Startup India Seed Fund Scheme (SISFS)
Startup India Seed Fund Scheme (SISFS)
Why in news?
- The Startup India Seed Fund Scheme (SISFS) has been launched.
About the Startup India Seed Fund Scheme (SISFS)
- The scheme aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry, and commercialization.
- Scheme was Launched by Department for Promotion of Industry and Internal Trade (DPIIT)Â with an outlay of Rs. 945 Crore.
- Some Eligibility Conditions:
- A startup, recognized by DPIIT, incorporated not more than 2 years ago at the time of application.
- Startups should not have received more than Rs. 10 lakh of monetary support under any other Central or State Government scheme.
Significance
- The Startup India Seed Fund Scheme (SISFS) will Secure seed funding, Inspire innovation, Support transformative ideas, Facilitate implementation, and Start startup revolution.
- The Startup India Seed Fund Scheme (SISFS)will create a robust startup ecosystem, particularly in Tier 2 and Tier 3 towns of India, which are often deprived of adequate funding.
Features
- It will support an estimated 3,600 entrepreneurs through 300 incubators in the next 4 years.
- An Experts Advisory Committee (EAC), constituted by DPIIT, will be responsible for the overall execution and monitoring of the Scheme.
- Grants of upto Rs. 5 crore will be provided to the eligible incubators selected by the committee.
- The selected incubators will provide grants of up to Rs. 20 lakh for validation of proof of concept, or prototype development, or product trials to startups.
- Investments of up to Rs. 50 lakh will be provided to the startups for market entry, commercialization, or scaling up through convertible debentures or debt-linked instruments.
Funding of the scheme
- Firstly, Eligible incubators throughout India will hand out funding to eligible startups across India.
- Secondly, Grants of up to Rs 5 Crores shall be provided to the eligible incubators selected by the EAC.
- Thirdly, the selected incubators shall provide grants of up to Rs 20 lakhs for validation of Proof of Concept, or prototype development, or product trials to startups.
- Finally, Startups will further receive investments of up to Rs 50 lakhs for market entry, commercialization, or scaling up through convertible debentures or debt-linked instruments.
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.
Various options for Seed Funding
- Crowdfunding
- Corporate seed funds
- Incubators Accelerators
- Angel investors
- Personal Savings
- VC Funding
- Angel Funds or Angel Networks
About Startup India Initiative
- It envisages building a robust Startup ecosystem in the country for nurturing innovation and providing opportunities to budding entrepreneurs. It was launched in 2016.
- The action plan of this initiative focuses on following three areas:
- Simplification and Handholding.
- Funding Support and Incentives.
- Industry-Academia Partnership and Incubation.
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