Startup India Seed Fund Scheme:- With an investment of Rs. 945 crore, the Department for Promotion of Industry and Internal Trade (DPIIT) established the Startup India Seed Fund Scheme (SISFS) to give businesses financial support for the development of prototypes, proofs of concept, market entry, product trials, and commercialization.
On January 16, 2021, the Honourable Prime Minister, Shri. Narendra Modi announced the SISFS plan. On January 21, 2021, the DPIIT announced this plan following approval from the Expenditure Finance Committee (EFC) and the Honourable Finance Minister.
Startups can only receive funding from venture capital firms and angel investors if they have demonstrated their proof of concept. In a similar vein, banks provide money to startups backed by assets. Seed money must be provided to innovative Indian businesses to support proof of concept tests.
Through incubators located all around India, the SISFS offers seed cash to qualified entrepreneurs so they can produce proof of concept. Through 300 incubators, it will provide support to over 3,600 entrepreneurs over the following four years, or 2021–2025. With the help of the seed fund, companies will be able to raise money from venture capitalists or angel investors and apply for loans from commercial banks and other financial organizations.
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Insufficient financing often plagues India’s startup environment throughout the proof of concept development phase. For businesses with strong business concepts, the funding needed during the proof of concept development phase frequently makes or breaks their scenario.
Inadequate key capital requirements at an early stage of prototype development, proof of concept, market entry, product trials, and commercialization cause many creative business concepts to fail. Giving seed money to such potential businesses can have a compounding impact on proving the viability of their company concepts, which will ultimately result in the creation of jobs.
The following list of requirements enables a business or incubator to apply for the business India Seed Fund Scheme.
The Department for Promotion of Industry and Internal Trade (DPIIT) created the Startup India Seed Fund Scheme (SISFS) with an outlay of Rs.945 crore to provide financial assistance to startups for prototype development, proof of concept, market-entry, product trials, and commercialization.
The Hon’ble Prime Minister, Shri. On January 16, 2021, Narendra Modi announced the SISFS plan. On January 21, 2021, the DPIIT announced this plan following approval from the Expenditure Finance Committee (EFC) and the Honourable Finance Minister.
The funding from venture capital firms and angel investors is available to startups only after providing their proof of concept. Similarly, banks offer loans to asset-backed startups. Thus, it is necessary to provide seed funding to startups in India that have an innovative idea to conduct proof of concept trials.
Through incubators located all around India, the SISFS offers seed cash to qualified entrepreneurs so they can produce proof of concept. It will support approximately 3,600 entrepreneurs through 300 incubators in the next four years, i.e. 2021-2025. The seed fund will enable startups to seek loans from commercial banks or financial institutions or raise investments from angel investors or venture capitalists.
The startup ecosystem in India generally suffers from capital inadequacy in the proof of concept development stage. For businesses with strong business concepts, the funding needed during the proof of concept development phase frequently makes or breaks their scenario.
Several innovative business ideas fail due to inadequate critical capital requirements at an early stage for prototype development, proof of concept, market entry, product trials, and commercialization. Giving seed money to such potential businesses can have a compounding impact on proving the viability of their company concepts, which will ultimately result in the creation of jobs.
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The following list of requirements enables a business or incubator to apply for the business India Seed Fund Scheme.
If businesses operating under SISFS want to apply for seed capital from incubators, they must follow these procedures:
Clicking the “Submit” button will cause the application to be received to select which business will get seed funding under the SISFS scheme.
A qualified startup will receive seed money from the incubator in the following ways:
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An Experts Advisory Committee (EAC) appointed by the DPIIT is in charge of overseeing and carrying out the SISFS. The EAC assesses and chooses the incubators to receive seed money, keeps track of developments, and takes the required actions to ensure that funds are used effectively to support the SISFS’s goals.
The EAC assesses the chosen incubators for grant assistance and awards grants to the chosen incubators in three or more milestone-based instalments, up to a maximum of Rs. 5 crore. Based on its review, the EAC determines the precise number of grants and instalments for each incubator. This committee will be responsible for choosing and assessing firms for seed support.
Q. For whom is the Startup India Seed Fund Scheme applicable?
Ans- Applications for the program are welcome from startups that are approved by DPIIT and were founded no more than two years before the time of application.
Q. What does seed investment mean for Indian startups?
Ans- The government of India launched the Startup India Seed Fund Scheme (“SISFS”) to give early-stage Indian entrepreneurs financial support. The SISFS seeks to close the funding gap that early-stage and proof-of-concept firms encounter. Grants from SISFS are offered to qualifying entrepreneurs via incubators located all over India.
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