National Initiative for Developing and Harnessing Innovations (NIDHI) is an umbrella programme conceived and developed by the Innovation & Entrepreneurship division, Department of Science & Technology, Government of India, for nurturing ideas and innovations (knowledge-based and technology-driven) into successful startups. The programme would work in line with the national priorities and goals and its focus would be to build an innovation-driven entrepreneurial ecosystem with an objective of socio-economic development through wealth and job creation.
NIDHI-Science & Technology Entrepreneurs Parks and Technology Business Incubators (STEP/TBIS) are institutional-linked facilities promoted by the Department of Science and Technology to nurture innovative and technologically led new ventures during the initial and critical period i.e. the start-up phase. By providing a range of specialised business support services, a TBI facilitates the initial journey of a start-up and enables new ventures to survive and succeed in the marketplace. Around 90 TBIs have been promoted by the NSTEDB of DST. TBIs are primarily hosted at the institutions of higher education across the country including both publicly and privately funded Universities and institutions e.g. IITs, IIMs, NITs, NID, PSG, Manipal Univ, VIT, Amrita Univ. etc .
The sole objective of the NIDHI-Seed Support System (NIDHI-SSS) is to ensure timely availability of the seed support to the deserving incubatee startups within an incubator, thereby enabling them to take their venture to the next level and facilitate towards their success in the market place. The scheme also enables the STEP/TBI to widen their pipeline of startups and also share the success of their startups which would also result in ensuring their long-term operational sustainability.
Eligibility Conditions for Incubatee Start-Ups for seed support
- Incubatee should be a registered company in India with a minimum of three months of residency at the STEP/TBIs.
- Incubatee has to be an Indian start-up. This support is not meant for Indian Subsidiaries of MNCs/foreign companies. Persons holding Overseas Citizens of India (OCI), and Persons of Indian Origin (PIO) would be considered Indian citizens for the purpose of this scheme.
- The shareholding by Indian promoters in the incubate start-up should be at least 51%.
Quantum and Disbursement of the NIDHI-SSS
Through NIDHI-SSS, a deserving and eligible STEP/TBI get maximum financial assistance of upto Rs. 1000.00 lakhs from DST as Loan/Investment/a combination of both for the seed support to be disbursed to its deserving incubatee startups in accordance with a proper process. The grant would be released in about 2-5 rounds with a max of Rs. 500.00 lakhs/round based on assessing the perceived needs of startups requiring seed funds and the capacity and capabilities of the seed support implementing as disbursement STEP/TBI.
- The implementing TBI puts in place a transparent and proper selection, monitoring and disbursement mechanism known as Seed Support Management Committee.
- The Seed Support would be disbursed to incubatee (physical resident units within the TBIs) which are registered units only based on the recommendation of the Seed Support Management Committee constituted by them. It is necessary that there exists a proper legally vetted agreement between the incubatee and TBI.
- The seed support would be disbursed to the deserving incubatee and eligible with proper due diligence by the TBIs.
- The seed support would generally cater to early-stage financing for the commercialization of indigenous ideas, innovations and technologies.
- Normally, seed support to the tune of Rs. 25 lakhs is given to a startup. However, in a few exceptionally deserving startups, the upper limit of seed support to a startup may be raised to Rs. 100 lakhs. A startup supported once will not be eligible for applying for the subsequent round of seed support to any other STEP/TBIs. After the seed support is recommended to an incubatee startup, the terms of agreement with the incubatee start up should be framed by the STEP/TB linking the progress milestones, monitoring norms, reasonable repayment, recovery provisions in case of loan and terms of equity liquidation in case of equity holding by STEP/TBI.
Broad Areas and Items to be covered under the NIDHI-Seed Support Assistance
The startups would be supported primarily on the following from the seed support
- Product development
- Testing and Trials
- Test Marketing
- Professional Consultancy (To attract professors/experts from institutions to work with startups.)
- IPR issues
- Manpower for day-to-day operations
- Any other area as deemed necessary and recommended by the Seed Support Management Committee of TBI.
Mechanism of Selection, Disbursement, Governance and Fund Management of NIDHI-SSS
The financing of start-ups in the TBI shall be done judiciously with efficiency and care.
- Each STEP/TBI implementing NIDHI-SSS would constitute a committee called the NIDHI-Seed Support Management Committee (NIDHI-SSMC) whose members would be experts who can evaluate the prospective incubatee under physical incubation requiring seed support.
- Selection of Incubatee Startups for NIDHI-SSS:
- Website/Newspaper advertisements indicating the availability of seed support
- Announcement for call for applications.
- Shortlisting the applicants as per eligibility criteria
- The decision by NIDHI-SSMC out of shortlisted applicants.
- The selection should be made within a reasonable period.
- The TBI would execute a legal agreement with the incubatee selected for the seed support and this agreement shall be signed before the release of the first instalment of seed funds to the incubatee. Subsequent disbursement schedules shall be linked to the achievement of milestones of the incubatee. The agreement shall include spelt necessary terms and conditions related to the Seed Support, repayment schedule in case of loan and equity liquidation, default in repayment against loan etc.
Repayment of NIDHI-SSS
- at least 30% of the amount of soft loan to be paid back within the incubation period in case the seed support is in the range of Rs. 20-25 lakhs
- repayment of the entire seed support money given as loan by the incubatee within 5 years
- seed support exceeding Rs. 25 lakhs shall be redeemed in equity shares.