The Startup India Seed Fund is closed. What now?
It is still the first name most founders are given, and it stopped taking applications months ago. Here is what it did, and where the two halves of it went.
Summary
- The last date for startup applications was 31 May 2026, after extensions, with incubators told to complete selection by 30 June 2026.
- It paid twice: up to INR 20 lakh as a grant for proof of concept, then up to INR 50 lakh as convertible debentures or debt for scaling. Each instrument came once.
- The grant half has substitutes in PRISM and PRAYAS. The convertible debenture half has none, and the register holds no convertible debt scheme today.
If you ask three people where a young Indian startup should look for its first government money, at least two will say the Startup India Seed Fund. It is the most recommended scheme in Indian startup writing, it had a genuine claim to that place, and it is not open.
The register records it as closed. The final extended last date for startup applications was 31 May 2026, and incubators were directed to complete all startup selection by 30 June 2026. As at the research date behind this export, no successor cycle had been announced, and we are not going to guess at one. What follows is what it was, and what actually covers the ground it left.
What did the seed fund put on the table?
Two instruments under one application, aimed at two different moments in a company's life.
What the Startup India Seed Fund Scheme offered, each instrument available once per startup
| What it paid | How much | What it was for |
|---|---|---|
| A grant, non-repayable, with no dilution | Up to INR 20 lakh | Validation of proof of concept, prototype development, or product trials |
| Convertible debentures, debt, or debt-linked instruments | Up to INR 50 lakh | Market entry, commercialization, or scaling up |
The debt half had terms a commercial lender would not have written. Interest was capped at the prevailing repo rate. The tenure was fixed at sanction and could not exceed 60 months, with a moratorium of up to 12 months. The facility was unsecured, with no promoter or third-party guarantee.
You applied on the seed fund portal, choosing up to three partner incubators in order of preference. The incubator's seed management committee shortlisted against the published criteria and selected within 45 days, and the first grant instalment was due within 60 days of the application. The scheme carried an outlay of INR 945 crore, aimed at roughly 3,600 startups through about 300 incubators.
Why did it matter more than the amounts suggest?
INR 20 lakh does not change a company. Neither, usually, does INR 50 lakh. The structure is what made this scheme unusual, and the structure is what has gone.
It was the one scheme in the register that covered both ends of the early journey for the same company. You could take the grant to get a prototype working, and come back later for the larger instrument to put that product into a market. One eligibility test, one portal, one relationship with an incubator.
Nothing else in the register follows a company from proof of concept to market entry. That continuity is the real casualty here.
It also reached companies at an age when almost nothing else would. Eligibility ran to DPIIT-recognised startups incorporated within two years, with at least 51% Indian promoter shareholding and no more than INR 10 lakh of other government support. Prize money, subsidised workspace, a founder allowance and access to labs did not count against that INR 10 lakh ceiling.
Where does the prototype money come from now?
Two schemes cover the grant end, and both are older than SISFS.
- PRISM, run by DSIR, funds an individual innovator translating an idea into a working prototype. Category I is up to INR 2 lakh on a project costing up to INR 5 lakh. Category II is up to INR 20 lakh on a project of INR 5 lakh to INR 35 lakh. Each is capped at 90% of approved project cost.
- PRISM Phase-II goes to INR 50 lakh, limited to half the total project cost, for projects of INR 35 lakh to INR 1 crore. It expects you to have already demonstrated proof of concept.
- NIDHI-PRAYAS 2.0, run by DST, gives a prototype grant of up to INR 20 lakh through a PRAYAS Centre. A deep tech project can get up to INR 40 lakh through an Advance PRAYAS Centre, which is also the overall ceiling.
Two differences matter more than the ceilings. PRISM Phase-I names a single individual as the applicant rather than a company, so the money and the paperwork do not sit where a startup's usually do. And PRAYAS requires physical product development: pure software, e-commerce, service solutions and app-only projects are excluded.
That second line disqualifies a large share of the companies SISFS used to fund. If you are a software startup that was counting on the seed fund, the honest position is that neither of these is a substitute for you. The PRISM and PRAYAS register pages carry the full eligibility, and both have tests this article does not reproduce.
Where does the scale money come from now?
The larger end has moved to , which is a different bargain from the one SISFS offered.
The SIDBI Seed Fund at a-IDEA puts up to INR 1 crore of seed equity into agritech startups incubated by a-IDEA at ICAR-NAARM. Its last published window ran from 1 July to 31 July 2026. The SIDBI iDEX Seed Fund at SINE, at IIT Bombay, invests INR 10 lakh to INR 1.5 crore in defence startups. The gate there is winning an iDEX challenge first.
GENESIS, run by MeitY Startup Hub, matches private equity you have already received, one for one, up to INR 50 lakh. Its Investment 2.0 call opened on 29 August 2026 and closes on 24 September 2026. It has no page in the register yet, so we name it here rather than link it.
Read the shape of that list before you read the numbers. One is agritech, one is defence, and the third only works if a -registered investor has already put money in your bank account. Each carries eligibility tests beyond what is summarised here. A generalist two-year-old company with no round closed has a much thinner set of options than it did eighteen months ago.
Which half of it has no replacement at all?
The INR 50 lakh of convertible debentures. Nothing in the register does that job today, and the absence is structural rather than accidental.
A convertible debenture at repo-rate interest, unsecured and with no guarantee, let a company take real money at the scaling stage without pricing itself. No valuation argument, no immediate , and a conversion decision pushed out to a point where the company had more to show. That is a genuinely useful instrument for a business between a prototype and a priced round.
Our register keeps a category for convertible debt and, as at this September 2026 export, there is no scheme in it. Every alternative at that stage is equity, which means a shareholder and a valuation, or a loan, which means repayment from cash you may not yet generate.
How should you plan around the gap?
Start by deleting SISFS from your list, along with anything that cites it as a current option. A surprising number of published guides still do, and applications fail on exactly this kind of stale reading.
Then split your need in two, the way the scheme used to. If what you need is prototype money, PRISM and PRAYAS are real and open through their host centres, subject to the exclusions above. If what you need is scaling money, ask whether you fit one of the sector funds. The other question is whether a private round is close enough for a matching scheme to be relevant.
Keep the either way. It gated SISFS, and it still gates CGSS, the product track of the Design Linked Incentive, and GENESIS. Losing the scheme does not cost you the credential. The chooser article runs the four questions that narrow this properly.
The SISFS register page keeps the full record of the scheme as it stood, and the register hub carries what is current. If you want the gap worked through against your own stage and sector, our grants and schemes work starts there, and it is CS Manavi Arora's desk.
Frequently asked questions
Is the Startup India Seed Fund Scheme still accepting applications?
No. The final extended last date for startup applications was 31 May 2026, and incubators were directed to complete 100% of their selection by 30 June 2026. No successor cycle had been announced as at the research date behind our register.
What replaced the INR 50 lakh convertible debenture support?
Nothing has. The register holds no convertible debt scheme at all in its September 2026 export. The options at that stage are seed equity through the SIDBI programmes, matching equity through GENESIS, or a guaranteed loan. None of them defers the pricing question the way a debenture did.
Do PRISM and PRAYAS work for a software startup?
Usually not. PRAYAS excludes pure software, e-commerce, service solutions and app-only projects, and requires physical product development. PRISM Phase-I funds an individual innovator building a working prototype, model or process. A software-only team has very little to apply to at that end.
Is my DPIIT recognition still worth holding?
Yes. It gates the credit guarantee scheme, the product track of the Design Linked Incentive and GENESIS, and it carries tax and procurement benefits that have nothing to do with SISFS. The recognition was never the scheme.
General guidance, current as at September 2026. Scheme status, windows and terms change, and a scheme recorded as closed here may be reopened or replaced by notification. Check the register or the scheme's own portal before you act on anything in this article.
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