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Startup Grants: Finding Non-Dilutive Funding

A banner titled "Finding Non-Dilutive Funding" featuring a close-up image of a hand pulling out a card labeled "Grants" from an organized file system. The background is warm and gradient, with the text "Finding Non-Dilutive Funding" prominently displayed in bold, white, and black letters on the left side.
By
Anurag Trivedi
6 min read

Navigating the world of startup funding can be overwhelming, especially for new entrepreneurs. While equity financing is a common route, it often leads to dilution of ownership. This blog will explore non-dilutive funding through grants, offering an in-depth understanding of their benefits and drawbacks, how to find them, the prerequisites for application, and a comprehensive list of available grants for Indian startups.

Understanding Grants and Their Pros and Cons

What are Grants? Grants are financial awards given by government bodies, corporations, or non-profits to support business activities. Unlike loans, grants do not need to be repaid, making them an attractive source of funding for startups.

Pros of Grants:

  • Non-Dilutive Funding: Grants do not require giving up equity or ownership in your company.
  • Financial Support: They provide crucial financial support for various stages of business development, from research to commercialization.
  • Validation: Receiving a grant can serve as validation and credibility for your business idea, potentially attracting further investment.

Cons of Grants:

  • Competitive: The application process is often highly competitive.
  • Specific Criteria: Grants usually come with strict eligibility criteria and conditions.
  • Administrative Burden: The application process can be time-consuming and may require extensive documentation and reporting.

How to Find Grants

Finding the right grant requires a strategic approach. Here are some tips to help you locate suitable grants for your startup:

  • Government Websites: Regularly check government portals like Startup India, MSME, and Department of Science and Technology for grant announcements.
  • Industry Associations: Organizations like Nasscom often have information on available grants.
  • Networking: Join startup networks, incubators, and accelerators to stay informed about new funding opportunities.
  • Online Databases: Utilize online platforms that aggregate information on various grants and funding options.

What are the Pre-Requisites?

Before applying for a grant, ensure you meet the following common prerequisites:

  • Eligibility: Verify that your startup fits the grant's eligibility criteria, such as industry sector, business stage, and location.
  • Documentation: Prepare necessary documents, including business plans, financial statements, and proof of concept.
  • Research: Thoroughly research the grant provider's objectives and tailor your application to align with their goals.
  • Clear Objectives: Define clear, measurable objectives for how the grant funds will be utilized.

List of Every Grant Available

Here’s a comprehensive list of major grants available for Indian startups, along with links for more information:

Government Grants

  1. Startup India Initiative
    • Overview: Launched in January 2016 to create a supportive ecosystem for startups.
    • Benefits: Tax exemptions, easier compliance, IPR fast-tracking, funding assistance, and incubation support.
    • Key Programs:
      • Startup India Seed Fund Scheme (SISFS): Provides financial assistance for proof of concept, prototype development, and commercialization. Approved for four years starting from 2021 with a corpus of Rs. 945 crore. Learn more
      • Fund of Funds for Startups (FFS): Established in June 2016 with a corpus of Rs. 10,000 crore, this fund, managed by SIDBI, invests in SEBI-registered Alternative Investment Funds, which in turn invest in startups. Learn more
      • Credit Guarantee Scheme for Startups (CGSS): Offers credit guarantees for loans to DPIIT-recognized startups, helping them secure loans from banks and financial institutions without collateral. Learn more

2. PRISM (Promoting Innovations in Individuals, Start-ups and MSMEs)

  • Overview: Managed by the Department of Science and Technology, this program supports innovators in developing and commercializing their ideas.
  • Support: Up to $2,600 for developing prototypes and up to $66,600 for scaling up technology-based innovations, including patenting and technology transfers. Learn more

3. NIDHI-Seed Support System (NIDHI-SSS)

  • Overview: Provides early-stage funding for product development and commercialization.
  • Support: Grants up to INR 1 crore for startups to develop products ready for commercialization. Learn more

4. Digital India GENESIS

  • Overview: Supports tech startups, particularly from Tier II and III cities, to scale up.
  • Support: Financial assistance is provided for a period of five years, helping startups grow and innovate. Learn more

5. ASPIRE (A Scheme for Promotion of Innovation, Rural Industries and Entrepreneurship)

  • Overview: Promotes entrepreneurship in rural areas, aiming to create jobs and reduce poverty.
  • Support: Provides the necessary knowledge and support to rural entrepreneurs to start and grow their businesses. Learn more

6. MSME Market Development Assistance (MDA)

  • Overview: Supports MSMEs in participating in international trade fairs and exhibitions.
  • Support: Covers up to 75% of the expenses related to airfares and other participation costs. Learn more

7. Multiplier Grants Scheme (MGS)

  • Overview: Encourages R&D collaboration between industry and academic institutions.
  • Support: The government matches the financial contributions made by the industry, fostering innovation and product development. Learn more

Private Grants

1. Nasscom 10,000 Startups

  • Overview: Launched in 2013, this initiative aims to support 10,000 technology startups in India over ten years through incubation, funding, and strategic partnerships.
  • Support: Provides access to investors, mentors, industry experts, and strategic partnerships. Startups are paired with accelerators and participate in numerous programs to foster growth. Learn more
  1. Zone Startups
    • Overview: Operated by the Ryerson Futures Network, Zone Startups offers a wide range of services including funding, mentorship, and access to corporate partners.
    • Support: Seed capital ranging from $66,000 to $400,000, along with access to a global network of investors and advisors. Learn more
  2. UnLtd India
    • Overview: Supports early-stage social entrepreneurs addressing socio-economic issues in India.
    • Support: Provides funding and incubation support for startups up to their first five years, covering sectors such as environment, agriculture, health, and education. Learn more
  3. HDFC Bank Parivartan SmartUp Grants
    • Overview: Supports social impact startups through funding incubators and accelerators.
    • Themes: Climate innovation, financial inclusion, agriculture, healthcare, education, and gender diversity.
    • Support: Grants provided to incubators, which in turn support startups with funding and mentorship. Learn more

Conclusion

Securing a grant can provide crucial non-dilutive funding for your startup, helping you grow without giving up equity. By understanding the benefits and drawbacks of grants, knowing where to find them, and preparing thoroughly for the application process, you can increase your chances of success. Utilize the comprehensive list of grants provided here to explore the opportunities available and take your startup to the next level.

By staying informed and prepared, you can navigate the competitive landscape of grant applications and secure the funding you need to bring your entrepreneurial vision to life.