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What is the Startup India Seed Fund Scheme?

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Startup India seed funding

Introduction: -

Unlocking entrepreneurial dreams with Startup India Seed Fund Scheme. Discover funding opportunities and kickstart your business journey towards success.

India's startup scene is buzzing with new ideas and energy. Fueled by young minds and government backing. Startups in various fields are thriving. 

From Tech startups to local services, entrepreneurship is on the rise making India a hotbed for innovation and economic growth.

Government initiatives play a vital role in supporting Indian entrepreneurs. Schemes like Startup India provide funding, mentorship, and a supportive environment for startups to thrive. 

By easing regulation and offering incentives, the government empowers small businesses, driving economic growth, and job creation in the country.

The Startup India Seed Fund Scheme is a boon for Indian startups. Launched by the Government of India.

 It offers financial support to budding businesses. With a focus on innovation and inclusivity, the scheme aims to nurture entrepreneurial dreams, providing the necessary seed capital to turn ideas into successful ventures, powering India's economic growth.

Start up India seed funding

Understanding the Startup India Seed Fund Scheme: 

a) Objective and goals of the Startup India Seed Fund: -

The Startup India Seed Fund has clear goals. Fueling dreams of the Indian entrepreneurs. It aims to provide vital initial funds, supporting innovative startups across sectors.

The government's objective is to boost economic growth by fostering a thriving startup ecosystem, creating jobs and driving forward India's position as a global innovation hub.

b) Key features and components of the scheme: -

The Startup India Seed Fund Scheme has key features that empower startups. It offers crucial early-stage funding, mentoring and support. 

With a focus on inclusivity, the scheme caters to diverse sectors, promoting innovation. By simplifying the application process, it ensures accessibility, nurturing the growth of startups across India.

Eligibility Criteria for Seed Funding in Startup India: -

a) Qualification requirements for Startups: -

For startups eyeing the Startup India Seed Fund, the qualification is straightforward. Eligible startups should be less than seven years old, and working on innovative solutions.

They must be incorporated in India and demonstrate potential for scalability. The government aims to support promising ventures, driving India's entrepreneurial spirit.

b) Criteria for incubators and angel groups to participate: -

Incubators and angel groups can join the Startup India Seed Fund to foster innovation. To qualify, they must be recognized by the government, supporting startups with mentorship and resources.

By partnering with such entities, the scheme ensures a collaboration effort in nurturing promising ideas, contributing to India's vibrant startup ecosystem.

c) How the scheme caters to diverse sectors and industries: -

The Startup India Seed Fund Scheme is designed to embrace diversity. It welcomes startups from various sectors and industries. Whether tech, health care or services, the scheme recognizes and supports innovative ideas. 

This approach fosters a vibrant entrepreneurial landscape, contributing to India's growth and development across different sectors.

Startup India Scheme

Step-by-step the Application process   for startups for the seed fund 

To apply for the Startup India Seed fund, the startup can follow a straightforward process.

First, ensure eligibility by meeting the criteria, which includes being less than seven years old.

Second:-The startup should be incorporated in India and there should be a focus on innovative solutions.

Third: Gather essential documents such as business plans and financial projections. 

Fourth: Visit the official portal of Startup India and complete the online application, providing accurate information about the startup and its founders.

Lastly: The selection committee reviews applications based on innovation, scalability and potential impact. Successful startups receive financial backing, mentorship, and support, propelling them towards success in India's dynamic entrepreneurial landscape.

Documentation and Information required for the application: -

There are 5 documents required to seek funding for startups: -
1. Confidentiality Agreement: -

You might be sharing a host of important information with your investors to get them on board. The most important of all is your business idea in the form of a business plan, financial pitch deck/presentation etc.

You must sign a Non-disclosure Agreement (NDA), barring the investors from sharing this information with any third parties or to use for any other purpose.

This ensures safe pitches of your business idea to several investors without any fear of misuse of your idea and data.

2. Valuation Report: 

A valuation report comes as a mandatory requirement under the law when you set out to seek funding for startups.

Valuation by a registered valuer is required as per the Companies Act, of 2013 and merchant banking valuation is required as per the Income Tax Act, of 1961.

It also helps you get a fair market value of your shares and makes it easy for you to decide on the price at which you are looking to issue shares to investors.

3. Term Sheet: - 

A  Term sheet lays down the terms on which the investors are willing to provide seed funding and the promoters /founders are willing to seek funding.

It is a non-binding document that provides for the most basic and important terms that are eventually captured in detail in the Share subscription and shareholder's agreement. The document should cover the terms relating to funding, corporate governance and liquidation.

4. Share Subscription and Shareholder's Agreement (SSHA): -

This is the most important document in any seed finance. It lays down the rights of the Investors as per the shares issued to them. Some of the important provisions of SSHA are: -

Capitalizations Table:-It is known as " Cap Table". In short, this should provide for the number of shares being issued, issue price, and percentage holding. This is the heart of the entire funding process.

Transfer Restrictions:-Transfer restriction provisions like a right of the first refusal of the first offer, pre-emptive rights etc. That the investors and the promoters would want to have are covered in these provisions.

Exist Rights:-Investors want a good existence while getting funding for startups. at the right price and at the right time. Without this, they may not be keen to invest in your startup. Ensuring existing provisions is a must from the investor's perspective.

5. Amendment to Article of Association (AOA) of the Company: -

Charter documents act as a constitution of any company. All rights and duties stem from here. If the provisions of SSHA are not included in the AOA, it may become difficult to enforce them. 

Hence it is a must to ensure that the important aspects of the SSHA are also captured in the AOA so that there is no room left for any discrepancy.

Evaluation process and criteria used by the selection committee: -

The selection process of the Startup India Seed Fund is transparent. The committee assesses startups based on innovation, scalability and social impact. 

They consider the potential for growth and success. By adhering to these criteria, the selection committee ensures fair evaluation, supporting startups that positive contributions to India's entrepreneurial growth.

What are the benefits Startups get from seed funding: -

Financial assistance and funding provided by the scheme: -

The Startup India Seed Fund brings a wealth of benefits to startups, chiefly through financial assistance. Successful applicants receive crucial funding that acts as a catalyst for growth, covering initial costs and facilitating innovative projects.

This monetary support extends beyond mere capital injection. It opens doors to scaling operations, hiring talent and refinancing products and services.

Ultimately, the funding provided by the scheme serves as a lifetime empowering Indian startups to transform groundbreaking ideas into successful impactful ventures.

Non-financial support, mentorship and networking opportunities: -

The Startup India Seed Fund Schemes offers more than just financial support to startups. Financial assistance like mentorship and networking opportunities, plays a vital role.

Startups gain access to experienced mentors who provide guidance and insights steering them through challenges.

Networking events create a platform for collaborations and knowledge sharing fostering a supportive community.

This holistic support system goes beyond funding, empowering startups with the skills, connections and wisdom needed for success.

This scheme stands as a testament to the government's commitment not only to invest in ideas but also to nurture them for long-term growth in Indian entrepreneurial growth.

Startup India scheme

Future Outlook of Startup India: -

How the Startup India Seed Fund aligns with broader Government initiatives: -

The Startup India Seed Fund aligns seamlessly with government initiatives, catalyzing innovation and entrepreneurship. Complementing flagship programs, it empowers budding enterprises, fueling economic growth.

This strategic alignment reinforces the government's commitment to fostering a robust ecosystem, propelling India towards self-reliance and global competitiveness.

Encouraging startups to explore the benefits of the Startup India Seed Fund Scheme: -

Startup, seize the opportunity with the Startup India seed Fund scheme. This initiative fuels your dream with financial backing, mentoring and a supportive ecosystem.

Embrace the benefits from seed funding to expert guidance, propelling your innovation journey. It is a catalyst for success in India's dynamic startup growth.

FAQ's:-

1.Question:-How many entities recognized as startups since launching a startup in India?

1. Answer:- More than 92000 entities recognized as startups since the launch of Startup India.

The number of entities recognized as startups by  DPIIT.

2018------------8635 entities start-up registered in DPIIT.

2019------------11279 entities startup registered in DPIIT.

2021-------------20046 entities startup registered in DPIIT.

2. Question: -How many startups in India in 2022?

2.Answer:-In the year 2022  over 26000 startups were recognized by the Department for Promotion of Industry and Internal Trade ( DPIIT).

3.Question:-What is the total funding for startup in 2022 in India?

3. Answer:- In 2022 Indian Startups raised  22Billion $ across more than  1200 deals.

4.Question:-How many startups funded in India in 2023?

4. Answer:- Indian startup secured  $7 Billion in the first three-quarters of FY2023.

5.Question:-How many startups are currently in India?

5. Answer: The startup Ecosystem in India has emerged as the 3rd largest ecosystem for startups globally over 1,12,718 DPIIT-recognized startups across  763 districts of the country as of 3rd October 2023.

Conclusion: -

Government support is the linchpin for the entrepreneurial growth of India. Initiatives like Startup India fuel innovation, job creation and economic growth of the country.

By fostering a conducive environment, policymakers empower the nation's dreamers and doers. This collaborative effort ensures a thriving economy, steering India towards sustained prosperity and global completeness.

AJAY PATRA

About Author

Ajay Kumar Patra is a highly experienced and accomplished accounts and taxation professional with over 27 years of experience in the industry. He is a Post graduate in Commerce (M. Com) from Sambalpur University with First Class and MBA-Finance with First Class from Jaipur National University....
He has worked with several large manufacturing units in India in various capacities. His last portfolio was (G.M) Finance & Accounts in large Steel Manufacturing Industry in Odisha. He Quit his job in the year May-2021.

Professional Content Writer: -
He is also a professional content writer and has published over 150 articles on business, finance, startups, e-commerce, and tourism. In 2021.All article you can see in the website www.odiyadigitalworld.com.
Content Writer
In addition to his professional work, Ajay is also a passionate content writer. He has published over 150 articles on business, finance, startups, e-commerce, and tourism. His articles are well-researched and informative, and they have been read by millions of people around the world. Ajay is also a regular contributor to several leading publications. He always published his own article in his website www.odiyadigitalworld.com.
Tax Consultant:
He is also Founder & CEO of own Tax consultancy firm, “Ajay Tax Consultant:, in Bhubaneswar, Odisha. Which has been started in the year 2021 with give best services to individuals and Business owner like Income Tax, GST. PAN, DSC, TDS with New company Registration with Insurance facilities to clients of PAN INDIA. You can visit website” www.ajaytaxconsultant.com.” to know more.

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Ajay Kumar Patra is a highly experienced and accomplished accounts and taxation professional with over 27 years of experience in the industry.