Startup India Seed Fund Scheme: Apply Online, Eligibility & Benefits

For entrepreneurs, the easy availability of capital is a very important factor in growing their enterprise. Many business ideas do not come into existence because of a lack of capital. So to curb this situation, the Government of India has launched a Startup India Seed Fund Scheme. Through this scheme, the government is going to provide financial assistance to entrepreneurs. Today through this article, we will give you complete details regarding this scheme, like what is the startup India seed fund scheme? Its benefits, objectives, features, eligibility criteria, required documents, application procedure, etc. So if you have the interest to grab every single detail regarding this scheme, then you have to read this article very carefully till the end.

Startup India Seed Fund Scheme 2021

To build a robust startup ecosystem, the Government of India has launched Startup India Seed Fund Scheme on 16th January 2016 to provide to entrepreneurs to grow their enterprise. The announcement to launch this scheme was made by our honorable Prime Minister, Mr. Narendra Modi. Through this scheme, financial assistance up to Rs 50 lakh will provide to the startups at the early stage through incubators. The Government has allocated a budget of Rs 945 crore for this scheme. This fund will use for proof of concept, prototype development, product trial, Market entry, and commercialization. Under this scheme, the Government is going to provide funds to incubators. The incubator will be responsible for providing these funds to the startups further. Three thousand six hundred entrepreneurs through 300 incubators will benefit from the startup India seed fund scheme in the next 4 years.

About Incubators

Incubators are the organizations that work to promote innovation and entrepreneurship among citizens. They provide funds and infrastructure to the startups to carry out their business development, product trial, market entry, commercialization, etc. The government provides incentives to the incubators, and the incubators will further provide funds to the startups. Under the Startup India Seed Fund Scheme 2021, the government will provide a grant to 300 incubators. The funds provided to the startup under this scheme will be up to Rs 50 lakh. The incubators can apply under the startup India seed fund scheme through the official portal. After verifying their application, the government will grant them the seed fund. The startups can also apply under this scheme directly from the portal, and from there, they can select the incubators of their choice according to their preference.

Key Highlights Of Startup India Seed Fund Scheme

Name Of The Scheme Startup India Seed Fund Scheme
Launched By Government Of India
Beneficiary Entrepreneurs
Objective To Provide Funds For Startup
Official Website Click Here
Year 2021
Financial Assistance Up To Rs 50 Lakh
Total Budget Rs 945 Crore
Number Of Beneficiaries 3600

Objective of Startup India Seed Fund Scheme

The main objective of the Startup India Seed Fund is to provide funds to the entrepreneurs for their startups so that they can grow their enterprises. Through this scheme, now entrepreneurs require to go to banks and financial institutions to get funds for their business idea. They can apply through this scheme and get funds directly from the government. Startup India seed fund scheme will fulfill the early requirement of capital at the right time. So that product development, trials, market entry, etc., can occur at the right time. This scheme will also generate a lot of employment and validate the business ideas of startups

Benefits And Features Of Startup India Seed Fund Scheme

  • The Government of India has launched Startup India Seed Fund Scheme 2021 to build a Startup ecosystem.
  • This scheme was launched on 16 January 2016 to provide opportunities for entrepreneurs to grow their enterprises.
  • The announcement to launch this scheme was made by our honorable Prime Minister, Mr. Narendra Modi.
  • Under this scheme, Financial assistance up to Rs 50 lakh will provide startups at an early stage through incubators.
  • The government has allocated a budget of Rs 945 crore for this scheme.
  • This fund will.no used for proof of concept, prototype development, product trial, market-entry, commercialization, etc
  • The government will provide funds to incubators, and the incubators will be responsible for providing this fund to startups.
  • 3600 entrepreneurs through 300 incubators will get the benefit from this scheme in the next 4 years

Implementation Of Startup India Seed Fund Scheme

The department for the promotion of industry and internal trade has constituted an expert advisory committee(EAC) responsible for implementing, executing, and monitoring the startup India seed fund scheme. Department for promotion of industry and internal trade will be the nodal agency to implement this scheme. This committee will verify the details provided by the incubators and select incubators to allow the seed fund. This committee will also monitor the progress of the incubator. The expert advisory committee has the power to make all the necessary actions so that the funds can be utilized efficiently. The expert advisory committee consists of the following members:-

  • Chairman
  • Representative of department of biotechnology
  • Additional secretary/joint secretary/director/deputy secretary, DPIIT
  • Representative of Department of science and technology
  • Financial advisor, DPIIT
  • Representative of ministry of electronics and information technology
  • Representatives of Indian council of agricultural research
  • At least three members nominated by secretary
  • Representative of NITI aayog

Monitoring Of Startup India Seed Fund Scheme

The expert advisory committee will review the progress of the startup India seed fund with the selected incubators. Under this scheme, for objective evaluation, the incubators must provide the report as directed by the expert advisory committee. If the incubator is not performing as per the standards, then the expert advisory committee has the full authority to discontinue the seed fund support. If the incubator is using the fund for other purposes, then legal action will be taken against such an incubator.

Factors Determining The Successful Implementation Of Startup India Seed Fund Scheme

  • Progress of market launch
  • Quantum of loan
  • Progress of field trial
  • Jobs created by startup
  • Progress of product development
  • Turnover of startup
  • Progress of prototype development
  • Progress of proof of concept

Note: All the startups selected to benefit from this scheme are required to provide details on the above parameter to the incubator. The incubator must provide the information given by the startup through the online dashboard and present this information to the expert advisory committee quarterly. Other than that, the incubator is also required to report the return on investment of the startup

Utilisation Of Finance And Accounting Under Startup India Seed Fund Scheme

Under the startup India seed fund scheme, the incubator’s proper utilization of funds should be maintained, and the incubator must maintain the accounting records of the received fund. This record shall be maintained in an exclusive project-specific trust and relation account with any nationalized banks. The funds under the startup India seed fund scheme will be disbursed into the bank account of the incubator in three or more installments as per the guidelines of the scheme. If any net return is received from the startup, then it can be used for further funding. In case there is no further funding, then this money will be returned to DPIIT. Each financial year, every incubator must report the sanctioned funds, received funds, and disbursed funds. Other than that, the incubator is also required to submit a detailed report on the status of utilization of funds and audited expenditure

Guidelines For Assistance To Incubators

  • The expert advisory committee will be responsible for disbursing the grant to the incubators.
  • The expert advisory committee will disburse the grant up to Rs 5 crore to the incubator in 3 or more installments. 
  • The incubator can use the grant only for disbursing it to eligible startups.
  • The expert Advisory Committee has the authority to decide the amount of grant assistance.
  • The incubator cannot use the grant for any other expenses.
  • 5% of seed fund grant will also be provided to the incubator for management fees
  • The incubator is not authorized to use the management fees for other expenses like facility creation or administrative expenses. It has to be used only for management purposes.
  • The first installment of a grant provided to the incubator will be up to 40% of the total approved amount.
  • The incubator will receive the next installment when the cash in hand goes below 10% of the total commitment.
  • The expert advisory committee will release the amount of the next installment within 30 days after submitting proof.
  • From the date of receipt of the first installment, the incubator’s assistance amount should be used within three years.
  • If the incubator has not used 50% of the grant within 2 years, then no further amount will be provided to the incubator, and the incubator is required to return the unutilized fund with interest
  • The startup selected under this scheme are not required to pay any fees
  • The incubator has to provide the physical infrastructure to the startup to maintain regular functioning, support, development, etc.
  • The incubator is also responsible for providing networking with investors.
  • The incubator has to maintain a transparent process of selection of startups.

Selection Procedure Of Startups

  • All the incubators across the country will be invited to participate in the startup India seed funds scheme through the official portal or any other platform which will be specifically designed for this purpose
  • The following points are to be considered while selecting the incubator
    • Number of startups that the incubator intends to support
    • Mentoring provided in last 3 years (number of mentors hired, average mentoring hour, No of IP)
    • Funding support extended in the last 3 years (investment agreement, number of startups, total Corpus, total investment)
    • Incubation support in last 3 years (number of startups, success rate, number of startups that cross revenue of 1 crore in 1 year, survival rate of startup)
    • Availability of infrastructure
    • Fulfillment of eligibility criteria
    • Other support (industry connects, stakeholder engagement)
  • Expert Advisory Committee has the authority to make changes in the guidelines of selection of incubators from time to time
  • The expert advisory committee will also monitor the progress of the grant
  • Incubators can apply under this scheme throughout the year

Selection Procedure Of Startups

  • All the incubators who will apply under the startup India seed fund scheme are required to constitute a committee which will be called as incubator seed management committee. This committee will evaluate and select a startup for a seed fund. This committee consists of the following members:-
    • Representatives from state government startup nodal team
    • Nominee of the incubator(chairman)
    • Representative of venture capital fund or Angel network
    • Two successful entrepreneurs
    • Domain expert from the academy
    • Domain expert from industry
    • Any other relevant stakeholder
  • The expert advisory committee is responsible for selecting the members of the incubator seed management committee
  • The open, transparent, and fair process should be followed while selecting the startup
  • Startups have to submit certain details like team profile, problem statement, product overview, service overview, business model, etc
  • Startups can apply for seed fund in any 3 incubators according to preference
  • All the startups will be selected on the basis of eligibility criteria
  • If an application is rejected then the applicant can apply afresh
  • All the rejected applicants will be informed about the rejection through email
  • Applicants can also track the progress of their application on the official portal
  • The incubator will select the startup and provide seed funding
  • While filling the application form the startup has to provide the preference and according to this preference the startup will be selected
  • The startups are required to give a presentation of their idea before the incubator seed management committee and on the basis of this presentation incubator will shortlist applicants
  • Within 45 days of receipt of the application, the incubator seed management committee will evaluate applicants on the basis of their submission and presentation and select eligible startups

Seed Fund Disbursement To Startups By Incubators

  • All the eligible startups will receive the seed fund under the startup India seed fund scheme as follows:-
  • Up to Rs 20 lakh as grant in the case for validation of proof of concept, prototype development or product trial
  • Up to Rs 50 lakh of investment for market entry, commercialization, and scaling up through convertible debentures of debt or debt linked instruments
  • The startup is not allowed to use this fund for the creation of any facility.
  • In order to address the issues of the applicant, a grievance cell will be set up
  • At the end of the project duration, the startup is required to submit a final report and audited utilization certificate of funds
  • If the venture is failed then the entrepreneur is required to share his learnings and reasons for failure in the report. The report has to be submitted along with a utilization certificate of the fund amount
  • The first installment to the startup will be provided within 60 days of receipt of the application form
  • For receiving the first installment the startup has to submit the interim progress update and utilization certificate
  • The startup will be provided the funds in their company bank account
  • The second installment will be provided to the startup after achieving the previously specified milestone
  • Before the release of the first installment, the incubator is required to execute a legal agreement with the startup in which all the necessary terms and conditions, milestones, etc should be mentioned
  • The incubator can only provide 20% of the total grant received by them to the startups

Eligibility Criteria Of Startup India Seed Fund Scheme

For Startups:

  • The startup should be recognized by DPIIT
  • At the time of application, the startup should be incorporated not more than two years ago
  • The started must have business ideas to develop a product or service which will be fit for the market, has the scope of scaling, and viable commercialization
  • At the time of application to the incubator for the scheme, the shareholding by the Indian promoter in the startup should be at least 51% or more according to the companies act 2013 and SEBI regulation 2018
  • The startup should have not received any support of rupees 10 lakh or more under any Central or government scheme
  • Those startups who are creating an innovative solution in water management, waste management, education, agriculture food processing, etc will be given preference
  • The startup should be using technology in its core product or service in order to solve the problem which is targeted

For Incubators:

  • The incubator must be a legal entity
  • An incubator must be assisted by central or state government
  • The incubator must be operational for 2 years at the time of application
  • The incubator must have the facility to seat at least 25 individuals
  • On the date of application, the incubator should have at least 5 startups that should be undergoing incubation physically
  • A full-time chief executive officer who must be experienced in business development and entrepreneurship should be presented in the incubator which should be supported by a capable team
  • If the incubator is providing funding from any third private entity to the incubatees then that incubator is ineligible
  • If the incubator is not assisted by central or State Government then the incubator must be operational for at least 10 years, must have presented audited annual reports for at least 2 years and at the time of application must have at least 10 separate startups which is undergoing incubation physically

Required Documents To Apply For Startup India Seed Fund Scheme

  • Aadhar card
  • GST number
  • Bank account details
  • Lease agreement
  • Detail report of the project
  • Passport size photograph
  • Mobile number

Procedure To Apply For Startup India Seed Fund Scheme

For Incubators

Startup India Seed Fund Scheme
  • The home page will open before you
  • On the homepage, you have to click on apply now
  • After that, you have to click on apply now under for incubator section
  • Now you have to click on create an account
  • A new page will appear before you
Startup India Seed Fund Scheme
  • On this new page, you have to enter your name, email id, mobile number, and password
  • After that, you have to click on the register
  • An OTP will send to your registered ID
  • You have to enter this OTP into the OTP box
  • Now you have to click on submit
  • After that, you have to click on the login option
  • Now you have to select your country and click on the input letterbox
  • Now you have to click on the next option
  • The Application form will appear before you
  • You have to enter your basic info, contact info, point of contact info, and success stories in this application form
  • After that, you have to click on save profile
  • Now you are profile will send to a moderator for approval
  • You have to again login on to the portal
  • Now you have to click on apply now under the seed fund scheme
  • The Application form will appear before you
  • You have to enter all the required details in this application form like general detail, incubator team detail, incubator support detail, fund requirement details, etc
  • After that, you have to upload all the necessary documents
  • Now you have to click on submit
  • By following this procedure you can apply under the startup India seed funds scheme

For Startups

  • Go to the official website of startup India seed fund scheme
  • The home page will open before you
  • On the homepage, you have to click on apply now
  • After that, you have to click on apply now under the startup section
  • After that application form will appear before you
  • In this application form have to enter all the required details like your name, email address, mobile number, etc
  • After that, you have to upload all the required documents
  • Now you have to click on submit
  • By following this procedure you can apply as a startup under the startup India seed fund scheme

Procedure To Login On The Portal

  • Go to the official website of startup India seed fund scheme
  • The home page will open before you
  • Now you have to click on the login
Login On The Portal
  • After that you have to choose your category which is are as follows:-
  • Now you have to enter your username and password
  • After that, you have to click on the login
  • By following this procedure you can log in to the portal

Contact Us

  • First of all, go to the official website of the startup India seed fund scheme
  • The home page will open before you
  • Now you have to click on the contact
Startup India Seed Fund Scheme
  • A new page will appear before you
  • Enter the following details on this new page:-
  • After that you have to click on submit
Contact Details

Through this article we have provided you all the important information regarding Startup India Seed Fund Scheme. If you are still facing any kind of problem then you can write an email to the concerned department in order to solve your problem. The email ID is [email protected]

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