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Govt notifies Startup India Seed Fund Scheme
The Central Government has notified the Startup India Seed Fund Scheme (SISFS) to provide financial assistance to budding entrepreneurs for activities like prototype development, product trials, market-entry, commercialization etc.
SISFS shall provide financial assistance to startups via a corpus of Rs. 945 crore that will be disbursed through selected incubators across India in 2021-25, said a notification.
Eligibility criteria for startups
The eligibility criteria for a startup to apply under the Seed Fund Scheme are as follows:
1. A startup, recognized by DPIIT, incorporated not more than 2 years ago at the time of application;
2. The startup must have a business idea to develop a product or a service with the market fit, viable commercialization, and scope of scaling;
3. The startup should be using technology in its core product or service, or business model, or distribution model, or methodology to solve the problem being targeted;
4. 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.;
5. The startup should not have received more than Rs 10 lakh of monetary support under any other Central or State Government scheme. This does not include prize money from competitions and grand challenges, subsidized working space, founder monthly allowance, access to labs, or access to prototyping facility;
6. Shareholding by Indian promoters in the startup should be at least 51% at the time of application to the incubator as per Companies Act, 2013 and SEBI (ICDR) Regulations, 2018; and
7. Any startup will not receive seed support more than once each as per provisions of guidelines.
The eligibility criteria for an incubator to apply in the Startup India Seed Fund scheme are as follows:
1. Incubator must be a legal entity;
2. Incubator should be operational for at least two years on the date of application;
3. Incubator must have facilities to seat at least 25 individuals;
4. Incubator must have at least 5 startups undergoing incubation physically on the date of application;
5. Incubator must have a full-time Chief Executive Officer, experienced in business development and entrepreneurship, supported by a capable team responsible for mentoring startups in testing and validating ideas, as well as in finance, legal and human resources functions;
6. Incubator should not be disbursing seed fund to incubatees using funding from any third-party private entity;
7. Incubator must have been assisted by Central/State Governments; and
8. In case the incubator has not been assisted by Central or State Governments:
a) Incubator must be operational for at least three years;
b) Must have at least 10 separate startups undergoing incubation in the incubator physically on the date of application; and
c) Must present audited annual reports for the last 2 years.
The Startup India Seed Fund Scheme will play a pivotal role in providing initial funding to budding entrepreneurs and eventually help in promoting innovation and generating employment. The scheme will come up for review by the end of 2024-25 with reference to financial, social and economic returns.