Startup India Funding MCQ

Question 1

Consider the following statements about incubator eligibility under the Startup India Seed Fund Scheme:
1. An incubator must have facilities to seat at least 25 individuals.
2. An incubator must have at least 5 startups undergoing physical incubation on the date of application.
3. Every incubator must be operational for at least 5 years on the date of application.
Which of the statements given above are correct?

Accepted Answer

Statements 1 and 2 are correct. The Gazette specifies seating capacity for at least 25 individuals and at least 5 physically incubated startups. Statement 3 is incorrect because the basic operational requirement is at least 2 years; a 3-year rule applies in a specified case for incubators not assisted by Central or State Governments.

Question 2

Consider the following statements about CGSS guarantee quantum:
1. The maximum amount of debt eligible for guarantee cover is Rs 20 crore per borrower.
2. For loans exceeding Rs 10 crore, transaction-based cover is 100% of the amount in default.
3. Umbrella-based cover is subject to a maximum of Rs 20 crore per borrower, net of collateral if any.
Which of the statements given above are correct?

Accepted Answer

Statements 1 and 3 are correct. The maximum eligible debt and the umbrella-based borrower cap are both Rs 20 crore. Statement 2 is incorrect because transaction-based cover for loans exceeding Rs 10 crore is 75% of amount in default, not 100%.

Question 3

Consider the following statements about operational design of Startup India Fund of Funds 2.0:
1. The operational guidelines introduce segments such as deep tech-focused funds and micro venture capital funds supporting early-growth startups.
2. AIF selection is a single-stage process done only by DPIIT, without an investment committee.
3. FoF 2.0 is designed to act as a catalyst rather than a direct investor.
Which of the statements given above are correct?

Accepted Answer

Statements 1 and 3 are correct. The guidelines segment AIFs into categories including deep tech and micro venture capital funds, and FoF 2.0 is meant to be catalytic rather than a direct investor. Statement 2 is incorrect because the AIF selection process is two-stage, with screening and due diligence followed by evaluation by a Venture Capital Investment Committee.

Question 4

Consider the following statements about the selection and governance of Startup India FoF 2.0:
1. AIF proposals are first screened and put through due diligence by the Implementation Agency.
2. A Venture Capital Investment Committee evaluates proposals after the Implementation Agency stage.
3. The Empowered Committee is chaired by the Secretary, DPIIT.
4. The operational guidelines are issued by the Ministry of Finance rather than DPIIT.
Which of the statements given above are correct?

Accepted Answer

Statements 1 and 2 are correct: the process has Implementation Agency screening/due diligence followed by VCIC evaluation. Statement 3 is correct because the Gazette places the Empowered Committee under the Secretary, DPIIT. Statement 4 is false because the operational guidelines are to be issued by DPIIT, not the Ministry of Finance.

Question 5

Consider the following statements about SISFS incubator-linked processes:
1. A selected incubator must maintain a transparent process of selection, monitoring and disbursement for the fund.
2. Seed fund is disbursed to selected startups after due diligence by the incubator.
3. A startup selected by an incubator for SISFS assistance must pay a mandatory selection fee to the incubator.
Which of the statements given above are correct?

Accepted Answer

Statements 1 and 2 are correct: the incubator must maintain a transparent process and disburse seed fund after due diligence. Statement 3 is incorrect because a selected startup cannot be charged fees for assistance under the scheme.

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