ALL ABOUT STARTUP INDIA SEED FUND SCHEME

A Startup Seed Fund is a type of financial support provided to early-stage startups to help them get off the ground and develop their business ideas into viable products or services. It typically involves providing a relatively small amount of capital to cover initial expenses such as product development, market research, prototype creation, and initial marketing efforts.

To support Startup India Mission the government has launched The Startup India Seed Fund Scheme (SISFS) which offers financial assistance to startups for proof of concept, prototype development, product trials, market-entry, and commercialization. Startups eligible for the scheme can apply through the Startup India portal. Selected startups will receive the Seed Fund disbursement through eligible incubators across India.

Who Can Apply to The Startup India Seed Fund Scheme

Any startup which is recognized by DPIIT and is in existence for not more than 2 years on the date of application is eligible to apply for the Startup India Seed Fund Scheme.

Eligibility Criteria

1. Incorporated not more than 2 years ago.
2. Startup should be recognized by the DPIIT (Click here for Startup India Recognition)
3. The eligible startup must have a business idea to develop a product or a service with a market fit, viable commercialisation and capacity to scale.
4. The startup should be using technology for its product or service or business model or distribution channel or for methodology to solve targeted problem.
5. Preferred sectors for the startup india seed fund schemes are 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.
6. The eligible startup should not have received more than Rs.10 lakh monetary support under any other scheme of central or state government.
7. Indian promoters should hold shareholder of at least 51% on the date of application.

Note: There are no exemptions to any of the eligibility criteria. Therefore, all the criteria should be fulfilled on the date of filing application.

How much a funding under startup india seed fund scheme

The eligible startups can receive funding under startup india seed fund scheme as below:

1. Up to Rs. 20 Lakhs as grant for validation of Proof of Concept, or prototype development, or product trials. The grant shall be disbursed in milestone-based installments. These milestones can be related to development of prototype, product testing, building a product ready for market launch, etc.
2. Up to Rs. 50 Lakhs of investment for market entry, commercialization, or scaling up through convertible debentures or debt or debt-linked instruments
3. 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

Startups must not use the seed fund for creating facilities; rather, they should employ it for its designated purpose. The grant should be allocated to validate Proof of Concept, develop prototypes, or conduct product trials. If provided as debt or convertible debenture, it can be utilized for market entry, commercialization, or scaling up.

Suitable Instruments

A grant and debt/convertible debenture represent distinct financing instruments that address various startup requirements. The subsequent table can assist applicant startups in determining the more suitable instrument for their needs. Ultimately, the startup applicants should independently make the final decision regarding this.

Procedure for Startup India Seed Funding Scheme Application

The eligible startup needs to follow below steps for applying for Seed fund scheme:

Step1: Visit the official startup India seed fund scheme website (SISFS (startupindia.gov.in))

Step2: Select the ‘Login’ tab available on the top right corner of the homepage.

Step3: Choose the ‘Create an Account’ option available at the bottom from the pop-up window. This directs you to the registration page of the ‘Startup India’ website.

Step4: Next, you need to enter the details related to the company like name, mobile number and email ID, then create a password and confirm it. Next, choose the ‘Register’ option.

Step5: Further, an OTP is sent to the applicant’s registered mobile number. This OTP needs to be validated, and next, hit the ‘Submit’ button.

Step6:  After that, you have to visit the official website of Startup India Seed Fund Scheme and choose the ‘Apply Now’ option from the right-hand side corner of the homepage. 

Step7: In the ‘For Startups’ option, click on the ‘Apply Now’ button to log in. Here you need to provide the username and password generated during registration.

Step8: This takes you to the application form window. You need to enter all the required details, upload the documents, and click on the ‘Submit’ button. Once you click the ‘Submit’ button, your application will be submitted.

Evaluation process of Startup India Seed Func Scheme Application

An Incubator Seed Management Committee (ISMC), formed by the applied-to incubators, will review the applications of each startup. The committee will also hold the responsibility for evaluating the startup’s performance in the future and disbursing subsequent tranches of funds. Each ISMC is composed of the following members:

1. Nominee of Incubator (Chairman)
2.  A representative from the State Government’s Startup Nodal Team
3.  A representative of a Venture Capital Fund or Angel Network
4.  A domain expert from Industry
5.  A domain expert from academia
6.  Two successful Entrepreneurs
7. Any other relevant Stakeholder

Parameters for evaluation of startup india seed fund application