India is home to the third-largest startup ecosystem, with almost 50,000 functional startups within the country. it’s predicted that startups in cities aside from Bangalore, Delhi, and Mumbai are likely to extend by 40% within the next decade. This makes seed funding for startups very relevant. during this post, we analyse the background and advantages of the Startup India Seed Fund Scheme 2021.
What Is the New Startup India Seed Fund Scheme?
- How long – In January 2021, the govt , through its Department of commercial Policy and Promotion approved the Startup India Seed Fund Scheme for a period of subsequent four years from 2021-22 to the fiscal year 2025-26.
- Who benefits and by what proportion – The scheme would offer financial assistance to startups. The corpus allocated for this scheme is around ₹ 950 crores. A grant of ₹1 crore to five crores would be available, supported the assessment of the Expert Committee.
- What’s the support like – it’s expected that the Startup India Seed Fund Scheme would give support to around 4000 startups, and eligible incubators across India. the quantity from this seed fund are often used for the subsequent purposes –
- Proof of concept
- Prototype development and related expenses
- Trial of the merchandise – including within India and abroad
- Market entry
This means that the scheme isn’t restricted only to mature startups that have verifiable, ready products. An entrepreneur with an honest idea may also seek funding under the scheme. the corporate will need to demonstrate the financial viability, need and use of the funds before a committee.
Eligibility Criteria Under the Startup India Seed Fund Scheme, 2021
- The startup must are incorporated less than two years before the time of application
- A business idea to develop a product or a service with the market fit, viable commercialization, and scope of scaling
- Must use technology in its core product or service, or business model, or distribution model, or methodology to unravel the matter for the target
- Preference to startups creating innovative solutions in sectors like social impact, waste management, water management, financial inclusion, education, agriculture, food processing, biotechnology, healthcare, energy, mobility, defence, space, railways, oil and gas, textiles, etc.
- The startup shouldn’t have received quite Rs 10 lakh of monetary support under the other central or government scheme. This doesn’t include prize from competitions and grand challenges, subsidized working space, founder monthly allowance, access to labs, or access to prototyping facility
- The shareholding by Indian promoters within the startup should be a minimum of 51% at the time of application to the incubator for the scheme, as per the businesses Act, 2013 and SEBI (ICDR) Regulations, 2018
Why Does an Upcoming Business Need Seed Funding?
Seed funding, because the name suggests is that the initial amount required. Further, to place the business on its path to growth. This money are often for arranging to fund, getting approvals, paying regulatory bodies for fees, accessing financing, arranging professionals that found out the corporate etc.
Using Seed Funding for property
Since startups under Indian law are as ‘entities working towards innovation, development. Or improvement of products or processes or services, it’s become extremely desirable to carry property (IP). These might be patents over your innovative product or an improved process of creating something already out there within the market or a trademark that provides you an prerogative over selling under a selected name. Moreover, IP valuation often becomes the cornerstone of the valuation as investors speculate on the price of your specific IP and its potential growth within the market.
At SC Bhagat, we assist our clients in dealing with various income tax compliance’s, Goods and Service Tax, Audit Assurance, tax advisory and other related services by providing them adequate support and guidance from our end. If you have any questions or wish to know more about the new Startup India Seed Fund Scheme, kindly contact us.