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Last updated: March 11, 2016 at 15:58 pm

Government Turns Angel – Increases Startup Fund By 5 Times!

Money Rupees investment funding India

World’s youngest startup nation, India, has once again received a major boost from the Government for promoting and encouraging startups. In a decision which will motivate young entrepreneurs to become job creators, instead of job seekers, Indian Govt. has increased their startup fund by 5 times.

From Rs 40 crore initially planned for startups, Govt. has now provisioned a budget of Rs 200 crore which would be used for angel funding for new startups.

As per the plan, Department of Science and Technology (DST) will fund 60-80 startups during fiscal year 2016-17, and every startup shall receive Rs 50 lakh to Rs 1 crore in angel funding via seed capital. Earlier, Govt. had provisioned only Rs 10 lakh as seed capital for startups under their program.

Ashutosh Sharma, Secretary at DST said, “Funding has always been a problem for start-ups. With the seed money, the start-ups can approach venture capitalists or other funding agencies.”

If we compare the contribution made by DST in the past, then this increase of 5 times is actually staggering. In the last 9 years, DST has invested only Rs 200 crore for providing seed capital to startups; and now this amount would be spent in one single year.

Investments Are Turning Profitable

As per Amitabh, Government has able to make money from their seed investments in startups, and this is a good sign. For example, Rs 200 crore invested by DST in the last 9 years has enabled wealth creation of Rs 4000 crore for the Government.

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Besides, these startups have collectively created 10,000 new jobs as well.

Other Highlights

As per their renewed focus on startups, some other major decisions were also taken:

  • Budget of Rs 10 crore created for establishing world class incubators in India
  • 66% of the funds would be allocated for hardware and manufacturing startups; this is a good news for those entrepreneurs who are not focussing on IT or ecommerce
  • 25 new Technology-focused incubators shall be created which will also provide advanced training to entrepreneurs
  • Govt. is maturing in their assessment of entrepreneurs. As per Amitabh, Govt. doesn’t think that providing seed capital to startups is risky as Phd holders and Scientists are now approaching Govt. for getting funded

There is certainly no dearth of talent in India, when it comes to startups and ideas. For instance, if a startup manufacturing night vision equipment for US defense can prosper, then imagine the potential if Indian Govt. actually helps and nurtures Indian entrepreneurs.

Pro-startup decisions made by Indian Govt. recently:

Draconian Tax On Seed Funding Will Be Abolished

More Reforms in Companies Act 2013; RBI To Allow Smooth Exit For Overseas Investors

Indian Startup Now Officially Defined By The Govt; 5 Year Old Company Is Not A Startup Anymore

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Startup India Action Plan: 20 Key Highlights

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