8 weeks, term sheet negotiation: 2-4 weeks, legal documentation: 2-4 weeks, and fund transfer: 1-2 weeks. Total: 3 to 6 months for most deals. Complex deals or larger amounts may take up to 12 months. The due diligence phase is usually the longest. Being investor-ready (clean financials, clear cap table, solid metrics) significantly shortens the timeline.

What is an AIF (Alternative Investment Fund)?

An Alternative Investment Fund (AIF) is a privately pooled investment vehicle registered with SEBI under the AIF Regulations, 2012. AIFs collect funds from investors and invest per a defined investment policy. Category I AIFs: venture capital, social venture, SME, infrastructure funds. Category II AIFs: private equity, debt funds. Category III AIFs: hedge funds. FFS invests primarily in Category I (venture capital) and Category II (growth equity) AIFs.

What do AIFs look for in startups?

Key evaluation criteria: market opportunity (large addressable market, growing sector), team quality (relevant experience, complementary skills, commitment), traction metrics (revenue, users, growth rate, retention), product differentiation (unique value proposition, defensible moat), unit economics (path to profitability), scalability (can the model scale 10-100x), and exit potential (IPO-able or acquirable). Stage determines emphasis: seed focuses on team and idea; growth focuses on metrics and unit economics.

Can a bootstrapped startup access FFS?

Yes. Bootstrapped startups are eligible for FFS-backed AIF investment if they have DPIIT recognition and meet the AIF's investment criteria. Many seed-stage FFS-backed funds specifically target first-time funded startups. Being bootstrapped with proven traction (revenue, users) is actually a positive signal -- it shows capital efficiency and founder commitment. Prepare: DPIIT recognition, clean financials showing revenue generation, and a clear growth plan requiring institutional capital.

What is the difference between FFS and Startup India Seed Fund?

Fund of Funds (FFS): Rs 10,000 crore, invests through AIFs, equity investment (Rs 25 lakh to Rs 25+ crore), for all stages from seed to growth, managed by SIDBI. Startup India Seed Fund Scheme (SISFS): Rs 945 crore, invests through incubators, grants up to Rs 20 lakh and debt/convertible up to Rs 50 lakh, only for seed/proof-of-concept stage, managed by DPIIT. SISFS is for earlier-stage startups needing smaller amounts; FFS is for startups ready for larger institutional rounds.

How to find FFS-backed AIFs relevant to my sector?

Sources: SIDBI FFS webpage (lists committed funds), startupindia.gov.in investor directory, SEBI AIF search (sebi.gov.in), VCCEdge and Tracxn (VC databases), LinkedIn (follow fund managers), startup events and demo days (many FFS funds participate). Filter by: sector focus, investment stage, ticket size, and geographic preference. Research their portfolio companies to understand their investment thesis. A warm introduction from a portfolio founder significantly improves response rates.

What happens after receiving FFS-backed funding?

Post-funding: share allotment and PAS-3 filing with RoC (within 15 days), AIF gets board seat (typically 1 observer or director), quarterly board meetings and investor updates, compliance with SHA terms (anti-dilution, information rights, consent matters), periodic financial reporting, and working towards agreed milestones (revenue, user, product targets). The AIF monitors the startup's progress and may participate in follow-on rounds. Exit expectations: 3-7 years via IPO, secondary sale, or acquisition.

Can an LLP or partnership receive FFS funding?

Yes, DPIIT-recognized LLPs and partnerships are eligible for FFS-backed funding. However, most AIFs prefer private limited companies because: equity shares are easier to issue and transfer, corporate governance is more structured, exit mechanisms (IPO, secondary sale) are more established, and cap table management is simpler. If your startup is an LLP, consider converting to a private limited company before approaching AIFs. The conversion process takes 2-4 months under Section 366 of the Companies Act.

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Guide by Dhanush Prabha

Dhanush Prabha is the Chief Technology Officer and Chief Marketing Officer at IncorpX, leading platform development, digital growth, and product strategy. With experience in full-stack development, scalable systems, SEO, and marketing automation, he focuses on building technology-driven solutions and educational business resources for startups and growing businesses. He writes on technology, entrepreneurship, business setup processes, and digital transformation.