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The Department of Promotion of Industry and Internal Trade (DPIIT) has launched an initiative called the Startup India Seed Fund Scheme (SISFS). This project offers financial support to emerging startups and assists them in the early stages of business.

This scheme provides assistance to startups in the following ways:

  • Offers support right from the proof-of-concept stage

  • Eases their market access

  • Aids in the prototype advancement

  • Helps in product trials and commercialisation

The Startup India Seed Fund Scheme facilitates the furnishing of capital for eligible startups with the help of incubators spread across Indi

The scheme plans to support around 3,600 entrepreneurs via 300 incubators between 2021 and 2025. This scheme also empowers startups to get loans from lenders, financial institutions, or commercial banks and generate investments from venture capitalists or angel investors.

Objectives of Startup India Seed Fund Scheme

The following points highlight the objectives of SISFS:

  • Providing adequate seed funds to the startups and validating their business ideas

  • This scheme has a multiplier effect, leading to exponential growth in employment opportunities 

  • SISFS aims to transform India into a country with a robust startup ecosystem 

  • As the entrepreneurs in Tier 2 and 3 cities have difficulty getting the required funding, SISFS supports budding entrepreneurs in smaller cities with necessary assistance

  • This scheme grants capital of up to ₹5 Crores to the qualified incubators chosen through a select committee 

  • These incubators have the authority to provide a maximum grant of ₹20 Lakhs to assist the startup in prototype development, product trials, or proving their concept 

  • Startups can get an additional ₹50 Lakhs for commercialisation, paving the way for market entry or business scaling through debt-linked financial instruments or convertible debentures

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Eligibility Criteria for SISFS

To qualify for a grant, startups must fulfil the following eligibility conditions:

  • The Department for Promotion of Industry and Internal Trade (DPIIT) recognised startups are eligible to apply for the Startup India Seed Fund Scheme

  • Startups that have business registration of not more than two years old can apply

  • Startups must use technology-driven factors behind the products, business model, core service, and distribution methodology to solve the targeted issues. 

  • The business idea should fulfil the parameters of products or services having commercialisation potential, complementing the market demand with a scope of scalability

  • SISFS prioritises startups offering pioneering solutions for water management, social impact, waste management, financial inclusion, education, food processing, healthcare, agriculture, biotechnology, space, defence, oil and gas, railways, etc.

  • The startups who have received funding or aid of up to ₹10 Lakhs through Central or State Governments are not eligible 

  • Grants under SISFS do not include any access to subsidised working space, monetary benefits from competitions/grand challenges, lab facilities, monthly allowances, or prototyping services

  • As per the Companies Act, 2013 and SEBI (ICDR) Regulations, 2018, any startup with an Indian promoter holding at least 51% shares can apply

  • The seed support provided in this scheme would be in the form of grants, convertible/debt debentures, etc., as per the scheme guidelines

Application Process to Apply for the Startup India Seed Fund Scheme

The startups need to follow these steps to apply for this scheme:

  • Step 1: Visit the official Startup India Seed Fund Scheme's website at https://seedfund.startupindia.gov.in/

  • Step 2: Click on the 'Login' tab on the top right corner of the homepage

  • Step 3: Choose the 'Create an Account' option and navigate to the registration page

  • Step 4: Enter your company’s name, mobile number and email ID, and create a password 

  • Step 5: Click on the 'Register' button 

  • Step 6: Enter the OTP sent to your registered mobile number

  • Step 7: Click the 'Submit' button to verify

  • Step 8: Click on 'Apply Now' under the ‘For Startups’ option on the homepage

  • Step 9: Log in with your username and password

  • Step 10: Enter all the required details, upload the documents, and click on the 'Submit' button

Disbursement of Seed Funds by Incubators to Startups

Once the startup qualifies for the grant, the incubators will distribute the seed fund as per the following parameters.

  • A grant of up to ₹20 Lakhs is disbursed for developing the prototype, product trails, or carrying out proof of concept in instalments with every milestone achieved

  • The grant of up to ₹50 Lakhs will be disbursed for commercialisation or scaling up supported by debt-linked mechanisms

  • The seed fund received by the startups must only be used for the intended purposes and not to build facilities

  • The incubator finalises the tenure when he approves the loan, subject to a maximum duration of five years

  • A moratorium period of 12 months can be offered to the startup

  • The loans sanctioned are unsecured loans as the startups are in their initial phases, so the promoters need not submit any guarantee

  • Before releasing the first instalment (within 60 days of application), the incubator signs a legal agreement with the concerned startup

  • The fund would be strictly transferred to the company’s bank account of the startup

  • The startups must submit a utilisation certificate and an interim progress update for the release of subsequent instalments

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Implementation of SISFS

To monitor and execute the rules and regulations of this Startup India Fund, the DPIIT has formed an Experts Advisory Committee (EAC). The EAC assesses and chooses the incubators to grant the seed funds, monitor the progress and perform all other required administrative tasks. 

This way, EAC ensures efficient funds utilisation and helps accomplish objectives set by the SISFS. The EAC is the deciding authority for the value of grant instalment size and directs the incubators based on its assessment. 

FAQs on the Startup India Seed Fund Scheme

What are the advantages of a Startup India Seed Fund Scheme?

The Startup Seed Fund Scheme provides seed funding to startups of non-metro cities that face difficulty in finding angel investors. This scheme helps new businesses create employment opportunities and promote the growth of the Indian economy.

Does the Startup India Seed Fund Scheme support any specific sector?

No. This scheme is open to startups in all sectors. However, the startup must provide an innovative solution with a technology-driven product or service. Businesses involved in the following sectors, such as agriculture, biotechnology, defence, education, energy, financial inclusion, food processing, healthcare, mobility, oil and gas, etc., are preferred.

Is there any minimum qualification required to apply for SISFS?

No. There are no minimum educational qualifications required for the founders to apply for SISFS.

Can I choose the incubators for my startup?

Yes. You can choose your preferred incubators based on your industry niche, sector, business goals, etc. You can find the details of all the incubators on the Seed Fund Portal.

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