Which are the bodies and agencies that fall under the category of “Funding Bodies”?
As per the notification no. G.S.R 180(E) dated February 17, 2016, Alternate Investment Funds, Venture Capital Funds, Angel Fund and Seed Funds registered with SEBI will be eligible for providing recommendation/ support/ endorsement letter to entities in which not less than 20 percent equity is taken up by such funds.
A list of SEBI registered VCFs and AIFs has been published on Startup India portal (http://startupindia.gov.in)
Is there any specific format in which a funding body would be required to provide recommendation?
Yes. The prescribed formats for recommendation/ support/ endorsement letters are published on Startup India portal.
What are the aspects that need to be reviewed before issuing a recommendation/ support/ endorsement letter?
A funding agency is required to validate if the entity under review is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property if it aims to develop and commercialize:
- A new product or service or process; OR
- A significantly improved existing product or service or process that will create or add value for customers or workflow.
The following activities are not considered as a valid case for issuing a recommendation/ support/ endorsement letter:
- Products or services or processes which do not have potential for commercialization; OR
- Undifferentiated products or services or processes; OR
- Products or services or processes with no or limited incremental value for customers or workflow.
Can we recommend/ endorse an idea that has not been funded by our funding body?
No. Only those ideas/ Startups can be recommended in which not less than 20 percent of the equity is funded by recommending fund.
Do we need to designate someone as a recommender or anyone from our staff can be a recommender?
A funding agency is encouraged to designate its officer(s) to sign/ issue recommendation/ support/ endorsement letter to entities, and share the same with DIPP.
Who will upload the recommendation/ support/ endorsement letter on the Startup India portal and mobile app?
The entity receiving the recommendation/ support/ endorsement letter will upload the relevant documents at the time of applying for recognition.
Is there any liability on a recommender?
Where a recommendation is issued by a fund without proper examination or without being satisfied about the innovative nature of the business it shall be blacklisted from giving any future recommendation.
Where a recommendation is given without actually funding equity (not less than 20 percent equity) of the Startup, DIPP may initiate criminal proceedings against the principal officers of the fund for providing wrong information.