Guidelines for Startup India Seed Fund Scheme; All You Need To Know

By : |February 2, 2021 0

The Central Government has approved the ‘Startup India Seed Fund Scheme (SISFS)’ to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization. SISFS shall provide financial assistance to startups via a corpus of Rs. 945 Crore that will be disbursed through selected incubators across India in 2021-25. All details for the Startup India Seed Fund Scheme will be available on the Startup India Portal.

A background

PM Narendra Modi interacted with startups and addressed ‘Prarambh: Startup India International Summit’ on January 16. In the event, that marked 5th anniversary of StartUp India, he announced a 1000 crore Startup India seed fund. He said that the Startup India seed fund will enable new entrepreneurs to start and grew their startups. Further, with the fund of one thousand crore rupees, there will not be a shortage of seed money for startups, he said.

Startup India Seed Fund Scheme shall offer Rs 20 Lakhs to startups as a grant for Proof of Concept. They can also avail another 50 lakhs through convertible debentures or debt or debt-linked instruments for commercialization. The fund will, further, provide financial assistance to startups for Proof of Concept, prototype development, product trials, market-entry, and commercialization.

Thus, to receive the fund, you will have to register yourself on Startup India platform. After that, in selected incubators, you can apply for the seed fund with relevant documents.

Who can apply for the Startup India Seed Fund Scheme (SISFS)?

A DPIIT recognised startup incorporated not more than 2 years ago at the time of application can apply for the fund. The startup must have a business idea to develop a product or a service with the market fit, viable commercialization, and scope of scaling. Further, the startup should be using technology in its core product or service. They can also use tech as a business model, or distribution model, or methodology to solve the target problem.

The guidelines state that the incubators will prefer 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.

Another criterion that startups have to fulfil that they must 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]. Any startup will not receive seed support more than once each as per provisions of guidelines.

How to Apply for the Startup India Seed Fund Scheme (SISFS)?

Applicants will have to go through the Startup India Portal and check which incubators will disburse the fund. On a later date, Startup India will invite online application from incubators across India to participate in the scheme. This could be in the Startup India website or any other platform the government specifically designs for the purpose.

As soon as the incubators have received their status, whether they have been selected or not, startups can start applying. The Startups can only utilise the Seed Fund for the purposes they have stated. The Government will evaluate individual and incubator progress at the end of every financial year. Further, it will evaluate the progress of the scheme at the end of FY 2025-26.

Read More: Guidelines for SISF Scheme PDF

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