Startup India Seed Fund Scheme: While an innovative idea is essential for starting a business, it isn’t the be-all and end-all. Unique ideas need the backing of finances for enterprises to see the light of day. Many entrepreneurs can’t grow their ventures because of a lack of funds.

And to help these entrepreneurs with financial assistance, the government of India came up with the Startup India Seed Fund Scheme in the year 2021. The Startup India Seed Fund Scheme, also known as SISFS, was an initiative to strengthen India’s startup ecosystem. Let’s learn more about SISFS in the subsequent section. Scroll down to find out more.

Overview of Startup India Seed Fund Scheme 

Let’s have an overview of Startup India Seed Fund Scheme:

Goal of SISFSThe scheme aims to provide financial assistance to startups for prototype development, market entry, product trials, and proof of concept. It will assist approximately 3600 startups through 300 incubators.
In Effect Since April 2021 
Time Period Four years (2021-2025) 
Created By The Department For Promotion of Industry and Internal Trade (DPIIT)
Expenditure 945 Crores 
Sector It is a sector-agnostic scheme that supports startups from all sectors. 
Website seedfund.startupindia.gov.in

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Eligibility Criteria for Startups Under SISFS | Who Is Eligible for Avail Seed Capital?

The eligibility criteria for getting funds through the Startup India Seed Fund Scheme are given below:

  • Each startup should have a business idea to develop a product or service with viable commercialization, scaling scope, and market fit.
  • Startups must use technology in their core product, service, distribution model, or business method to solve the targeted problem.
  • The startup must be recognised by DPIIT, with the registration not older than two years.
  • Any startup inventing innovative solutions in water management, waste management, social impact, education, agriculture, food processing, healthcare, financial inclusion, biotechnology, gas, energy, mobility, defense, railways, textiles, etc. will get preference.
  • If a startup has received over INR 10 lakh of monetary support under any state or central government scheme, they wouldn’t be considered for this scheme. However, this amount doesn’t include prize money from competitions, subsidized working space, access to a prototyping facility, or lab access.
  • As per the Companies Act 2013 and SEBI Regulations 2018, each startup should include an Indian promoter with a minimum of 51% shares.
  • The startup should be eligible to receive seed support in the form of debt debentures and grants.

How to Apply for Startup India Seed Fund? | Process To Avail Startup India Seed Fund Scheme 

If you are eligible for the Startup India Seed Fund Scheme, here’s how you can claim it:

  • Step 1: Visit the official website of SISFS.
  • Step 2: Choose “Login” on the top right corner of the homepage.
  • Step 3: Click on the “Create Account” option in the lower right corner of your pop-up windows. It’ll take you to the registration page.
  • Step 4: Once there, put in the information related to your business, like name, contact details, and email ID.
  • Step 5: After that, you’d have to create a password and verify it.
  • Step 6: Now select the option to register.
  • Step 7: The next step is to get an OTP on the registered mobile number. Verify the OTP and press “Submit.
  • Step 8: Once you’re done with it, visit the official Startup India Seed Fund Scheme website and click on the “Apply Now” button. You can find it on the right-hand side of the homepage.
  • Step 9: Find the “For Startups” option and click “Apply Now” to sign in.
  • Step 10: Enter the username and password you created earlier.
  • Step 11: You will reach the application window. Once there, fill in your necessary information and upload the required documents.
  • Step 12: After doing so, click on the “Submit” option and let your application process take place.

Application for Startup India Seed Fund Scheme

Here is the process to register for SISFS as a startup:

  • Step 1: Visit the official website of SISFS.
  • Step 2: On the top right-hand side of the homepage, click on the “Login” button.
  • Step 3: Once the tab opens, choose the “Create an Account” option at the tab’s bottom.
  • Step 4: There you will find the registration page.
  • Step 5: Here you can enter your name, mobile number, and password.
  • Step 6: After confirming your password, choose the registration option.
  • Step 7: An OTP gets sent to the registered mobile number. Enter it and click on the “Submit” button.
  • Step 8: Now go to the homepage of the Startup India Seed Fund Scheme and click on “Apply Now” on the top side.
  • Step 9: Under the “For Startups” option, log in using your username and password.
  • Step 10: Once the application form opens, enter all the details. After that, upload your documents and choose the “Submit” button.

Disbursement of Seed Funds by Incubators to Startups

The disbursement of the seed fund to an eligible startup by an incubator occurs as follows:

  • The incubator will provide up to Rs. 20 lakh as a grant for validating prototype development, product trials, or both. The grant for milestone-based instalments related to product testing, prototype development, etc. gets disposed of by the incubator.
  • Up to 50 lakhs of investment is made available for market entry, commercialization, debt-linked instruments, or debt-based scaling up.
  • The startups can’t utilise the seed fund to create any facilities. They should use it for relevant purposes only.
  • The startups will receive the funds at a rate of interest not greater than the prevailing repo rate for startups supported via convertible debentures, debt, or deb-linked instruments.
  • Fixing the tenure while sanctioning a loan is necessary for the incubator. That said, it cannot be more than five years.
  • The incubator isn’t allowed to give more than 1/5th of its total grant as grants to a startup.
  • Due to the early stages of the startups, the incubator’s loans will be unsecured. That is why a third party or promoter doesn’t need to provide a guarantee.
  • Before releasing the first payment, the incubator must execute a legal agreement with the eligible startups.
  • The startups will get the funds in their company bank account.
  • The first instalment gets released within two months of receipt of the application from the startup.
  • Eligible startups must submit their interim progress report and utilization certificate to start the delivery of subsequent grant installments.

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Implementation of the Startup India Seed Fund Scheme

The Experts Advisory Committee (EAC) monitors and executes the Startup India Seed Fund Scheme. It was constituted by the DPIIT. The committee evaluates and selects the incubators for monitoring progress and allotting seed funds.

Besides, it undertakes the required measures for the effective utilisation of funds for fulfilling the objectives of SISFS. After evaluating the selected incubators, the EAC provides a grant of up to Rs 5 crore to these individuals.

The payment is made in three or more instalments based on milestones.The committee also decides on precise instalments and volumes of grants for each incubator.

Every incubator under the Startup India Seed Fund Scheme needs to constitute a committee. The respective committee is known as the Incubator Seed Management Committee.

It comprises specialists who can pick and evaluate startups for seed support. The incubators can shortlist startups after their evaluation and present them before ISMC.

After that, it is up to the ISMC to select the startups for the seed funds within 45 days of getting applications. The selected startups will receive seed funding through the incubator. 

FAQs on Startup India Seed Fund Scheme

How can I apply for a seed funding program?

You can apply for the seed funding scheme on the official website of SISFS. In the startup section, create an account, fill in the essential details, and submit documents.

How do you apply for funding through the Startup India program?

For starters, you’d have to register on the Startup India portal. Post-registration, apply for DPIIT registration. Afterward, you can fill out the application form and submit the required documents.

How do I get government funding for my startup?

There are various loan schemes offered by the government of India that you can consider for funding your startup. These include PMMY, CGTMSE, Atal Innovation Mission, and SISFS.

How do I participate in pre-seed funding?

Pre-seed funding can come from angel investors, crowdfunding, and startup grants. So, try building your pitch deck and making a list of potential investors or grantors. Once done, present your pitches to investors and negotiate.

How much does it cost to raise pre-seed?

It can range between $50,000 and $200,000 in price.

What are the stages of startup funding?

There are five to six startup funding stages. These include pre-seed funding, seed funding, angel funding, venture capital, mezzanine financing, and an IPO.

We hope this article on Startup India Seed Fund Scheme is helpful to you. To know more about Startup India Seed Fund Scheme, stay updated with myHQ.