Startup India Seed Fund Scheme: where the Rs 945 crore went
The Startup India Seed Fund Scheme (SISFS) is a Rs 945 crore government fund that reaches startups only through selected incubators. As of 30 June 2026, 219 incubators held the full corpus and had approved Rs 706.33 crore to 4,245 startups, as grants of up to Rs 20 lakh and loans or convertibles of up to Rs 50 lakh.
By Akshay Kendurkar, CEO, MyStartupValley
Most government money for startups goes through a middleman. With the Seed Fund Scheme, the middleman is an incubator, and that one design choice explains most of what the numbers show.
This note covers what the scheme is, how the money moves, how much has been approved so far, and where it landed. It sits alongside the other central schemes in our map of government funding for startups in India.
What is the Startup India Seed Fund Scheme?
The Startup India Seed Fund Scheme, or SISFS, is a Rs 945 crore DPIIT fund for startups at the stage before angels or banks will engage. It pays for proof of concept, prototypes, product trials, market entry and commercialisation. It has been operational since April 2021, and startups apply through incubators, never to DPIIT directly.
The scheme guidelines state the problem plainly: angel and VC money tends to arrive only after proof of concept, and banks lend against assets. SISFS is meant to cover the gap before either will look at you.
An Experts Advisory Committee set up by DPIIT selects the incubators and monitors them. The corpus and start date come from the government's June 2026 backgrounder.
How does SISFS money reach a startup?
SISFS money moves in two steps. DPIIT grants each selected incubator up to Rs 5 crore in three or more milestone-based instalments. The incubator then picks startups and pays them in instalments of its own, tied to milestones agreed in a contract. Startups never deal with DPIIT for the money.
The guidelines set out the terms at each step:
- To the incubator: up to Rs 5 crore, plus a 5% management fee. The first instalment can be up to 40% of the commitment.
- Use it or lose it: an incubator that hasn't used at least 50% of its commitment within two years can't draw more, and must return unused money with interest.
- Grant to a startup: up to Rs 20 lakh for proof of concept, prototypes or product trials.
- Debt to a startup: up to Rs 50 lakh through convertible debentures, debt or debt-linked instruments, at no more than the repo rate, for up to 60 months.
- Security: none. The debt is unsecured, with no guarantee asked of the promoter.
The guidelines also say an incubator may not charge applicants any fee for selection, disbursement or monitoring under the scheme. If one asks, that is a reason to walk away.
Who is eligible for SISFS?
A startup qualifies if it is DPIIT-recognised, was incorporated no more than two years before applying, uses technology at its core, and is at least 51% held by Indian promoters. It must not have taken more than Rs 10 lakh from other central or state schemes, prizes and subsidised space aside.
Incubators face their own bar. They must have run for at least two years, seat at least 25 people, have at least five startups in residence, and have a full-time CEO. One condition matters for founders: an incubator must have been assisted by a central or state government, or meet stricter tests of three years and ten startups.
That rule means the scheme mostly flows through incubators that already carry other government money. It is also why the incubator you pick matters so much. Our guide on how incubators help startups raise funding covers what to look for.
How much SISFS money has been approved so far?
As of 30 June 2026, the full Rs 945 crore had been committed to 219 incubators, and those incubators had approved Rs 706.33 crore to 4,245 startups. That is about three quarters of the corpus, on our arithmetic, and works out to roughly Rs 16.6 lakh per startup on average.
Those figures come from the government's reply to Lok Sabha Question No. 1446 on 28 July 2026. Six months earlier the count was lower, according to a Rajya Sabha reply reported by The Tribune:
| As of | Startups approved | Funding approved |
|---|---|---|
| 31 Dec 2025 | 3,271 | Rs 590.93 crore |
| 30 Jun 2026 | 4,245 | Rs 706.33 crore |
That is Rs 115.4 crore and 974 more startups in half a year, on our arithmetic. The December 2025 reply said supported startups had created over 22,600 jobs.
Is approved money the same as money paid out?
No. "Approved" is what incubators have sanctioned; startups receive it in milestone-based instalments, so the cash paid out is lower. The government does not publish a national disbursed figure in the latest reply, but it gave one for Karnataka: Rs 79.08 crore paid of Rs 104.87 crore approved.
That is about 75% paid out in Karnataka, on our arithmetic. One Bengaluru incubator named in the reply, C-CAMP, had approved Rs 4.55 crore to 13 startups and paid Rs 3.45 crore. Expect a lag between a sanction letter and money in your account.
A seed fund sanction is a promise in instalments. The milestones decide when the money arrives.
Which states has the Seed Fund Scheme reached?
Maharashtra leads with 665 supported startups and Rs 117.318 crore approved, followed by Karnataka with 542 and Tamil Nadu with 450. Those three account for 39% of all supported startups, on our arithmetic. Some states and UTs have one or two.
| State | Startups supported | Approved (Rs crore) |
|---|---|---|
| Maharashtra | 665 | 117.318 |
| Karnataka | 542 | 104.869 |
| Tamil Nadu | 450 | 69.159 |
| Uttar Pradesh | 327 | 47.038 |
| Gujarat | 294 | 51.686 |
| Delhi | 293 | 50.577 |
Source: Annexure-III of the Lok Sabha reply, as on 30 June 2026. At the other end, the north-eastern states listed total 111 startups, with Assam at 52. Odisha has 166.
The spread follows the incubators. A state with many government-backed incubators gets more seed money, whatever its count of recognised startups. Our note on startup funding by state shows the same pattern in private funding.
What should founders take from the numbers?
For founders, the numbers say three things. The corpus is committed, so new money depends on incubators that still have room. Most cheques are small, averaging about Rs 16.6 lakh. And the incubator is the gate: pick one that is selected under the scheme and active.
A short checklist before you apply:
- Check the dates. Your incorporation must be within two years of applying.
- Check your cap table. Indian promoters need at least 51%.
- Ask the incubator how much of its commitment it has left, and how fast it pays instalments.
- Prepare milestones you can prove, because each instalment depends on them.
Incubators score applicants in their own way under the scheme. Our note on how incubators evaluate startups shows what they tend to weigh. If you need a loan instead of a grant, the credit guarantee scheme works through lenders.
Questions
What is the Startup India Seed Fund Scheme?
SISFS is a DPIIT scheme, operational since April 2021, that gives early-stage startups money for proof of concept, prototypes, product trials, market entry and commercialisation. It has a corpus of Rs 945 crore, and the money reaches startups only through incubators the government selects.
How much can a startup get under SISFS?
Under the 2021 guidelines, an incubator can give a startup up to Rs 20 lakh as a grant for proof of concept, prototypes or trials, and up to Rs 50 lakh as convertible debentures, debt or debt-linked instruments for market entry or scaling. Both are paid in milestone-based instalments.
How many startups have received SISFS funding?
As of 30 June 2026, the government told the Lok Sabha that selected incubators had approved Rs 706.33 crore to 4,245 startups. Six months earlier, on 31 December 2025, the figure was Rs 590.93 crore to 3,271 startups. Approval is not the same as money received.
Who is eligible for the Seed Fund Scheme?
The guidelines require a DPIIT-recognised startup incorporated not more than two years before applying, using technology in its product, service or model, with at least 51% held by Indian promoters. It must not have received more than Rs 10 lakh from other central or state schemes.
Sources: Lok Sabha, Unstarred Question No. 1446 (DPIIT reply, Annexure-III), 28 Jul 2026 · DPIIT, Guidelines for Startup India Seed Fund Scheme, Jan 2021 · Press Information Bureau, Empowered Youth, Stronger Nation (backgrounder), 13 Jun 2026 · Press Information Bureau, A Decade of Startup India (backgrounder), 15 Jan 2026 · The Tribune (ANI), Startup India recognises 2.07 lakh ventures, 13 Feb 2026
For more on how startup funding works in India, read the MyStartupValley blog or visit mystartupvalley.com.