The Telangana Budget for 2025-26, which is likely to be presented during the second week of March, will have a key announcement on the establishment of a Fund of Funds for start-ups with the government expected to play the role of a facilitator of the fund. 

“The Government can only be a facilitator to the fund, and it will not be the major player when it comes to infusing the funds. We will only facilitate the establishment of the fund,” sources in the Telangana Government said.

T-Hub, a State-government-promoted start-up incubator, will be asked to take the lead in managing the fund.

Though the focus of the Fund of Funds would be sector agnostic, promoting start-ups across all sectors, start-ups around deeptech, particularly artificial intelligence, would get additional focus. “There will also be a focus on healthcare start-ups, particularly those working in the AI in healthcare space,” sources said.

The then Telangana Rashtra Samithi (TRS) Government announced a ₹2,000-crore Fund of Funds Financing to support the start-up ecosystem. In the State Innovation Policy in 2016, the Government proposed to set up a few funds, including one for early-stage start-ups.

Lack of funds

“One of the major challenges for a start-up is the lack of funds to commercialize his/her idea. As a consequence, most ideas generated in the minds of our youth don’t even go into the prototype development phase. Lack of funding is a crucial bottleneck in the innovation ecosystem of the country, which the Government aims to address through the funding initiative,” the Policy document said.

The policy said the Government would rope in global investors to launch the fund. It wanted T-Hub and its Board of Directors, corporate network, and senior government officials to roll out the fund.

However, it hit a few roadblocks and could not see the light of the day even after the TRS Government retained power in 2019.

The Congress Government has decided to go ahead with the launching of the fund. It, however, seems to have decided to keep its role minimal in terms of funding contribution. “We don’t want to involve much about funding. We will let other funding firms to take part in it,” the sources said.

Published on March 2, 2025