Startup India Seed Fund Scheme

What is Startup India?

The Government of India’s Startup India initiative aims to create a robust startup ecosystem in the country to foster innovation and provide opportunities for aspiring entrepreneurs.

On January 16, 2016, the Honorable Prime Minister unveiled an Action Plan comprising 19 action points for the Startup India initiative.

This Action Plan outlined a strategy for the development of a Startup-friendly ecosystem in India. Consequently, numerous initiatives have been implemented to promote Startups. Startup India Seed Fund Scheme (SISFS) is one such initiative which/that provides provides financial assistance to early-stage startups.

What is Startup India Seed Fund Scheme?

In the early phases of a company’s growth, entrepreneurs must have access to capital that is readily available.

The availability of funding from angel investors and venture capital firms to entrepreneurs is contingent upon the provision of a proof of concept. Similarly, banks only lend to candidates with collateral. It is crucial to provide seed funding to innovative enterprises so they can conduct proof-of-concept trials.
DPIIT has established the Startup India Seed Fund Scheme (SISFS) with a budget of 945 Crore to assist startups with Proof of Concept, prototype development, product trials, market entrance, and commercialization.In the next four years, it will support an estimated 3,600 entrepreneurs through 300 incubators.

The scheme was declared by the Honorable Prime Minister of India during his Grand Plenary address at the Prarambh: Startup India International Summit on January 16, 2021. The initiative was announced on 01.21.2021 following EFC and Honorable Finance Minister approval.

The Seed Fund will be distributed to eligible companies in India via eligible incubators.

Objectives of Startup India Seed Fund Scheme

In the foundation and ‘Proof of Concept’ development stages, the Indian startup ecosystem lacks sufficient capital.

The capital required at this stage often determines the success or failure of ventures with sound business concepts.

Due to the lack of early-stage capital required for proof of concept, prototype development, product trials, market entry, and commercialization, many innovative business ideas fail to launch.

The Seed Fund provided to such promising cases can have a multiplier effect on the validation of business concepts for numerous startups, resulting in the creation of employment.

Startup India Seed Fund Scheme – Eligibility Criteria

A DPIIT-recognized startup that was founded within the past two years at the time of application.
Please visit https://www.startupindia.gov.in/content/sih/en/startupgov/startup_recognition_page.html to become DPIIT-recognized.
The startup must have a business concept to develop a product or service with market fit, commercial viability, and scalability potential.
The startup must incorporate technology into its primary product or service, business model, distribution model, or methodology in order to address the targeted issue.
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 cannot have received more than 10 lakh rupees in financial assistance from any other Central or State Government scheme. This does not include prize money from competitions and grand challenges, subsidized working space, founder monthly allowance, lab access, or prototyping facility access.
In accordance with the Companies Act of 2013 and the SEBI (ICDR) Regulations of 2018, Indian promoters must possess at least 51% of the startup’s shares at the time of application to the incubator.
A startup applicant can avail initial support in the form of grant and debt/convertible debentures each once as per the guidelines of the scheme.