SEED Fund for Startups & Incubators by Startup India Scheme

Application starts from 1st July 2021

About Startup India:

The Startup India initiative of the Government of India envisages building a robust Start-up ecosystem in the country for nurturing innovation and providing opportunities to budding entrepreneurs.

An Action Plan with 19 action points for the Startup India initiative was unveiled by the Hon’ble Prime Minister on January 16, 2016. This Action Plan laid down a roadmap for the creation of a conducive ecosystem for Startups in India. Subsequently, many activities have been undertaken to encourage Startups. Startup India Seed Fund Scheme (SISFS) is one such scheme provides financial assistance to early-stage startups.

About the Startup India Seed Fund Scheme:

Startup India Seed Fund Scheme (SISFS) aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization. This would enable these startups to graduate to a level where they will be able to raise investments from angel investors or venture capitalists, or seek loans from commercial banks or financial institutions. The Seed Fund will be disbursed to eligible startups through eligible incubators across India. Importance of the scheme:

  • The ecosystem of Indian startups suffers from a lack of capital in the development phase of seed and "Proof of Concept".

  • The capital required at this stage often presents a hit or miss situation for startups with good business ideas.

  • Many innovative business ideas fail to take off due to the lack of this critical capital required at an early stage for proof of concept, prototype development, product testing, market entry and commercialization.

  • The seed money offered to such promising cases can have a multiplier effect in validating the business ideas of many startups, leading to job creation.

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Who Can Apply:

The eligibility criteria for a startup to apply under the Startup India Seed Fund Scheme shall be as follows:

  1. A startup, recognized by DPIIT, incorporated not more than 2 years ago at the time of application

  2. Startup must have a business idea to develop a product or a service with market fit, viable commercialization, and scope of scaling

  3. Startup should be using technology in its core product or service, or business model, or distribution model, or methodology to solve the problem being targeted

  4. Preference would be given to startups creating innovative solutions in sectors such as social impact, waste management, water management, financial inclusion, education, agriculture, food processing, biotechnology, healthcare, energy, mobility, defence, space, railways, oil and gas, textiles, etc.

  5. Startup should not have received more than Rs 10 lakh of monetary support under any other Central or State Government scheme. This does not include prize money from competitions and grand challenges, subsidized working space, founder monthly allowance, access to labs, or access to prototyping facility

  6. Shareholding by Indian promoters in the startup should be at least 51% at the time of application to incubator for the scheme, as per Companies Act, 2013 and SEBI (ICDR) Regulations, 2018

  7. Any startup will not receive seed support more than once each as per provisions of para 8.1 (i) and 8.1 (ii) respectively

The eligibility criteria for an incubator to apply in the Startup India Seed Fund scheme are as follows:

  1. Incubator must be a legal entity: a) A society registered under the Societies Registration Act 1860, or b) A Trust registered under the Indian Trusts Act 1882, or c)A Private Limited company registered under the Companies Act 1956 or the Companies Act 2013, or d) A statutory body created through an Act of legislature

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

  3. Incubator must have facilities to seat at least 25 individuals

  4. Incubator must have at least 5 startups undergoing incubation physically on the date of application Incubator must have a full-time Chief Executive Officer, experienced in business development and entrepreneurship, supported by a capable team responsible for mentoring startups in testing and validating ideas, as well as in finance, legal and human resources functions

  5. Incubator should not be disbursing seed fund to incubatees using funding from any third-party private entity

  6. Incubator must have been assisted by Central/State Government(s)

  7. In case the incubator has not been assisted by Central or State Government(s): a) Incubator must be operational for at least three years b) Must have at least 10 separate startups undergoing incubation in the incubator physically on the date of application c) Must present audited annual reports for the last 2 years

  8. Any additional criteria as may be decided by the Experts Advisory Committee (EAC)


Also Read: Internship on Industrial Automation and Robotics

Seed Fund to an eligible startup by the incubator shall be disbursed as follows:

  1. Up to Rs. 20 Lakhs as grant for validation of Proof of Concept, or prototype development, or product trials. The grant shall be disbursed in milestone-based installments. These milestones can be related to development of prototype, product testing, building a product ready for market launch, etc.

  2. Up to Rs. 50 Lakhs of investment for market entry, commercialization, or scaling up through convertible debentures or debt or debt-linked instruments

  3. A startup applicant can avail seed support in the form of grant and debt/convertible debentures each once as per the guidelines of the scheme



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---Rajasekar Madhavan 
Founder & CEO-Projectcontest.com
Innovation Influencer I MoE IIC InnoV Ambassador