Startup Registration & Seed Funding

For entrepreneurs, the easy availability of capital is a very important factor in order to grow their enterprise. There are many business ideas that do not come into existence because of a lack of capital. So in order 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.

Startup India Seed Fund Scheme (SISFS)

The Startup India Seed Fund Scheme (SISFS) is a government initiative to provide financial assistance to startup companies in India. The Government of India launched the Startup India Seed Fund Scheme (SISFS) in Jan 2016. The scheme aims to provide financial assistance to startups through seed funding.

  • Under the plan, the government offers seed funding of up to Rs. 10 crores to startup companies. The scheme is operated by the Department of Industrial Policy and Promotion (DIPP) and the Ministry of Commerce and Industry.
  • Seed funding can apply for seed funding of up to Rs. 20 to 50 lakh at an initial stage. The funds can be used for various purposes, such as product development, business development, and marketing. The scheme also provides mentorship and incubation support to startups.
  • So far, the Seed funding for startups in India has received a good response from startups and has helped develop many new businesses. The scheme is a part of the government’s broader Startup India initiative, which aims to promote entrepreneurship in the country.

Benefits of SISFS

  • The Government of India has launched Startup India Seed Fund Scheme 2022 in order to build a Startup ecosystem.
  • This scheme was launched on 16 January 2016 in order to provide opportunities for entrepreneurs to grow their enterprise.

  • Under this scheme Financial assistance up to Rs, 50 lakh will provide to 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 is going to provide funds to incubators and the incubators will be responsible for providing these funds to startups.

  • 3600 entrepreneurs through 300 incubators will get benefit from this scheme in the next 4 Years.

Objectives of SISFS

  • The main objective of the Startup India Seed Fund is to provide funds to entrepreneurs for their startups so that they can grow their enterprises.

  • They can simply apply through this scheme and get funds directly from the government.

  • This scheme will also generate a lot of employment and validate the business ideas of startups.

  • 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.

  • Seed Funds offered to such promising cases can have a multiplier effect in the validation of business ideas of many startups, leading to employment generation.

  • This scheme now entrepreneurs require to go to banks and financial institutions in order to get funds for their business idea.

Eligibility For Seed Funding

For Incubators:

  • If you want to be eligible for the incubator scheme, there are things you need to have in order: You must be a legal entity registered under either the Societies Registration Act 1860, the Indian Trusts Act 1882, or Companies Act 1956 or 2013.
  • You have been operational for at least two years by the time you apply to the scheme. You must have enough space to seat at least 25 people.
  • The incubator must have at least five startups going through the incubation process on the date of application. In addition, the incubator must experience in business development and entrepreneurship, supported by a team capable of mentoring startups in testing and validating ideas and full support in finance, legal, and human resources functions.
  • The incubator shouldn’t be using seed funding from other private entities. The incubator must have been assisted by the Central/State Government (s). The incubator must have been operational for at least three years. There must be at least ten startups physically undergoing incubation in the incubator on the date of application.

For Startups:

  • If you’re a startup that’s been incorporated for less than two years, you might be eligible for it.

  • Your business must also be commercially viable and have the potential to scale u p. So before you start whipping up your business plan, check that you meet all the eligibility criteria.

  • There are some eligibility criteria that startups should consider when applying for fo r funding. For example, the startup should use technology in its core product or service, business model, distribution model, or methodology to solve the targeted problem.

  • If you’re a startup looking to get involved with this scheme, you should know a few things. Firstly, you can’t receive more than Rs 10 lakh from any other government scheme, including prize money, subsidized working space, and the founder r’s monthly allowance. Also, according to the Companies Act 2013 and SEBI (ICD R) Regulations 2018, Indian promoters must own at least 51% of the startup’s shares.

Documents and Details Required

There are a few key documents that an entrepreneur will need to provide to secure seed funding from investors. These include a business plan, financial projections, and a Pitch Deck. The business plan should outline the company’s vision, mission, and critical goals. The economic forecast should show how the company plans to generate revenue and profitability. The Pitch Deck should provide an overview of the business, the market opportunity, the team, and the company’s growth strategy.

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