Commerce and Industry Minister Piyush Goyal on Monday expressed hope that the Startup India seed fund scheme would support domestic entrepreneurs and their business ideas that often cannot take off due to the absence of critical capital at an early stage.
The scheme was announced by Prime Minister Narendra Modi in January to support startups and help budding entrepreneurs pursue innovative ideas.
Goyal said good ideas often get bought out by international venture capitalists at throwaway prices.
“The idea behind the scheme is to ensure adequate availability of funds, particularly to startups with good ideas in different fields. I do hope that this scheme will support our domestic entrepreneurs and their business ideas that often cannot take off due to the absence of critical capital at an early stage,” Goyal said while launching the scheme.
He also exuded confidence that the scheme will secure seed funding, inspire innovation, support transformative ideas, and facilitate the implementation of those ideas.
He added that smaller towns are often deprived of adequate funding and this scheme will create a robust startup ecosystem in Tier II and Tier III regions of India.
It will be implemented from April 1, 2021. The Rs 945 crore corpus will be divided over the next four years for providing seed funding to eligible startups through eligible incubators across India.
The government has constituted an Experts Advisory Committee (EAC) which will be responsible for the overall execution and monitoring of the scheme.
Over 7,500 new startups are incorporated every year and it is essential to provide seed funding to startups with innovative ideas to conduct their ‘Proof of Concept’.
The scheme is being launched by DPIIT (Department for Promotion of Industry and Internal Trade) to support this early-stage startup funding.
It would provide financial assistance to startups for Proof of Concept, prototype development, product trials, market-entry, and commercialisation. The scheme aims to support an estimated 3,600 entrepreneurs through 300 incubators.
The online portal created by DPIIT for the scheme will allow incubators to apply for funds under it.
Grants of up to Rs 5 crore shall be provided to the eligible incubators selected by the EAC.
The selected incubators would provide grants of up to Rs 20 lakh for validation of Proof of Concept, or prototype development, or product trials to startups.
Further, investments of up to Rs 50 lakh will be provided to the startups for market entry, commercialization, or scaling up through convertible debentures or debt-linked instruments.