Introduction
The Startup India Seed Fund Scheme (SISFS) is a game-changing initiative by the Department for Promotion of Industry and Internal Trade (DPIIT) aimed at addressing a critical gap in the early stages of startup funding. Recognizing that seed-stage funding is often the most challenging to secure, SISFS provides financial assistance to innovative startups for proof of concept, prototype development, product trials, market entry, and commercialization. This empowers them to reach a stage where they can attract angel investors, venture capitalists, or traditional loans.
Eligibility Criteria for Startups
To be eligible for SISFS, a startup must meet the following criteria
Recognition: The startup must be recognized by the Department for Promotion of Industry and Internal Trade (DPIIT).
Incorporation: The startup must be a private limited company, a registered partnership firm, or a limited liability partnership (LLP) incorporated in India.
Age: The startup should not be older than 2 years from the date of its incorporation.
Innovative and Scalable Business Idea: The startup must have a business idea that is innovative, scalable, and capable of creating value addition, employment, or wealth generation.
Preference: 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.
Funding: Should not have received more than ₹10 lakhs of monetary support under any other Central or State Government scheme.
Shareholding: At least 51% of shareholding should be held by Indian promoters.
Guidelines for Disbursement of Seed Fund to Startups by Incubators
The scheme operates through a network of eligible incubators across India. These incubators, selected by the Experts Advisory Committee (EAC), receive grants and disburse the seed funding to selected startups. The funding is provided as follows:
Grant up to ₹20 lakhs: This grant is for validation of proof of concept, prototype development, or product trials,and is disbursed in milestone-based installments.
Debt Funding: Up to ₹50 lakhs is available as debt funding to help startups reach the next level of funding.
Selection of Startups
The selection process is rigorous and involves multiple stages:
Application: Startups apply through the Startup India portal, providing detailed information about their business model, financials, and growth potential.
Screening: Applications are scrutinized by an Expert Advisory Committee (EAC) appointed by DPIIT.
Pitching: Shortlisted startups present their ideas to the EAC and incubator representatives.
Due Diligence: Selected startups undergo due diligence by incubators to assess their eligibility and potential.
Approval and Disbursement: Approved startups receive funding in milestone-based installments through their designated incubator.
Key Takeaways
A lifeline for early-stage startups: SISFS addresses a critical funding gap for startups with innovative ideas.
Empowering innovation: By supporting proof of concept and product development, SISFS fosters innovation and technological advancements.
Collaboration with incubators: The scheme leverages the expertise of incubators to nurture startups.
Holistic support: In addition to funding, startups receive mentoring and incubation support.
If you're an innovative startup based in India with a high-growth potential idea, explore the Startup India Seed Fund Scheme. Consult with PCA and Co. to understand the eligibility criteria and application process.
Comments