The Concept of Seed Funding
It often refers to the first official money that a business or organisation raises. It supports a company’s initial finance needs for brand production and market analysis projects. In a seed fundraising scenario, there are several prospective investors: entrepreneurs, friends, venture capital firms, family, incubators, and more.
An “angel investor” is one of the most famous investors participating in startup investment. Angel investors typically prefer riskier endeavours (such as startups with a scant prior track record) and anticipate receiving an ownership share in the firm in return for their investment.
The goal of the Scheme
To offer entrepreneurs financial support for concept validation, model development, product testing, market entrance, and commercialisation.
Department for Promotion of Industry and Internal Trade (DPIIT) commissioned it with an over Rs 900 crore rupee investment.
Some prerequisites for eligibility
- A DPIIT-recognized startup that was just two years old when the application was submitted.
- Under any other programme run by the Central or State Government, startups should not have gotten more financial assistance than Rs. 10 lakh.
Key Features of the Scheme
- Over the next four years, it will assist 4000 startups via 350 incubators.
- DPIIT has appointed an Experts Advisory Committee (EAC) to oversee the comprehensive administration and oversight of the Scheme.
- The committee will disburse funds to the chosen qualified incubators, up to Rs. 5 crore.
- Grants of up to Rs. 20 lakh would be given to entrepreneurs by the chosen incubators to verify proof of concept, model development, or product testing.
- Using convertible debentures or debt-linked securities, investments of up to Rs. 50 lakh would be given to businesses for market entrance, commercialisation, or scaling up.
Expected Benefit
Since smaller cities in India frequently lack adequate finance, it would aid in building a strong startup environment in Tier 2 and Tier 3 areas.
Initiative for Startups in India
It plans to create a strong startup ecosystem in the nation to foster innovation and provide aspiring business owners with opportunities. It debuted that year.
The following three areas are the main emphasis of this initiative’s action plan
- Simplifying and supporting.
- Funding, encouragement, and rewards.
- Partnerships and incubation between industry and academia.
Associated Government Initiatives
- Startup Innovation Challenges: This is an excellent chance for startups to make the most of their connections and financing efforts.
- The National Startup Awards: These are designed to honour and reward exceptional entrepreneurs and ecosystem builders, promoting economic vibrancy by fostering innovation and introducing competition.
- States’ Support for Startup Ecosystems Ranked by: It is an advanced evaluation tool designed to increase State and UT assistance for the comprehensive development of respective startup ecosystems.
- Startup Conference for SCO: To create and enhance startup ecosystems cooperatively, the Shanghai Cooperation Organization (SCO) organised its first-ever Startup Forum in October 2020.
- Prarambh: The “Prarambh” Summit strives to give companies and young people from all over the world a platform to present fresh concepts, inventions, and innovations.
Let’s talk about the Department for Promotion of Industry and Internal Trade
- In January 2019, the department’s last name, the Department of Industrial Policy & Promotion, was changed to DPIIT.
- The Ministry of Commerce is responsible for it.
- The department was granted responsibility for e-commerce-related issues in 2018 and internal trade, the well-being of business owners and their staff, and startups in 2019.
- By enabling investments in innovative and emerging technology, foreign direct investment, and supporting the balanced growth of industries, DPIIT’s goal is to stimulate and expedite industrial expansion in the nation.
