Indian startups and entrepreneurs can look forward to securing funds from the Indian government kitty as it announced a $125 million or ₹ 945 crore seed fund scheme.
The Government of India launched the Startup India Seed Fund Scheme in January. The scheme aims to offer financial assistance to startups for prototype development, proof of concept, product trials, commercialization, and market entry. The ₹ 945 crore corpus will be given over the next four years to provide seed funding to startups through incubators. As per reports, the idea is to ensure adequate availability of funds for startups with good ideas in varied fields.
Scheme to be provided over four years period
Piyush Goyal, Minister of Commerce and Industry, recently announced that in the past, often too many times, good ideas are bought by international venture capitalists. He also said that he hopes that domestic entrepreneurs and their great ideas are supported by this scheme.
The scheme is approved for four years, starting 2021-22. It is expected to provide funding to about 3,600 startups.An expert advisory committee set up by DPIIT (Department for Promotion of Industry and Internal Trade) will monitor and execute this scheme.
As per the guidelines, up to Rs 5 crore grants will be given to incubators selected by the committee. The incubators that the committee selects will give out up to Rs 20 lakh grants to startups for prototype development, validation of proof of concept or product trials. Up to Rs 50 lakh investments will be given to startups for commercialization, scaling up through convertible debentures or market entry.
The purpose of the Seed Fund Scheme is also to enable incubators to support startups to promote virtual incubation for startups from all corners of the country. It is believed that the impact of this Seed Fund Scheme will be seen among tier 2 and tier 3 regions of India with the spur of innovations.
Piyush further added that with this scheme, he wishes to see the growth of the startup ecosystem in tier two and three towns of India, which according to him, often don’t receive adequate funding. He especially encourages entrepreneurs from rural areas to benefit from this Seed Fund Scheme.