Union Commerce and Industry Minister Piyush Goyal has unveiled Startup India Seed Fund Scheme (SISFS) to handhold and financially support early-stage startups across 300 incubation centres. The scheme was announced by Prime Minister Narendra Modi in January to support startups and help budding entrepreneurs pursue innovative ideas.

At the Startup India’s international summit, ‘Prarambh’, PM Modi had said that his government is trying to “create a startup system, which is based on the mantra ‘of the youth, by the youth, for the youth’.

There are over 41,000 startups in the country and 44% of these ventures are officially recognized. More than 5,700 startups are in information technology (IT), around 3,600 in healthcare, and over 1,700 in agriculture. “These startups are changing the demographic character of business. India today is one of the biggest nations in the startup ecosystem," Modi had said.

It is in implementation since April 1, 2021. The Rs 945 crore corpus will be divided over the next four years for providing seed funding to eligible startups through eligible incubators across India.

According to the commerce ministry, the fund is expected to benefit around 3,600 startups and boost the startup ecosystem, particularly in tier-2 and 3 cities. The fund aims to provide financial assistance to startups for proof of concept, prototype development, product trails, market entry, and commercialization.

"The idea behind the scheme is to ensure adequate availability of funds, particularly to startups with good ideas in different fields. I do hope that this scheme will support our domestic entrepreneurs and their business ideas that often cannot take off due to the absence of critical capital at an early stage," says Goyal.

He also exuded confidence that the scheme will secure seed funding, inspire innovation, support transformative ideas, and facilitate the implementation of those ideas.

He went on to say that smaller towns frequently lack adequate funding and that this scheme would help to build a strong startup ecosystem in India's Tier II and Tier III regions.

Experts Advisory Committee (EAC) constituted by the government will be responsible for the overall execution and monitoring of the scheme.

Over 7,500 new startups are incorporated every year and it is essential to provide seed funding to startups with innovative ideas to conduct their 'Proof of Concept'.

The scheme is being launched by DPIIT (Department for promotion of Industry and Internal Trade) to support this early-stage startup funding. The online portal created by DPIIT for the scheme will allow incubators to apply for funds under it.

Eligible incubators selected by the EAC will receive grants of up to Rs 5 crore. Startups will be eligible for grants of up to Rs 20 lakh from the selected incubators to validate their Proof of Concept, prototype creation, or product trials.

Additionally, convertible debentures or debt-linked instruments can be used to provide up to Rs 50 lakh in funding to startups for market entry, commercialization, or scaling up.

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