What is Startup India Seed Fund Scheme? Amount, eligibility & key features explained

Startups: Launched in 2021, this scheme provides financial assistance to startups for proof of concept, prototype development, product trials, market-entry and commercialisation. Eligible startups can apply for the scheme on the startup India portal.

The seed fund is disbursed to selected startups through eligible incubators across India.

These are the key features of the scheme:

>> There is a year-round ‘call for applications’ for incubators and startups

>> This is sector-agnostic

>> There is no mandatory physical incubation

>> This is a PAN-India startup programme

>> Startups are free to apply to three incubators at the same time.

Amount of funding

>> Up to ₹20 lakhs as a grant for validation of proof of Concept, prototype development, or product trials. .

>> Up to ₹50 lakhs of investment given for market entry, commercialisation, or scaling up through convertible debentures or debt or debt-linked instruments.

>> Seed funds are meant to be used by startups for the creation of any facilities and shall be utilised for the purpose it has been granted for.

Eligibility for a startup to apply:

I. Two years: A startup incorporated not more than two years ago at the time of application.

II. Business idea: Startups must have a business idea to develop a product or a service with market fit, viable commercialisation, and scope of scaling.

III. Solve the problem: A 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.

IV. Innovation: 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, defense, space, railways, oil and gas, textiles, etc.

V. Limited support: The startup should not have received more than ₹10 lakhs 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.

VI. Indian entity: Shareholding by Indian promoters in the startup should be at least 51 percent at the time of application.

VII. Different options: A startup applicant can avail seed support in the form of grants and debt/convertible debentures each once as per the guidelines of the scheme.

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