Tamil Nadu would introduce an equity model for start-ups in the fifth edition of Tamil Nadu Startup Seed Fund (TANSEED 5.0) for the first time, to encourage enterprises to scale up their operations, the state government said on Sunday.

Since the introduction of TANSEED in 2021, the government has supported 84 start-ups in the state. In its fifth edition, TANSEED for the first time would be awarded in an equity model for a three percent stake in the start-ups.

"Investment in the form of equity is aimed at helping the start-ups through proper guidance to reach their milestones and soar to greater heights," the government said in an official release.

The fifth edition of TANSEED aims at benefitting 50 start-ups in the form of equity investments.

TANSEED aims at bridging the gap in fund requirements of start-ups in their early stages and the seed fund provides support of up to Rs 15 lakh to green technology, rural impact and women-led ventures.

 Minister for Micro, Small and Medium Enterprises T M Anbarasan had announced in the assembly earlier that Rs 10 crore would be provided to 100 start-ups under this initiative.

According to the release, start-ups who seek to benefit from TANSEED should work towards innovation, development or improvement of products with a high potential for employment generation. The start-up should be headquartered in Tamil Nadu and registered with the department of promotion of industry and internal trade.

Many beneficiaries of TANSEED in its previous editions have recorded growth and raised venture capital funds from prominent investors, the government said.