The Startup India Seed Fund Scheme (SISFS) is a government scheme launched under the broader Startup India initiative to provide financial assistance to early-stage startups. The scheme was announced by the Prime Minister on January 16, 2021, and formally notified on January 21, 2021, with implementation beginning on April 1, 2021. It was created to solve the problem of "capital inadequacy" in the seed and 'Proof of Concept' development stage, where startups often struggle to secure funding from angel investors or banks before validating their ideas.
The scheme, administered by the Department for Promotion of Industry and Internal Trade (DPIIT), has an approved corpus of ₹945 crore for a four-year period starting from 2021-22. The mechanism involves the DPIIT allocating funds to eligible incubators, which then select and disburse the funds to DPIIT-recognized startups. A startup, which must be incorporated not more than two years ago, can receive up to ₹20 lakh as a grant for validation of Proof of Concept, prototype development, or product trials. Additionally, it can receive up to ₹50 lakh as investment through convertible debentures or debt for market entry, commercialization, or scaling up. The scheme connects directly to the Startup India Action Plan unveiled on January 16, 2016, and is monitored by an Experts Advisory Committee (EAC). A related concept is the Credit Guarantee Scheme for Startups (CGSS), which was notified in October 2022 to provide collateral-free loans to startups. The core structure of the SISFS has remained consistent since its notification, focusing on bridging the early-stage funding gap.