One of the biggest challenges that entrepreneurs face is gathering initial funding to initiate their business. Entrepreneurs hesitate and worry if they want to launch a business, and don’t have enough capital to invest in it. As a result, the Indian government has launched a beneficial scheme to boost the economy, employment and entrepreneurship in India. This is known as the Seed Fund Scheme. Seed Fund Scheme provides seed funding for startups in India. Today, you will get to know all about seed fund schemes and seed funding for startups in India.
What is a Seed Fund Scheme in India?
The Government of India’s Startup India initiative aims to create a strong Start-up ecosystem in India for innovation and entrepreneurship opportunities.
The Hon’ble Prime Minister unveiled a plan with 19 action points to support the Startup India initiative on January 16, 2016.
This Action Plan provided a roadmap to create a supportive ecosystem for Indian Startups. Many activities were then undertaken to promote Startups. Startup India Seed Fund Scheme, (SISFS), is one example of a scheme that provides financial assistance for early-stage startups.
If you have Startup India Certificate and MSME Registration, you become eligible for many of the beneficial schemes launched by the Indian government for startups.
Objective of Seed Fund Scheme
Startup India Seed Fund Scheme, (SISFS), aims to provide financial support to startups for proof-of-concept, prototype development, product trials and market entry.
This will allow these startups to proceed to a next level that allows them to seek loans from commercial banks and financial institutions, or raise investment from venture capitalists or angel investors.
Importance of Seed Fund Scheme for Seed Funding for Startups in India
Entrepreneurs in the initial stages of a business’ growth need capital quickly.
Startups can only get funding from venture capital firms and angel investors after they have presented proof of concept. Banks only lend to applicants who are asset-backed.
Therefore, early stage startups or entrepreneurs with innovative ideas miss the chance to start off their venture.
Here, Startups with innovative ideas need seed funding in order to carry out proof-of-concept trials. Seed Fund Scheme thus becomes an important instrument that helps the entrepreneurs to kick start their business.
Who can apply for Seed funding for Startups through Seed Fund Scheme?
The scheme is open to any startup that was established less than two years ago at the time of application. Furthermore, the startup must have Startup India Certificate and it must be recognized by DPIIT. For the detailed eligibility for Seed Fund Scheme, you can consult our experts at: 8881-069-069 or [email protected].
How much amount can you get through Seed Fund Scheme?
- As much as Rs. 20 Lakhs for the validation of Proof of Concept or prototype development or product trials. The grant will be distributed in milestone-based installments. These milestones may be related to product development, product testing, and building a product ready to go on the market.
- As high as Rs. 50 Lakhs in investment to market entry, commercialization or scaling up via convertible debentures, debt or other debt-linked instruments
- Startup applicants can receive seed support in the form either of debt/convertible debentures or grants.
Can you apply for a Seed Fund Scheme Online?
Yes. The procedure of Seed Fund Scheme is completely online. No physical submission of documents is necessary.
Must note for seed funding for startups in India through Seed Fund Scheme
- All applicants to the startup India seed funding scheme must form a committee called the incubator seed management committee. This committee will select and evaluate startups for seed funds.
- The selection of members for the incubator seed management committee is done by the expert advisory committee
- When selecting a startup, it is important to follow an open, transparent, and fair process
- Startups must submit details such as team profile, problem statement and product overview. Startups can also utilize Pitch Deck and Virtual CFO Services to communicate their ideas effectively.
- Entrepreneurs may apply for seed funds in any of the 3 incubators they prefer.
- All startups will be chosen based on eligibility criteria
- The applicant can submit a new application if the original one is not accepted.
- All rejected applicants will receive an email notification about their rejection
- The official portal allows applicants to track the progress of their applications.
- The incubator will choose the startup and provide seed financing
- The preference must be given when filling out the application form. Startups will be selected based on this preference
- Startups are required to present their ideas before the incubator seed management board. The incubator will then shortlist applicants based on this presentation.
- Within 45 days after receipt of your application, the incubator seed committee will review applicants based on their presentation and determine eligible startups.
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