Program Details
Objective
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. The objective is to help startups reach a stage where they can raise investments from angel investors or venture capitalists or obtain loans from commercial banks and financial institutions. The scheme is expected to support nearly 3,600 entrepreneurs through around 300 incubators over four years.
Eligibility
- A startup recognized by DPIIT and incorporated not more than two years before the date of application.
- The startup must have a business idea for a product or service with market fit, commercialization potential, and scalability.
- The startup should use technology in its core product, service, business model, distribution model, or methodology to solve the identified problem.
- Preference is given to startups working in sectors such as social impact, waste management, water management, financial inclusion, education, agriculture, food processing, biotechnology, healthcare, energy, mobility, defence, space, railways, oil & gas, textiles, and related areas.
- The startup should not have received more than ₹10 lakh in monetary support under any other Central or State Government scheme. This excludes prize money, subsidized workspace, founder allowance, access to laboratories, or prototyping facilities.
- Indian promoters must hold at least 51% shareholding in the startup at the time of application, in accordance with the Companies Act, 2013 and SEBI (ICDR) Regulations, 2018.
- A startup may avail seed support once as a grant and once as debt/convertible debentures, as permitted under the scheme guidelines.
Seed Fund Support
Seed Fund assistance is provided to eligible startups by the incubator in the following forms:
- Up to ₹20 lakh as a grant for validation of Proof of Concept, prototype development, or product trials. The grant is released in milestone-based instalments linked to prototype development, product testing, and market readiness.
- Up to ₹50 lakh for market entry, commercialization, or scaling through convertible debentures, debt, or debt-linked instruments.
- A startup may receive grant support and debt/convertible debenture support once each under the scheme.
Application of Fund Support
Seed Fund support shall not be used for creating facilities or infrastructure. The funds must be utilized only for the purpose for which they are sanctioned. Grant support may be used for Proof of Concept validation, prototype development, or product trials, while debt or convertible debenture support may be used for market entry, commercialization, or business scaling.
Application Process
Applications are invited online on a rolling basis through the Startup India portal. DPIIT-recognized startups can log in using their existing Startup India credentials and submit applications entirely online without any physical document submission.
Applicants may choose up to three incubators in order of preference. Funding will be awarded by the highest preferred incubator that selects the startup. For example, if both Preference 1 and Preference 2 incubators approve the application, funding will be provided by the Preference 1 incubator. If Preference 1 rejects the application and Preference 2 approves it, funding will be provided by Preference 2, and so on.
Evaluation, Selection of Applications & Closure of Incubation
Eligible applications are evaluated on the following parameters:
- Need for the idea
- Feasibility
- Potential impact
- Novelty
- Team strength
- Fund utilization plan
- Additional evaluation parameters
- Presentation
The Selection Committee evaluates applications based on submitted documents and presentations and aims to complete the selection process within 45 days of receiving the application. Selected startups receive seed funding through the incubator that selects them according to their stated preference. Before the release of the first installment, the incubator executes a legal agreement with the startup. At the completion of the project, startups must submit a final report along with an audited utilization certificate.
Throughout the project, selected startups are required to submit periodic progress reports covering:
- Progress of Proof of Concept
- Prototype development progress
- Product development progress
- Field trial progress
- Market launch progress
- Loan, angel, or venture capital funding raised
- Employment generated by the startup
- Startup turnover
- Any other parameters required by the incubator
Re-application
Applicants whose proposals are not selected may reapply after three months from the date of rejection. This period allows applicants to address the feedback received from incubators before submitting a fresh application.
