Seed Funding from the Government for the Start-ups

Last Updated at: February 18, 2020
383
Seed Funding from the Government for the Start-ups

This post is written by CA Ghanasyam 

 

In Union Budget 2020, the government plans to set up an Investment Clearance Cell for early-stage start-ups. Interestingly, this cell will offer “end-to-end” support and facilitation for investment, and clearance for both centre and state levels. Start-ups raise funding in the form of seed funds.

What is this seed fund? How new businesses will get benefitted. Let’s find out.

What is Seed funding?

  • Seed funding is an initial stage investment that helps potentially a new business to begin and establish its idea/process before the company starts generating revenues or until further investment.
  • Investment is a monetary fuel to any start-up company and the Seed Funding is the first drop of it.
  • Seed funding is also known as Seed Capital (or) Seed money (or) Start-up fund (or) Initial funding etc.

Seed Funding from the Government for the Start-ups

As you can see from the above fig. that, a start-up company at the beginning requires a huge push for its uplift in the competitive markets to establish itself.

These seed funds help the start-ups to fuel their R&D, Product development, Market promotions, etc.

Different Types of Seed funding

  • Crowdfunding
  • Corporate Seed funding
  • Incubators
  • Accelerators
  • Angel Investors
  • Bootstrapping (Personal funding)
  • Debt funding
  • Venture Capital funding
  • Angel funds or Angel Investors

Seed funding from the Government of India

The Newly elected in 2014 has heard Central government the voice of young entrepreneurs in India, its hunger and eagerness to grow bigger and powerful. The government in this regard has taken a step to boost the start-ups, R &D, and Financial Infrastructure to achieve this.

GOI has so far recognized the following sector for the seed funding. They are

Seed Funding from the Government for the Start-ups

Accordingly, it has set up (FFS) Fund of funds for Start-ups under SIDBI to extend its support to the Indian start-ups.

This FFS setup in 2016 under SIDBI, makes downstream investment in Venture Capitals (VC funds) and AIF’s (Alternate Investment funds) registered under SEBI which will invest in Start-ups.

Seed Funding from the Government for the Start-ups

How Start-ups get seed funding from GOI?

To get the seed funding from the GOI

Step 1:

Register in Start India portal and get certified as per the process listed.

Step 2:

Once, registered in the Start-up India Website, the Start-up shall analyse the metrics to be satisfied to get the seed fund.

Step 3:

Start-up will not get seed fund directly from GOI, it will get seed from the AIF’s (Venture Capitalist registered under SEBI)

Step 4:

Start-up companies have to approach the AIF’s for presenting their Ideas/Innovation. These AIF’s are Venture Capitalist registered under SEBI

Step 5:

Once the idea is approved, the AIF will give analysis and recommendation to SIDBI to disburse the said seed fund to such start-ups.

Ask for Free Legal Advice

Repayment of Seed funding

  1. SIDBI (Small Industries Development Bank of India) while disbursing the Seed funding, will provide for terms and conditions & tenure for the repayment of the Seed funding.
Financial Year Government Seed fund Corpus No. of Start-ups got the benefit
2015-16 500 Crore  

 

A total of 243 Start-ups received Seed funding from GOI.

2016-17 100 Crore
2017-18 1,150 Crore
2018-19 1,115 Crore
2019-20 431 Crore
2020-21 (Estimate) 1,054 Crore


Other Ways of getting seed fund from GOI’s Start-up action plan

Apart from above, there are other ways where the GOI is helping the start-ups to get their seed fund through and Price Incentive schemes money contest.

These contest (or) Workshops are organized by the GOI in collaboration with various sponsors across the world

  • Application form following is welcomed
  1. Students (As a team of 3 Members)
  2. Ideation stage startups
  3. Validation stage startups
  4. Early traction stage startups
  5. Scaling stage startups
  6. Individual Innovators
  • Benefits
  1. Top Shortlisted teams/members receive the member to present their innovative ideas and concepts
  2. Best ideas will be selected, who will then receive seed funding/price money from the Government

 

0

Seed Funding from the Government for the Start-ups

383

This post is written by CA Ghanasyam 

 

In Union Budget 2020, the government plans to set up an Investment Clearance Cell for early-stage start-ups. Interestingly, this cell will offer “end-to-end” support and facilitation for investment, and clearance for both centre and state levels. Start-ups raise funding in the form of seed funds.

What is this seed fund? How new businesses will get benefitted. Let’s find out.

What is Seed funding?

  • Seed funding is an initial stage investment that helps potentially a new business to begin and establish its idea/process before the company starts generating revenues or until further investment.
  • Investment is a monetary fuel to any start-up company and the Seed Funding is the first drop of it.
  • Seed funding is also known as Seed Capital (or) Seed money (or) Start-up fund (or) Initial funding etc.

Seed Funding from the Government for the Start-ups

As you can see from the above fig. that, a start-up company at the beginning requires a huge push for its uplift in the competitive markets to establish itself.

These seed funds help the start-ups to fuel their R&D, Product development, Market promotions, etc.

Different Types of Seed funding

  • Crowdfunding
  • Corporate Seed funding
  • Incubators
  • Accelerators
  • Angel Investors
  • Bootstrapping (Personal funding)
  • Debt funding
  • Venture Capital funding
  • Angel funds or Angel Investors

Seed funding from the Government of India

The Newly elected in 2014 has heard Central government the voice of young entrepreneurs in India, its hunger and eagerness to grow bigger and powerful. The government in this regard has taken a step to boost the start-ups, R &D, and Financial Infrastructure to achieve this.

GOI has so far recognized the following sector for the seed funding. They are

Seed Funding from the Government for the Start-ups

Accordingly, it has set up (FFS) Fund of funds for Start-ups under SIDBI to extend its support to the Indian start-ups.

This FFS setup in 2016 under SIDBI, makes downstream investment in Venture Capitals (VC funds) and AIF’s (Alternate Investment funds) registered under SEBI which will invest in Start-ups.

Seed Funding from the Government for the Start-ups

How Start-ups get seed funding from GOI?

To get the seed funding from the GOI

Step 1:

Register in Start India portal and get certified as per the process listed.

Step 2:

Once, registered in the Start-up India Website, the Start-up shall analyse the metrics to be satisfied to get the seed fund.

Step 3:

Start-up will not get seed fund directly from GOI, it will get seed from the AIF’s (Venture Capitalist registered under SEBI)

Step 4:

Start-up companies have to approach the AIF’s for presenting their Ideas/Innovation. These AIF’s are Venture Capitalist registered under SEBI

Step 5:

Once the idea is approved, the AIF will give analysis and recommendation to SIDBI to disburse the said seed fund to such start-ups.

Ask for Free Legal Advice

Repayment of Seed funding

  1. SIDBI (Small Industries Development Bank of India) while disbursing the Seed funding, will provide for terms and conditions & tenure for the repayment of the Seed funding.
Financial Year Government Seed fund Corpus No. of Start-ups got the benefit
2015-16 500 Crore  

 

A total of 243 Start-ups received Seed funding from GOI.

2016-17 100 Crore
2017-18 1,150 Crore
2018-19 1,115 Crore
2019-20 431 Crore
2020-21 (Estimate) 1,054 Crore


Other Ways of getting seed fund from GOI’s Start-up action plan

Apart from above, there are other ways where the GOI is helping the start-ups to get their seed fund through and Price Incentive schemes money contest.

These contest (or) Workshops are organized by the GOI in collaboration with various sponsors across the world

  • Application form following is welcomed
  1. Students (As a team of 3 Members)
  2. Ideation stage startups
  3. Validation stage startups
  4. Early traction stage startups
  5. Scaling stage startups
  6. Individual Innovators
  • Benefits
  1. Top Shortlisted teams/members receive the member to present their innovative ideas and concepts
  2. Best ideas will be selected, who will then receive seed funding/price money from the Government

 

0

FAQs

No FAQs found

Add a Question


No Record Found
SHARE