Everything to know about: Startup India Seed Fund Scheme (SISFS Scheme)

 

India’s entrepreneurial ecosystem has grown tremendously over the last decade, supported by government-backed initiatives, technology adoption, and a surge of innovative business ideas. To further strengthen this momentum, the Government of India launched the Startup India Seed Fund Scheme (SISFS), a landmark initiative designed to ease the critical financial challenges faced by early-stage startups.


Introduced by Shri Piyush Goyal, Minister for Railways, Commerce and Industry, Consumer Affairs, and Food & Public Distribution, the SISFS provides startups with essential seed funding to develop proof of concept, create prototypes, conduct product trials, enter the market, and begin commercialisation.


This early-stage support bridges the funding gap that often prevents new businesses from transforming innovative ideas into viable, scalable companies.


What is the Startup India Seed Fund Scheme (SISFS)?


The Startup India Seed Fund Scheme is a government-backed initiative offering financial assistance to startups throughout their early life cycle, helping them progress from ideation to prototyping, testing, product development, and final market entry.


Startups can apply through the Startup India portal, and once selected, funds are disbursed through incubators across India. By enabling easier access to seed funding, the SISFS aims to improve the likelihood that startups become investment-ready and attract further funding through banks, angel investors, and venture capitalists.


The government has allocated INR 945 crore for the scheme, aiming to support around 3,600 startups through 300 incubators over four years.


Seed funding is especially important because conventional funding avenues—like angel and VC investments—usually become available only after substantial proof of concept. Meanwhile, banks typically require collateral, which early-stage entrepreneurs often lack. Thus, SISFS fills a crucial gap by empowering startups at the most vulnerable stages.


How Does the SISFS Operate?


The scheme functions through a structured and transparent mechanism:


  • DPIIT (Department for Promotion of Industry and Internal Trade) serves as the nodal body.
  • An Experts Advisory Committee (EAC) selects incubators eligible for fund distribution.
  • Both government-supported and private incubators with 2–3 years of experience can participate.
  • Startups must be DPIIT-recognised and not more than 2 years old at the time of application.
  • Funds are disbursed to startups indirectly through incubators, ensuring monitoring and performance-based utilisation.

This framework ensures a streamlined process, bridging early-stage funding challenges and nurturing startups toward successful growth.


Eligibility Criteria for Startups


To apply for SISFS, startups must meet the following conditions:


  • Be DPIIT-recognised and incorporated within the last two years.
  • Offer a product or service with strong market potential, scalability, and commercial viability.
  • Use technology in their core product, service, business model, or operations.
  • Preference is given to sectors like:
    • Social impact
    • Water & waste management
    • Education
    • Financial inclusion
    • Agriculture
    • Biotechnology
    • Health
    • Energy
    • Mobility
    • Defence, railways, textiles, and more
  • Must not have received more than ₹10 lakhs from any other government scheme.
  • Must be 51% owned by Indian promoters at the time of application.
  • Can receive seed support only once in the form of grants or convertible debentures.

Eligibility Criteria for Incubators


Incubators must meet strict standards to participate:

  • They must be a legally recognised entity such as a society, trust, private limited company, or statutory body.
  • Must be operational for at least two years.
  • Must provide infrastructure to accommodate 25+ incubatees.
  • Must have at least five startups currently incubating.
  • Must employ an experienced full-time CEO and team.
  • Should not distribute seed funds from third-party private sources.
  • Must have received government assistance, or else meet additional criteria like being operational for three years with 10 active startups and audited reports.

Maximum Seed Funding Available Under SISFS


Startups can avail funding in two forms:


1. Grants (Up to ₹20 Lakhs)

For:

  • Proof of concept
  • Prototype development
  • Product trials

Disbursed in milestone-based instalments depending on progress.


2. Debt or Convertible Debentures (Up to ₹50 Lakhs)

For:

  • Market entry
  • Commercialisation
  • Scaling operations

This structured funding ensures that startups receive support aligned with their actual growth and needs.


Top Benefits of SISFS


The scheme brings significant advantages to both startups and India’s overall entrepreneurial landscape:


  • Bridges the funding gap during the earliest and riskiest stages.
  • Supports idea validation through a milestone-based funding model.
  • Offers hands-on mentorship across strategy, finance, legal, HR, and technical areas.
  • Enhances startup credibility, helping attract private capital.
  • Focuses on high-growth sectors such as deep tech, fintech, healthcare, and agriculture.
  • Helps startups move faster from ideation to commercialisation.
  • Encourages innovation and contributes to India’s vision of becoming a global startup hub.

How to Apply for the SISFS Scheme


Step 1: Check Your Eligibility


Ensure your startup is DPIIT-recognised, less than two years old, tech-driven, and at least 51% Indian-owned.


Step 2: Choose Eligible Incubators


Browse the list of government-approved incubators on the SISFS portal. You may apply to up to three incubators.


Step 3: Prepare the Application


You will need:


  • Incorporation documents
  • DPIIT recognition certificate
  • Business plan
  • Founder details
  • Budget and milestone roadmap
  • Traction or prototype details (if any)

Step 4: Submit the Application


Apply online through the incubator or SISFS portal with all required documents.


Step 5: Incubator Evaluation


Your startup will be evaluated by the incubator’s Internal Startup Management Committee (ISMC) based on innovation, feasibility, and scalability. Evaluation may include pitches and interviews.


Step 6: Fund Disbursement


If selected, you will receive milestone-based funding of up to:


  • ₹20 lakhs (grant)
  • ₹50 lakhs (debt/convertible debentures)

Incubators may charge a maximum 5% management fee.


Frequently Asked Questions


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

No, individual entrepreneurs are not permitted to apply for assistance under the scheme. Only Startups recognised by DPIIT will be able to apply for SISFS. Please visit https://www.startupindia.gov.in/content/sih/en/startupgov/startup-recognition-page.html.


  • Does the SISF scheme support startups from specific sectors?

There is no restriction on the geographical or sectoral location of application for SISFS, so all Startups are eligible to apply. Those working on innovative solutions in social impact, waste and water management, financial inclusion, education, agriculture, food processing, biotechnology, health, energy, mobility, defence, space, railways, oil and gas, textiles, etc., could have preferential treatment. This is not an exhaustive list; it is simply examples.


  • Are there any minimum educational qualifications for founders to apply for SISFS?

No minimum educational qualification is required for founders to apply for SISFS.


  • How can I apply to SISFS?

Applications will soon open on the Startup India portal and will be accepted on an ongoing basis. If DPIIT recognises your startup, you can log in with the same credentials you used for startup recognition to apply.


Conclusion


The Startup India Seed Fund Scheme is a game-changing initiative for early-stage entrepreneurs. It provides crucial financial backing, mentorship, and a structured path to market validation. For founders working on innovative, tech-led solutions, SISFS can act as a launchpad to build scalable, impactful businesses.


With India continuing to rise as a global innovation hub, schemes like SISFS play a pivotal role in nurturing talent, supporting risk-takers, and accelerating the country’s economic growth through entrepreneurship.

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