Government Representatives & Insustry experts
Operational for atleast 2-3 years
Incorporated less than 2 years ago
Repeat Incubator Applicants for Seed Fund- 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.
Note:All the startups that are selected to get the benefit of this scheme are required to provide details on the above parameter to the incubator. The incubator is required to provide the information given by the startup through the online dashboard and also present this information to the expert advisory committee quarterly. Other than that the incubator is also required to report the return on investment of the startup
Step 1: Incorporation of the business
Incorporating your business in Limited Liability Partnership or a Private Limited company or a Firm. You must follow the ordinary procedures as a certificate of incorporation, Pan card and other compliances related to the particular type of business. Registration must be after or in 1st April 2016.
Step 2: Registering business with the startup India scheme
Registering for a startup is a very easy process. All you need to do is upload a form online with all requisite forms startup India website. The entire process is simplified and made online by the government.
Step 3: Documents required to be upload online (upload only .pdf format)
Recommendation letter from the following:
Step 4: Choose if you would like to have tax benefits
After getting all the work done you need to go through one more step of getting an approval from the inter-ministry board. It totally depends upon the ministry that they will approve your application or not. Once they approve your application then you will able to register your startup with tax benefits. Startups recognized by DIPP can avail IPR related benefits without requiring any further license.
Step 5: Self-certify your documentation
You must self-certify all your documents before filing for the recognition. Check your company is qualifying all the required conditions to avail the benefits i.e within first 7 years you can apply, ₹25 crore turnover must not exceed, innovation in the product is must, the idea must not be copied, your business must not result from any reconstruction or splitting
Step 6: Getting recognition number
You are all set to apply for the recognition and on applying you will be allotted with one unique recognition number. Certificate of recognition will be issued after going through the documents submitted by you. Remember, always take much care while uploading the documents, if it is found that you have upload forged document or some documents were required but you forget to upload then you shall be liable for the fine of 50% of the paid up capital of your startup with ₹25000 minimum fine.
Step 7: Other areas to look over
First of all, go to the official website of the startup India seed fund scheme The home page will open before you On the homepage, you have to click on apply now
After that, you have to click on apply now under for incubator section Now you have to click on create an account A new page will appear before you On this new page, you have to enter your name, email id, mobile number, and password
After that, you have to click on the register An OTP will send to your registered ID You have to enter this OTP into the OTP box Now you have to click on submit
After that, you have to click on the login option Now you have to select your country and click on the input letterbox & click on the next option The Application form will appear before you where you have to enter your basic info, contact info, point of contact info, and success stories in this application form
After that, you have to click on save profile Now you are profile will send to a moderator for approval
You have to again login on to the portal Now you have to click on apply now under the seed fund scheme The Application form will appear before you You have to enter all the required details in this application form like general detail, incubator team detail, incubator support detail, fund requirement details, etc
After that, you have to upload all the necessary documents Now you have to click on submit
First of all you have to go to the official website of the StartUp India Seed Fund Scheme. After this, the homepage of the website will open in front of you. On the homepage of the website, you have to click on the option of “StartUp India Seed Fund Scheme”. After this, a new page will open in front of you. Here on this page you need to click on the Create an Account link and the registration form will open in front of you.
Fill this form with required details like Name, Email ID, Mobile Number, Password , Confirm Password. After successful registration login on the portal and the user Dashboard will open on your device screen. Go to the apply now tab and application form will open in front of you.
In this application form enter Enter the subtleties of the startup in the principal area, the contact number in the subsequent segment, the class depiction in the following segment, and afterward your advantage as demonstrated in the structure. Online candidates can pick any of the three Incubators according to their decision.
All applications got, will be imparted online to the particular Incubators for additional assessment. Likewise, up-and-comers applying to the plan ought to submit insights concerning the group profile, issue proclamation, item/administration outline, plan of action, client profile, market size, measure of cash, and so forth
At that point, the Incubators will waitlist the competitors who meet all the qualification measures. Chosen candidates should make a show before ISMC. After the show, the startup should make reference to the advancement on the Startup India gateway.
All chosen new companies will get seed cash from the public authority according to the decision of the candidates. Kindly note that dismissed candidates have the chance to apply once more after 3 months of receiving a rejection
When it comes to getting investment, a business plan and other documents are essential ways to communicate your company as an investment opportunity investors shouldn’t miss out on, particularly as they will be inundated with requests for investment.
Due diligence is the term given to the investigatory work done around a transaction such as investment where the investor conducts detailed research into the financial, corporate and contractual status of your company. Your investors will usually make a preliminary request for you to provide documents which will include your corporate information, budgets, forecasts, key supplier/ customer contracts in place, employees and employment contracts, schedule of intellectual property, a schedule of property or leases, a list of equipment owned by the company, details of other investors, shareholders, and bank loans, any existing or future litigation, tax and GST filings and insurance documentation, and, if applicable, your data protection policies.
The term sheet sets out the terms on which your investor is going to give you funding be that by taking equity in your company, a convertible note, or another arrangement. It will also set out any conditions you will have to meet in order to successfully gain funding. It will also include decisions about dilution of shares and decision making rights. The term sheet is not necessarily a legally binding agreement; it is just the headline terms of the long form documents listed in Step 4 before the parties go through the more minor details. The term sheet can be prepared by your side or the investor’s, but in either case, it is important to seek advice from a solicitor to ensure that you understand each term, but also so that your solicitor may negotiate the most favorable terms possible on your behalf.
Once the headline terms have been agreed and the due diligence has been completed, your (or the investor’s) solicitor will start to prepare the long form documentation which will implement the funding arrangement. The following documentation will usually be involved:
Once all the specific conditions of investment have been met, the documents have been prepared and terms agreed, a closing date will be scheduled for the signing of the agreements and the transfer of the shares and funds, when you have successfully secured your first round of funding. ISMC shall evaluate applicants based on their submissions and presentations and select startups for Seed Fund within 45 days of receipt of application
Startups can apply for seed fund in any 3 incubators according to preferenceSelected startups shall receive seed funding under the respective incubator that selects them as beneficiaries as per their preference shared during application (for example, if incubators at Preference 1 and Preference 2 both 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.)For grants, the first installment 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 installment of 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 be sometimes time-consuming
The Startup India Seed Fund Scheme (SISFS) provides tax reliefs for early stage investors 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, in certain qualifying companies and are designed to encourage investment in startups. 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.
There are different rules on qualifying for each scheme, so you should seek the advice of a solicitor before you raise money to ensure that your company will meet the criteria, making you more attractive to investors. Before the investor can claim tax relief on their investment in your company, you will need to register yourself under the scheme and demonstrate that your company meets the criteria. Saying that you are eligible for SISFS under Section 56 and then not actually meeting the criteria may lose you your investors, so make sure you seek advice early on for how to meet these.
The incubator shall maintain an exclusive, project-specific Trust and Retention Account (TRA) with any nationalized bank. Funds under this scheme shall be released into that account in milestone-based three (or) more installments.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 DPIITEach incubator shall report the funds sanctioned, received, and disbursed to each startup for each financial year
Incubators would also submit detailed report on status of utilization of funds and audited expenditure for each financial year Startup shall submit final report and audited utilization certificate at the end of the project duration. For failed ventures, the entrepreneur will share his/her learning and the reasons for failure in the report and submit this along with the utilization certificate for the fund amount, However, it doesn’t stop there. Once you have external investors, your accounts and bookkeeping will need to be in immaculate condition and completely up to date. You will probably also have reporting obligations as part of your investment terms so at any given time you may need to report on the financial health of the company
Seed Fund to an eligible startup by the incubator shall be disbursed as follows:
|Debt/Convertible Debenture||Ideation Stage||Commercialization & Scale-up stage|
|Need Catered by the fund
Max. funding amount
|Validation of Proof of Concept, or Prototype development, or Product trials
Upto ₹ 20 Lakhs
|Market entry, Commercialization, or Scaling up
Upto ₹ 50 Lakhs
|Financing Terms||Under this scheme, the grant will be disbursed in milestone-based installments. These can be related to development of prototype, product testing, building a product ready for market launch, etc||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.|
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 performance of the startup and disbursement of further tranches. Each ISMC constitutes of the following members:
|Criteria Is there a need for this Idea?||Details 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 (Proof of Concept) 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|
|Roadmap of money utilization
Any additional parameters considered appropriate by the incubator
The startups shall be selected through an open, transparent and fair process, comprising, inter-alia: