We all are know to India’s journey of giving opportunity to startups . Though we have may startups firms in India , but they don’t survive in long run , one of the main reason behind this is Indian startup ecosystem suffers from capital inadequacy in the seed and ‘Proof of Concept’ development stage. The capital required at this stage often presents a make or break situation for startups with good business ideas. Many innovative business ideas fail to take off due to the absence of this critical capital required at an early stage. The problem starts with seed funding , here is a short note on what is seed funding :
Seed funding : For growing a tree we need seed , so as to grow our business we need capital , and that is too at an early stage , Seed funding, or seed capital, is a relatively small amount of money that is used to start a business, fund research, or develop a product. The term’s reference to a “seed” is quite fitting. A tiny seed can someday grow into a lush forest. A tiny investment can help a struggling startup grow into a successful enterprise.
About the SISF Scheme: The Startup India Seed Fund Scheme aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization. On February 5, 2021, the Government of India made an official announcement about the approval of SISFS. It has been approved for a period of four years and was implemented with effect from April 1, 2021. Under the guidance of our honorable prime minister , Shri Narender Modi ji & Shri Piyush Goyal , minister of commerce & industry , this scheme was launched.
- The Scheme aims to provide financial assistance to startups at the very initial stage of their project
- It has been approved for a time period of four years, starting from 2021-22
- Rs. 945 Crore corpus will be divided over the next 4 years for providing seed funding to eligible startups through eligible incubators across India
- It is expected that the Startup India Seed Fund Scheme shall help over 3600 startups in the country
- This scheme is in line with the Atmanirbhar Bharat Campaign launched in May 2020
- Seed Fund to an eligible startup by the incubator shall be disbursed as follows:
- Up to Rs. 20 Lakhs as a grant for validation of Proof of Concept, or prototype development, or product trials
- Up to Rs. 50 Lakhs of investment for market entry, commercialization, or scaling up through convertible debentures or debt or debt-linked instruments
Who are eligible for SISFS ?
The eligibility criteria for a startup to apply under the Startup India Seed Fund Scheme shall be as follows:
- The startup must be recognised by the Department for Promotion of Industry and Internal Trade (DPIIT)
- It must have incorporated not more than 2 years ago at the time of application
- 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, defense, space, railways, oil and gas, textiles, etc.
- The startup should not have received more than Rs 10 lakh of monetary support under any other Central or State Government scheme
- Shareholding by Indian promoters in the startup should be at least 51% at the time of application to the incubator for the scheme
How will SISFS work ?
1. Department for Promotion of Industry and Internal Trade
The Seed Fund will be disbursed to eligible startups through eligible incubators across India DPIIT
Nodal Department EAC
2. Experts Advisory Committee
Government Representatives & Industry Experts Incubators
3. Govt assisted/Not-Govt assisted Incubators
Operational for at least 2-3 years Startups
4. DPIIT-recognized Startups
Incorporated less than 2 years ago