Easy availability of capital is essential for entrepreneurs at the early stages of growth of an
enterprise. Funding from angel investors and venture capital firms becomes available to startups
only after the proof of concept has been provided. Similarly, banks provide loans only to asset-
backed applicants. It is essential to provide seed funding to startups with an innovative ideas to
conduct proof of concept trials.
SP-TBI with the help of Startup India Seed Fund Scheme (SISFS) aims to provide financial assistance
to startups for proof of concept, prototype development, product trials, market entry and
commercialization. This would enable these startups to graduate to a level where they will be able to
raise investments from angel investors or venture capitalists or seek loans from commercial banks
or financial institutions.
The SISFS provides up to INR 20 Lakhs as grant for validation of Proof of Concept, or prototype
development, or product trials. The grant shall be disbursed in milestone-based installments. These
milestones can be related to the development of a prototype, product testing, building a product
ready for market launch, etc.
And this scheme provides up to INR 50 Lakhs of investment to the startups for market entry,
commercialization, or scaling up through convertible debentures or debt or debt-linked instruments.
The Indian startup ecosystem suffers from capital inadequacy in the seed and ‘Proof of Concept’ development stage. The capital required at this stage often presents a make-or- break situation for startups with good business ideas.
Many innovative business ideas fail to take off due to the absence of this critical capital required at an early stage for proof of concept, prototype development, product trials, market entry and commercialization.
Seed Fund offered to such promising cases can have a multiplier effect in validation of business ideas of many startups, leading to employment generation.
The eligibility criteria for a startup to apply under the Startup India Seed Fund Scheme shall be as
A startup, recognized by DPIIT, incorporated not more than 2 years ago at the time of application
Startup must have a business idea to develop a product or a service with market fit, viable
commercialization, and scope of scaling
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
Preference would be given to startups creating innovative solutions in sectors such as social impact, waste management, water management, financial inclusion, education, agriculture, food processing, biotechnology, healthcare, energy, mobility, defence, space, railways, oil and gas, textiles, etc.
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, subsidized working space, founder monthly allowance, access to labs, or access to a prototyping facility.
Shareholding by Indian promoters in the startup should be at least 51% at the time of application to the incubator for the scheme, as per the Companies Act, 2013 and SEBI (ICDR) Regulations, 2018.
A prototype grant up to INR 20 Lakhs for validation of Proof of Concept, or prototype development, or product trials.
An investment of up to INR 50 Lakhs in the form of convertible debentures or debt or debt-
linked instruments for market entry, commercialization, or scaling up.