Introduction
The Department for Promotion of Industry and Internal Trade (DPIIT) has launched the Seed Fund Scheme, aimed at offering financial assistance to early-stage startups in India. This article outlines the process for obtaining grants and loans under this scheme, including eligibility requirements, the application process, and evaluation criteria.
Purpose of the Scheme
Access to financial resources and mentorship is crucial for startups in their initial phases. The Seed Fund Scheme supports innovative startups that aim to address socio-economic issues through technological solutions. This funding is essential for guiding startups from the idea stage to successful implementation.
Eligibility Criteria
To be eligible for the Seed Fund Scheme, startups must meet the following requirements:
- Applicants must be incorporated entities to be considered for Startup India Seed Funds.
- DPIIT recognition is a prerequisite for application.
- Applications must be submitted within two years of the startup's incorporation.
- A viable and scalable business idea is required.
- The core product, service, or business model should incorporate technology to address specific challenges.
- Startups focusing on sectors like social impact, waste management, education, healthcare, and energy will be prioritized.
- The startup must not have received more than ₹10 lakh from any other Central or State Government schemes, with exceptions for prize money or subsidized facilities.
- At least 51% of the startup's shareholding must be owned by Indian citizens.
- Startups should not have previously received seed funding.
- Grants of up to ₹20 lakhs are available for prototype development, product testing, and preparation for market launch.
- Loans can be obtained up to ₹50 lakhs for market entry, commercialization, or scaling, which can be provided through convertible debentures or other debt instruments. Startups are eligible for one grant and one loan but cannot apply multiple times.
- Physical presence at an incubator is not required for participation in the scheme.
- The scheme has a total allocation of ₹945 crore for the period 2021–2025, aiming to support approximately 3,600 startups through 300 incubators.
Required Documentation
To apply, the following documents must be gathered:
- Certificate of Incorporation
- DPIIT Recognition Certificate
- Business PAN
- Registered Office Address
- GST Number
- Aadhaar Card
- Bank Account Details
- Product or Service Description
- Employee Details
- A video presentation showcasing the startup’s product, service, or business model
Evaluation Criteria
The Expert Advisory Committee (EAC), consisting of representatives from government, industry, and academia, establishes the evaluation guidelines. The Incubator Seed Management Committee (ISMC) reviews applications and selects startups for grants or loans based on the following criteria:
- Need: Evaluation of market size, gaps identified, and the problem being addressed.
- Feasibility: Assessment of technical viability, validation strategies, and a development roadmap.
- Impact: Potential effects on target customer demographics and relevance to national challenges.
- Novelty: Examination of unique attributes and intellectual property considerations.
- Team: Analysis of the team's strengths and technological or business expertise.
- Fund Utilization: A clear plan for the intended use of funds.