Startup India Seed Fund Scheme- For Incubators
Startup India Seed Fund Scheme (SISFS) for Incubators
The Startup India Seed Fund Scheme (SISFS) was initiated by the Department for Promotion of Industry and Internal Trade (DPIIT) on April 19, 2021, with a substantial financial allocation of INR 945 Crore. This scheme is designed to extend financial support to startups for various developmental stages, including proof of concept, prototype creation, product trials, market entry, and commercialization. By facilitating access to funds, the initiative aims to empower startups to attract investments from angel investors, venture capitalists, and banks.
Overview of the Scheme
The SISFS strives to provide crucial financial backing to startups through recognized incubators across India. Startups that meet the eligibility criteria can submit their applications via the Startup India portal. The funds will be disbursed in a structured manner to ensure accountability and effective utilization.
Scheme Objectives
- To provide financial assistance to startups during the initial stages of development.
- To enable startups to reach a level conducive for attracting further investments.
- To foster innovation and entrepreneurship across diverse sectors in India.
Key Features
- Continuous ‘Call for Applications’ for both incubators and startups.
- Applicable across all sectors without any restrictions.
- No requirement for mandatory physical incubation.
- Nationwide initiative accessible to startups across India.
- Startups are permitted to apply to a maximum of three incubators simultaneously.
Benefits of the Scheme
Each selected incubator stands to receive a grant of up to ₹5 Crore, distributed in multiple milestone-based installments. Additionally, a management fee of 5% of the Seed Fund grant will be included. For instance, if an incubator is awarded ₹1 Crore, the total financial assistance would amount to ₹1.050 Crore when factoring in the management fee.
Important Notes:
- The specific grant amount and installment structure will be determined by the Experts Advisory Committee (EAC) based on evaluations.
- Incubators must utilize the grant solely for disbursing funds to eligible startups, prohibiting the use for infrastructure creation or unrelated expenses.
- The management fee is designated for administrative purposes and necessary project monitoring, not facility development.
- Installments are disbursed contingent upon proof of milestone achievements submitted by the incubator.
- The first installment may reach up to 40% of the total approved amount, with subsequent requests facilitated if the incubator’s available funds drop below 10% of the commitment.
- All grant funds must be fully utilized within three years of receiving the first installment.
- If less than 50% of the commitment is utilized within the first two years, the incubator becomes ineligible for further funds and must return unutilized amounts with interest.
- Interest accrued on unspent funds will be considered during future fund releases.
- Efficient management and distribution of the Seed Fund is the responsibility of the selected incubators, which must maintain transparency in all processes.
- Incubators are expected to provide physical infrastructure and comprehensive support services to startups, including idea validation, mentoring, and networking opportunities.
- No fees will be charged to startups selected for assistance under this scheme.
Eligibility Criteria for Incubators
To qualify for the Startup India Seed Fund Scheme, incubators must meet the following criteria:
- The incubator must be a legally recognized entity, such as:
- A society under the Societies Registration Act, 1860;
- A Trust under the Indian Trusts Act, 1882;
- A Private Limited Company under the Companies Act, 1956 or 2013;
- A statutory body established by legislative act.
- The incubator should have been operational for a minimum of two years before applying.
- It must have the capacity to accommodate at least 25 individuals.
- There should be at least five startups currently undergoing incubation.
- A full-time Chief Executive Officer with expertise in business development and a capable support team is required.
- Incubators must not utilize third-party private funding for disbursing seed funds to startups.
- Assistance from Central or State Government(s) is a prerequisite, except for specific cases.
Application Procedure
To apply for the Startup India Seed Fund Scheme, follow these steps:
- The application window for incubators is open year-round.
- Interested incubators can apply online at Startup India Portal or Seed Fund Portal.
- Register on the Startup India portal if not already registered.
- After registration, log in and select ‘Incubator’ to apply.
Note: The application process is entirely digital, eliminating the need for physical document submissions. There are no application fees associated with this scheme.
Eligibility Criteria
The eligibility criteria for an incubator to apply in the Startup India Seed Fund scheme are as follows:
1. Incubator must be a legal entity:
a) A society registered under the Societies Registration Act 1860, or
b) A Trust registered under the Indian Trusts Act 1882, or
c) A Private Limited company registered under the Companies Act 1956 or the Companies Act 2013, or
d) A statutory body created through an Act of the legislature.
2. The incubator should be operational for at least two years from the date of application to the scheme.
3. The incubator must have facilities to seat at least 25 individuals.
4. The incubator must have at least 5 startups undergoing incubation physically on the date of application.
5. The incubator must have a full-time Chief Executive Officer, experienced in business development and entrepreneurship, supported by a capable team responsible for mentoring startups in testing and validating ideas, as well as in finance, legal, and human resources functions.
6. Incubator should not be disbursing seed funds to incubatees using funding from any third-party private entity.
7. The incubator must have been assisted by the Central/State Government(s).
8. In case the incubator has not been assisted by Central or State Government(s):
a) The incubator must be operational for at least three years.
b) Must have at least 10 separate startups undergoing incubation in the incubator physically on the date of application.
c) Must present audited annual reports for the last 2 years.
Note: Any additional criteria as may be decided by the Experts Advisory Committee (EAC).
Benefits
A Grant of up to ₹5 (five) crore would be provided to a selected incubator in milestone-based three (or) more installments.
A component of Management Fee @ 5% of the Seed Fund grant to the incubator will be provisioned (i.e. if an incubator is granted ₹1 crore of Seed Fund, then by including management fee @ 5%, the total assistance would be ₹1.050 crore).
Note 01: The exact quantum of grant and installments for each incubator will be decided by the Experts Advisory Committee (EAC) based on its evaluation.
Note 02: Incubators shall use the grant only for disbursal to eligible startups and shall not use the grant for facility creation or any other expenses.
Note 03: The Management Fee provisioned for incubators shall not be used by the incubator for facility creation or any other administrative expenses. The Management Fee will be utilized for administrative expenditure, selection and due diligence of startups, and monitoring of the progress of beneficiary startups.
Note 04: Installments shall be released to incubators upon submission of proofs of achievement of milestones as decided by EAC. A Proportionate Management fee shall also be released with each installment.
Note 05: The quantum of the first installment may be up to 40% of the total approved commitment. When the cash-in-hand of the incubator goes below 10% of the total commitment by EAC, the Incubator may request for the next installment, which shall be released to the incubator within 30 days of submission of proof of achievement of milestones.
Note 06: The grant should be utilized fully by the incubator within a period of three years from the date of receipt of the first installment of funds.
Note 07: If the Incubator has not utilized at least 50% of the total commitment within the first 2 years, then the Incubator will not be eligible for any further drawdowns. It will return all unutilized funds along with interest.
Note 08: Interest earned on all unutilized funds available with incubators shall be taken into account and adjusted at the time of the next release.
Note 09: The financing of beneficiaries will be done with efficiency and care. Selected incubators would be responsible for proper management and disbursement of the Seed Fund.
Note 10: The selected incubator shall maintain a transparent process of selection, monitoring, and disbursement mechanism for the fund. Seed Fund would be disbursed to selected startups after due diligence by the incubator.
Note 11: The incubators shall be responsible for providing physical infrastructure to the selected startups for regular functioning, support for testing and validating ideas, mentoring for prototype or product development or commercialization, and developing capacities in finance, human resources, legal compliances, and other functions. They are also expected to provide networking with investors and opportunities for showcasing at various national and international events. If the selected startup does not want to utilize the physical infrastructure of the incubator, the incubator shall offer all other resources and services to the startup.
Note 12: A startup selected by an incubator for assistance under this scheme shall not be charged any fees.
Application Process
Apply OnlineApplication Procedure:
Step 01: The Call for Applications for incubators will be open online throughout the year.
Step 02: Online Applications
will be invited from incubators across India to participate in the scheme on https://www.startupindia.gov.in
or any other platform specifically designated for the purpose. (https://seedfund.startupindia.gov.in
/)
Step 03: Applicants need to register on the Startup India portal
, if not registered, using their details.
Step 04: After successful registration, the applicant can login and apply under the scheme by selecting ‘Incubator’.
Note 01: The application submission is completely online, and no physical submission of documents is required.
Note 02: There are no application fees for the scheme. Even after the selection of a startup by an incubator for assistance under this scheme, the startup shall not be charged any fees. The incubator or any of its staff members shall not charge any fee in cash or in kind from applicants or beneficiaries under the scheme for any process of selection, disbursement, incubation, or monitoring.
Note 03: An incubator can reapply for funds under the Scheme when it has disbursed or committed its entire previously released grant.
Selection of Incubators:
Incubators shall be selected on the basis of the following parameters:
1. Fulfillment of eligibility criteria
2. Quality of the team of Incubator
3. Available infrastructure, testing labs, etc.
4. Composition of Incubator Seed Management Committee (ISMC)
5. Incubation support provided by incubator in the last three years:
No. of startups incubated
No. of startups graduated, i.e. progressed from one stage of the business development cycle to the next
No. of startups that raised follow-on investments
No. of startups that crossed revenue of Rs 1 Cr in the last 1 year
2-year survival rate of startups from the date of joining incubator
6. Funding support extended to incubatees in the last three years:
Investment agreements signed between incubators and startups
No. of startups invested in
Total corpus allocated to incubatees
Total investments raised by incubatees from external sources
7. Mentoring provided to incubatees in the last three years:
No. of mentors hired
Average mentoring hours allocated per startup per month
No. of IP (patents, copyrights, designs, and trademarks) registered by incubatees
8. Other support extended to incubatees in the last three years:
Industry/Corporate connects
Events held for stakeholder engagements
Participation in other events
9. Number of startups that the incubator intends to support
10. Quantum of funds applied for, along with fund deployment plan with timelines
11. Any other relevant parameters that decided by the Experts Advisory Committee (EAC).
References & Official Links
Scheme Details
| Full Name | Startup India Seed Fund Scheme- For Incubators |
| Short Title | SISFS-FI |
| Level | Central |
| Scheme For | Infra |
| Ministry | Ministry Of Commerce And Industry |
| Categories | Business & Entrepreneurship |
| States | All India |
| Gender | All |
| Age Range | 25 — 40 years |
| Area | Both |
| Source | www.myscheme.gov.in ↗ |
Deepika Raikwar
Deepika Raikwar is an Education Analyst and scholarship researcher who focuses on public welfare and merit-based scholarships. She simplifies complex eligibility rules, deadlines, and application processes to help common people access reliable funding opportunities worldwide.
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