Startup India Seed Fund Scheme (SISFS)

Startup India Seed Fund Scheme (SISFS)

Startup India Seed Fund Scheme (SISFS) is a committee established by the department for the promotion of industry and internal trade (DPIIT). It created the Startup India Seed Fund Scheme (SISFS) with an outlay of Rs. 945 crore to provide financial assistance to the startups for prototype development, proof of concept, market entry, product trials, and commercialization.

The Hon’ble Prime Minister, Shri. Narendra Damodar Das Modi announced this scheme on 16th January 2021. After the honourable finance minister and expenditure Finance committee (EFC), and then the Department of Promotion of Industry and Internal Trade notified about this scheme on 21st January 2021.

The objective of the Startup India Seed Fund Scheme (SISFS)

• To startup the ecosystem of India that is mainly suffering from capital inadequacy in the proof of concept development stage.
• To provide adequate capital to the startups
• And in developing the proof of concept which often makes or breaks a situation for startups with good business ideas.
• To stop several innovative business ideas fails due to inadequate critical capital requirements at an early stage for prototype development, proof of concept, trails of products and commercialization etc.

Eligibility criteria for Startup India Seed Fund Scheme (SISFS)

The eligibility criteria can be divided into two types the ones for startups and another for Incubators.

Start-ups

• A startup that has been recognised by the DPIIT and has been incorporated or registered for no more than two years at the time of filing an application.
• Startups must have a business idea in order to develop a service or product that is commercially viable, has a market fit, and has the potential to scale.
• To solve the targeted problem, startups must incorporate technology into their core service, product, distribution model, business model, or methodology.
• Startups developing innovative solutions in sectors such as waste management, social impact, water management, education, financial inclusion, food processing, agriculture, healthcare, biotechnology, mobility, energy, space, defence, oil and gas, textiles, railways, and so on are given priority.
• Startups that have received more than Rs.10 lakh in financial assistance from any Central or State Government scheme are ineligible for this scheme. This figure does not include subsidised working space, prize money from competitions and grand challenges, lab access, a monthly allowance for the founder, or access to a prototyping facility.
• According to the Companies Act of 2013, and the SEBI (ICDR) Regulations of 2018, an Indian promoter’s shareholding in a startup must be at least 51% at the time of application to the incubator.
• A startup can receive seed funding in the form of grants or convertible/debt debentures, depending on the scheme guidelines.

Incubators

• The incubator should be a legal entity, such as one of the following:

1.         A society formed or registered under the Societies Registration Act of 1860.
2.         Private Limited Company formed or registered under the provisions of the Companies Act, 2013, or the Companies Act, 1956.
3.         Trust established or registered under the Indian Trusts Act of 1882.
4.         The statutory body is established by a legislative Act.

• Incubators must have been in operation for at least two years prior to the date of application submission.
• Incubators should have enough seating for at least 25 people.
• Prior to the date of application, incubators should have at least five startups physically undergoing incubation.
• Incubators must have a full-time CEO who is experienced in entrepreneurship and business development, as well as a team capable of mentoring startups in validating and testing, legal, finance, and human resources functions.
• Incubators must not make seed funding available to incubates through any third-party private entity.
• Incubators should have received assistance from the federal or state governments.
• If the incubators have not received assistance from the Central or State Governments, they must meet the following criteria to be eligible:

1.           It must be operational for at least three years.
2.           On the date of application, at least ten separate startups must be physically incubating.
3.           Annual audited reports for the previous two years must be provided.
4.           Any additional criteria that the Experts Advisory Committee decides on (EAC).

FAQ’s on Startup India Seed Fund Scheme (SISFS)

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