Seed Stage Funding Scheme

The National Development Council (NDC) of India has launched the Seed Stage Funding Scheme under the guidelines of RKVY-RAFTAAR scheme. Under this funding scheme, financial assistance of Rs.25 lakhs will be provided for setting up of new agri-business ventures. In this article, we look at the Seed Stage Funding Scheme in detail.

Objectives

The objectives of the Seed Stage Funding Scheme are given below:

To provide funding required to enable new agribusiness ventures across the country.
To enhance agricultural development.
To inspire and support agricultural entrepreneurs
To ensure translation of minimum viable product (MVP) to the marketable stage and scale up the product and business.

Eligibility Criteria

The following are the eligibility criteria for submitting the proposal for setting up agribusiness ventures:

The unit to be formed should be a limited liability partnership/private limited company/partnership firm.
Also, the incubators formed under R-Agri Business Incubator will be eligible for this funding based on consistent performance evaluated by R-ABI Incubation Committee (RIC).

Note: This support does not apply to Indian Subsidiaries of MNCs or foreign companies.

Selection Process for Seed Stage Funding

The R-ABIs would establish an RKVY- RAFTAAR Incubation Committee (RIC) during the selection process, R-ABI will verify that any other grant has been received by the incubatee/Entrepreneur for the same activity/product from other ministries.
In such cases, a self-declaration is required from the incubatee about such funding.
RIC will evaluate the process of the incubatee and based on their performance will recommend incubatee for seed-stage funding to RC after 2 months of residency of incubatees. Further, RC will verify and recommend the incubatees to the Nodal Division, DAC&FW of seed-stage funding.
Based on the recommendation of RC, the Nodal Division, DAC&FW will approve and sanction the project of the incubatees and release the 1st instalment of the grant-in-aid to the respective R-ABI for further disbursement to the incubatee.
The R-ABI is supposed to execute a legal agreement with the incubatee who is approved for the seed support, and this agreement has to be signed before the release of the 1st instalment of subsidy to the incubatee.
The agreement with the incubates startup must be formed by the R-ABI linking with the progress milestones, monitoring norms etc.
Also, Subsequent disbursement schedules have to be linked to the achievement of milestones taken by the incubatee.

Pattern of Funding and Release of Funds

Under the Seed Stage Funding scheme, it has been proposed to support around 500 startups during the operative period of the scheme. The maximum of 20 startups per R-ABI will be supported under this scheme. Each selected startup will be provided with a maximum limit of Rs.25 Lakh as a grant. The start-ups already receiving financial support or grant from any other source will not be eligible under RKVYRAFTAAR. For ensuring incubatee participation in the programme, 15% of the project cost has to be borne by the incubatee. The balance 85 % of the project cost up to a maximum limit of Rs. 25 lakhs has to be borne under RKVY-RAFTAAR scheme which will be released in 3 instalments as specified below: First instalment: The 1st instalment of 40 % of the sanctioned project for seed support will be disbursed after signing of the agreement between the incubator/RABI and the incubatee. Second instalment: After the recommendation of RIC, 2nd instalment of 40% will be distributed to the incubatee depending upon their performance and achievement of the milestone. After the utilization of 80% of amount and receipt of provisional Utilization Certificate (UC) is required for already utilized funds. Third instalment: After the recommendation of RIC, 3rd instalment of 20% will be disbursed to incubatee by the Nodal Division through R-ABIs based on their performance and achievement of the milestone. And after utilization of 80% of amount and receipt of provisional Utilization CErtificate is required for already utilized funds. Note: After two months, market access will be promoted by the R-ABI. Also, the R-ABI will arrange for a Demo Day to showcase the developed product of the incubatee to investors for further facilitation of seed funding.

Broad Activities supported under Seed Stage Funding

The expenses for the following broad activities would be covered under this scheme:
Product Refinement/Testing and Trials/Marketing launch/Test Marketing
Expenses acquired on data generation/data acquisition for ideas working on AI or IT sector.
Fees for one-time technology licensing, IP issues can be claimed
Manpower cost for day to day services.
Day to day operational cost such as incubation charges, electricity bill etc. Any other activity or area as deemed necessary and recommended by the RIC of R-ABIs.