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The Startup India Seed Fund, which was announced by Prime Minister Narendra Modi in the month of January, will become operational from April 1, 2021 as the government looks to boost the ecosystem, providing the crucial capital for startups.
What is startup India seed fund?
The Rs. 945 crore Startup Indian Seed Fund Scheme will provide financial assistance to startups, and will be disbursed through selected incubators. This will help in setting up new startups and promote their growth. The EAC will evaluate and select incubators for the allotment of Seed Funds, monitor progress, and take all necessary measures for efficient utilization of funds towards the fulfilment of objectives of the scheme.
In order to provide initial capital for startups, the nation is launching a Rs. 1,000 crore Startup India Seed Fund. This will help in setting up new startups and promote their growth,” PM Modi said at an event to mark the fifth anniversary of the creation of Startup India initiative. The PM also said that the government would also help startups raise debt capital.
The Startup India Seed Fund will offer financial assistance to startups for proofs of concept, prototype development, product trials, market-entry and commercialization of products or ideas.
How can your startup be eligible for the seed funding?
- A startup, recognized by DPIIT, incorporated not more than two years ago at the time of application.
- Startups must have a business idea to develop a product or a service with market fit, viable commercialization, and scope of scaling.
- Startup should be using technology in its core product or service, or business model, or distribution model, or methodology to solve the problem being targeted.
- Preference would be given to startups creating innovative solutions in sectors such as:
- Social impact
- Waste management
- Water management
- Financial inclusion
- Education
- Agriculture
- Food processing
- Biotechnology
- Healthcare
- Energy
- Mobility
- Defense
- Space
- Railways
- Oil and gas
- Textiles, etc.
- Startups should not have received more than Rs. 10 lakh of monetary support under any other Central or State Government scheme. This does not include prize money, subsidized working space, etc.
- Shareholding by Indian promoters in the startup should be at least 51% at the time of application to an incubator for the scheme.
- Any startup will not receive seed support more than once each as per provisions of guidelines.
You can create your startup budget and check if you’re eligible for the seed fund as per the guidelines.
What’s happening now with the startup India seed fund?
The Central Government has approved the Rs. 945-crore ‘Start-up India Seed Fund Scheme’ (SISFS), which aims to provide financial assistance to start-ups for the product trials, market-entry, proof of concept, prototype development and commercialisation.
The Rs. 945 crore Startup India Seed Fund Scheme (SISFS) will become operational from April 1 of this year till 2025 and this will be disbursed through selected incubators across India, according to a gazette notification by the government. The scheme will be implemented by the Department for Promotion of Industry and Internal Trade (DIIT). The funds under the scheme will be disbursed through the selected startups across the country. A startup will receive seed support only once.
The Startup India Seed Fund Scheme is sector-agnostic and will have a central common application on Startup India portal for startups and incubators on an ongoing basis.
As per the notification by TOI, DPIIT will form an Experts Advisory Committee (EAC) and it will be responsible for the overall execution and monitoring of the Startup India Seed Fund Scheme.
The EAC will evaluate and select startups for the allotment of Seed Funds, monitor progress, and take all necessary measures for efficient utilization of funds towards the fulfilment of objectives of the scheme.
Is your Incubator eligible for the Startup India Seed Fund?
- Your Incubator should be operational for at least two years on the date of application to the scheme.
- Your Incubator must have facilities to seat at least 25 individuals. It must have at least five startups undergoing incubation physically on the date of application.
- The incubator must have a full-time Chief Executive Officer, experienced in business development and entrepreneurship.
- The incubator should not be disbursing seed fund to incubates using funding from any third-party private entity.
- The startup incubator must have been assisted by the central/state government(s).
- In case the incubator has not been assisted by Central or State Government then must be operational for at least three years.
- Finally, it must have at least 10 separate startups undergoing incubation in the incubator physically on the date of application and must present audited annual reports for the last two years.
How will your startup be selected for the Startup India Seed fund?
- Each of the small businesses applying for the Startup India Seed Fund Scheme will constitute a committee called the Incubator Seed Management Committee (ISMC), consisting of experts who can evaluate and select startups for seed support.
- The final composition and members of ISMC of each incubator shall also be approved by EAC.
- The startups shall be selected through an open, transparent and fair process.
- They shortlist applicants based on their evaluation for a presentation before ISMC.
- ISMC shall evaluate applicants based on their submissions and presentations and select startups for Seed Fund within 45 days of receipt of application.
- All incubators shall provide information about the progress of evaluation of startups real-time to Startup India portal.
- Selected startups shall receive seed funding under the respective incubator that selects them as beneficiaries as per their preference shared during application.
- All applicants will be able to track the progress of their application on the Startup India portal on a real-time basis.
- An applicant, if rejected once, may apply afresh.
Conclusion
The Central Government has also approved the ‘Startup India Seed Fund Scheme (SISFS)’ ; to also provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization. SISFS shall also provide financial assistance to startups via corpus of Rs. 945 Crore that will also be disbursed through selected startups across India in 2021-25.
Earlier, on January 16, Prime Minister Narendra Modi had announced the launch of this Rs. 1,000-crore ‘Startup India Seed Fund’ to support startups and help budding entrepreneurs pursue innovative ideas.
Speaking at the ‘Prarambh: Startup India International Summit’, PM Modi exuded confidence that the growth of startups will help in generating jobs and improving the lives of people in the region.
In order to provide initial capital for startups, the nation is launching a Rs. 1,000 crore Startup India Seed Fund. This will help in setting up new startups and promote their growth.
The Guidelines of the above-mentioned scheme is available on the website of Startup India at https://www.startupindia.gov.in/
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Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant or Labour Law expert for specific guidance.
