/Govt notifies Rs 945 crore seed fund scheme for startups

Govt notifies Rs 945 crore seed fund scheme for startups

The government has approved the Startup India Seed Fund Scheme (SISFS) with a corpus of Rs 945 crore to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization.

The funds will be disbursed through selected incubators across India from 2021-25, the Department for Promotion of Industry and Internal Trade (DPIIT) said in a notification.

“An Experts Advisory Committee (EAC) will be constituted by DPIIT, which will be responsible for the overall execution and monitoring of the Startup India Seed Fund Scheme,” the department said.

To be chaired by an individual of eminence, the committee will evaluate and select incubators for allotment of Seed Funds, monitor progress, and take all necessary measures for efficient utilization of funds.

The SISFS can be availed by a startup, recognised by DPIIT, incorporated not more than two years ago at the time of application. It must have a suitable commercially viable business idea and should use technology in its core product or service.

“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.,” the notification stated.

A National Seed Fund was announced in Budget 2020-21 to support ideation and development of early-stage startups whereas the credit guarantee scheme will enable startups to raise loans for their business purposes.

As per the notification, the eligible startups should not have received more than Rs 10 lakh of monetary support under any other central or state government scheme. However, this does not include prize money from competitions and grand challenges, subsidised working space, founder monthly allowance, access to labs, or access to prototyping facility.

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

A startup will not receive seed support more than once each as per provisions of guidelines, according to the notification.

As for the eligibility criterion for incubators, they must be legal entities, be operational for at least two years on the date of application to the scheme, have facilities to seat at least 25 individuals and have at least five startups undergoing incubation physically. The incubators must also have a full-time Chief Executive Officer, supported by a capable team.

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