Commerce and industry minister Piyush Goyal said on Monday that the government’s recently announced Seed Fund Scheme for new age firms will ensure adequate availability of funds, especially for startups with good ideas across various fields.
The minister also said that often good ideas are bought out by international venture capitalists at throwaway prices.
“I hope good ideas don’t get sold very cheap, particularly to foreign investors, who are able to identify a good idea...I hope this scheme supports our domestic entrepreneurs and their business ideas who often cannot take off due to the absence of critical funding at an early stage,” he added.
The Startup India Seed Fund scheme scheme was announced by Prime Minister Narendra Modi in January. It aims to offer financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization. Over the next four years, Rs 945 crore corpus will provide seed funding to eligible startups through incubators.
The scheme has been approved for a period of four years, starting 2021-22 and is expected to support about 3,600 startups.
Department for Promotion of Industry and Internal Trade (DPIIT) has set up an experts advisory committee to execute and monitor the scheme. According to the guidelines, grants of upto Rs 5 crore will be provided to the eligible incubators selected by the committee. The selected incubators will provide grants of up to Rs 20 lakh for validation of proof of concept, or prototype development, or product trials to startups. Investments of up to Rs 50 lakh will be provided to the startups for market entry, commercialization, or scaling up through convertible debentures or debt-linked instruments.
“The Seed Fund Scheme also envisions to promote virtual incubation for startups by enabling 300 incubators to support startups from all corners of the country. The impact of this will be visible by the spur of innovations in tier 2 and tier 3 regions of India,” an official statement said.
Goyal further said that the scheme will create a robust startup ecosystem, particularly in tier two and tier three towns of India, which are often deprived of adequate funding. “Would like to especially encourage innovators from rural areas to come forward and benefit from this scheme,” he added.