Startup India Seed Fund Scheme- For Incubators

Any Indian incubator operational for at least two years (for Government-supported incubators) and for three years (for incubators non-supported by Government) on the date of application can apply to the scheme.

A Grant of up to [?] 5 (five) crore would be provided to a selected incubator in milestone-based three (or) more installments. The exact quantum of grant and instalments for each incubator will be decided by the Experts Advisory Committee (EAC) based on its evaluation.

Yes, a component of Management Fee @ 5% of Seed Fund grant to the incubator will be provisioned (i.e. if an incubator is granted [?]1 crore of Seed Fund, then by including management fee @ 5%, the total assistance would be [?]1.050 crore). The Management Fee will be utilized for administrative expenditure, selection and due diligence of startups, and monitoring of progress of beneficiary startups. The Management Fee provisioned for incubators shall not be used by the incubator for facility creation or any other administrative expenses. As Installments of the Grant are released to incubators, proportionate Management fee shall also be released with each installment.

Incubators shall use the grant for disbursal of seed fund to eligible startups as follows: 1. Up to [?]20 Lakhs as grant for validation of Proof of Concept, or prototype development, or product trials. The grant shall be disbursed in milestone-based installments. These milestones can be related to development of prototype, product testing, building a product ready for market launch, etc. 2. Up to [?]50 Lakhs of investment for market entry, commercialization, or scaling up through convertible debentures or debt or debt-linked instruments. 3. Not more than 20% of the total grant to an incubator shall be given as grants to startups by incubator. 4. A startup applicant can avail seed support in the form of grant and debt/convertible debentures each once as per the guidelines of the scheme. Incubators shall not use the grant for facility creation or any other expenses. A component of Management Fee @ 5% of Seed Fund grant to the incubator will be provisioned (i.e. if an incubator is granted [?] 1 crore of Seed Fund, then by including management fee @ 5%, the total assistance would be [?] 1.050 crore). The Management Fee will be utilized for administrative expenditure, selection and due diligence of startups, and monitoring of progress of beneficiary startups. The Management Fee provisioned for incubators shall not be used by the incubator for facility creation or any other administrative expenses.

The grant should be utilized fully by the incubator within a period of three years from the date of receipt of the first installment of funds. If the Incubator has not utilized at least 50% of the total commitment within the first 2 years, then the Incubator will not be eligible for any further drawdowns. It will return all unutilized funds along with interest.

The incubators shall be responsible for providing physical infrastructure to the selected startups for regular functioning, support for testing and validating ideas, mentoring for prototype or product development or commercialization, and developing capacities in finance, human resources, legal compliances, and other functions. They are also expected to provide networking with investors and opportunities for showcasing in various national and international events. If the selected startup does not want to utilize the physical infrastructure of the incubator, the incubator shall offer all other resources and services to the startup.

Each of the incubators applying for the Startup India Seed Fund Scheme will constitute a committee called the Incubator Seed Management Committee (ISMC), consisting of experts who can evaluate and select startups for seed support. The composition of ISMC would be as follows: 1. Nominee of Incubator (Chairman) 2. Representative from State Government's Startup Nodal Team 3. Representative of a Venture Capital Fund or Angel Network 4. A domain expert from Industry 5. A domain expert from academia 6. Two successful Entrepreneurs 7. Any other relevant Stakeholder The final composition and members of ISMC of each incubator shall be approved by EAC and will be a critical parameter in selection of incubators.

Startup India or EAC shall not be directly involved in constituting the members of ISMC at each incubator. It is the responsibility of the selected incubator to constitute the ISMC.

An online call for applications is hosted on an ongoing basis on the Startup India portal at https://www.startupindia.gov.in

The application submission is completely online, and no physical submission of documents is required.

There are no application fees for the scheme. Even after the selection of a startup by an incubator for assistance under this scheme, the startup shall not be charged any fees. The incubator or any of its staff members shall not charge any fee in cash or in kind from applicants or beneficiaries under the scheme for any process of selection, disbursement, incubation, or monitoring.

No. A central Call for Applications for startups will be hosted by DPIIT on Startup India portal. Applicants can apply for seed fund to any three incubators selected as disbursing partners for this scheme in order of their preference. All applications received will be shared online with respective incubators for further evaluation.

We maintain confidentiality of all the proposals we receive under the scheme. Your application is only shared with the EAC for the purpose of evaluation and monitoring.

We maintain confidentiality of all the proposals we receive under the scheme. Your application is only shared with the incubators you apply to for the purpose of evaluation, and with the EAC for the purpose of monitoring.

Yes, you can apply to the SISFS again after 3 months of receiving a rejection. This buffer time is given to ensure that you have worked on the feedback received from incubators and are ready to be considered again.

An Experts Advisory Committee (EAC) has been constituted by DPIIT will evaluate and select incubators for allotment of Seed Funds, monitor progress, and take all necessary measures for efficient utilization of funds towards the fulfilment of objectives of the Startup India Seed Fund Scheme.

Incubators shall be selected based on the following parameters: 1. Fulfillment of eligibility criteria 2. Quality of the team of Incubator 3. Available infrastructure, testing labs etc. 4. Composition of ISMC 5. Incubation support provided by incubator in last three years: - No. of startups incubated - No. of startups graduated, i.e. progressed from one stage of business development cycle to the next - No. of startups that raised follow on investments - No. of startups that crossed a revenue of Rs 1 Cr in last 1 year - 2-year survival rate of startups from the date of joining incubator 6. Funding support extended to incubatees in last three years: - Investment agreements signed between incubator and startups - No. of startups invested in - Total corpus allocated to incubatees - Total investments raised by incubatees from external sources 7. Mentoring provided to incubatees in last three years: - No. of mentors hired - Average mentoring hours allocated per startup per month - No. of IP (patents, copyrights, designs, and trademarks) registered by incubatees 8. Other support extended to incubatees in last three years: - Industry/Corporate connects - Events held for stakeholder engagements - Participation in other events 9. Number of startups that the incubator intends to support 10. Quantum of funds applied for, along with fund deployment plan with timelines 11. Any other relevant parameters that decided by the EAC

The Call for Applications for incubators will be open online throughout the year. Experts Advisory Committee (EAC) will convene at least quarterly to: 1. Evaluate the applications received during the period 2. Select incubators for funds under the Scheme 3. Decide the total amount of fund and number of installments in which it is to be allocated to each incubator 4. Specify milestones to be achieved by each incubator for release of installments

The Call for Applications for incubators will be open online throughout the year. Experts Advisory Committee (EAC) will convene at least quarterly to evaluate the applications received during the period, select incubators for funds under the Scheme and, decide the total amount of fund and number of installments in which it is to be allocated to each incubator.

Once the incubator has submitted its seed fund scheme application, they will get access to their respective dashboard. The dashboard can be accessed using their login credential to check the real-time application status.

Features of the scheme, as mentioned in Guidelines on https://dipp.gov.in/sites/default/files/Guidelines-FundScheme-Startup-29January2021.pdf, are non-negotiable. Any other terms, such as quantum of fund, quantum of each tranche, or milestones, are to be negotiated between the EAC and the incubator only. If a selected incubator chooses to not participate in the scheme for any reason, they can communicate the same to DPIIT and the EAC.

After approval by EAC, the following actionables must be completed before release of first instalment:- Before issuance of Sanction Order to Incubator from DPIIT (through email):- 1. To open a Trust and Retention Account in any Nationalized Bank by the Incubator and share the ECS mandate form signed by the bank in prescribed format 2. To share details on Public Financial Management System (PFMS) a. For Incubators already registered on PFMS: To share Unique PFMS Agency Code b. For Incubators not registered on PFMS: To share following information - i. Type of registration: ii. PAN Number: iii. Agency Name: iv. Act or Registration No: v. Registering Authority: vi. Registering Authority Name: vii. State Of Registration: viii. TIN Number: ix. TAN Number: x. Father/Husband Name: xi. Birth Date: xii. GST Number: xiii. Full Address: xiv. Contact Person: xv. Designation: xvi. Phone Number: xvii. STD Code: xviii. Phone Number: xix. Mobile Number: xx. Email: xxi. Agency Name In Bank: xxii. Bank Name: xxiii. IFSC Code: xxiv. Account Number: 3. To share the ID of registration on Darpan Portal of NITI Aayog (www.ngodarpan.gov.in). After Issuance of Sanction Order to ensure release of funds:- Below mentioned documents need to be shared through email at [email protected] and physical copy through post at the following address: (Startup India Section, Room No.: 435A, DPIIT, Ministry of Commerce & Industry, Udyog Bhawan, New Delhi - 110011) 1. To furnish TRA Agreement signed by the concerned bank and Incubator 2. To send pre-receipt in prescribed format affixing revenue stamp and signing across 3. To send an undertaking that it will comply with all the terms and conditions stipulated in the sanction order, including that the incubator will not avail any funds from any other Ministry/Department of Government of India or State Government for this purpose under SISFS.

Experts Advisory Committee (EAC) will convene at least quarterly to evaluate incubator applications and select incubators for funds under the Scheme. The exact quantum of grant and instalments for each incubator will be decided by the Experts Advisory Committee (EAC) based on its evaluation. DPIIT will release the first tranche of funds to the incubator as per the directions of EAC. When the cash-in-hand of the incubator goes below 10% of the total commitment by EAC, the Incubator may request for the next installment, which shall be released to incubator within 30 days of submission of proof of achievement of milestones. The incubator shall submit the interim progress update and utilisation certificate to initiate the release of subsequent installment of grant.

A Grant of up to [?]5 (five) crore would be provided to a selected incubator in milestone-based three (or) more installments. The exact quantum of grant and instalments for each incubator will be decided by the Experts Advisory Committee (EAC) based on its evaluation. The quantum of first installment may be up to 40% of total approved commitment.

Each selected incubator shall maintain an exclusive, project-specific Trust and Retention Account (TRA) with any nationalized bank.

1. Each Incubator shall provide information on progress of selected startups (see Para 10 of guidelines) real-time to Startup India through their online dashboards and shall present the same to EAC on a quarterly basis 2. Incubator shall also report return on investment for each Startup. 3. Each incubator shall report the funds sanctioned, received, and disbursed to each startup for each financial year 4. Incubators would also submit detailed report on status of utilization of funds and audited expenditure for each financial year

An incubator can quit the scheme. The procedure for the same depends on the stage of the incubator in the application process. 1. If the incubator has been selected and the first tranche is approved, they will be required to write a short letter mentioning the reason to pull out of the process. Post the acknowledgment of the letter, they will find a cancel application button on the application tracker tab of their dashboard which will allow them to cancel their application 2. If the incubator has already received the first tranche, it will be required to write a short letter mentioning the reason to pull out of the process. Post acknowledgment of the letter, they will be obliged to return the fund along with the interest accumulated within 15 days. Post the acknowledgment of refund, they will find a cancel application butt

1. An online call for applications shall be hosted for startups on an ongoing basis on the Startup India portal 2. Applicants can apply for seed fund to any three incubators selected as disbursing partners for this scheme in order of their preference 3. All applications received will be shared online with respective incubators for further evaluation 4. The incubators shall shortlist applicants as per eligibility criteria 5. Incubator may shortlist applicants based on their evaluation for a presentation before ISMC 6. ISMC shall evaluate applicants based on their submissions and presentations and select startups for Seed Fund within 45 days of receipt of application 7. All incubators shall provide information about progress of evaluation of startups real-time to Startup India portal 8. Selected startups shall receive seed funding under the respective incubator that selects them as beneficiaries as per their preference shared during application 9. Incubator shall conduct due diligence of the startups and sign legal agreement with them 10. For grants, the first installment to any selected startup shall be released not more than 60 days from receipt of application from the startup.

No. The ISMC of each incubator will be responsible for evaluating and selecting startups for seed support under the scheme.

For startups being supported through convertible debentures, or debt, or debt-linked instruments, funds shall be provided at a rate of interest of not more than prevailing repo rate. The tenure should be fixed at the time of sanctioning the loan by the incubator, which shall be not more than 60 months (5 years). A moratorium of up to 12 months may be provided for the startups. Because of the early stage of the startups, this shall be unsecured and no guarantee from promoter or third-party will be required.

Seed Fund to an eligible startup by the incubator shall be disbursed as follows: 1. Up to [?] 20 Lakhs as grant for validation of Proof of Concept, or prototype development, or product trials. The grant shall be disbursed in milestone-based installments. These milestones can be related to development of prototype, product testing, building a product ready for market launch, etc. 2. Up to[?] 50 Lakhs of investment for market entry, commercialization, or scaling up through convertible debentures or debt or debt-linked instruments. 3. Not more than 20% of the total grant to an incubator shall be given as grants to startups by incubator. 4. A startup applicant can avail seed support in the form of grant and debt/convertible debentures each once as per the guidelines of the scheme.

The startup shall bear the cost of any consultant hired to guide them finalizing their seed fund engagement with an incubator.

The Management Fee provisioned to each selected incubator will be utilized for administrative expenditure, selection and due diligence of startups, and monitoring of progress of beneficiary startups.

The incubator shall execute a legal agreement with the selected startups before the release of the first installment. The incubators shall ensure that the necessary terms and conditions, including milestones, related to the Seed Fund are clearly detailed in the agreement.

Yes. The incubator can make suitable changes to the sample agreement on the basis of the terms and conditions finalized with each selected startup. However, no mandatory clause of the Guidelines may be changed in this Agreement.

A startup selected by an incubator for assistance under this scheme shall not be charged any fees. The incubator or any of its staff members shall not charge any fee in cash or in kind from applicants or beneficiaries under the scheme for any process of selection, disbursement, incubation, or monitoring.

Each startup will be required to touch base with the incubator team and share updates with them at least once in 15 days via videoconferences or physical meetings. These updates should be shared on the scheme dashboard at least on a monthly basis.

The following shall be tracked and recorded by incubators for all beneficiary startups: 1. Progress of proof of concept 2. Progress of prototype development 3. Progress of product development 4. Progress of field trials 5. Progress of market launch 6. Quantum of loan, angel or VC funding raised 7. Jobs created by startup 8. Turnover of startup 9. Any other appropriate parameter Selected startups shall furnish details on above parameters to incubator in all progress reports. The incubator shall provide the above information real-time to Startup India through their online dashboards and shall present the same to EAC on a quarterly basis. Incubator shall also report return on investment for each Startup.

When the cash-in-hand of the incubator goes below 10% of the total commitment by EAC, the Incubator may request for the next installment, which shall be released to incubator within 30 days of submission of proof of achievement of milestones.

Rate of interest (as defined under GFR) on unutilized funds available with incubator shall be taken into account and adjusted at the time of next release. If the Incubator has not utilized at least 50% of the total commitment within the first 2 years, then the Incubator will not be eligible for any further drawdowns. It will return all unutilized funds along with interest. In case of poor performance of any selected incubator, EAC may decide to discontinue seed fund support to the incubator and take further action as may be required.

Any net return received from beneficiary startup can be used for further funding in startups as per guidelines of this scheme (net returns shall include principal, interest, and profits). In case of no further funding of startups using this money for three years, this shall be returned to DPIIT.

It is understood that every startup cannot be successful.

An incubator can reapply for funds under the Scheme when it has disbursed or committed its entire previously released grant.