A flagship scheme under the Startup India initiative, the Startup India Seed fund Scheme (SISFS), was implemented on April 1, 2021. Rs 477.45 crore has been approved by the Ministry of State for Commerce and Industry. The amount is approved for 133 incubators. An early investment stage in a new business idea or startup is known as seed funding. Seed funding aims at helping the company reach a point where additional revenue can be generated so the company can become self-sustaining.
The Startup India scheme provides support to startups at different stages of their business cycle, which are provided through the startup initiatives, namely, the Startup India Seed Fund Scheme (SISFS), Credit Guarantee Scheme for Startups (CGSS), and Fund of Funds for Startups (FFS). After that, the startups can raise investments from venture capitalists or angel investors. They can even seek loans from financial institutions or commercial banks.
The overall SISFS is monitored and executed by the Government’s Experts Advisory Committee (EAC). The EAC will select and evaluate the allotment of incubators in the Seed Funds scheme. Different measures will be taken by the EAC to fulfil the scheme’s objectives through efficient utilization of funds. The startup India Seed Fund Scheme aims at providing financial assistance to startups for prototype development, market-entry, proof of concept, and commercialization.
Startup India Initiative
A government-based initiative, Startup India focuses on building a robust startup ecosystem in India to provide opportunities to growing entrepreneurs. It also encourages private investments in startups. To develop the startup ecosystem, the government implements annual programs and exercises, which include National Startup awards, States’ Startup Ranking, and Innovation Week.
To reduce compliance burden and enhance ease of doing business, stakeholder consultancy is used by the government, where policy-related recommendations are made.
Who is eligible for the scheme?
- A startup incorporated not more than 2 years ago and recognized by the Department for Promotion of Industry, and Internal trade (DPIIT) can apply for the scheme.
- The startups should not receive monetary support of more than Rs 10 lakhs through any other state or central government scheme.
- Startups creating innovative solutions in sectors such as education, agriculture, social impact, water management, waste management, food processing, financial inclusion, biotechnology, energy, healthcare, defense, mobility, railways, space, textiles, oil, and gas, etc. will be preferred for the scheme.
This scheme will provide capital to the entrepreneurs at the early stages of growth when investment is essential for the enterprise. Availability of capital works as a make-or-break situation for startups, and inadequacy of capital increases the sufferings of the Indian Startups who have good business ideas and opportunities. With the availability of capital investment, startups can easily take off in their business. This scheme provides funding to innovative startups and also leads to employment generation.
