Start-up India Seed Fund Scheme (SISFS)

Source: pmmodiyojana.in

To boost the start-up ecosystem in India and offer opportunities to budding entrepreneurs, the Government of India has come up with Start-up India Seed Fund Scheme. Through this government-backed scheme, start-ups with innovative ideas can get financial assistance, i.e. initial funding, to enter the business arena. Read on to know everything about the Start-up India Seed Fund Scheme.

The Department of Promotion of Industry and Internal Trade (DPIIT) announced the Start-up India Seed Fund Scheme on 16th January 2021 with an outlay of ₹945 crores to provide financial assistance to start-ups.

The government provides this funding to start-ups, especially for prototype development, market-entry, proof of concept, commercialisation. Eligible start-ups will receive seed funding through incubators. This scheme is expected to support 3600 entrepreneurs through 300 incubators in the next 4 years, i.e. 2021-2025.

Availing funds from angel investors and venture capitalists is quite difficult as start-ups have to provide proof of concept. On the other hand, banks or financial institutions prefer to offer loans against collateral which start-ups may fail to arrange. In such circumstances, to ensure budding entrepreneurs and start-ups with an innovative idea get seed funding to participate in proof of concept trials.

Now that you can understand the meaning of SISFS, let’s delve more into this scheme, its objectives, application process, and benefits.

As stated earlier, the start-up ecosystem in India struggles to avail funding in the seed and ‘Proof of Concept’ stage. As many businesses with innovative ideas fail to overcome this situation, they automatically move out from the business arena even while having enough potential.

Here, Start-up India Seed Fund Scheme aims to ensure a multiplier effect for validating the business ideas for many start-ups with the ultimate cause of generating employment.

Eligibility Criteria for Start-ups

• Start-ups recognised by DPIIT must not be registered or incorporated for more than 2 years at the time of application.
• A start-up business must use technology in its core product or services or distribution model, business model, methodology to resolve targeted issues.
• Start-ups must have a business plan to develop a service or product with a scope of scaling, viable commercialisation, market fit.
• Start-ups must not have availed financial support of more than ₹10 lakh from any other Central and State Government scheme. Please note that prize money from competitions, access to prototyping facility, access to labs, founder monthly allowances are excluded from calculation.
• Start-up Seed Fund Scheme gives special preference to start-ups that are inventing innovative solutions in sectors like water management, waste management,  oil and gas, food production, agriculture, social impact, healthcare, biotechnology, mobility, defence, financial inclusion, food processing, energy, space, textiles, and railways.
• Start-ups can receive seed support in debt/convertibles and grants, each one per the scheme guidelines.
• According to the Companies Act, 2013 and SEBI (ICDR) Regulations, 2018, an Indian promoter must have at least 51% shareholding in a start-up at the time of application to the incubator.

Eligibility Criteria for Incubators

Following are the eligibility criteria of Start-up India Seed Fund Scheme

• Incubators must be legal entities and must be any of the following options -
  • Trusts registered or incorporated under the Indian Trusts Act, 1882.
  • Society registered or incorporated under the Securities Registration Act, 1860.
  • Statutory body developed through an Act of the legislature.
  • Private Limited company registered or incorporated under the Companies Act 1956 of the Companies Act 2013.
• Incubators must have a seating facility of at least 25 individuals.
• They must not provide seed funds to incubatees from any third-party fund.
• Incubators must have at least five start-ups receiving incubation physically on the date of application.
• They must get assistance from the Central or State government.
• If the Central or State government do not assist incubators, they must fulfil the following conditions,
  • Incubators must have an operational history of three years.
  • They must submit audited annual reports for the past 2 years.
  • They must have at least 10 start-ups undergoing incubation on the date of application.
• Incubators are required to have a full-time Chief Executive Officer who has experience in entrepreneurship and business development and a team that can responsibly mentor start-ups in testing and validating ideas, legal, finance and human resource functions.

As the eligibility criteria for Start-up India Seed Fund Scheme is different for start-ups and incubators, the application process also varies. Read along!

Application Procedure of SISFS for Start-ups

• Step-1- Visit the official website of Start-up India Seed Fund Scheme. On the homepage, click on ‘Login’. Next, choose ‘Create an Account’.
• Step-2- A registration page of ‘Start-up India’ will open. Enter required details, confirm password, and click on ‘Register’.
• Step-3- An OTP will be generated. Provide the OTP and select the ‘submit’ option.
• Step-4- Again visit the official website of Start-up India Seed Fund Scheme and click on ‘Apply now’ and select ‘For Start-ups’ under this option. Next, log in to the Start-up India website with the username and password.
• Step-5- An application form will open, provide all the information, upload documents and click on ‘Submit’ to complete the application process.

Application Procedure of SISFS for Incubators

Incubators must visit the official website of the Start-up India Seed Fund Scheme and follow the steps mentioned below to apply for this scheme –

• Step-1- Click on ‘Login’ on the homepage and select ‘Create an Account’. Once the ‘Start-up India’ registration web page opens, enter name, mobile number, email-ID password, and confirm the details.
• Step-2- Click on ‘Register’. Next, you will receive an OTP on your registered mobile number. Provide the OTP and click on ‘Submit’. Once the registration is complete, again go to the official website of Start-up India Seed Fund Scheme and select ‘Apply Now’.
• Step-3- Select ‘For Incubators’ from the drop-down list. Log in with your username and password on the Start-up India website. Select country and click on the input letterbox and ‘Next’ option, respectively.
• Step-4- An application form will appear on the open screen. Provide the required information and click on ‘Save Profile’. Next, the profile will be evaluated by moderators and sent to them for approval.
• Step-5- Again, log in to the official website of Start-up India Seed Fund Scheme. Here, click on ‘Apply Now’ under the seed fund scheme. Provide details in the application form such as general detail, fund requirement details, incubator team detail etc. Lastly, upload all the essential documents and click on the ‘Submit’ option.

The scheme is expected to build up a robust start-up ecosystem in Tier 2 and Tier 3 regions. The target will be achieved by providing Start-up India Seed Fund Scheme amount of ₹50 lakh at the early stage through incubators.

• Start-ups can track application status by dashboard available on the website and using their login credentials.
• On the other hand, incubators can check their status by accessing their respective dashboard on the website using login credentials.

The above-mentioned piece talks about the Start-up India Seed Fund Scheme. Read the eligibility criteria and application process of both start-ups and incubators and apply accordingly to boost the start-up ecosystem within the country.