The selected startups will be offered up Rs 20 lakhs as a grant for proof of concept and up to Rs 50 lakhs through convertible debentures or debt or debt-linked instruments for commercialization of the product, DPIIT said.
The Startup India Seed Fund, which has a target corpus of Rs 945 crore to be disbursed over five years in early-stage startups, is looking to support around 3,600 entrepreneurs through 300 incubators, according to its implementing body Department for Promotion of Industry and Internal Trade (DPIIT). The investment will be made in eligible startups in order to support their proof of concept, prototype development, product trials, market-entry, and commercialization. The Commerce Ministry had last week notified the scheme days after Prime Minister Narendra Modi had announced the fund at the Startup India’s international summit Prarambh. The scheme is likely to be implemented on April 1, 2021.
These 3,600 entrepreneurs will represent DPIIT-registered startups across sectors and incorporated not more than two years ago at the time of applying for the scheme. The selected startups will be offered up Rs 20 lakhs as a grant for proof of concept and up to Rs 50 lakhs through convertible debentures or debt or debt-linked instruments for commercialization of the product, DPIIT had said on Monday on Twitter. Startups selected under the scheme would preferably be from sectors including social impact, waste management, water management, financial inclusion, education, agriculture, food processing, biotechnology, healthcare, energy, mobility, defence, space, railways, oil and gas, textiles, etc.
The development came days after Commerce Minister Piyush Goyal had urged established Indian businesses and entrepreneurs to dedicate a portion of their wealth for “maybe an initial Rs 10,000-crore fund” for early-stage investing in startups. The fund is likely to support startups in the said sectors that haven’t received as much exposure to venture funding as other sectors such as e-commerce, foodtech, travel, education, etc. According to the data from Tracxn, edtech followed by food delivery, digital wallets, gaming, e-commerce logistics were among the top categories attracting majority funding in 2020. Startups missing the early-stage capital infusion from select investors explore foreign investments from venture funds, corporates.
With respect to incubators to be onboarded to the Seed Fund scheme, those assisted by the Central government or state governments will be eligible. The criteria also included at least two years of operability on the date of applying for the scheme, capacity to seat at least 25 individuals, at least five startups undergoing incubation at the time of application of the scheme, etc.