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Startup India Seed Fund Scheme (SISFS)

Objective

Startup India Seed Fund Scheme (SISFS) aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization to enable these startups to graduate to a level where they will be able to raise investments from angel investors or venture capitalists or seek loans from commercial banks or financial institutions. It will support an estimated 3,600 entrepreneurs through 300 incubators in the next 4 years.

Eligibility

  • A startup, recognized by DPIIT, incorporated not more than 2 years ago at the time of application.
  • The startup must have a business idea to develop a product or a service with a market fit, viable commercialization, and scope of scaling
  • The startup should be using technology in its core product or service, business model, or distribution model, or methodology to solve the problem being targeted.
  • Preference would be given to 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
  • Startup should not have received more than Rs 10 lakh of monetary support under any other Central or State Government scheme. This does not include prize money from competitions and grand challenges, subsidized working space, founder monthly allowance, access to labs, or access to prototyping facilities.
  • Shareholding by Indian promoters in the startup should be at least 51% at the time of application to the incubator for the scheme, as per the Companies Act, 2013 and SEBI (ICDR) Regulations, 2018.
  • 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

Seed Fund Support:

Seed Fund to an eligible startup by the incubator is disbursed as follows:

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

Application of fund support

Seed fund shall strictly not be used by startups for creation of any facilities and shall be utilized for the purpose it has been granted for. A grant can be used for validation of Proof of Concept, prototype development, or product trials. A debt/ convertible debenture can be used for Market entry, Commercialization, or Scaling up.

Application Process

An online call for applications is hosted on an ongoing basis on the Startup India. The portal will be opened soon. DPIIT-recognized startups can log in using the credentials used during the startup recognition process to apply for the scheme. The application submission is entirely online, and no physical submission of documents is required. startups have the option to apply to 3 different incubators according to their preference. For example, if incubators at Preference 1 and Preference 2 both select a startup, the funding shall be given by the Preference 1 incubator. If the Preference 1 incubator rejects and the Preference 2 incubator selects, the funding shall be given by the incubator at Preference 2, and so on.

Evaluation, Selection of applications and closure of incubation:

Eligible applications shall be evaluated on the following criteria:

  • Is there a need for this Idea?
  • Feasibility
  • Potential Impact
  • Novelty
  • Team
  • Fund Utilization Plan
  • Additional Parameters
  • Presentation

The Selection Committee shall evaluate applicants based on their submissions and presentations and select startups for Seed Fund within 45 days of receipt of application. Selected startups shall receive seed funding under the respective incubator that selects them as beneficiaries as per their preference shared during application. The incubator shall execute a legal agreement with the selected startups before the release of the first instalment. The startup shall submit a final report and audited utilisation certificate at the end of the project duration.

Selected startups shall furnish details on the above parameter to the incubator in all progress reports

  • Progress of proof of concept
  • Progress of prototype development
  • Progress of product development
  • Progress of field trials
  • Progress of market launch
  • Quantum of loan, angel or VC funding raised
  • Jobs created by startup
  • Turnover of startup
  • Any other appropriate parameter

Re-application

An applicant can apply to the SISFS again after 3 months of receiving a rejection. This buffer time is given to ensure that you have worked on the feedback received from incubators and are ready to be considered again.

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