Startup India Seed Fund – Get ₹50L Funding for Your Business!Scheme StatusScheme Status

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Launched by the Department for Promotion of Industry and Internal Trade (DPIIT) on 19th April 2021, the Startup India Seed Fund Scheme (SISFS) offers financial assistance with an outlay of INR 945 Crore. This scheme supports startups with proof of concept, prototype development, product trials, market entry, and commercialization. Disbursement is managed via eligible incubators across India, and applications are processed through the Startup India portal.

Objective

The primary aim of SISFS is to enable startups to reach a stage where they can secure investments from angel investors, venture capitalists, or obtain loans from financial institutions. This is achieved by providing seed funding for:

  • Validating proof of concept

  • Developing prototypes

  • Conducting product trials

  • Facilitating market entry and commercialization

Key Features

  1. Ongoing Application Process:
    Applications are accepted year-round from both incubators and startups. Startups can apply to three incubators simultaneously.

  2. Sector-Agnostic & PAN-India Reach:
    The scheme is not limited to any specific sector or region.

  3. Funding Components:

    • Grants: Up to ₹20 Lakhs for proof of concept, prototype development, or product trials. Disbursed in milestone-based installments.

    • Investment: Up to ₹50 Lakhs for market entry, commercialization, or scaling, provided as convertible debentures, debt, or debt-linked instruments.

  4. Usage Restriction:
    Funds are strictly for validating and scaling the product or service and cannot be used for creating new facilities.

  5. Legal and Monitoring Framework:
    Incubators must execute a legal agreement with selected startups that outlines milestones, repayment conditions (if applicable), and disbursement schedules. A grievance cell is also established at DPIIT for addressing any issues.

Benefits and Disbursement Details

  • Grant Disbursement:
    Startups receive funds in milestone-based installments. The first installment is released within 60 days after application receipt.

  • Investment Terms:
    Funds for market entry or scaling are provided at an interest rate not exceeding the prevailing repo rate with a fixed tenure of up to 60 months and a moratorium of up to 12 months. These funds are unsecured, with no guarantee required from promoters or third parties.

  • Monitoring and Reporting:
    Startups must submit periodic progress updates and a final report with an audited utilization certificate. In the case of failed ventures, a report detailing learnings and reasons for failure is required.

Eligibility Criteria

To be eligible, a startup must:

  1. Be recognized by DPIIT and incorporated within the last 2 years.

  2. Have a business idea with potential for market fit, viable commercialization, and scaling.

  3. Utilize technology in its core product, service, business model, distribution model, or methodology.

  4. Preferably operate 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.

  5. Not have received more than ₹10 Lakhs of monetary support under any other government scheme (excluding prizes, subsidized workspace, etc.).

  6. Maintain at least 51% shareholding by Indian promoters as per the Companies Act, 2013 and SEBI (ICDR) Regulations, 2018.

  7. Be eligible for seed support only once in the form of grants and debt/convertible debentures, respectively.

Application Process

The application process is entirely online via the Startup India portal. The steps are as follows:

  1. Application Submission:

    • Access the Startup India portal at seedfund.startupindia.gov.in.

    • Click on “Apply Now” and use your DPIIT-recognized startup credentials to log in and fill out the application form.

    • Select your preference for up to three incubators as disbursing partners.

  2. Evaluation and Selection:

    • Incubators form an Incubator Seed Management Committee (ISMC) that reviews applications based on criteria such as market need, feasibility, impact, novelty, team strength, and fund utilization plan.

    • Applicants may be shortlisted for presentations before the ISMC.

    • Startups are selected within 45 days of application receipt, and progress is tracked on the Startup India portal.

  3. Disbursement:

    • Selected startups receive funds in their company bank accounts.

    • Milestone-based funding ensures disbursement aligns with project progress.

  4. No Application Fees:

    • There are no charges for applying to the scheme, and incubators or their staff are prohibited from levying any fees.

Documents Required

Applicants need to submit several documents, including:

  1. Board resolution/Authorization Letter/PoA

  2. PAN Card, GST number, and Aadhaar Card

  3. Bank account details

  4. Certificate of incorporation/partnership deed

  5. Financial statements

  6. A startup video describing your product, service, or business model

  7. Any additional relevant documents as specified

Frequently Asked Questions

  1. What is the Startup India Seed Fund Scheme?
    It is a financial assistance programme designed to support early-stage startups in developing their products or services.

  2. Who can apply?
    DPIIT-recognized startups incorporated within the last 2 years with a viable business idea and technology focus are eligible.

  3. How much funding is available?
    Startups can receive up to ₹20 Lakhs as a grant and up to ₹50 Lakhs for market entry or scaling, based on milestone achievements.

  4. Can I apply as an individual entrepreneur?
    Startups must be registered entities; solo entrepreneurs must establish a legal entity to be eligible.

  5. What sectors are supported?
    The scheme is sector-agnostic, although priority is given to innovative solutions in sectors like healthcare, education, agriculture, energy, etc.

  6. How is the application process managed?
    Applications are entirely online through the Startup India portal, where you can also track your application status in real time.

  7. Is there an application fee?
    No, the scheme does not charge any fees for application, selection, or disbursement.

  8. Can I choose multiple incubators?
    Yes, you can apply to up to three incubators simultaneously and select your preferred one based on the evaluation.

  9. What happens if my startup is not selected?
    Rejected applicants are notified via email and may reapply as a new application.

  10. How is the funding disbursed?
    Funds are directly released to the startup’s bank account in milestone-based installments after meeting specified criteria.

Sources and References

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