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
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Question
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Response
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1.
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Which are the bodies
and agencies that
fall under the
category of “Funding
Bodies”?
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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
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2.
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Is there any specific format in which a
funding body would be required to
provide recommendation?
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Yes. The prescribed formats for recommendation/ support/ endorsement letters are published on Startup
India portal.
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3.
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What are the aspects that need
to be reviewed before issuing a
recommendation/ support/ endorsement
letter?
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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
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:
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.
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4.
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Can we recommend/ endorse an idea that
has not been funded by our funding body?
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No. Only those ideas/ Startups can be recommended in which not less than 20 percent of the equity is
funded by recommending fund.
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5.
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Do we need to designate someone as a
recommender or anyone from our staff can be a
recommender?
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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.
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6.
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Who will upload the
recommendation/
support/ endorsement letter on the
Startup India portal and
mobile app?
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The entity receiving the recommendation/ support/ endorsement letter will upload the relevant documents
at the time of applying for recognition.
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#
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Question
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Response
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7.
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Is there any liability on a recommender?
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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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