Focus: GS III- Growth and Development
Why in News?
As on 30th July 2022, of the corpus of Rs. 945 crore, Rs. 375.25 crore have been approved to 102 incubators under the Startup India Seed Fund Scheme (SISFS).
About Seed Fund Scheme:
- The scheme aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization.
- 945 Crore corpus will be divided over the next 4 years for providing seed funding to eligible startups through eligible incubators across India.
- The scheme is expected to support about 3600 startups.
- It will Secure seed funding, Inspire innovation, Support transformative ideas, Facilitate implementation, and Start startup revolution.
- It will create a robust startup ecosystem, particularly in Tier 2 and Tier 3 towns of India, which are often deprived of adequate funding.
- Objective: Fund has been set up to provide initial capital to the startups. After that start-ups will be provided with the Govt. Guarantees, to help them raise debt capital.
- Funding: The Scheme will offer startups up to Rs. 20 Lakhs as a grant for Proof of Concept. Upto Rs. 50 Lakhs can also be availed through convertible debentures or debt or debt-linked instruments for commercialization.
What is Seed Funding?
- Seed funding or seed-stage funding is a very early investment which aims at helping a business grow and generating its own capital.
- Also referred to as seed money or seed capital, investors often get an equity stake in exchange for the capital invested.
- The investors can themselves be the founders and use their savings as seed money for their new company — also known as bootstrapping.