STARTUP INDIA SEED FUND SCHEME

Introduction

Easy availability of capital is essential for entrepreneurs at the early stages of growth for an enterprise. Having a good line of credit is something every business needs. This credit can come from banks or from private investors such as angel investors or venture capital firms. Banks tend to work with people who already have assets and good credit scores, however these institutions are generally less willing to work with businesses in their very early stages because they don't know much about them yet. The best way to get started off on the right foot is by applying for a loan so that you can get existing businesses off the ground immediately and prove your credibility both financially and professionally if you're looking to obtain funds from angel investors or venture capital firms in order grow further.

Startup India Seed Fund Scheme (SISFS) has a budget of INR 945 Crore and aims to give startup founders financial assistance. This will help them with Proof of Concept, prototype development, product trials, market entry, commercialization. It can also help them access 300 incubators across India within 4 years. The scheme is designed to support around 3,600 entrepreneurs and has been announced by the Prime Minister in his keynote address at the 'Startup India' event that was held on 16 January 2021. After getting approval from the Empowered Committee of Finance Ministers and the Union Cabinet, this scheme became operational on 21 January 2021.

Objectives of SISFS

There are a lot of exciting, innovative ideas in India today. Unfortunately, many of these great concepts have a hard time getting off the ground simply because there's no money to put them into play and truly bring them to fruition. While this is an industry-wide problem, it is magnified within the Indian startup ecosystem due to its stage in independent evolution. New businesses often do not get the capital they need from large institutions like banks or venture capitalists even when their vision for the future seems so promising. Therefore, for many startups whose bold ideas about modern technology have yet to be fully realized or made commonplace within our existing industries, seed funds like Y Combinator can be a tremendous option for introducing new products into the marketplace as well as helping solve problems at hand.

 

 

 

 

 

 

 

 

 

 

 

Eligibility Criteria

STARTUPS: 
 

1. A startup, recognized by DPIIT, incorporated not more than 2 years ago at the time of application.
   To get DPIIT-recognized, please visit https://www.startupindia.gov.in/content/sih/en/startupgov/startup-recognition-page.html

2. The startup must have a business idea to develop a product or a service with a market fit, viable commercialization, and scope of scaling.

3. The 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.

4. 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, defence, space, railways, oil and gas, textiles, etc.

5. Startup 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 from competitions and grand challenges, subsidized working space, founder monthly allowance, access to labs, or access to prototyping facility.

6. Shareholding by Indian promoters in the startup should be at least 51% at the time of application to the incubator for the scheme, as per Companies Act, 2013 and SEBI (ICDR) Regulations, 2018.

7. A startup applicant can avail seed support in the form of grant and debt/convertible debentures each once as per the guidelines of the scheme.
    

INCUBATORS

1. The incubator must be a legal entity:
   - A society registered under the Societies Registration Act 1860, or
   - A Trust registered under the Indian Trusts Act 1882, or
   - A Private Limited company registered under the Companies Act 1956 or the Companies Act 2013, or
   - A statutory body created through an Act of the legislature

2. The incubator should be operational for at least two years on the date of application to the scheme

3. The incubator must have facilities to seat at least 25 individuals

4. The incubator must have at least 5 startups undergoing incubation physically on the date of application

5. The incubator must have a full-time Chief Executive Officer, experienced in business development and entrepreneurship, supported by a capable team responsible for mentoring startups in testing and validating ideas, as well as in finance, legal, and human resources functions

6. The incubator should not be disbursing seed fund to incubatees using funding from any third-party private entity

7. The incubator must have been assisted by the Central/State Government(s)

8. In case the incubator has not been assisted by the Central or State Government(s):
   - The incubator must be operational for at least three years
   - Must have at least 10 separate startups undergoing incubation in the incubator physically on the date of application
   - Must present audited annual reports for the last 2 years

9. Any additional criteria as may be decided by the Experts Advisory Committee (EAC)

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