Startup Grants: Are They Free Money or Fancy Unicorn Dust?

 

Are you a founder wondering if you can score some “free money” without selling a piece of your startup equity? Grants might sound like the cheat code to growth, but do they really work like that?

Here’s your no-jargon, yet totally informative guide to everything Indian startup founders need to know about grants. 

"At what stage should I apply for a grant?"

Think of grants like training wheels. They help you build momentum when you’re just getting started.

• You should ideally apply at the PoC (Proof of Concept) or MVP (Minimum Viable Product) stage. Some schemes even fund ideation.
  
  
• For example, the Startup India Seed Fund Scheme offers up to ₹20 lakhs for proof-of-concept and ₹50 lakhs for product development or market entry.
  
  
• Some incubators like NIDHI-PRAYAS give up to ₹10 lakhs for just building a prototype. That’s right, even your “garage phase” could qualify.
  
  
  

TL;DR - The earlier the stage (idea → prototype), the better your grant odds.

 

"Are grants free money or are there strings attached?"

The age-old question: Is it really free money?

Yes, and no.

• Grants are non-dilutive, meaning you don’t have to give away equity (unlike investors).
• But “free” doesn’t mean “easy.” You’ll need to:
  
  
• Provide usage plans
• Submit reports
• Hit milestones (some tranches are linked to progress)
  
  
  
• Think of it as money with a Google Sheet attached.
  
  
  

Also, failing to use the funds as outlined could mean:

• Rejection from future grants
• Audit headaches
  
  
  

"What are the risks involved in taking grants?"

Grants aren't risky in a “lose-your-house” way like loans or equity, but:

• You might get locked into deliverables and timelines that slow your startup down.
• Some grant schemes are incubator-tied, so you may have to shift your base to their location temporarily.
• Reputational risk: If you misuse or underdeliver, it’s documented and affects future fundraising.

With equity, the investor takes the financial risk. If your startup fails, they lose their money. But for you, the founder, the risk lies in giving up control and sharing future rewards.

Debt financing shifts more risk onto your shoulders. Even if your business underperforms, the repayment obligation stays. Plus, you might need to put up assets as collateral—yep, that's your laptop or inventory on the line.

Grants don’t carry financial repayment risk, but there’s still pressure. It’s definitely a responsibility. Don't treat it like a gift card.

 

"What should I have in hand to attract grants?"

If Shark Tank is about storytelling, grants are about paperwork.

Here’s your grant-attraction checklist:

• Registered company (most prefer DPIIT-recognized startups)
• Solid business plan + problem-solution clarity
• Pitch deck + cost breakdown (esp. tech/infra spend)
• Letter of recommendation from incubators (some schemes)
  
  
• MVP or at least a proof-of-need
  
  
  

Bonus tip: Schemes love alignment with government goals (think rural inclusion, green tech, women empowerment).

 

"I'm already running a ₹30 LPA business. Can I still apply?"

Short answer: Yes, if your startup fits the eligibility box.

• Grants like SAMRIDH are meant for startups with revenue looking to scale.
• Some schemes are even built for market-ready products. So being profitable is NOT a disqualifier.
  
  
  

However:

• If your business is mature and not DPIIT-registered, you may be redirected toward soft loans or accelerators instead of grants.

 

"My startup isn't tech-based. Can I still get a grant?"

Absolutely! Not every grant is reserved for code-wizards or AI wizards.

• Grants exist for agriculture, crafts, mental health, sanitation, and more.
• Non-tech founders can apply via schemes focused on impact, not just innovation.
  
  
  

Just ensure your startup:

• Has a unique problem-solving angle
• Is scalable or replicable
• Aligns with any public interest themes (health, inclusion, education, etc.)

For instance, The/Nudge Institute supports social and livelihood-focused ventures with grants up to ₹15 L (incubator) and ₹2 Cr (accelerator).

Should You Go for It?

Grants are like a really supportive mentor. They won’t take your company but will expect you to do your homework.

If you’re in the early stages, need capital without giving up control, and can handle the paperwork and expectations - go for it. If not now, bookmark for later.

Want a cheat sheet PDF or pitch deck template for grants? Get in touch via our LaunchPad program - we’ve got your back.