|VENTURE discussion taking place at Amity Innovation Incubator|
ALL of us have heard of HP, a brand popular for a range of computer hardware and other IT-based accessories. Two Electrical Engineering students of Stanford University, Hewlett and Packard, transformed their idea of this company during their fellowship under the mentorship of a professor in 1939. They started it in a one-car garage with an initial investment of 538 US dollars and in around a decade HP was incorporated. A similar case can be found in India where students of IIT-Madras created Midas Communication Technologies in 1994 and brought about the wireless communication revolution in the country.
These are examples of how universities have been playing a major role in entrepreneurship. Gone are the days when education was limited to theory and a few-hours of practicals. Education domain is spreading its wings and encouraging students to think beyond and establish themselves as founders and owners. To achieve this aim, incubators were set up.
These centres help not only in the growth of technology-based new enterprises but also in improving their survival rate substantially. They are open for individuals or groups of any community and regions who can approach them directly by mail, walk-ins and phones. Such establishments include Innovation and Entrepreneurship Development Centres (IEDC), Science and Technology Entrepreneurship Development (STED) Projects, Science and Technology Entrepreneurs Parks (STEP) and Technology Business Incubators (TBI). Although some of these units are hosted in universities, they are a totally different entity as a registered Not for Profit Section (25) Company and the board is not dominated by the university management.
|CENTRAL lab facility for Biotechnology based Incubatee at KIIT TBI|
Range of services
Services provided by these mentor centres aim at realizing a venture idea into successful commercial venture. The help vary from physical to mental support in the form of business training, technology assistance, handholding, mentoring, physical space, technical infrastructure, basic start-up funds, legal support, and importantly networking at both national and international level. Sometimes, rent-free space for a few months is provided, depending on the case. The tenant companies have to leave the incubator space within two-three years. In return, the incubatee pays some money either as rent fee or commission. At KIIT TBI, the rent starts from Rs. 3000 per month to Rs. 8000 per month whereas at SIDBI Innovation and Incubation Centre (SIIC) at Institute of Information Technology, Kanpur (IIT-K), it is in the form of a stake in the company. “The incubatee gives three percent stake to the institute and one percent to the mentor in the company,” says Sudha Selvaraj, Manager, SIIC, IIT-Kanpur.
To fund start-ups, these incubators receive grants from the government in terms of technology facilities while the institutions/co-promoters are expected to provide land and building. RMP Jawahar, Executive Director of TREC-STEP at NIT-Trichy, shares that the first five years’ recurring expenditure is provided by the government and after this, incubators have to generate their own resources as self sustaining ventures. “New Seed Funding instruments are also launched by various Ministries for the benefit of young start-up entrepreneurs from time to time. NSTEDB provides up to Rs. 50 lakh seed fund (soft loan) support for entrepreneurs while Technology Development Board provides Rs. 25 lakh seed fund through the concerned incubators. For developing innovative prototypes processes, Department of Scientific Industrial Research also provides Rs. 15 lakh for developing innovation and another Rs. 45 lakh for commercialising them as 50 percent cost support for select innovations. Ministry of Finance has provided Service Tax exemptions for young start-ups and for the hosting incubators up to a certain ceiling,” says Mr. Jawahar.
Besides, funds are generated from rent, consultancy, equity share, training programmes which make the set- up sustainable. Amity Incubator has a tie-up with Amity Capital Ventures, which raises funds to invest in startups and entrepreneurs. Their current portfolio includes online gaming, clinical research, GIS-based company and a process automation organisation.
“Text messaging is fun, even to the shop next door”
Here is Gingr, a mobile messenger that lets you interact with the businesses around you through text messages. Be it a restaurant, florist, gym or salon, no more calling them. Gingr delivers your message to that business and ensures that you receive a quick response. Such a solution provider is jointly brought to you by three students of IIT Delhi; Himanshu Bamoria, Himanshu Geed and Suneet Choudhary. Gingr is their second venture together. Himanshu Bamoria shares that in 2012 Gingr got shortlisted for India’s multi-city accelerator programme Global Superangels Forum. During that 8- week programme, Gingr was grilled on every aspect including the idea, business model, marketing strategy and customer acquisition. It was mentored by prominent entrepreneurs of Internet and mobile industry. So far, Gingr has raised 28,000 US dollars from GSF Superangels.
|START-UPS AT TREC-STEP: Birahma team that manufactures innovative wood processing tools|
Varying needs of entrepreneurs
These services are availed of by incubatees in varying permutations and combinations. GVC Systems, an electronics product design and development company, has rented an entire office room at Amity Innovation Incubator. Its CEO, Vinay Chadda, recalls that when he first approached the centre, his company was short of funds. But the centre believed in his business plan.
Since then the company has successfully designed several products including traffic light systems, vending machines and power monitoring devices. Visibility and guidance are two top perks, shares Gauravv Mittal, Managing Director of ITCONS e-solutions, which has its office at the Amity Incubator premises. Gauravv is referring to the several CEOs, entrepreneurs and investors who frequent the incubator premises, as well as the workshops that are regularly conducted.
These cover a range of topics relevant to entrepreneurs, from corporate governance, goods and service tax to social media and to master classes on due diligence. Some companies don’t need an office space and only avail of the incubators’ virtual incubation platform. For instance, patent consulting is one such service offered and a team of IPR professionals process this service.
Tractor Mounted Pulverizer to produce new bio-mass fuel
Knowledge bank for universities
An incubation centre gives a different identity to the host institution. It improves their entrepreneurial and innovation culture. On one hand it helps the faculty to explore possibility of commercialising their research findings and on the other it helps the students to develop their entrepreneurial talents.
This in turn provides an opportunity for the institute’s knowledge resource to sync with latest developments in the technology market and brings cutting edge knowledge to faculty, improving the entrepreneurial and innovation culture. SIIC has a faculty entrepreneurship policy. Through it, till now four such faculty-owned ventures have graduated from this centre. “If the students who take up entrepreneurship succeed in developing enterprises, they create jobs for others. They generally take their classmates or juniors and others try to follow the same,” says Dr Mrutyunjay Suar, CEO, KIIT-TBI, the only incubator in Odisha.
Challenges of mismanagement
It’s said, “Many great ideas have been lost because the people who had them could not stand being laughed at.” The saying goes true for many start-ups which though begin but sooner or later face shut-down. A team with a good idea never wants to fail. Dr Suar observed that businesses fail when the business touch is missing, even though the idea is good with high-end technology. “If more failures come from a host institution then the flow of incubatees stops,” he adds. This leads to more problems like loss of time, resources and reputation. “Mismanagement is very frequent in the academic world since they lack business exposure, at least in India,” adds Jawahar.
“A company can be referred to venture capitalists for funding after incubation, but if VC feels it needs further nurturing, he can refer it to an incubator”
Dr Mrutyunjay Suar
“Presence of TBI in the host institution helps in creating jobs for its students. It also acts as a support to get accreditation by various bodies”
Scaling up required
All said and done, there is much needed to be improved as far as incubation is concerned in India. National Science and Technology Entrepreneurship Development Board (NSTEDB) under the Department of Science and Technology, Government of India, is the one responsible for setting up these incubators. Scaling up the number of incubators is an absolute must. Compared to China, which has nearly 800 incubators, the United States 1000 incubators and South Korea nearly 500 incubators, India has only 100 incubators. This is very low and needs urgent scaling up. Incubators’ support for only five years is unrealistic and needs a review. More support from the Government is also essential. Dr Suar feels that separate fellowships should be awarded to promote innovation and entrepreneurship like those in research and development. Moreover, coordination with various departments promoting innovation and incubators is essential for building synergistic uplift. Over reliance on academic incubation needs to be reviewed. More stand alone initiatives with knowledge linkages have to be encouraged. Innovation in incubation is essential. A new look at HR policies for incubators are required for nurturing the spirit of innovation and entrepreneurship in the country.
“Coffee with a friend and lunch with a colleague are different”
Impatience kills start-ups, says start-up and turn around expert Vicky Narang, a commercial pilot and mentor at IITs and IIMs to aspiring student entrepreneurs for past five years. He shares (through his experience), what one needs, along with resources.
“A business start-up is like a baby. The way a baby learns to crawl, stand up, walk and fall; a business venture experiences these twist and turns too. Constant motivation, determination and patience are prerequisites. You have to wait for results to come. To site an example, there was a students group working on an innovative idea to make dumbbells. India has not been able to incorporate that technology yet as it costs too much. One team member was very energetic and capable enough to come out with solutions immediately to any challenge. With such talent and innovative ability, he had to give the idea time to develop and earn rewards. A-click-of-a–button approach didn’t go well with the team working with him and unfortunately, the project sank.
When you think of a business venture, you neither have a set up nor people. It’s a poor man’s show and you need at least two-three brains to start. So, you have to bring them in and guide them. This calls for team management. This is where it gets tricky, when grilling and testing, clashes of ego take place. It’s all a part of the entire journey. Different viewpoints are significant but it’s important to collaborate and take a decision. Also, if any view point is contrary to the decision taken, the team should be supportive enough to understand, accept and go along with it.
Self-presentation skill is another substantial need. You might have a record-breaking academic background, enough money and a fruitful business idea but if you go out to meet people dressed in jeans and a T-shirt thinking that’s cool, you’re in for a surprise. I feel a changeover from today being a college student enjoying coffee in a canteen to tomorrow being an employee sitting with a colleague and having lunch is not coming through. Despite having the basic finance or HR knowledge, they usually don’t know what and how to speak, or when to speak. They are young, which is brilliant, but somewhere their minds are still not well versed with conversing with a particular person who might fund their project. These are not the only things but these are the small things which a person who is funding notices because tomorrow his/her name would be associated with your company and it would be a part of that ecosystem. You would be called up because a company has funded you and if you are able to present yourself well, you can present your product well. First you sell ‘you’ as a brand and then after years the brand (product) starts selling and becomes a Parle or Maggi. It’s highly recommended to maintain an overall quality.