By ecloudOn

Many business concepts cannot proceed in a successful way due to the lack of funding. To address this issue, The India Government has established a Startup India Seed Fund Scheme on 16th of January  2014 to provide opportunities for the growth of the  organization.

The Start up India Seed fund Scheme is led by the department for Promotion of Industry and Internal trade(DPIIT) and it provides financial help to companies for prototype development, proof of concept, market entry, product trials and commercialization.

After demonstrating the  proof of concept , startups can only receive funding from venture capital firms and investors. Banks also provide loans only to asset  backed firms. Within 2025, it will support around 3600 entrepreneurs through 300 incubators.

Objectives 

  1. The Government of India launched Startup India Seed Fund Scheme 2021 to foster the growth of startups in India.
  2. Financial assistance of  upto 50 lakhs will be provided to the startups at the early stage.
  3. The fund will be used for prototype development, proof of concept, market entry, product trials and commercialization.

Eligibility Criteria for Startups

  1. A startup  should be recognized by DPIIT  and  has been in operation for less than 2 years at the time of application and must have a business idea for a product or service with the market fit and should be commercially  viable and a potential to scale.
  2. To solve the problem being targeted , a startup should use technology in its core product, service , business model , distribution model and methodology .
  3. A start up should not have received more than 10 lakhs in financial assistance . This should not include prize money  from competitors and grand challenges , subsidized working space, founder monthly allowance , access to labs and access to prototyping facility.
  4. Shareholding by Indian promoters in the startup should be atleast 51% as per the companies act of 2013 and SEBI (ICDR) regulations of 2018.
  5. Preference would be given to the following sectors :

1. Social impact

2. Waste and Water Management

3. Financial Inclusion

4. Education and Agriculture

5. Food processing and Biotechnology

6. Healthcare

7. Energy and Mobility

8. Defense and Space

9. Railways and Textiles

10. Oil and Gas

Eligibility Criteria for Incubators

  1. An Incubator must be a legal entity:

1. A Society registered under the Societies Registration Act 1860,

2. A Trust registered under the Indian Trusts Act 1882

3. A Private limited company registered under the Companies Act 1956 or the Companies Act 2013

4.  A Statutory body  created  through an Act of Legislature.

2. An Incubator should be operational for at least 2 years on the date of application to the scheme.

3.  An Incubator must have facilities to seat 25 individuals.

4.  Physically on the date of application , an Incubator should have at least 5 startups.

5. An Incubator must have a full time chief executive officer with experience in business development and                       entrepreneurship , as well as a capable team to mentor startups in testing and validating ideas  as well as finance, legal and human resources functions.

6. Should not disburse seed money to incubates using funds from any private entity .

7. The Incubators must be assisted by the Central/State Government.

8. In case the incubator has not been assisted by the Central or State Government

1. Incubator must be operational for at least 3 years

2. Physically on the date of application , an Incubator should have at least 10 startups undergoing.

3. Must present audited annual reports  for the last 2 years.

Experts Advisory Committee(EAC)

DPIIT will form an Experts Advisory Committee ,which would be in charge of the overall execution and supervision of the Startup India Seed Fund Scheme . They would choose the incubators for seed fund allotment , monitor progress and take all steps to ensure that funds .

The Experts Advisory Committee  will comprise of the following members :

  1. Chairman, an Individual of eminence .
  2. Representative of Department of Biotechnology(DBT)
  3. Representative of Department of Science and Technology (DST)
  4. Financial Advisor ,DPIIT or his Representative .
  5. Representative of the Ministry of  Electronics and Information Technology(MeiTY)
  6. Representative of Indian Council of Agricultural Research(ICAR)
  7. Additional Secretary/Joint Secretary, Director/Deputy Secretary,  DPIIT (Convener)
  8. Representative of NITI Aayog
  9. At least 3 expert members nominated by the Secretary ,DPIIT from the startup ecosystem , investors, experts in the domain of   R&D , technology development and commercialization , entrepreneurship  and other relevant domains.

Selection of Incubators

The applicant needs to apply to the scheme through the Official website of Startup India.

Shall be selected on the following Parameters:

  1. Fulfillment of eligibility Criteria
  2. Quality of the team of Incubator
  3. Available Infrastructure , testing labs.
  4. Composition of ISMC
  5. Incubation support provided by the Incubator in the last 3 years
  6. Funding support extended to startups in the last 3 years
  7. Mentoring provided in the last 3 years
  8. Number of startups that the Incubator intends to support
  9. Quantum of funds applied for , and fund deployment plan with timelines

Application Procedure

  1. Selection of Startups 

will constitute a committee called the Incubator Seed Management Committee (ISMC), consisting of experts who will evaluate and select startups .

2.  Online Application

An online Application Call will be hosted on the basis of  Startup India portal

The Applicant needs to fill the following details:

  1. Team Profile
  2. Problem Statement
  3. Product / Service Overview
  4. Business Model
  5. Customer Profile
  6. Market Size
  7. Quantum of funds Needed
  8. Projected Utilization Plans for Funds

3.Evaluation of  Application

All the application received will be shared online with respected Incubators  for further Evaluation.

Eligible applications will be evaluated by ISMC using the following criteria:

  1. Idea
  2. Feasibility
  3. Potential Impact
  4. Novelty
  5. Team
  6. Fund Utilization Plan
  7. Additional Parameters
  8. Presentation
  • Before ISMC, the incubator may shortlist the applicants based on their evaluation of presentation
  •  ISMC  would evaluate the applicants based on their submissions and presentations and select startups  for         seed fund within 45 days of receipt of application.
  • All Incubators should provide information about the progress of  evaluation of startups to the Startup India Portal.

 Disbursement of Seed  Fund     

  • Selected startups shall receive seed funding under the incubator who selects them as beneficiaries .
  • All Applicants will be able to track the progress of their application on the Start up India Portal on a time basis
  • Applicants who are rejected will be notified by mail and can apply afresh.

 Disbursement of Seed  Fund  to Startups by Incubators

  • The Government would provide up to Rs  20 Lakhs as a grant for validation of proof of concept, prototype development  and product trials. This would be disbursed in milestone based installments. Milestones can be related to the development of prototype , product testing , building a product ready for market launch
  • The Government would provide up to Rs  50 Lakhs as a investment for market entry, commercialization, or scaling up through convertible debentures or debt or debt – linked instruments