KATHMANDU, Feb 22: The government has announced that it would provide a seed capital for innovative businesses, start up or entrepreneurs up to a limit of 50% of their project cost.
According to the 'Working Procedure on Seed Capital for Innovative Businesses' released by the Ministry of Finance, the government will provide a seed capital up to 50% of the project cost with a maximum limit of Rs 5 million to the selected innovative businesses through an open call of proposals.
The seed capital that the government will offer as a subsidy to innovative businesses is aimed at promoting startups and businesses with innovative knowledge, skills and capacities through financial support.
Though the government had announced the program some years ago as 'Challenge Fund', it did not come into implementation mainly due to a dispute between the Ministry of Finance and the Ministry of Industry, Commerce and Supplies over who should operate the fund.
However, the Ministry of Finance (MoF) has taken the lead to bring the program included in the budget speech for the current fiscal year – FY2019/20.
According to the procedure, a five-member steering committee led by a member of the National Planning Commission (NPC) with a representation each from the MoF, Ministry of Industry, Commerce and Supplies, Ministry of Education, Science and Technology and NPC will call for proposals for the seed funds from innovators who have not been able to mobilize capital to innovate, run or operate their ideas.
In its working procedure, the ministry has defined 'innovative work' as entrepreneurial work that result into high-quality innovation or system through new technology by optimizing resource, time and cost.
Those in information technology, agriculture, energy, health service and tourism sectors with innovative knowledge, skills and capacity can submit their proposals to innovate, produce or do businesses. In their proposals, the applicant should explain the innovative idea, risk, possible return, required fund, expected seed capital from the government and positive impact in the economy of the country, according to the working procedure in a prescribed format.
A sub-committee formed by the committee will then evaluate the proposals within 30 days and select appropriate proposals to offer the seed fund.
While evaluating the proposals, the sub-committee will take into considerations the achievement and impact from the implementation of the proposed idea, cost, equity investment from the entrepreneur and qualification of innovator and capacity and mechanism to implement the idea, among other issues.
Based on the budget allocated for the program, the MoF will provide the seed capital to the innovative businesses and start-ups.
After the proposal is selected for the seed capital, the Ministry of Finance will release the fund in three installments. The first installment will be released to start the implementation of the idea after the selection while the second installment will be provided later based on the work progress. The last installment will be released after the idea is implemented. If the seed capital is not utilized in the approved program, the government will recover the fund from the recipient like other government dues.