All about Start-Up India Fund Scheme (SISFS)

India is on a mission to build a robust start-up ecosystem. This entire blog will be focused on one of the start-up schemes that is, the Start-up India Seed Fund Scheme(SISFS).  Start-up India was first announced by the Indian Prime Minister, Shri Narendra Modi during his speech on eve of Independence day 2015. His was first launched on 16/01/2016 by the former Finance Minister of India Arun Jaitley.

The government of India has launched various schemes to develop and encourage entrepreneurship throughout India. Some of the schemes are SAMRIDH Scheme; Start-up India Initiatives; Start-up India Seed Fund Scheme; Pradhan Mantri Mudra Yojana(PMMY); ATAL Innovation Mission; and many more.

Start-up India Seed Fund Scheme (SISFS)

Indian Prime Minister, Narendra Modi announced the launch of this scheme on 16/01/20021. The worth INR announced was 1,000 crores. In the central government, April 2021 rolled out SISFS intending to provide financial assistance to Indian start-ups. Start-up India Seed Fund Scheme got Rs. 283.5 crore in the 2022-23 budget, which is higher than the revised estimated of about Rs. 100 crores.

Star-up India seed fund scheme is led by the department of promotion of industry and internal trade (DPIIT). Seed funding to qualifying entrepreneurs for the proof concept development through incubators all over India is provided by SISFS. The seed fund helps those entrepreneurs to apply for loans from financial institutes or commercial banks. A collaborative programme designed keeping in mind to help new start-ups is start-up incubators.

The objective of the Start-up India Seed Fund Scheme (SISFS) 

Following are the main objective behind launching this scheme on the eve of the fifth anniversary of the start-up India programme:

• To provide financial assistance to start-ups;
• Help entrepreneurs with the proof of concept, product trials, market entry, prototype development and commercialization;
• To provide financial help up to Rs. 50 lakhs even at an early phase of the business;
• To be an Angle investor or venture capitalist for those firms which might seek funding in the middle of their progress.

Features of SISFS

Following are the features of the Start-up India Seed Fund Scheme:

• There is a year-round ‘call application’ for start-ups and incubators. This means one can apply at any time for the benefits of the scheme.
• This scheme is sector–agnostic
• There is no mandatory physical incubation
• Start-ups can apply to three incubators simultaneously.
• The overall execution and monitoring of the scheme are done by an expert advisory committee (EAC).
• This fund is single time.

Eligibility Criteria for Start-up to avail the benefit of SISFS 

Every scheme has certain eligibility criteria to avail of the benefit of that scheme. Following are some of the eligibility criteria for a start-up India seed fund scheme:

• The start-up which recognized by DPIIT (Department for Promotion of Industry and Internal Trade) and incorporated not more than 2 years after the date of applying.
• Start-ups should have a business idea for the development of a product or a service with a market fit, scope for scaling, and viable commercialization.
• To solve the problems being targeted start-up should be using technology in its core business, service, or method of production and distribution.
• The start-up which creates innovative solutions in the sectors of agriculture, biotechnology, food processing, defence, space, oil, textile, health care, energy, waste and water management, and many more services which have social impacts, would be given preference as compared to other start-ups.
• At the time of application to the incubators, the shareholding by Indian promoters in the start-up should at least be 51% according to SIBI (ICDR) regulations, 2018 and Companies Act, 2013.
• Start-up at the time of application should not have received more than Rs. 10 lakhs monetary support from other schemes from both central and state government, but the prize money from the competitions and grand challenges, founder monthly allowance, etc. do not include monetary support.

Application Procedure for start-ups under SISFS

The application procedure for the entrepreneurs seeking seed funds from incubators is such as:

• Firstly, visit the official website of the Start-up India Seed Fund scheme.
• Click the ‘Login’ button on the right-hand side of the homepage.
• Select the ‘create Account’ option at the bottom of the login tab.
• Then the ‘star-up India’ websites registration page will open.
• After filling in all the details like name, email, address, phone number and password, click on the ‘Register’ button.
• After entering the OTP sent, select the ‘submit’ button.
• Click on ‘Apply Now button on the right-hand side of the homepage to get to the official website of the Start-up India Seed Fund Scheme.
• Under the ‘For Start-up’ option, click the ‘Apply Now button and log in with the username and password created on the Star-up India website.
• The application form will appear on the screen. After filling in all the details and uploading all the documents click the ‘Submit’ button.
• After clicking the ‘submit’ button the application will move further for the selection of the start-up for seed funding.

Eligibility criteria for Incubators under SISFS

Following are the eligibility criteria for an incubator for applying for Start-up India Seed Fund Scheme:

• Incubator should be a legal entity.
• It should be a society whose registration is under the Societies Registration Act,1860, or
• A trust registered under the Indian Trusts Act, 1882, or
• A Private Limited company registered under the Companies Act 1956 or under the Companies Act 2013.
• A statutory body created through an Act of the legislature.
•  The incubator should have been operating for at least two years at the time of application.
• Not less than 25 people must be able to sit in the incubator.
• The incubator must have at least 5 start-ups in physical incubation. The incubators must have a capable CEO with experience in business development and entrepreneurship, as well as a finance, legal and human resources, team to mentor start-ups in testing and validating dates functions.
• The incubator should not disburse seed money to incubates using funds from any private entity.
• Incubators must have received aid from both central and state governments.
• Any other criteria that the Experts Advisory Committee thinks to be necessary.
•  In the case where incubators did not receive any help fromthe central or state government:
• The incubator must be operational for at least three years
• Must present the last two year’s audited annual reports
• May have at least ten-year separate star-ups undergoing incubation in the incubators.

Application procedure for Incubators under Start-up India Seed Fund Scheme

Following are the application procedure for incubators under Start-up India Seed Fund Scheme is:

• Firstly, visit the official website of the Start-up India Seed Fund scheme.
• Click the ‘Login’ button on the right-hand side of the homepage.
• Select the ‘Create an account’ option at the bottom of the login tab.
• Then the ‘Star-up India’ websites registration page will open.
• After filling in all the details like name, email, address, phone number and password, click on the ‘Register’ button.
• OTP will be sent on the registered mobile number. After entering the OTP, select the ‘submit’ button.
• Click on the ‘Apply Now’ button on the right-hand side of the homepage to get to the official website of the Start-up India Seed Fund Scheme.
• Under the ‘For Incubators’ option, click the ‘Apply Now’ button and log in with the username and password created on the Star-up India website.
• After selecting the country, type in the letters in an input box, and click the ‘Next’ option.
• The application form will appear on the screen. After filling in all the details, click the ‘Save Profile’ button.
• The profile will be emailed to a moderator for approval. Log on to the Start-up India Seed Fund Scheme official website when the application is approved.
• After this click ‘Apply Now’ under the seed money plan.
• Fill out the basic information on the application form like incubator support, incubator team information, fund requirement information and many more.
• Then, after uploading the documents required click the ‘Submit’ button.

Experts Advisory Committee (EAC)

DPIIT creates the expert advisory committee (EAC). This committee is in charge of all execution and supervision of the Star-up India Seed Fund Scheme. They also assess and choose incubators for seed fund allotment, monitor progress, and take all the necessary steps to ensure that the fund given are used efficiently to achieve the goals of the Start-up India Seed Fund Scheme.

Process Post Funding for Start-ups

Every beneficiary of this scheme must present the reports to their incubators periodically. The incubators will also track the following for each beneficiary start-up and the content of the reports includes:

• Proof of concept
• Prototype development
• Turnover of start-ups
• Progress of product development and field trials
• Progress of market launch
• Quantum of loan, angel or VC funding raised
• Jobs created by start-up
• and, Any other appropriate parameter

The incubators will offer the above data to Start-up India in real-time via their web dashboards and will submit it to the EAC within three months. The incubators will also report about every Start-up’s return on investment.

Conclusion

Therefore, it is clear from the above that, the start-up India seed fund scheme is led by the department of promotion of industry and internal trade (DPIIT). Seed funding to qualifying entrepreneurs for the proof concept development through incubators all over India is provided by SISFS. Further, the seed fund helps those entrepreneurs to apply for loans from financial institutes or commercial banks. DPIIT creates the expert advisory committee (EAC). Further, this committee will be in charge of over execution and supervision of the Star-up India Seed Fund Scheme.