Startup India Seed Fund Scheme

The Union Minister for Commerce and Industry recently launched the “Start Up India Seed Fund” scheme. The scheme aims to provide financial support to the startups for their prototype development, proof of concept, product trials, market entry.

Startup India Fund Scheme

  • The scheme will provide Rs 945 crores in the next four years to the startups.
  • It is expected to support more than 3,600 startups through three hundred incubators.
  • The scheme will create robust startup ecosystem in Tier-2 and Tier-3 cities. The startups in these cities are often deprived of funding.
  • The fund will support transformative ideas and kindle startup revolution.

Disbursement

The funds under the scheme will be disbursed in following ways:

  • Up to Rs 20 lakhs is to be granted for prototype development, Proof of concept and product trials.
  • Up to Rs 50 lakhs is to be granted to scale up through convertible debentures.

Seed Funds

Seed Funds are those funds that are provided or used during the very beginning of an investment.

Need for Seed Funds

Indian startups are facing capital inadequacy especially in the seed and Proof of Concept development stage. Capital requirement is highly crucial at this stage as it might make or break a situation for startups that possess good business ideas.

Expert Advisory Committee

The Department for Promotion of Industry and Internal Trade shall constitute an Expert Advisory Committee to monitor the overall execution of the scheme.

Background

In February 2021, the GoI announced that a SISFS is to be established by April 2021. It is inline with Atma Nirbhar Bharat campaign that was launched in May 2020.

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