Wednesday, March 30, 2016

FAQs by DIPP For Funding Bodies providing Recommendation/ Support/ Endorsement Letter to Startups !

This is third frequently asked question ( FAQs) on startups program of India is for funding bodies providing recommendation or providing support or endorsement letter to startups . Earlier , FAQs published by DIPP for incubator was brought to readers

Which are the bodies and agencies that
fall under the category ofFunding
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
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)   A new product or service or process; OR
b)   A  significantly improved existing product or  service or  process that  wilcreate or  add  value for customers or workflow.

The  following  activities  are  not  considered  as  a  valid  case  for  issuing  a  recommendation/ support/
endorsement letter:
a)   Products or services or processes which do not have potential for commercialization; OR
b)   Undifferentiated products or services or processes; OR
c 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.

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