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ENTREPRENEURSHIP
Beginning To Hatch
Tech start-ups are warmed up in incubation centres
VENKATESH GANESH
16 Jan 2009
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Shaping Futures: While Indian incubators
are known for their technology expertise,
they are yet to develop a world-class product |
The busy second floor at the Society for Innovation and Entrepreneurship (SINE) in IIT Mumbai defies all indications of a global economic downturn as young people armed with engineering, math and enthusiasm work on start-up ventures. SINE has about 50 start-up companies under its wings in an initiative partly aided by the Indian government, along the lines of those found in the Massachusetts Institute of Technology (MIT) and Stanford. Fifteen such incubation centres have sprung up across some of the IITs and IIMs, and they cater to 300 companies based in India and abroad. “When the incubation centres started, our dreams started getting a shape,” says Professor G.R. Shevare, director of Zeus Numerix, which makes numerical software solutions for fluid dynamics, one of the firms incubated in IIT Mumbai.
IITs, especially those in Mumbai, Chennai and Delhi, have been at the forefront of incubation efforts, but others are beginning to play catch up. The International School of Business (ISB) and International Institute of Information Technology (IIIT) in Hyderabad are also incubating companies. Last November, the Punjab government announced the setting up of a knowledge city in Mohali; its plans included a biotechnology incubator. ISB has a tie-up with The Indus Entrepreneurs (TiE) for identifying and, later, funding start-ups incubated by them. The Amity Innovation Incubator, a registered not-for-profit society in Noida, has incubated 12 firms till date, and N.S. Raghavan centre for Entrepreneurial Learning (NSRCEL) has incubated some 13 firms.
“I would say that the past two years have contributed significantly to the maturing of Indian tech start-ups,” says Professor S. Sadagopan of IIT Mumbai. “For example, ICICI Bank and Asian Paints, earlier the preserve of Hewlett-Packard or IBM, now use home-grown products.”
The IITs’ (other than Guwahati and Roorkee) start-up corpus funds come from the regional IITs, the Department of Science and Technology and IIT alumni, and are valued at between Rs 60 crore and Rs 120 crore. In each project, they invest Rs 1-25 lakh. Among companies that benefited from early funding are Webaroo, which makes Web content accessible on portable devices; Idea Forge, which makes alternative power sources for electronics gadgets; Vegayan Systems, which provides software for communications networks; and Seclore Technology, which works for information usage control.
As with MIT or Stanford, faculty is involved in 13 companies incubated in IIT Mumbai; 12 companies in the IIMs claim the same. “Being technology-oriented, we are still learning the ropes when it comes to strategy,” says Shevare.
It is all slow going, though. Consider this: nine of the 30-odd companies incubated in IIT Mumbai have graduated and do not require any assistance from the institute. Out of the nine, venture capitalists (VCs) invested in a few but the $30 million (Rs 147 crore) they received by way of funding, when compared to private equity (PE) and VC investments, is a small drop in the ocean.
“A seed funding ecosystem, in its true meaning, is non-existent in India,” says Kristi Lafleur, executive director of TiE Midwest. According to Venture Intelligence, a research firm, PE and VC investments in India totalled $9.5 billion in the period from January to September 2008. “While Indian incubators are known to have tech prowess, we are yet to see them build a strong brand/product that could be a world-beater,” says Rahul Khanna, director of Clearstone Ventures.
With inputs from Dhanya Krishnakumar
venkatesh(dot)ganesh(at)abp(dot)in
(Businessworld Issue 20-26 Jan 2009) |
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