Incubator FAQs – Startup India Seed Fund Scheme (SISFS)

Articles discuss Incubator FAQs – Startup India Seed Fund Scheme (SISFS), The Scheme and Eligibility Criteria, Application Process, Evaluation Process, and After Selection of Startups.

Table of Contents

What is a Business Incubator, and how does it work?

A Startup Business Incubator is common for new firms — generally physically situated in one central location — that provides workspace, seed money, mentorship, and training to assist entrepreneurs in flourishing in their early stages.

Startup India Seed Fund Scheme (SISFS)

The Startup India Seed Fund Scheme seeks to help entrepreneurs with proof of concept, technical feasibility, product testing, market entrance, and industrialization. It would allow these businesses to progress to the point where they might seek funding from investors and venture capitalists and get loans from commercial banks and financial institutions.

Eligibility Criteria Startup India Seed Fund Scheme (SISFS)

At least 25 people must be able to sit in the incubator.
The central or state government must have aided the incubator
On the date of application, the incubator must have at least 5 companies in physical incubation.
On the date of application to the program, the incubator must have been active for at least two years.
A legal entity must be established for the incubator:

A society incorporated under the Societies Registration Act 1860 or
A trust incorporated under the Indian Trusts Act 1882 or
A private limited company incorporated under the Companies Act 1956 of the Companies Act 2013 or
A statutory body incorporated under an Act of the legislature

If the incubator has not received funding from the federal or state governments, the following steps should be taken:
The incubator must have been in existence for at least three years
The incubator has to have at least ten distinct companies receiving incubation upon the application date
The incubator must submit audited yearly reports for the previous two years

Start-up India Application Process

startupindia.gov.in is the official website of the Startup India Seed Fund Scheme.
Click the “Apply Now” link beneath the menu option on the homepage.
After that, go to the incubator section and click on apply now, then establish an account.
You must now enter your name, email address, phone number, and password.
You must type this OTP into the OTP box and then press the submit button. It’ll take you to the Startup India Portal.
Following that, you must select the login option. Put your Username and Password in the boxes below. After the Robot Verification, click Login. It will take you to the Persona Page of Start-up India.
Click on the Incubator Box after selecting the country. Following the Next Button, you will be routed to the incubator details form. On the screen, the application form will display. This application form requires you to fill out your basic information, contact information, point of contact information, and success stories. After that, you must select Save Profile.
You must log in to the portal once more. Now you must apply for the seed fund plan by clicking on apply now. On the screen, the application form will display. In this application form, you must fill all the needed fields, such as basic information, incubator team information, incubator support information, the fund needs information, etc. Your profile will now be sent to a moderator for review.
Thereafter, you must enter all of the required paperwork.
Now you must press the submit button.
You can apply for startup India seed funding by following this approach.

The evaluation process for Startup India Seed Funding

Entrepreneurs upload their proposals through the Startup India portal and receive an automated email. In order of priority, applicants can apply for seed funding to any of the three incubators chosen as disbursing partners for this scheme.
All submitted proposals will be shared online with the appropriate incubators for further review.
A request for resubmission will be made to the startup for all incomplete submissions.
The incubators will make a selection of applicants based on their qualifications.
The Incubator Seed Management Committee (ISMC) will review eligible proposals based on the eligibility criteria.
Incubators will choose applications for a demonstration before ISMC, depending on their assessment.
Upon 45 days of receiving an application, ISMC will assess candidates based on their submissions and demonstrations and choose businesses for the Seed Fund.
Selected businesses will get seed financing from the incubator that chooses them as beneficiaries based on preferences provided throughout the application procedure. All candidates would be able to track the status of their proposal in real-time on the Start-up India webpage.
Rejected applicants will also get an email notification.

I’ve been chosen for a seed fund, but I don’t want to continue the process. So, what do I do now?

Incubator FAQs – Startup India Seed Fund Scheme (SISFS). If the business has previously secured seed funding, it must submit a brief letter explaining why it is withdrawing from the program. They will have 15 days from the day they receive the letter to refund the funds. They will discover a cancel application when the reimbursement has been acknowledged.

FAQ’S for Start-Ups

Incubator FAQs – The Scheme and Eligibility Criteria

What is Startup India Seed Fund Scheme?

Startup India Seed Fund Scheme (SISFS) provides financial assistance to startups for proof of concept, prototype development, product trials, market entry, and commercialization. The Seed Fund will be disbursed to selected startups through eligible incubators across India. Eligible startups can apply for the scheme on the Startup India portal.

Who can apply to SISFS?

A startup recognized by DPIIT, incorporated not more than 2 years ago at the time of application, is invited to apply for the scheme. Detailed eligibility criteria can be found at https://seedfund.startupindia.gov.in/about.
To get DPIIT-recognized, please visit https://www.startupindia.gov.in/content/sih/en/startupgov/startup-recognition-page.html.

How much seed funding can a startup receive under the scheme?

Seed Fund to an eligible startup by the incubator shall be disbursed as follows:

Up to Rs. 20 Lakhs as a grant for validation of Proof of Concept, prototype development, or product trials. The grant shall be disbursed in milestone-based instalments. These milestones can be related to developing prototypes, product testing, building a product ready for market launch, etc.
Up to Rs. 50 Lakhs of investment for market entry, commercialization, or scaling up through convertible debentures or debt or debt-linked instruments
A startup applicant can avail of seed support in the form of grants and debt/convertible debentures each once per the scheme’s guidelines.

Can I apply for the scheme as an individual entrepreneur, or do I need a team?

No, individual entrepreneurs are not eligible to apply for support under the scheme. Only DPIIT recognized startups could apply for the SISFS. To get DPIIT-recognized, please visit https://www.startupindia.gov.in/content/sih/en/startupgov/startup-recognition-page.html.

Does the scheme support startups from specific sectors?

Incubator FAQs – Startup India Seed Fund Scheme (SISFS). SISFS is a sector agnostic scheme, which means that startups from any sector can apply for the scheme. However, preference would be given to startups creating innovative solutions in sectors such as social impact, waste management, water management, financial inclusion, education, agriculture, food processing, biotechnology, healthcare, energy, mobility, defence, space, railways, oil, and gas, textiles, etc. This list of sectors is indicative and not exhaustive.

Are there any minimum education qualification criteria for founders to apply for SISFS?

There is no minimum education qualification required for founders to apply for SISFS.

Are there any exemptions to any of the eligibility criteria?

No, there are no exemptions to any of the eligibility criteria. All the criteria must be met on the date of application submission.

What is a DPIIT-recognized startup?

An entity shall be considered a “Startup” –

Suppose it’s incorporated as either Private Limited Company or Registered Partnership Firm or Limited Liability Partnership. A sole proprietorship or a public limited company is not eligible as a startup.
If it is up to 10 years from the date of its incorporation/ registration
If its turnover for any of the financial years has not exceeded INR 100 crore
If it is working towards innovation, development, or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation
It should not have been formed by splitting up or reconstructing a business already in existence.

To get DPIIT-recognized, please visit
https://www.startupindia.gov.in/content/sih/en/startupgov/startup-recognition-page.html

What can I use the seed fund for?

Seed fund shall strictly not be used by startups to create any facilities and shall be utilized for the purpose it has been granted for. A grant can be used to validate Proof of Concept, prototype development, or product trials. A debt/ convertible debenture can be used for Market entry, Commercialization, or Scaling up. Incubator FAQs – Startup India Seed Fund Scheme (SISFS).

Incubator FAQs – Application Process

How can I apply to SISFS?

An online call for applications is hosted on an ongoing basis on the Startup India portal will be opened soon. DPIIT-recognized startups can log in using the credentials used during the startup recognition process to apply for the scheme.

Is the SISFS application process completely online?

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

Is there a fee for applying to this scheme?

There are no application fees for the scheme. Even after selecting 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.

Why is the application form allowing me to apply to 3 incubators?

The scheme aims to maximize the chances of each startup applicant getting supported through seed funds. It also aims to allow startups to get supported by a relevant incubator that can give the necessary guidance to them. Thus, we give startups an option to apply to 3 different incubators according to their preference. For example, if incubators at Preference 1 and Preference 2 select a startup, the funding shall be given by the Preference 1 incubator. If Preference 1 incubator rejects and Preference 2 incubator selects, the funding shall be given by the incubator at Preference 2, and so on. Incubator FAQs – Startup India Seed Fund Scheme (SISFS).

How do I choose the incubators to apply to?

The incubator preference should be filled at the startup applicants’ discretion. Applicants can choose incubators basis their sector, stage, business needs, and strategic goals. Details of the incubators which are part of the scheme will be available on Seed Fund Portal soon.

I can see an option to apply either for a grant or convertible debenture, or loan instruments. What is the difference between these? How do I choose?

A grant and debt/convertible debenture are different financing instruments to cater to different startup needs. The following table can help an applicant startup decide which instrument shall suit their needs better. The final decision on this should be at the startup applicants’ discretion.

Parameter	Grant	Debt/Convertible Debenture
Debt/Convertible Debenture	Ideation Stage	Commercialization & Scale-up stage
Need to be Catered by the fund	Validation of Proof of Concept, or Prototype development, or Product trials	Market entry, Commercialization, or Scaling up
Max. funding amount	Up to Rs. 20 Lakhs	Upto Rs. 50 Lakhs
Financing Terms	Under this scheme, the grant will be disbursed in milestone-based instalments. These milestones can be related to developing prototypes, product testing, building a product ready for market launch, etc.	For startups being supported through convertible debentures, debt, or debt-linked instruments, funds shall be provided at an interest rate of not more than the prevailing repo rate. Because of the early stage of the startups, this shall be unsecured, and no guarantee from promoter or third party will be required. The tenure should be fixed when 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.

What are the terms and conditions of the seed fund under the scheme?

The scheme guidelines are available at https://www.startupindia.gov.in/content/dam/invest-india/Templates/public/Guidelines%20for%20Startup%20India%20Seed%20Fund%20Scheme.pdf.

Is the information provided by me in the application form kept confidential?

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

Do I need to be physically present at an incubator’s premises to avail seed funds under this scheme?

It is not mandatory to be physically present at the incubator’s location to apply for the scheme. For startups being monitored virtually by the incubator, it is required for both parties to touch base every 30 days. This is to ensure that an incubator will be able to keep a check on the startup’s progress, and a startup will be able to take guidance for their business from the incubator.

Can I apply to the Startup India Seed Fund Scheme again after receiving a rejection?

Incubator FAQs – Startup India Seed Fund Scheme (SISFS). 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.

Incubator FAQs – Evaluation Process

Who is going to review my application?

The application of each startup will be reviewed by an Incubator Seed Management Committee (ISMC) formed by the incubators you apply to. The committee will also be responsible for future assessment of the startup’s performance and disbursement of further tranches. Each ISMC constitutes of the following members:

Nominee of Incubator (Chairman)
A representative from the State Government’s Startup Nodal Team
A representative of a Venture Capital Fund or Angel Network
A domain expert from Industry
A domain expert from academia
Two successful Entrepreneurs
Any other relevant Stakeholder

What are the parameters for the evaluation of startup applicants?

Criteria	Details
Is there a need for this Idea?	Market size, what market gap is it filling, does it solve a real-world problem?
Feasibility	Feasibility and reasonability of the technical claims, the methodology used/ to be used for PoC and validation, a roadmap for product development
Potential Impact	Customer demographic & the technology’s effect on these, national importance (if any)
Novelty	USP of the technology, associated IP
Team	Strength of the team, Technical and business expertise
Fund Utilization Plan	Roadmap of money utilization
Additional Parameters	Any additional parameters considered appropriate by the incubator
Presentation	Overall assessment

What is the process of evaluation?

The startups shall be selected through an open, transparent, and fair process, comprising, inter-alia:

Startups submit their application on the Startup India portal, and an email confirmation is shared with them. Applicants can apply for seed funds 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.
For all incomplete applications, a prompt of resubmission will be sent to the startup.
The incubators shall shortlist applicants as per eligibility criteria
Eligible applications will be evaluated by Incubator Seed Management Committee (ISMC) using the following criteria:

	Criteria	Details	The weightage (%)
1	Is there a need for this Idea?	Market size, what market gap is it filling, does it solve a real-world problem?	p
2	Feasibility	Feasibility and reasonability of the technical claims, methodology used/ to be used for PoC and validation, a roadmap for product development	q
3	Potential Impact	Customer demographic & the technology’s effect on these, national importance (if any)	r
4	Novelty	USP of the technology, associated IP	s
5	Team	Strength of the team, Technical and business expertise	t
6	Fund Utilization Plan	Roadmap of money utilization	u
7	Additional Parameters	Any additional parameters considered appropriate by the incubator	v
8	Presentation	USP of the technology, associated IP	Overall assessment
			100%
Weights for criteria (p, q, r, s, t, u, v, w) may be assigned by each incubator differently.

Incubators may shortlist applicants based on their evaluation for a presentation before ISMC.
ISMC shall evaluate applicants based on their submissions and presentations and select startups for Seed Fund within 45 days of receipt of the application
Selected startups shall receive seed funding under the respective incubator that selects them as beneficiaries per their preference shared during application (for example, if incubators at Preference 1 and Preference 2 select a startup, the funding shall be given by Preference 1 incubator. If Preference 1 incubator rejects and Preference 2 incubator selects, the funding shall be given by incubator at Preference 2, and so on.)
All applicants will be able to track the progress of their application on the Startup India portal on a real-time basis.
Applicants who are rejected will also be notified through email

How much time will it take for my application to get processed?

After receiving the application, each Incubator shall evaluate applicants based on their submissions and presentations and select startups for Seed Fund within 45 days.

How can I track the status of my application?

Once the startup has submitted its seed fund scheme application, a dashboard can be accessed using their login credential to check the real-time application status: incubator FAQs – Startup India Seed Fund Scheme (SISFS).

Incubator FAQs – After Selection of Startups

I had filled the order of preference for incubators while applying. Can I change this preference order after application?

Applications, once filled and submitted, are final. The preference order of the incubator cannot be changed at a later stage.

I have been selected for a seed fund, but the incubator’s quantum of fund/ terms and conditions is not agreeable. What should I do?

The quantum and terms for the seed fund assistance are negotiated between the startup and the incubator only. The mandatory elements of the scheme can be seen in the Guidelines on https://dipp.gov.in/sites/default/files/Guidelines-FundScheme-Startup-29January2021.pdf; anything beyond this can be negotiated. In case of any issue, kindly reach out to us using the grievance form at https://seedfund.startupindia.gov.in/contact.

I need to hire a legal or financial consultant for my seed fund discussions with the incubator. Who will bear the cost of these services?

The startup shall bear the cost of any consultants required to guide them through documentation, negotiations with incubator, signing an agreement with incubator, reporting progress after approval of seed fund, etc. Hiring such an external consultant is not mandatory at all and shall be at the discretion of the startup.

I have been selected for the seed fund. Is it mandatory to sign a legal agreement with the incubator?

Yes, it is mandatory to sign a legal agreement with the incubator to avail of the seed fund you have been granted.

I had applied for a certain amount of seed fund, but the approved amount is lower/higher. Can I negotiate this?

The applicant can discuss the quantum of seed funds and the milestones associated with the tranches to be disbursed with the Incubator Seed Management Committee. The decision of the Committee shall be final.

Will my living expenses be borne if I want to be physically incubated at the incubator funding me?

The selected incubator shall provide 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 showcase in various national and international events. Any other expenses, including living expenses, shall be borne by the startup.

How much time will it take for the first instalment of the seed fund to be released to me?

For grants, the first instalment to any selected startup shall be released not more than 60 days from receipt of application from the startup. The startup shall submit the interim progress update and utilization certificate to initiate the release of subsequent instalment of the grant. For debt or convertible debentures, a similar timeline will be aimed, but it is understood that due diligence and documentation in these cases can sometimes be time-consuming. Incubator FAQs – Startup India Seed Fund Scheme (SISFS).

Where can I receive the seed funds?

Startups will receive the funds in their company bank accounts.

How often do I have to report back my progress after receiving the seed fund?

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 every month. In case of milestone-based disbursements, the startup shall submit the interim progress update and utilization certificate to initiate the release of subsequent instalments of the grant. The startup shall also submit a final report and audited utilization certificate at the end of the project duration.

I have been selected for a seed fund, but I would not like to take the process forward. What do I do?

A startup can choose not to avail of the support being offered to them under the scheme. The procedure for the same depends on the stage of the startup in the application process.

If the startup has been selected and the seed funding has been approved, they will be required to write a short letter mentioning the reason to pull out of the process. Post the letter’s acknowledgement; they will find a cancel application button on the application tracker tab of their dashboard, which will allow them to cancel their application.
If the startup has already received any seed fund, it will be required to write a short letter mentioning the reason to pull out of the process. Post acknowledgement of the letter, they will be required to return the fund within 15 days. Post the acknowledgement of refund; they will find a cancel application button on the application tracker tab of their dashboard.

What if my startup fails after receiving the seed fund? Will there be any liability on me or my company?

It is understood that every startup cannot be successful. The legal agreement you sign with the incubator will have provisions related to the failure of startups supported under the scheme. For failed ventures, the entrepreneur shall share their learnings and the reasons for failure in the report and submit this along with the utilization certificate for the fund amount.

I have some complaints regarding the incubator funding me. Who shall I reach out to?

In case of any issue, kindly reach out to us using the grievance form at https://seedfund.startupindia.gov.in/contact.

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