A flagship programme under the Startup India Initiative, the Startup India Seed Fund Scheme (SISFS) has received approval for an amount of Rs. 477.25 crore from the Ministry of Commerce and Industry.
- An early stage of financing in a start-up or fresh business venture is known as seed funding. The objective of seed investment is to assist the business in getting to a position where it can obtain further funding rounds or start making enough money to support itself.
What is the Startup India Initiative?
- The goal of the Startup India project is to establish a strong startup ecosystem in the nation to foster innovation and give aspiring business owners opportunity.
- In January 2016, the Prime Minister released an Action Plan consisting of 19 Action Points under the Initiative.
- A path for the development of a supportive ecosystem for startups in India was outlined in this action plan.
- Startups at different phases of their business cycle can receive funding from the flagship programmes of the Startup India initiative, which include the Fund of Funds for Startups (FFS), SISFS, and Credit Guarantee Scheme for Startups (CGSS).
What is SISFS?
About:
- On January 16, 2021, the programme was unveiled at the Startup India International Summit.
- A budget of Rs. 945 crore has been allocated by the Department for Promotion of Industry and Internal Trade (DPIIT) to support businesses with funding for Proof of Concept, prototype development, product trials, market entry, and commercialization during a four-year period beginning in 2021–2022.
Execution and Monitoring:
- DPIIT has established an Experts Advisory Committee (EAC) to oversee the overall management and oversight of the Startup India Seed Fund Scheme.
- The EAC will assess and choose incubators to receive Seed Funds, track advancements, and take all required actions to ensure that funds are used effectively to achieve the goals of the Startup India Seed Fund Scheme.
Eligibility:
- A startup that was approved by the Ministry of Commerce and Industry's DPIIT and had only been incorporated for two years at the time of application.
- More than Rs. 10 lakhs in funding should not have been given to startups under any other Central or State government programme.
- Innovative solutions in the following areas would be prioritised: energy, mobility, defence, space, railroads, oil and gas, textiles, education, agriculture, food processing, waste management, water management, financial inclusion, and biotechnology.
Grants and Support:
- In the upcoming four years, it will provide 300 incubators to support an estimated 3,600 businesses.
- The committee will pick qualifying incubators to receive grants of up to Rs. 5 crores.
- The chosen incubators will offer up to Rs. 20 lakhs in incentives to businesses for product trials, prototype development, or proof of concept validation.
- The startups would receive up to Rs. 50 lakhs in investments for debt-linked securities or convertible debentures, which they can use for market entry, commercialization, or scaling up.
What is the Need for Seed Fund?
- In the early phases of an enterprise's growth, entrepreneurs want easy access to financing.
- Insufficient finance during the seed and "Proof of Concept" development stages plagues the Indian startup ecosystem.
- For startups that have solid business concepts, the money needed at this point frequently means the difference between success and failure.
- Due to a lack of funding at the outset for proof of concept, prototype development, product trials, market entry, and commercialization, many creative business ideas never get off the ground.
- Offering seed money to such exceptional examples can have a compounding effect on the validation of other companies' business concepts, resulting in the creation of jobs.
What are the other Initiatives Pertaining to Startups?
- Startup Innovation Challenges: Using networking and fundraising as a tool is a great chance for any startup.
- The National Startup Awards aim to identify and honour exceptional startups and ecosystem facilitators that are promoting economic dynamism via competition and innovation.
- State-by-State Ranking of Support for Startup Ecosystems: This is an advanced assessment tool designed to increase State and UT support for the comprehensive development of respective startup ecosystems.
- SCO Startup Forum: Established in October 2020, the Shanghai Cooperation Organisation (SCO) Startup Forum aims to collaboratively enhance and expand startup ecosystems.
- Prarambh: The "Prarambh" Summit seeks to give young people and entrepreneurs from all over the world a venue to present their fresh concepts, inventions, and innovations.
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