The journey from a dream to a revenue-generating company involves the support of capital investments. However, finding funds for the initial phase of the business is not simple as it seems. If you think a bank or any other financial institution will brace you during financial crunches, then let us assure you this happens only when the pigs fly. The result is the immature death of startup companies. Realizing these difficulties, the government has initiated a new scheme that intends to provide seed funding or basic funding facilities to emerging startups. The goal is to encourage new innovations and back them with concrete financial assistance so that they can yield in the future.
What Is a Seed Fund Scheme?
The Startup India Seed Fund Scheme envisages providing money support at the early stages of a company. Thus when you commence your planning with the proof of business concept, prototyping, product trials, market entry and promotion, you can seek necessary fiscal aid from the government. Once saved at the initial stage, the venture can slowly make it to further investments and raise money by approaching banks or joining hands with other firms. The inception of the scheme can be traced back to the Department for Promotion of Industry and Internal Trade (DPPIIT) which has dedicated about Rs. 945 crore for assisting budding ventures.
The Indian PM announced the scheme on 16 January 2021, and DPIIT notified it on 21 January 2021. According to it, you can unlock financial backup from venture capital firms and angel investors after you submit proof of your concept. The scheme will support up to 3,600 entrepreneurs all around the country and create about 300 incubators in the coming four years.
The objective of the scheme
India being a youthful nation, strives to promote innovative projects that suffer from the inevitable financial crisis in the present scenario. Most of these problems arise at the developmental stage of a company. Because companies cannot allocate enough funds during conceptualization, businesses will end up dying or succeeding. Giving this extra push will bring positive impacts to businesses, as more companies will flourish under the new scheme, creating more employment opportunities for the rest.
Who can apply for the scheme?
Take a look at the following eligibility requirements to qualify for the scheme;
- You can apply for the scheme if DPPIT recognizes your venture. Also, the incorporation should be within the threshold of 2 years at the time of application. To get recognition from the DPPIT department, follow the given link. https://bit.ly/3qbCQdK
- You should have a clear business concept or idea to introduce the service or the product into the market.
- Your concept or service should deploy a tech-centric approach and should have technology infrastructure at its foundation. You can also integrate technology assistance in the business model, methodology, distribution.
- More weightage and encouragement is provided to startups that will contribute to the improvement of the community as a whole. Hence ventures that focus on waste management, education, agriculture, food processing, biotechnology, healthcare, energy, mobility, defence, space, railways, oil and gas, textiles and so on will be promoted at a vast scale.
- You will not be eligible if you have gained any additional governmental support of more than INR 10 lakh. This excludes any prize money, grand challenges, subsidized work environment, periodical financial aid of the founder, admittance to labs, or any other prototyping equipment.
- Apart from this, the Companies Act 2013 and SEBI (ICDR) restrictions denote that the shareholding capacity should be at least 51% during the time of the application to the incubator. After granted, the startup applicant can avail of the financial aid in the form of grants and debts/convertible debentures, adhering to the guidelines of the scheme.
Documents necessary for the application of the Seed Fund Scheme
Now let us take a look at the document criteria of the startup scheme.
- You need to have a copy of the Adhar card of the owner, partner or director for verification of the ownership status.
- Carry a copy of the registration document of your venture. These can be the documents that you have received with the State or Central Government; for instance Incorporation Certificate, Partnership Deed etc.
- Address of your location or the current location of the company.
Proof of your Residential area (generally owner, director, partner).
Eligibility Criteria for Incubators Under Startup India Seed Fund Scheme
- To qualify for the financial aid, the incubator should be;
- A legal entity registered or a part of the Societies Registration Act, 1860.
- A Private Limited Company registered under Companies Act, 2013 or 1956.
- A Trust registered under the Indian Trusts Act, 1882.
- A statutory body legally formulated by an Act of the legislature.
- Registered at least two years prior to the registration.
- Accommodation facilities for at least 25 people.
- The incubation should have a minimum of 5 incubation startups going on before registration.
- The incubator should be headed by a full-time Chief Executive Officer with experience in entrepreneurship and business development and a team to mentor and guide the startups. They will validate the legal, financial, and human resource functions of the newly started venture.
- Should not raise money with any external help of private third parties.
- Incubators should be under the Central and State Governments.
- If the incubator is not registered to any of these governing bodies, then it should satisfy the following conditions;
- Incubators should function for at least three years.
- Must have a minimum of 10 ongoing incubations at the time of application.
How to apply?
To apply for the Seed Funds Scheme, open the official website of Startup India Seed Fund Scheme.
- Login on the top right side of the homepage
- The registration page of Startup India will appear on the screen.
- Now register your name, email, mobile number, password, and confirm it.
- You will receive an OTP to your mobile number; enter the OTP to the box.
- Visit the website again and click on the "Apply Now" option below the "For Startup" icon. You can log in with the previously entered password and ID.
- Finally, fill the appeared application form and upload the necessary documents and click "Submit".
Find great backing in managing the compliances for the seed fund scheme with Gotaxfile!
Applying for the scheme can benefit your Startup by giving additional financial support at the initial stage. If you need help with the application or find it difficult to comply with the regulations, you can contact Gotaxfile experts. We help you with the tax intricates and documentation filing of the Startup India Seed Fund Scheme and are well-equipped to assist you throughout the process. Contact us to know more!