GOI launches landmark Startup India Seed Fund Scheme (SISFS)

The Scheme which has been launched in April will disburse seed funding worth US$ 126mn to 3,600 eligible startups over four years

April 18, 2021

Startups hailing from Tier-II and Tier-III cities will receive special focus as against the norm.

Three types of funding will be disbursed under the aegis of the programme through a DPIIT portal.

Virtual incubation facilities will be extended to startups across the nation.

SaaS, gaming, entertainment, home delivery, FMCG startups have received a majority of 2020 funding.

The Startup India Seed Fund Scheme (SISFS) has been officially launched today post the announcement by Prime Minister Sh Narendra Modi on January 16, 2021. The scheme will see the roll-out of a seed fund worth US$ 126mn (INR 945 crore) over a period of four years so as to target close to 3,600 eligible startups across the nation. Union Minister Sh Piyush Goyal highlighted that the fund would come to the aid of startups based in Tier-II and Tier-III cities that usually do not usually receive a majority of the seed funding. The SISFS initiative will have an online platform to speed up the application process for funding through incubators. Under the guidance of the Department for Promotion of Industry and Internal Trade (DPIIT), different types of grants will be provided as follows : (i) US$ 66,680 (INR 50 lakhs) for entry-level startups for the purpose of commercialization and market entry, (ii) US$ 666,805 (INR 5 crores) for incubators, (iii) US$ 266,722 (INR 20 lakhs) for startup product trials, Proof of Concept and prototype development. Virtual incubation facilities will be extended by 300 incubators for promising startups from all parts of India. The Government of India’s approach to the startup landscape is encapsulated by the motto ‘Connect, Collaborate & Catalyse’ which continues to enhance India’s quest for innovation and excellence in all domains. Parties interested in availing the scheme can visit the Startup India platform for more information. 

The startup funding ecosystem in India witnessed a 50% decrease with only 34 deals secured as of March 2020. The seed funding space had previously witnessed a 29% slump in 2017 in comparison to the 2015 quantum. Given the upheavals ushered in by the pandemic, FMCG, EdTech, last-mile delivery, cybersecurity, entertainment and FinTech startups are receiving a bulk of the funding. Opportunities have also emerged in the gaming, UPI, SaaS, insurance, B2B agriculture marketing, sports ecosystems and the gig economy. With potentially pathbreaking schemes like the Startup India Seed Fund Scheme (SISFS), the startup ecosystem can expect to see greater funding and most importantly, sustain the innovative potential of rural ideators.