All about Startup India Seed Fund Scheme

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As an Early-stage entrepreneur, you may require capital for various purposes including proof of concept.

One of the best ways to raise capital at the early stage is through the Startup India Seed Fund Scheme (SISFS). The SISFS provides financial assistance to startups in a quick and easy manner.

Thus, helping startups attract further investments for growth.

Eligibility Criteria for Startup India Seed Fund Scheme Application

  1. Startups must  be recognised by DPIIT and obtain Startup India Registration.
  2. The startup should not be older than 2 years since incorporation.
  3. Technology must be a core element in the startup product, service, business model, or distribution model to address targeted problems.
  4. No Monetary support obtained from other Central or State Government schemes exceeding Rs 10 lakh, excluding specific allowances and prizes.
  5. Indian promoters must hold a minimum of 51% share in the startup during the application.


Startup Seed Fund Disbursement Process

Startups receive the Seed Fund through the following modes:

  1. Grants of up to Rs. 20 Lakhs for validating Proof of Concept, developing prototypes, or conducting product trials.
  2. Convertible debentures up to Rs. 50 Lakhs as investment for market entry, commercialization, or scaling up.
  3. Startups can also get loans, or funding through  debt-linked instruments at lower interest rates.

Important Note: Disbursement occurs in milestone-based installments tied to prototype development, product testing, and preparing a market-ready product.

Startup India Seed Fund Scheme Application Requirements

  1. Aadhar Card of Promoters
  2. Startup India Certificate
  3. Pitch Deck
  4. Social Media Links of Business/Directors or Any Authorized Person
  5. Board Resolution or Authorization Letter
  6. Startup India Login ID/Password
  7. Video showcasing your product and/or business model

Understand more about Pitch Deck at: 11 Elements to Include in a Pitch Deck 

Process to apply for Startup India Seed Fund Scheme

  1. Firstly, Startups need to submit their applications through the Startup India portal.
  2. As the application proceeds, you need to submit online details such as:
    1. Aadhar Card of Promoters
    2. Video
    3. List of Competitors
    4. Funding Requirement and Funding Instrument
    5. Answers to questions in funding application form
    6. Social Media Links of Business & Promoters
    7. Team Details
    8. Other Necessary Details
  3. In the next step, Startups can choose and apply to up to three preferred incubators. List of Incubators is available here: Selected Incubators – Startup India 
  4. Afterward, Incubators will then invite you to a virtual meeting. The virtual meeting includes a pitch deck presentation and Q&A. Virtual meeting venue details and joining link will be sent to your registered email.
  5. After conducting thorough due diligence, the incubator disburses the Seed Fund to the chosen startups.

Key Points to remember for Startup India Seed Fund Scheme

  1. Startups supported through convertible debentures or debt will receive funds at an interest rate not exceeding the prevailing repo rate.
  2. The tenure, capped at 60 months, will be determined by the incubator during loan approval, with a possible 12-month moratorium for startups.
  3. The loan for early-stage startups is unsecured, requiring no guarantees from promoters or third parties.
  4. A legal agreement between the incubator and startups, outlining terms and milestones, is mandatory before the first instalment is released.
  5. Subsequent disbursements depend on the achievement of agreed-upon milestones between the startup and incubator.
  6. Funds will be directly deposited into the company bank accounts of startups.
  7. For grants, the initial installment is released within 60 days of receiving the application, with subsequent releases based on interim progress updates and utilization certificates.
  8. At the project’s end, startups must submit a final report and an audited utilization certificate. In case of failure, entrepreneurs share insights in the report.
  9. The incubator and its staff cannot charge any fees from applicants or beneficiaries for selection, disbursement, incubation, or monitoring.
  10. A grievance cell at DPIIT addresses issues like delayed evaluations and disbursements.


What is the purpose and benefit of  Startup India Seed Fund Scheme?

The Startup India Seed Fund Scheme (SISFS) gives money to new businesses for things like trying out ideas, building prototypes, entering the market, and making their products widely available. To get this support, eligible startups can apply on the Startup India website. The chosen startups will receive the Seed Fund through certain incubators in India.

Can I apply for the scheme alone, or do I need a team?

No, if you are working alone, you cannot apply for support from this scheme.

Does the Startup India Seed Fund Scheme support specific types of startups?

No, the scheme supports startups from any type of business. However, it gives extra consideration to startups that are creating new and helpful solutions in areas like social impact, waste management, water management, finance, education, farming, food processing, biotech, healthcare, energy, transportation, defense, space, railways, oil and gas, textiles, and more.

Is there a minimum education requirement for founders to apply?

No, founders don’t need a specific level of education to apply.

How do I choose which incubator to apply to?

You can choose the incubator that fits your startup best. Consider your industry, stage of development, business needs, and goals. Information about the incubators in this scheme will be on the Seed Fund Portal soon.

What’s the difference between a grant, convertible debenture, and loan?

  • Grant: For startups in the early stages, up to Rs. 20 Lakhs, used for proving concepts or developing prototypes.
  • Debt/Convertible Debenture: For startups in later stages, up to Rs. 50 Lakhs, used for entering the market or growing. The funds come with interest, and the startup has up to 5 years to pay it back. There’s also a possibility of a 12-month grace period before repayment begins. This type of funding doesn’t require any security or guarantees.

Do I need to be physically present at an incubator to get seed funds?

No, you don’t have to be physically present at the incubator’s location to apply for the scheme. E-StartupIndia experts can help you online through each step of your application process.

Take a call from Expert

Also Read:

How to Build Your Seed Round Pitch Deck

If you have any other doubts related to Startup India Seed Fund Scheme, contact us here: 8881-069-069 or to get all your answers.

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