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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) 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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