Piyush Goyal launches Startup India Seed Fund scheme, to support India's domestic entrepreneurs

CIOReviewIndia Team | Tuesday, 20 April 2021, 04:19 IST

Piyush Goyal launches Startup India Seed Fund scheme, to support India's domestic entrepreneurs Commerce and industry minister Piyush Goyal launched the Startup India Seed Fund scheme and told the scheme will support India’s domestic entrepreneurs and their business ideas who often can’t take off due to the absence of critical capital at an early stage. He also said startups not get sold very cheap, particularly to foreign investors.

The Rs 945-crore scheme aim is to offer financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialisation and has been approved for the period of next four years starting April 1, 2021. It is expected to support about 3600 startups and 300 incubators. The call for incubators opened Monday while that for startups would open July 1.

“Don’t get sold very cheap, particularly to foreign investors or savvy investors who are able to identify a good idea and are able to buy out at an early stage of funding required,” Goyal stated, adding that a very good idea often gets bought out by international venture capitalists at throwaway prices.

“I do hope the scheme will support our domestic entrepreneurs and their business ideas who often can’t take off due to the absence of critical capital at an early stage,” he stated and asked startups to build a ‘crisis-proof’ business for the country.

As per the Department for Promotion of Industry and Internal Trade (DPIIT), the government will provide grants of up to Rs 5 crore to eligible incubators in three or more tranches and the quantum of the first instalment maybe upto 40% of the approved commitment.

“A component of management fee at 5% of the seed fund grant to the incubator will be provisioned,” the department stated.

Under the scheme, grants up to Rs 20 lakh will be provided to the startups for 'Proof of Concept' whereas funding up to Rs 50 lakh can also be claimed through convertible debentures or debt-linked investments for commercialization or scale up support. Not more than 20% of total grant to incubator shall be given as grants to startups.

An incubator will be responsible for the holistic development of the incubatee, according to the department, including physical infrastructure, support testing and validation of ideas and mentorship.

The sector-agnostic scheme doesn’t need physical incubation and allows startups to apply to three incubators simultaneously.

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