Startup India Seed Fund Scheme (SISFS)

The Startup India Seed Fund Scheme intends to help entrepreneurs with proof of concept, prototype development, product testing, market entrance, and commercialization.

The approval of SISFS was officially announced by the Government of India on February 5, 2021. It was approved for a four-year period and became operational on April 1, 2021.

Also, get the List of Government Schemes in India at the linked article. 

Startup India Seed Fund Scheme [UPSC Notes]:-Download PDF Here

About the SISF Scheme

• The Scheme intends to give financial support to entrepreneurs at the very beginning of their venture.
• It has been granted for a four-year term, beginning in 2021-22.
• The Rs. 945 crore money will be distributed over the next four years to qualifying entrepreneurs through approved incubators across India.
• The Startup India Seed Fund Scheme is projected to assist over 3600 enterprises throughout the country.
• This programme corresponds to the Atmanirbhar Bharat Campaign, which was launched in May 2020.

• The incubator will distribute the Seed Fund to a qualified business as follows:
• For validation of Proof of Concept, prototype development, or product testing, a grant of up to Rs. 20 lakhs is available.
• Through convertible debentures, loans, or debt-linked instruments, up to Rs. 50 lakhs of investment can be made for market entrance, commercialization, or scaling up.
• Candidates may learn everything they need to know about the Startup India Scheme, which was created to assist the country's startup economy.

What is Seed Funding?

Seed funding or seed-stage funding is a very initial investment. Generally, investors often get an equity stake in exchange for the capital invested. In case the founders use their savings to start up a business, it is called bootstrapping.

What is the need for Startup Seed Funding Scheme in India?

In the seed and ‘Proof of Concept' development stages, the Indian startup ecosystem suffers from a lack of finance. For businesses with strong company concepts, the funding necessary at this point might be a make or break issue.

Many great company concepts fail to take off because they lack the necessary money at an early stage. If such promising examples are given initial money, it can have a multiplier effect in validating the business plans of numerous firms, resulting in the creation of jobs in the country.

A States' Startup Ranking Framework has been established in India with the goal of strengthening the assistance of States and UTs in building their startup ecosystems holistically. The linked item has the most recent report from the States' Startup Ranking Framework.

Who all are eligible for SISFS?

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

The Department for Promotion of Industry and Internal Trade must approve the startup (DPIIT)
Startups developing new solutions in areas such as social impact, waste management, water management, financial inclusion, education, agriculture, food processing, biotechnology, healthcare, energy, mobility, defence, space, railroads, oil and gas, textiles, and others will be given priority.

Under any other Central or State Government initiative, the startup should not have received more than Rs 10 lakh in financial assistance.
At the time of application to the incubator under the plan, Indian promoters must own at least 51 percent of the business.

What is the Experts Advisory Committee (EAC) under SISFS?

The DPIIT will appoint an Expert Advisory Committee to oversee the Startup India Seed Fund Scheme's overall implementation and monitoring. The EAC will assess and choose incubators for Seed Fund allotment, monitor progress, and take all necessary steps to ensure that monies are used efficiently.

EAC will be made up of members from several departments and will include:

• A Chairman
• Financial Advisor, DPIIT or his representative
• Additional Secretary/ Joint Secretary/ Director/ Deputy Secretary, DPIIT
• One Representative each from:
  • Department of Biotechnology (DBT)
  • Department of Science & Technology (DST)
  • Ministry of Electronics and Information Technology (MeiTY)
  • Indian Council of Agricultural Research (ICAR)
  • NITI Aayog

• At least three expert members from the startup ecosystem, investors, specialists in R&D, technology development and commercialization, entrepreneurship, and other relevant fields nominated by the Secretary, DPIIT