How to raise funding for tech based startups ? Seed Funding Support for Technology Based Startups
SEED FUNDING SUPPORT for Technology Based Startups
The challenge that the young innovators face is to raise the initial funding for his startup. Having reached the stage where he has done the technology demonstration and has a working prototype, the innovator is now looking for preparing his business plan, product validation and launch of startup.
Startup launch, product development and validation requires some investment part of the young innovator.
However, when technology is untested and market is unsure making returns uncertain, the risk of investment is too high for conventional investors including the Venture Capitalists to pitch in.
The funds required at this pre-incubation stage is not a very large amount of fund but it does certainly gives the startup and the young innovator a breather in this competitive space.
THEREFORE, TO ENCOURAGE THE CONVERSION OF TECHNOLOGY BASED INNOVATION INTO A COMMERCIALIZE STARTUP
The Department of Science and Technology has launched a programme to support startups. The programme, called NIDHI, is aimed at helping startups across the country in terms of both funding and incubation support.
Several number of schemes taken up under NIDHI. Some relevant scheme as follows
- NIDHI PRAYAS, which is focused on addressing the gap between idea and prototype funding;
- NIDHI Seed Support System for funding early-stage startups to commercialize & launch their innovative product and
- NIDHI Centres of Excellence, which will help startups to enter into global market.
- The quantum of seed funds / prototype grant would be a maximum of Rs 10.00 lakhs which is recently proposed to extended to Rs. 1 crore for each eligible startup.
- It is also proposed that eligible startup shall granted Rs 30000/- per month to meet operational expenditure.
- DST provides funds in the form of a grant to the incubator/STEPs/TBIs. The incubator in turn invests the same in the form of debt or equity in the eligible startup companies.
- The seed support would be disbursed to the deserving startup companies and eligible with proper due diligence by the STEP/TBIs.
- The seed support would generally cater to early stage financing for commercialization of the indigenous ideas, innovations and technologies.
- The funds disbursed to elegible startup companies can be utilized for Product development, Testing and Trials of product, Test Marketing, IPR issues like patent, Manpower for day to day operations, etc
Who is eligible for Seed Funding/ Prototype Grant?
- Startup should be technology based innovation
- Innovator Startup should be a registered company in India.
- Innovator must be an Indian start-up.
- The share holding by Indian promoters in the start up should be at least 51%.
NIDHI- National Initiative for Developing and Harnessing Innovations
STEP- Science and Technology Entrepreneurship Parks
TBI- Technology Business Incubators
DST-Department of Science & Technology, Government of India
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