Innovation bonds as an additional source for startup funding— could this work?

Can public funds be invested in startups through bonds?

With the recession around the corner, startups are finding it hard to raise funds.

I was thinking about how the government can extend financial support to the Indian startup ecosystem and came across “Innovation bonds” — could it be an effective way?

Innovation Bonds are an alternate funding source, where the startups can borrow money in exchange for ownership of their innovation. The government can channel public funding into innovation activities through such bonds and help early-stage startups that meet specific criteria.

For eg: If you designed a unique prototype for an electric bicycle, you can issue bonds with collateral as copyrights for your design.

Innovation Bonds serve a dual purpose: they help startups raise funds and encourage innovation in the country.

And speaking of the benefits, Innovation Bonds…

• offer low-risk low-cost funding, where you don’t have to put your house or other valuable assets as collateral…