Startup India Seed Fund Scheme (SISFS) - Guide

The Government of India's Startup initiative aims to build a strong Start-up ecosystem in the country, fostering innovation and offering opportunities for emerging entrepreneurs.

On January 16, 2016, the Hon’ble Prime Minister unveiled an Action Plan for  the Startup India initiative, consisting of 19 key action points.

This Action Plan outlined a roadmap for establishing a supportive ecosystem for Startups in India. Since then, multiple schemes have been launched and promoted Startups such as Startup India Seed Fund Scheme (SISFS), which helps early-stage startups by providing financial support.

What is Startup India Seed Fund Scheme?

Easy access to capital is essential for entrepreneurs during the early stages of growing their enterprise. Funding from angel investors and venture capital is available to startups only after they have demonstrated proof of concept. Likewise, banks offer loans primarily to applicants with asset backing. Therefore, providing seed funding to startups with innovative ideas is crucial to help them carry out proof of concept trials.

The DPIIT has launched the Startup India Seed Fund Scheme (SISFS) with a budget of INR 945 Crore. This scheme aims to provide financial startups for Proof of Concept, prototype development, product trials, market entry, and commercialization.In the upcoming years, it is expected to support approximately 3,600 entrepreneurs through 300 incubators.

The Hon’ble Prime Minister of India announced the Startup India Seed fund scheme during his Grand Plenary address at the Prarambh: Startup India International Summit on January 16th 2021. 

The Seed Fund will be given to eligible startups through selected incubators across India.

Objectives of SISFS

The Indian startup ecosystem faces a shortage of funding during the seed and ‘Proof of Concept’ development stage.

At this point, the necessary capital can often determine whether a startup has good business ideas.

There are various unique business ideas that fail to launch because they lack the important early stage funding which is needed for proof of concept, prototype development, product trials, market entry and commercialization.

Seed Fund offered to such promising cases can have a various effect in validation of business ideas of many startups, leading to employment generation.

SISFS Experts Advisory Committee

There is an Expert Advisory Committee, which is formed by DPIIT (Department for Promotion of Industry and Internal Trade), they are responsible for monitoring the startup India Seed Fund Scheme.

The EAC will assess and select incubators for the distribution of Seed Funds, track their progress, and all necessary measures are taken to efficiently utilise the funds in achieving the goals of objectives of the Startup India Seed Fund Scheme.

SISFS Eligibility Criteria for Startups:-

1. A startup, recognized by DPIIT, and set up no more than 2 years before applying.

2. The startup must have a business idea for a product or service that fits the market, can be successfully commercialised, and has the potential to grow.

3. The startup should use technology in its main product or service, business model, distribution method, or approach to solve the problem it's targeting.

4. Preference will be given to startups offering innovative solutions in areas such as waste management, social impact, water management, education, food processing, agriculture, biotechnology, financial inclusion, energy, healthcare, textiles, defence, space, railways, oil and mobility, gas and many more.

5. The Startup should not raise more than Rs 10 lakh from Central or State Government schemes. Except subsidised office space, competitions, founder monthly allowance, lab access, grants, or prototyping facility. 

6. Indian promoters must hold at least 51% at the shares in the Startup at the time of applying to the incubator for the scheme, according to the Companies Act, 2013 and SEBI (ICDR) Regulations, 2018.

7. A startup applicant can receive seed support once in the form of grant and once in the form of debt or convertible according to the scheme guidelines.

Know the startup registration process.

SISFS Eligibility Criteria for Incubator

1. The incubator must be registered legally under the section.

2. At the time of operation, the incubator must be two years old at the time of application.

3. The incubator must have space for at least 25 people.

4. At the time of application incubator must have worked with at least 5 startups.

5. The incubator must be associated with the central government or state government or at least 3 years old.

Conclusion SISFS

The startup India Seed fund scheme aims to help early stage startup's by offering important funding for various things such as prototype, proof of concept etc. It's mission is to help startups and build a strong ecosystem.