Empowering Indian Startups: A Look at Government Schemes and Support (Navigating the Funding Landscape – Part 9 of 9)

The Indian government has been actively fostering the growth and development of the country’s startup ecosystem through various schemes and initiatives. These initiatives aim to provide financial support, facilitate investor connections, and promote entrepreneurship across diverse sectors and regions.

Let’s take a closer look at some of the key government schemes and support programs:

  1. SIDBI Fund of Funds Scheme: Managed by the Small Industries Development Bank of India (SIDBI), the SIDBI Fund of Funds Scheme is a significant initiative aimed at accelerating the growth of the Indian startup ecosystem. With a fund size of INR 10,000 crores, this scheme provides capital to SEBI-registered Alternative Investment Funds (AIFs), also known as daughter funds. The objective is to catalyze investments in startups and fuel their growth trajectory. As of February 28, 2023, the scheme has injected INR 14,828 crores, supporting 818 startups.
  2. Startup India Investor Connect: Launched in March 2023, the Startup India Investor Connect initiative aims to bridge the gap between startups and investors by facilitating connections across diverse sectors and stages. Leveraging AI-based matchmaking, this initiative ensures tailored connections between startups and potential investors. Additionally, it focuses on emerging cities and creates a virtual marketplace to foster collaboration and investment opportunities.
  3. Credit Guarantee Scheme for Startups (CGSS): The Credit Guarantee Scheme for Startups is designed to provide credit guarantees to startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT). Under this scheme, credit guarantees are extended by Scheduled Commercial Banks, Non-Banking Financial Companies (NBFCs), and Venture Debt Funds (VDFs). As of November 3, 2023, guarantees worth INR 132.13 crores have been issued to 46 startups, with a special focus on supporting women-led startups. Notably, INR 11.3 crore worth of guarantees have been allocated to seven women-led startups, positively impacting over 6,073 individuals across various industries and states.
  4. SAMRIDH Scheme: Supporting IT-based Startups for India’s Growth: The SAMRIDH scheme, an initiative by the Ministry of Electronics and Information Technology (MeitY), stands for Startup Accelerators of MeitY for Product Innovation, Development, and Growth. Launched on August 25, 2021, by Ashwini Vaishnaw, the then newly appointed Minister of Electronics and Information Technology, the scheme underscores the government’s commitment to fostering innovation and growth in the startup ecosystem.

a) Objectives and Goals

The primary aim of the SAMRIDH scheme is to support accelerators in identifying and nurturing potential IT-based startups that can address India’s unique challenges and create a positive social impact. By providing the necessary funding and resources, the scheme seeks to scale these startups, enabling them to contribute to the country’s technological and economic development.

b) Funding and Support Structure

Under the SAMRIDH scheme, selected accelerators will receive funding to support IT-based startups. Each startup can receive up to ₹40 lakh in the first round of funding, with an average allocation of ₹30 lakh per startup per cohort. The program is structured to invite applications from both existing and upcoming accelerators to partner with MeitY.

c) Program Structure

The accelerators partnering with MeitY will offer six-month accelerator programs to selected startups. These programs will be run annually, with a proposed support structure for approximately 300 tech startups through about 40 cohorts, each comprising 8-10 startups.

d) Impact and Vision

By nurturing early-stage startups, the SAMRIDH scheme aims to create a robust ecosystem for innovation and entrepreneurship in India. The focus on IT-based solutions ensures that the supported startups are well-equipped to tackle contemporary challenges and contribute significantly to India’s digital transformation.

The SAMRIDH scheme is a strategic initiative by MeitY to accelerate the growth of IT-based startups in India, providing them with the necessary support and funding to innovate and solve critical issues, thereby fostering a vibrant startup ecosystem with significant social and economic impact.

5. Startup India Seed Fund Scheme (SISFS): Empowering Aspiring Entrepreneurs

On January 16, 2021, Prime Minister Narendra Modi announced the launch of the Startup India Seed Fund Scheme (SISFS), aimed at providing crucial financial support to early-stage startups and fostering a culture of innovation and entrepreneurship in India. This initiative is part of the government’s broader strategy to ensure that startups do not face capital shortages, enabling them to grow and thrive.

The Startup India Seed Fund Scheme, with an outlay of INR 945 crores, focuses on nurturing early-stage startups by providing support for proof of concept, prototype development, and market entry. This scheme aims to facilitate the graduation of startups, enabling them to attract investments from angels or venture capitalists. Over the next four years, the scheme is estimated to support 3,600 entrepreneurs through 300 incubators across the country.

a) Objectives and Scope

The Startup India Seed Fund Scheme is designed to provide financial assistance to startups at the seed stage, helping them transform innovative ideas into viable business propositions. The scheme targets entrepreneurs who require early-stage funding to develop prototypes, conduct product trials, and market their solutions.

b) Funding and Implementation

The Department for Promotion of Industry and Internal Trade (DPIIT) has allocated INR 945 crore for SISFS, with the goal of supporting around 3,600 startups through 300 incubators over a four-year period (2021-2025). An Experts Advisory Committee (EAC) oversees the execution and monitoring of the scheme, ensuring that funds are disbursed efficiently and effectively.

c) Eligibility Criteria

To qualify for the Startup India Seed Fund, startups must meet the following criteria:

  1. DPIIT Recognition: The startup must be recognized by DPIIT and incorporated not more than two years before the application date.
  2. Innovative Business Idea: The startup must have a business idea aimed at developing a product or service with market potential, viable commercialization, and scalability.
  3. Technology-Driven Solutions: The core product or service should leverage technology, whether in its business model, distribution, or methodology, to address a targeted problem.
  4. Sectoral Focus: Preference is given to startups offering innovative solutions in sectors such as social impact, waste management, water management, financial inclusion, education, agriculture, food processing, biotechnology, healthcare, energy, mobility, defense, space, railways, oil and gas, textiles, etc.
  5. Previous Funding: The startup should not have received more than ₹10 lakh in monetary support under any other central or state government scheme, excluding prize money from competitions and grand challenges, subsidized workspace, founder allowances, or access to labs and prototyping facilities.
  6. Indian Promoters’ Shareholding: At least 51% of the shareholding should be with Indian promoters at the time of application, in accordance with the Companies Act, 2013, and SEBI (ICDR) Regulations, 2018.
  7. Seed Support: A startup can avail of seed support in the form of grants and debt/convertible debentures once, as per the scheme guidelines.

d) Disbursement Process

Eligible startups will receive the seed fund through approved incubators across India. These incubators will play a pivotal role in selecting, mentoring, and supporting the startups to ensure their growth and development.

e) Impact and Vision

The SISFS aims to build a strong foundation for a robust startup ecosystem in India by addressing early-stage funding challenges. By empowering startups with the necessary financial support and resources, the scheme seeks to foster innovation, create jobs, and drive economic growth. The emphasis on technology and sector-specific solutions ensures that supported startups can address critical issues and contribute significantly to India’s development goals.

The Startup India Seed Fund Scheme is a strategic initiative to nurture early-stage startups, providing them with the essential support needed to bring their innovative ideas to life and scale them into successful enterprises.

The Indian government’s schemes and support programs play a pivotal role in nurturing the country’s vibrant startup ecosystem. By providing financial assistance, facilitating investor connections, and promoting entrepreneurship, these initiatives pave the way for innovation, economic growth, and job creation across India. As startups continue to thrive and expand their impact, government support remains essential in fostering a conducive environment for their success.

Author: Dr. Abdul Razak MBA, Ph.D, PDF, EDII, Ahmedabad


Leave a Comment