Context:
The Department for Promotion of Industry and Internal Trade (DPIIT) is undertaking a third-party assessment of the Rs 945-crore Startup India Seed Fund Scheme to see its impact on the ground.
Relevance:
GS III- Growth and Development
Dimensions of the Article:
- About Seed Fund Scheme:
- What is Seed Funding?
About Seed Fund Scheme:
- The scheme aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization.
- 945 Crore corpus will be divided over the next 4 years for providing seed funding to eligible startups through eligible incubators across India.
- The scheme is expected to support about 3600 startups.
- It will Secure seed funding, Inspire innovation, Support transformative ideas, Facilitate implementation, and Start startup revolution.
- It will create a robust startup ecosystem, particularly in Tier 2 and Tier 3 towns of India, which are often deprived of adequate funding.
- Objective: Fund has been set up to provide initial capital to the startups. After that start-ups will be provided with the Govt. Guarantees, to help them raise debt capital.
- Funding: The Scheme will offer startups up to Rs. 20 Lakhs as a grant for Proof of Concept. Upto Rs. 50 Lakhs can also be availed through convertible debentures or debt or debt-linked instruments for commercialization.
Eligibility Criteria for Startups
- The startup must be recognized by DPIIT and should not be more than 2 years old at the time of application.
- The startup should have a viable business idea to develop a product or service with a market fit, commercialization potential, and scalability.
- The startup should use technology in its core product or service, business model, distribution model, or methodology to solve the problem being targeted.
- The startup should not have received more than Rs 10 lakh of monetary support under any other Central or State Government scheme.
- At the time of application to the incubator for the scheme, Indian promoters should hold at least 51% of the startup’s shareholding.
What is Seed Funding?
- Seed funding or seed-stage funding is a very early investment which aims at helping a business grow and generating its own capital.
- Also referred to as seed money or seed capital, investors often get an equity stake in exchange for the capital invested.
- The investors can themselves be the founders and use their savings as seed money for their new company — also known as bootstrapping.
-Source: Indian Express
