What is Startup India seed fund scheme?

 

Many times we have the idea. We have the passion, dedication to implement the idea but we don’t have money to implement the idea. Now what we should do? If we go to the bank they will not fund the idea. So the question is how we can start the business without the capital. So for filling this gap Government of India launched a startup India seed fund scheme. 

Now we may ask the question like how do startups get seed funding? What are the eligibility criteria for startup India? Many questions like this come to our minds. Today we will find the answer to all these questions. So here is the information which you need:

In this article, we will discuss in detail about startup India seed fund scheme 2021

 

Who launched the startup India seed fund scheme?

Honorable prime minister Mr.Narender Modi had launched Startup India seed fund scheme on 16th January 2016. It has a complete action plan with 19 action points.

 

What is startup India seed fund scheme 2021?

Many entrepreneurs have the idea for a business but don`t have the money to implement them. Startup India seed fund scheme (SISFS) is for them.

Department for promotion of Industry and internal trade (DPIIT) has created this fund for the entrepreneurs who don’t have funds to convert their idea into a proof of concept, to develop a prototype, Product trials, Market entry, and commercialization.

 

What is a DPIIT recognized startup?

An entity can be called a startup

1. If it is incorporated as a Private Limited Company/Registered Partnership firm/Limited liability Partnership

2. Entity should be up to 10 years old at the time of filling the application.

3. If its turnover is less than 100 cr

4. If it is working on innovation, development, or improvement of products and processes. if it is a scalable business with a good scope of employment generation or wealth creation.

5. It should not have been split from the already existed business.

For getting the recognition as a startup from t DPIIT please visit

 https://www.startupindia.gov.in/content/sih/en/startupgov/startup-recognition-page.html 

Who is eligible for startup India?

Eligibility criteria for qualifying for startup India is as under:

1. A startup must have been recognized by DPIIT. It should be not more than two years old at the time of applying.

2. A startup should have a business idea to develop a product or a service which should have a good prospect in the market. It should have good commercial value and scope of scaling up.

3. The startup targeting services, business model or methodology for solving the problem should be using the technology as its core.

4. Although the startup is not sector-specific preference would be given to the startups who are working to create innovative solutions in sectors like social impact, waste management, water management, financial inclusion, education, agriculture, food processing, biotechnology, healthcare, energy, mobility, defense, space, railways, oil and gas, and textiles.

5. Startup shouldn’t have received more than 10 lakh rupees as a grant through any other central or state scheme.If the startup has received any kind of prize from competition or availed the subsidized working space, founder monthly allowance, access to labs, or access to prototyping facility this will not be counted as a grant and it will not come under the 10 lakh bracket.

6. This scheme is for Indians. So shareholding of the founder of the startups should not be less than 51% at the time of application to the incubator

7. A startup applicant can get the fund support in the form of grant and debt/convertible debentures as per the guideline of the scheme

 

How do startups get seed funding in India?           

Once you are recognized as a startup by DPIIT then you can use the same log-in credential for applying for the fund. Startups are applying on regular basis. The Startup portal opens frequently. Please apply for the fund. 

You have to choose any of the three incubators as a disbursing partner. All applications will go to the respective incubators for further evaluation. They will form a committee for evaluation. The Incubator seed management committee (ISMC) will review your application. This committee will do the evaluation based on the submission and presentation of the startups. 

Within 45 days of the application, startups will receive the seed fund. This committee will be responsible for your future review of the performance and disbursement of the amount. Incubators will shortlist the applications as per the eligibility criteria.

 

Evaluation Team For Seed Fund

The Application of startup will be reviewed by the Incubator seed Management Committee(ISMC). This committee will be formed by respective incubators who have been chosen by the applicants.ISMC will have the following members:

1. Nominee of an Incubator(Chairman)

2. Member of state govt`s startup nodal team

3. Representative of venture capital fund

4. A domain Expert of the industry

5. A domain expert of the academia

6. Two successful entrepreneurs

7. Other relevant stakeholders

 

Evaluation criteria for startup seed fund scheme

1. Uniqueness of the idea. What is the market size of this idea? What gap it is filling? This idea is solving the real-world problem?

2. Workability of the concept. Methodology of the technology and road map for the product development

3. Impact of the project. Technology`s impact

4. Uniqueness of the technology.

5. Strength of the startup team. Technical and business acumen.

6. Fund utilization plan

7. Incubator may add any kind of additional parameter depending upon their requirement.

 

How much seed funding can a startup receive under the scheme?

Seed fund to the shortlisted startup will be disbursed as follows:

1. Upto 20 lakh as a grant will be given to the startups. It will be disbursed in milestone-based installments. Milestone may differ from startup to startup. But it will be broadly categorized as proof of concept, development of a prototype, product testing, making a final product for market launch.

2. Up to 50 lakh for market entry, commercialization or scaling up through convertible debentures/debt/debt linked instruments.

3. A startup applicant can avail of seed support in the form of grants or debt or convertible debentures as per the scheme guidelines.

 

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