The document provides details about the Startup India Seed Fund Scheme (SISFS), including its introduction, need, objectives, operations, features, eligibility criteria for startups and incubators, application process, selection factors, and frequently asked questions. The key points are:
1. SISFS aims to help startups with proof of concept, prototype development, product trials, market entry and commercialization through eligible incubators.
2. It intends to support 3,600 entrepreneurs with up to Rs. 20 lakhs in grants and Rs. 50 lakhs in debt through 300 incubators over four years.
3. Startups must be DPIIT-recognized and incorporated less than two years
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Encourage Entrepreneurship in India with Seed Funding Scheme
1. startease
An Effort to Encourage
Entrepreneurship in India
Startup India
Seed Fund
Scheme
2. Content
Content
List of points
covered
1. Introduction to
the Seed Find scheme
2. Need for
the Seed Find scheme
3. Objectives of
the Seed Find scheme
4. How the seed fund scheme
will operate?
5. Features of
the Seed Find scheme
6. Eligibility of Startups
for application
7. Eligibility of Incubators
for application
3. Content
Content8. Procedure for application
to the seed fund scheme
9. Factors for selection
to the seed fund scheme
10. FAQs about the scheme
5. Introduction | 01
The Government of India's Start up India initiative aims to create a
strong start up ecosystem in the country to foster innovation and
provide chances for aspiring entrepreneurs.
This Action Plan outlined a strategy for creating a favorable startup
environment in India.
On January 16, 2016, the Hon'ble Prime Minister launched a Startup India
Action Plan that included 19 action points.
Startup Action plan launched
As a result, a slew of initiatives has been launched to support startups.
One such plan, the Startup India Seed Fund Scheme (SISFS), gives
financial help to early-stage enterprises.
LAUNCH
7. Need for the scheme | 02
Seed capital is critical for firms with new ideas to undergo
proof of concept trials.
Startups can only get funding from angel investors and
venture capital firms when they have demonstrated their
concept.
Similarly, banks only lend to applicants who have assets to
back up their claims.
The Obstacles
Having easy access to financing is critical for entrepreneurs
in the early phases of their business development.
The Goal
The DPIIT has established the Startup India Seed Fund
Scheme (SISFS) with a budget of INR 945 crore to help
entrepreneurs with Proof of Concept, technical feasibility,
product trials, entry into the market, and monetization.
In the next four years, it expects to support 3,600 entre-
preneurs through 300 incubators.
The Solution
9. Objectives | 03
This would allow these firms to progress to the point where they might seek
funding from angel investors or venture capitalists, as well as obtain loans from
commercial banks or financial institutions.
01 02 03
05 04
Proof
Of concept
Prototype
development
Product
Trials
Commercialization
Market
Entry
TESTED
BY EXPERTS
The Startup India Seed Fund Scheme (SISFS) intends to help entrepreneurs
with proof of concept, prototype development, product trials, market -
entry, and commercialization.
SISFS helps in early stages
11. How will scheme operate | 04
Department for Promotion of Industry
and Internal Trade
Nodal Department
DPIIT
Experts Advisory Committee
Nodal Department
EAC
Govt assisted/Not-Govt assisted
Incubators
Operational for at least 2-3 years
Incubators
DPIIT-recognised Startups
Incorporated less than 2 years ago
Startups
The Seed Fund will be disbursed to eligible startups through
eligible incubators across India:
13. Features | 05
SISFS has the following features:
The ‘Call for Applications' for Incu-
bators and Startups is open all year.
Sector-agnostic
There is no requirement for
physical incubation.
Startup India is a pan-India
initiative.
Startups can apply to three
incubators at the same time.
01
02
03
04
05
SECTORS
2.
3.
4.
5.
6.
1.
15. Eligibility of startups | 06
A startup, recognized by DPIIT, incorporated not more than 2 years ago at the time
of application.
DPIIT Recognized Startup:
The startup must have a business idea to develop a product or a service with a
market fit, viable commercialization, and scope of scaling.
Ready Business idea:
The startup should be using technology in its core product or service, or business
model, or distribution model, or methodology to solve the problem being targeted.
Tech focused Core product/ Service
Following are the list of Startup eligibility criteria:
01
02
03
https://www.startupindia.gov.in/content/sih/en/startupgov/startup
-recognition-page.html
To get DPIIT-recognized, please visit
16. Eligibility of startups | 06
Preference would be given to startups creating innovative solutions in sectors
such as social impact, waste management, water management, financial inclu-
sion, education, agriculture, food processing, biotechnology, healthcare, energy,
mobility, defence, space, railways, oil and gas, textiles, etc.
Innovative solutions based startups preferred
Startup should not have received more than Rs 10 lakh of monetary support under
any other Central or State Government scheme.
This does not include prize money from competitions and grand challenges, sub-
sidized working space, founder monthly allowance, access to labs, or access to
prototyping facility.
Monetary support recieved < 10 lakhs
Shareholding by Indian promoters in the startup should be at least 51% at the time
Indian promoters’ shareholding > 51%
04
05
06
17. Eligibility of startups | 06
of application to the incubator for the scheme, as per Companies Act, 2013 and
SEBI (ICDR) Regulations, 2018.
A startup applicant can avail seed support in the form of grant and debt/convert-
ible debentures each once as per the guidelines of the scheme.
Seed support can be availed once
07
19. Eligibility of Incubators | 07
Following are the list of Incubators eligibility criteria:
Following types of legal entities are allowed:
A society registered 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 the
Companies Act 2013, or
A statutory body created through an Act of the legislature
The incubator must be a legal entity:
The incubator should be operational for at least two years on the date of applica-
tion to the scheme.
Operational for two years:
The incubator must have facilities to seat at least 25 individuals.
Seats > 25
_
01
02
03
20. Eligibility of Incubators | 07
The incubator must have at least 5 startups undergoing incubation physically on
the date of application.
Physical incubations > 5
_
The incubator must have a full-time Chief Executive Officer, experienced in busi-
ness development and entrepreneurship, supported by a capable team responsi-
ble for mentoring startups in testing and validating ideas, as well as in finance,
legal, and human resources functions.
Headed by experienced CEO
The incubator should not be disbursing seed fund to incubatees using funding
from any third-party private entity.
Funding from third party entities not allowed
Government assistance required
04
05
06
07
21. Eligibility of Incubators | 07
The incubator must have been assisted by the Central/State Government(s).
In case the incubator has not been assisted by the Central or State Govern-
ment(s):
- The incubator must be operational for at least three years
- Must have at least 10 separate startups undergoing incubation in the incubator
physically on the date of application
- Must present audited annual reports for the last 2 years
Conditions in absence of government assistance
Any additional criteria as may be decided by the Experts Advisory Committee
(EAC)
Decided additional criteria
08
09
25. Factors for selection | 09
Incubators should be chosen based on the following criteria:
Startups will be chosen based on the following criteria:
Meeting the eligibility requirements
The quality of the incubator teams
Infrastructure, testing labs, and so forth.
ISMC's composition ( Incubator seed management committee)
The incubators will form a committee to assess and choose the
startups for the program.
Applicants can apply for seed money to any of the three incuba-
tors that have been chosen as disbursing partners.
The applicants will be shortlisted by the incubators based on their
presentation at IMSC.
Incubators
Startups
Check out the link for further information:
https://dpiit.gov.in/sites/default/files/Guidelines-Fund
Scheme-Startup-29January2021.pdf
27. FAQs | 10
How is the scheme being implemented?
The Department for the Promotion of Industry and Internal Trade (DPIIT) will form
an EAC (Experts Advisory Committee) to oversee the scheme's development,
execution, and monitoring.
What are the advantages of the scheme?
This program will help to create a startup ecosystem.
Incubators would provide financial help to startups in the amount of Rs.50 lakhs.
The scheme will support 3600 entrepreneurs through 300 incubators.
01. What is the maximum amount of seed money a firm can obtain under the
scheme?
A grant of up to Rs. 20 lakhs for proof of concept, prototype development, or
product trials validation. The award will be paid out in stages dependent on
milestones.
Up to Rs. 50 lakhs in convertible debentures, debt, or debt-linked instruments
for market entry, commercialization, or scaling up.
According to the scheme's requirements, a startup applicant can receive
seed funding in the form of a grant and debt/convertible debentures at the
same time.
The Scheme and Eligibility Criteria
28. FAQs | 10
01
02. Can I apply for the scheme as a solo entrepreneur or do I need to form a
group?
Individual entrepreneurs are not eligible to apply for financial assistance under the
scheme. Only DPIIT-approved startups are eligible to apply for the SISFS.
03. Does the program promote companies in specific industries?
SISFS is a sector-neutral program, which means that companies from any
industry can apply.
Startups developing innovative solutions in areas such as social impact, waste
management, water management, financial inclusion, education, agriculture,
food processing, biotechnology, healthcare, energy, mobility, defense, space,
railways, oil and gas, textiles, and others would be given priority.
04. Are there any educational requirements for founders who want to apply for
SISFS?
Founders are not required to have a certain level of education to apply for SISFS.
05. Do any of the eligibility criteria have any exceptions?
No, none of the eligibility criteria have any exceptions. At the time of application
submission, all of the criteria must be met.
06. What does it mean to be a DPIIT-recognized startup?
If it's a Limited Liability Partnership, a Private Limited Company, or a Regis-
tered Partnership Firm.
29. FAQs | 10
02
03
04
05
07. What can I do with the seed money?
Seed funds must not be used for the construction of any facilities by startups.
A grant can be used to validate a Proof of Concept, construct a prototype, or
conduct product trials.
A debt/convertible debenture can be used to enter the market, commercialize
a product, or scale up a business.
To get DPIIT-recognized, please visit:
https://www.startupindia.gov.in/content/sih/en/startupgov-
/startup-recognition-page.html
If it has been up to ten years since its incorporation/registration
If its annual turnover has not exceeded INR 100 crore in any of the previous
financial years.
If it is working toward product or process or service innovation, develop-
ment, or improvement, or if it is a scalable business model with a strong
potential for job creation or wealth creation.
It should not have been founded by dismantling or reorganizing an existing
firm.
30. FAQs | 10
A grant and a debt/convertible debenture are two types of funding instruments
that can be used to meet the demands of a company. It should be up to the
startup applicants to make the final decision on this.
01. How come the application form allows me to apply to three different incuba-
tors?
The scheme attempts to increase the chances of each business applicant
receiving initial funding. It also intends to provide an opportunity for entrepre-
neurs to be supported by an appropriate incubator that can provide them
with the necessary mentoring.
As a result, we provide companies with the option of applying to three differ-
ent incubators based on their preferences.
For example, if a firm is chosen by both Preference 1 and Preference 2 incuba-
tors, money will be provided by Preference 1 incubator. If Preference 1 declines
and Preference 2 accepts, financing will be provided by Preference 2, and so
on.
02. How do I select the incubators to which I should apply?
Startup applicants should fill out the incubator preference form at their discretion.
Applicants can select incubators based on their industry, stage of development,
business needs, and strategic objectives.
03. I see the possibility of applying for a grant, a convertible debenture, or a loan
instrument. What is the distinction between these two? How do I make a deci-
sion?
Application Process
31. FAQs | 10
Criteria Details
Details
Stage
Need
Catered by
the fund
Max.
funding
amount
Ideation Stage
Validation of Proof of
Concept, or Prototype
development, or Product
trials
Upto Rs. 20 Lakhs
Financing
Terms
Under this scheme, the
grant will be disbursed
in milestone-based
installments. These
milestones can be
related to development
of prototype, product
testing, building a
product ready for
market launch, etc.
Commercialization & Scale-up
stage
Market entry, Commercialization,
or Scaling up
Upto Rs. 50 Lakhs
For startups being supported
through convertible debentures, or
debt, or debt-linked instruments,
funds shall be provided at a rate of
interest of not more than prevailing
repo rate. The tenure should be fixed
at the time of sanctioning the loan
by the incubator, which shall be not
more than 60 months (5 years). A
moratorium of up to 12 months may
be provided for the startups.
Because of the early stage of the
startups, this shall be unsecured and
no guarantee from promoter or
third-party will be required.
32. FAQs | 10
05. Will the information I enter on the application form be kept private?
All proposals received under the initiative are kept confidential by us. Your appli-
cation is solely shared with the incubators you apply to for evaluation purposes
and with the EAC for monitoring purposes.
06. Do I have to be physically present on the grounds of an incubator to get seed
monies under this scheme?
It is not necessary to be physically present at the incubator to apply for the plan.
Both parties must communicate every 30 days for startups that are being
watched virtually by the incubator.
This is to ensure that an incubator can maintain track of a startup's growth and
that a startup can get advice from the incubator on how to grow its firm.
07. Can I reapply for the Startup India Seed Fund Scheme after being rejected
the first time?
Yes, you can apply to the SISFS again after 3 months of receiving a rejection. This
buffer time is given to ensure that you have worked on the feedback received
from incubators and are ready to be considered again.
33. FAQs | 10
Criteria Details
Is there a need for
this Idea?
Market size, what market gap is it filling, does it
solve a real-world problem?
01. Who is going to review my application?
Application of each startup will be reviewed by an Incubator Seed Management
Committee (ISMC) formed by the incubators you apply to.
The committee will also be responsible for future assessment of the performance
of the startup and disbursement of further tranches.
Each ISMC constitutes of the following members:
02. What are the parameters for evaluation of startup applicants?
Nominee of Incubator (Chairman)
A representative from the State Government’s Startup Nodal Team
A representative of a Venture Capital Fund or Angel Network
A domain expert from Industry
A domain expert from academia
Two successful Entrepreneurs
Any other relevant Stakeholder
Evaluation Process
34. FAQs | 10
01
Criteria Details
Feasibility
Potential Impact
Novelty
Feasibility and reasonability of the technical claims,
the methodology used/ to be used for PoC and
validation, a roadmap for product development
Customer demographic & the technology’s effect
on these, national importance (if any)
USP of the technology, associated IP
Team
Strength of the team, Technical and business
expertise
Fund Utilization Plan Roadmap of money utilization
Additional Parameters
Any additional parameters considered appropri-
ate by the incubator
Presentation Overall assessment
03. What is the process of evaluation?
The startups shall be selected through an open, transparent and fair process,
comprising, inter-alia:
Startups submit their application on the Startup India portal and an email
confirmation is shared with them. Applicants can apply for seed fund to any
three incubators selected as disbursing partners for this scheme in order of
their preference.
35. FAQs | 10
02
03
04
05
Criteria Details
Feasibility
Potential Impact
Novelty
Feasibility and reasonability of the
technical claims, the methodology
used/ to be used for PoC and validation,
a roadmap for product development
Customer demographic & the technolo-
gy’s effect on these, national impor-
tance (if any)
USP of the technology, associated IP
Is there a need for
this Idea?
Market size, what market gap is it filling,
does it solve a real-world problem?
Weightage
p
q
r
s
All applications received will be shared online with respective incubators for
further evaluation.
For all incomplete applications, a prompt of resubmission will be sent to the
startup.
The incubators shall shortlist applicants as per eligibility criteria.
Eligible applications will be evaluated by Incubator Seed Management Com-
mittee (ISMC) using the following criteria:
36. FAQs | 10
06
07
08
Team
Strength of the team, Technical and
business expertise
Fund Utilization Plan Roadmap of money utilization
Additional Parameters
Any additional parameters considered
appropriate by the incubator
Presentation
Weightages for criteria (p, q, r, s, t, u, v, w) may be assigned by each incubator
differently
100%
Overall assessment
Criteria Details Weightage
t
u
v
w
Incubator may shortlist applicants based on their evaluation for a presenta-
tion before ISMC
ISMC shall evaluate applicants based on their submissions and presenta-
tions and select startups for Seed Fund within 45 days of receipt of applica-
tion
Selected startups shall receive seed funding under the respective incubator
that selects them as beneficiaries as per their preference shared during
37. FAQs | 10
09
10
application (for example, if incubators at Preference 1 and Preference 2 both
select a startup, the funding shall be given by Preference 1 incubator. If Pref-
erence 1 incubator rejects and Preference 2 incubator selects, the funding
shall be given by incubator at Preference 2, and so on.)
All applicants will be able to track the progress of their application on the
Startup India portal on a real-time basis
Applicants who are rejected will also be notified through email
Once the startup has submitted its seed fund scheme application, a dashboard
can be accessed using their login credential to check the real-time application
status
38. FAQs | 10
01. I had filled an order of preference for incubators while applying. Can I
change this preference order after application?
Applications once filled and submitted are final. The preference order of the incu-
bator cannot be changed at a later stage.
02. I have been selected for seed fund, but the quantum of fund/ terms and
conditions being set by the incubator are not agreeable to me. What should I
do?
The quantum and terms for the seed fund assistance are to be negotiated be-
tween the startup and the incubator only.
The mandatory elements of the scheme can be seen in the Guidelines on:
https://dipp.gov.in/sites/default/files/Guidelines-Fund-
Scheme-Startup-29January2021.pdf,
anything beyond this can be negotiated. In case of any issue, kindly reach out to
us using grievance form at:
https://seedfund.startupindia.gov.in/contact
After Selection of Startups
39. FAQs | 10
03. I need to hire a legal or financial consultant for my seed fund discussions
with the incubator. Who will bear the cost of these services?
The startup shall bear the cost of any consultants required to guide them through
documentation, negotiations with incubator, signing of agreement with incubator,
reporting progress after approval of seed fund, etc.
Hiring such an external consultant is not mandatory at all, and shall be at the
discretion of the startup.
04. I have been selected for seed fund. Is it mandatory to sign a legal agree-
ment with the incubator?
Yes, it is mandatory to sign a legal agreement with the incubator to avail the seed
fund you have been granted.
05. I had applied for a certain amount of seed fund, but the approved amount is
lower/higher. Can I negotiate this?
The applicant can discuss the quantum of seed fund and the milestones associ-
ated with the tranches to be disbursed with the Incubator Seed Management
Committee. The decision of the Committee shall be final.
06. Will my living expenses be borne if I want to be physically incubated at the
incubator that is funding me?
The selected incubator shall provide physical infrastructure to the selected start-
ups for regular functioning, support for testing and validating ideas, mentoring for
40. FAQs | 10
prototype or product development or commercialization, and developing capaci-
ties in finance, human resources, legal compliances, and other functions. They are
also expected to provide networking with investors and opportunities for show-
casing in various national and international events. Any other expenses, including
living expenses, shall be borne by the startup.
07. How much time will it take for the first installment of the seed fund to be
released to me?
For grants, the first installment to any selected startup shall be released not more
than 60 days from receipt of application from the startup.
The startup shall submit the interim progress update and utilization certificate to
initiate the release of subsequent installment of grant.
For debt or convertible debentures, a similar timeline will be aimed but it is under-
stood that due diligence and documentation in these cases can be sometimes
time-consuming.
08. Where can I receive the seed funds?
Startups will receive the funds in their company bank accounts.
09. Where can I receive the seed funds?
Each startup will be required to touch base with the incubator team and share
updates with them at least once in 15 days via videoconferences or physical
meetings. These updates should be shared on the scheme dashboard at least on
41. FAQs | 10
01
02
a monthly basis. In case of milestone-based disbursements, startup shall submit
the interim progress update and utilisation certificate to initiate the release of
subsequent installment of grant. Startup shall also submit final report and audited
utilisation certificate at the end of the project duration.
10. I have been selected for seed fund, but I would not like to take the process
forward. What do I do?
A startup can choose to not avail the support being offered to them under the
scheme. The procedure for the same depends on the stage of the startup in the
application process.
If the startup has been selected and the seed funding has been approved,
they will be required to write a short letter mentioning the reason to pull out
of the process.
Post the acknowledgment of the letter, they will find a cancel application
button on the application tracker tab of their dashboard which will allow
them to cancel their application.
If the startup has already received any seed fund, it will be required to write
a short letter mentioning the reason to pull out of the process.
Post acknowledgment of the letter, they will be required to return the fund
within 15 days.
Post the acknowledgment of refund, they will find a cancel application
button on the application tracker tab of their dashboard
42. FAQs | 10
11. What if my startup fails after receiving the seed fund? Will there be any liabil-
ity on me or my company?
It is understood that every startup cannot be successful. The legal agreement that
you sign with the incubator will have provisions related to failure of startups sup-
ported under the scheme.
For failed ventures, the entrepreneur shall share his/her learnings and the reasons
for failure in the report and submit this along with the utilization certificate for the
fund amount.
12. I have some complaints regarding the incubator funding me. Who shall I
reach out to?
In case of any issue, kindly reach out to us using grievance form at
https://seedfund.startupindia.gov.in/contact
43. startease
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Our mission is to ease the business setup process.
To allow visionary entrepreneurs walk in with their ideas and
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