NIDHI Seed Support System Program

Disclaimer….before you read ahead!

The information contained herein is of a general nature and for information purposes only, with the intent of raising awareness around various resources, schemes etc. available for women entrepreneurs in India. It is not intended to address the circumstances of any particular individual or entity. It does not purport to be all-inclusive or necessarily contain all the information that may be relevant for the reader, and may be subject to updating, revision or amendment. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to remain accurate in the future. The reader, therefore, is required to exercise their discretion; and not act on such information without appropriate professional advice after a thorough examination of the particular situation.

Furthermore, we are not a lender and are not authorized by the Reserve Bank of India to act as one. By disseminating the information contained herein, we are not soliciting any borrower or customers for the company or organization mentioned herein nor do we intend to syndicate any capital for the reader of this article.

About this scheme…

National Initiative for Developing and Harnessing Innovations (NIDHI) – Seed Support System (SSS) Program was launched in 2008 but later revamped in May 2016 by the National Science & Technology Entrepreneurship Development Board (NSTEDB), Department of Science and Technology (DST), Government of India (GoI) with the objective of providing financial assistance to potential startups with promising ideas, innovations and technologies for proof of concept, prototype development, product trials, market entry and commercialization etc.

NIDHI-SSS Program is also referred to as NIDHI Seed Support Program (NIDHI-SSP).

NIDHI SSS Program is one of the 7 key components of NIDHI, an umbrella program conceived and developed by DST-NSTEB for nurturing ideas and innovations (knowledge-based and technology – driven) into successful startups.

Note: We have also covered another one of the 7 key components of NIDHI, namely, NIDHI PRAYAS Program, that is aimed at addressing the idea to prototype funding gap here for your reference.

How is it being implemented?

Under NIDHI-SSS Program, financing in the form of direct seed capital (in the form of Equity, Equity-Linked Instruments or Soft Loan) is given to start-ups with promising Ideas, Innovations, and Technologies.

Preferences is given to start-ups who have not availed any funding from Government of India or State Government body.

This seed capital is invested by Technology Business Incubators (TBIs) approved by DST-NSTEDB who are responsible for on -ground implementation of this Program. TBIs typically invite applications annually and begin their evaluation cycle in January every year.

Please feel free to reach out to a TBI nearest to you to know more the application & evaluation process & timelines for 2024. For TBIs implementing NIDHI-SSS Program, please refer here. Additionally, you may also refer to the latest available comprehensive list of TBIs here and here.

What’s on offer?

I. Product

• Term loan, Equity, Equity-linked instruments
• Equity/ Equity-linked instruments would be the preferred financing option
• Ticket size: Upto 1 Crore with an average ticket size of ₹10-25 Lakhs

II. Purpose:

• Acquisition/development of intangible assets such as product development, technology development & derisking, IPR etc.
• Working capital requirements
  • Maximum 10% of funds can be directed towards team salaries
• TBI at its discretion shall recommend heads on which the funds provided can be utilized by the start-up & any caps on heads
• Specified exclusions w.r.t utilization of funds under the NIDHI-SSS Program include:
  • Repayment of loans or dues of promoters & their associates to the company
  • Repayment of loans from any other source or for payment of interest on the support borrowed from such other source
  • Creation of personal assets
  • Personal benefit of promoters or their associates
  • Extending loan support to promoters or their associates
  • Making any inter corporate deposits or any speculative purpose
  • Company/ Promoter buying shares or any other security of the company or any other company
  • Any other exclusions as defined by the local level committee at TBI

III. Borrower Type:

• Company, preferably Department for Promotion of Industrial & Internal Trade (DPIIT) registered or applied start-up

IV. Security or Collateral or Guarantee or Insurance

• Term loan: For more information on this, please reach out to the TBI you are (or want to be) associated with via means mentioned below
• Equity/ Equity-linked instruments: Not applicable

V. Interest Rate

• Term loan: Upto the prevailing Repo Rate which currently stands at 6.5%
• Equity/ Equity-linked instruments: Not applicable

VI. Processing Fee

• Term loan: For more information on this, please reach out to the TBI you are (or want to be) associated with via means mentioned below
• Equity/ Equity-linked instruments: Not applicable

VII. Margin Money Requirement

• Term loan: For more information on this, please reach out to the TBI you are (or want to be) associated with via means mentioned below
• Equity/ Equity-linked instruments: Not applicable

VIII. Tenure, Repayments & Pre-Closures

• Term loan:
  • Tenure: Preferably co-terminus with the length of the stay of the start-up at the TBI. However, could be extended to 3 – 5 years. A moratorium of 12 months may be provided
  • Repayment: For more information on this, please reach out to the TBI you are (or want to be) associated with via means mentioned below
  • Pre-Closure: For more information on this, please reach out to the TBI you are (or want to be) associated with via means mentioned below
• Equity/ Equity-linked instruments: Not applicable

IX. Evaluation Process

• TBIs make an announcement for call for applications on their website, social media platform etc. For more information around the current or proposed timelines of accepting applications by the TBI you are (or want to be) associated with, please reach out to them via means mentioned below
• TBIs evaluate these applications and conduct a preliminary due diligence
• Shortlisted start-ups pitch to the Seed Support Management Committee (SSMC) formed by the TBI
• Final decision on start-ups selected for funding is taken from DST after considering recommendations by SSMC
• TBI conducts a final due diligence on the start-up along with formulation of Term Sheet, Financing Structure (Loan/Equity/Both)
• Agreement is entered into between start-up and TBI covering progress milestones, monitoring, repayment & recovery and/or equity terms
• Fund Sanction Order is issued post the agreement

Interested? Read ahead to check your eligibility….

I. Your start-up company is not an Indian subsidiary of a foreign company or MNC? Please note that Overseas Citizens of India (OCI) and Persons of Indian Origin (PIO) will be considered Indian citizens

II. Have you completed an association with the TBI, with whom you are applying for the NIDHI- SSS Program, for at least 3 months in its resident or virtual incubation program?

III. Has your start-up developed clarity on Unique Selling Proposition (USP) validated by customer feedback?

IV. Has your start-up developed clarity on value proposition for its targeted customers?

V. Do Indian promoters hold at least 51% shareholding in your startup?

VI. Your start-ups has never been supported through NIDHI-SSS Program from any TBI?

VII. You confirm that your start-up is not seeking seed capital assistance through NIDHI-SSS Program for repaying loans or dues of promoters/associates, creating personal assets, repaying loans or interest on loans from other sources, extending loan support to promoters or their associates, making inter-corporate deposits or any speculative purpose, personal benefit of promoters or associates, or company/promoter buying shares or securities of the start-up or any other company?

If your answers to the questions above are an emphatic YES, you are all set to avail seed capital under NIDHI-SSS Program!

So…how big is this scheme and what has been done so far?

• Around 150+ TBIs were promoted by NSTDEB, of which, 73 TBIs were supported under NIDHI-SSS Program. These TBIs were granted & disbursed ₹165 Crores to invest further as seed capital in promising start-ups
• These TBIs seed-funded 460+ startups with an average funding of ₹25-30 Lakhs per startup
• On an average, the start-ups funded by NIDHI-SSS Program subsequently went on to raise 5X times the seed capital, on an average, from external investors

So, now, how should you go about it?

I. For information on the annual application process (current or prospective), document requirements etc., please reach out to the TBI you are (or want to be) associated with at their contact coordinates mentioned below

II. For any queries, please contact the TBI directly on their website, via email or phone:

• For TBIs implementing NIDHI-SSS Program, please refer here
• Additionally, you may also refer to the latest available comprehensive list of TBIs here and here

Go on then…and do spread the word!

1. About NIDHI-SSS Program 1

2. About NIDHI-SSS Program 2

3. Latest NIDHI-SSS Program Guidelines (May 2021)

4. Old NIDHI-SSS Program Guidelines (May 2016)

5. 75 Promising startups supported by DST NIDHI-SSP

6. About NSTDEB and NIDHI initiative