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"It's not just money
that draws people to us. What we offer is an environment and
a network in which entrepreneurship can bloom"
Mathew Manimala
Professor Of Organisation Behaviour And The Jamuna Raghavan
Chair Professor Of Entrepreneurship/IIM-B |
Two
years ago when sadasivam Ramakrisnan returned to India after spending
13 years in the us working, among others, for DSL technology companies
like Aspect and Telera (the latter was acquired by Alcatel in 2002),
he was full of hope. The it market was booming, thanks to the offshoring
wave, and it seemed like the right time to launch a tech company
of his own. Hooking up with an old colleague, Ian Morcott, and putting
together a business plan, the University of Roorkee (it's now an
IIT) computer engineer started doing the rounds of venture capital
firms to raise money to get started. Disappointment came quickly.
"All of them were looking for easy money and had no patience
to wait," recalls Ramakrisnan. Courtesy the dotcom fiasco of
2001, most VCs had stopped funding startups and were looking at
second- or third-round funding.
Could there possibly be somebody still interested
in funding just a business plan? There was, and the discovery of
that unlikely source happened almost by chance. At his wit's end,
the 41-year-old called up his Roorkee batchmate, B. Mahadevan, professor
and Chairperson of Production and Operations Management at IIM Bangalore
(IIM-B). Mahadevan suggested to Ramakrisnan that he try his luck
at the B-school's newly-opened Nadathur S. Raghavan Centre for Entrepreneurial
Learning (NSRCEL, named after the eponymous co-founder of Infosys
Technologies who contributed the bulk of the centre's Rs 8.75-crore
corpus). As luck would have it, IIM-B screened Ramakrisnan's business
plan and technological competence and decided to incubate it on
campus. That was four months ago, and Ramakrisnan's VoiceTech Solutions
is on its way to take on telecom technology biggies like Nortel
and Avaya. Says Ramakrisnan: "I was not looking at huge sums
as investment. All I wanted was some basic infrastructure and a
supportive ecosystem."
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"Being just 27-year-olds,
we needed somebody we could consult in full confidence, and
that's what we got at NSRCEL"
Kalyan Chakravarthy
Co-founder/ Brain League |
Meet the new business incubator on the block:
the B-school. Universities in the us have been long known to spawn
companies (Sun Microsystems, Yahoo!, Cisco and Google are just a
few examples), but it's only now that India's top educational institutions
are waking up to the potential of incubating business ideas into
real businesses. IIM-B apart, IIM Ahmedabad set up a Centre for
Innovation, Incubation and Entrepreneurship in 2001, and IIM Calcutta
launched its Centre for Entrepreneurship and Innovation in 2003.
Even the relatively new Indian School of Business (ISB) in Hyderabad
kick-started in January this year a "business accelerator"
called the ISB K-Hub (K for knowledge) with Rs 50 lakh in corpus,
which is expected to grow to Rs 10 crore by the end of this year.
Another Hyderabad-based B-school, ICFAI, has a Centre for Entrepreneurship
Development (ICED). (However, IIM-B, because of Raghavan's munificence,
seems to have a greater number of significant and more successful
startups to its credit.)
In their avatar as incubators, the B-schools
offer a range of services: from seed capital to infrastructure to
professional advise. For example, VoiceTech gets all the basic facilities
like PCs, secretarial help, office space and telecom free of cost
from IIM-B. In addition, the professors at the institute offer pro
bono consultation, besides helping VoiceTech network within the
it and VC communities. Says K. Ramachandran, Professor of Entrepreneurship
and Strategy at ISB: "We want to ensure that business schools
go beyond producing students with just employability skills. We
want to nurture and create entrepreneurs."
What kind of deals do the institutes strike
with their investee companies? It depends. To start with, most of
them expect to be paid back in cash, but would want equity once
the companies are on their feet. Says Sunil Gupta, head of iced:
"Since we want this to be a self-sustaining model, we prefer
that companies also give us an equity stake." Adds Mathew Manimala,
Professor of Organisation Behaviour and the Jamuna Raghavan Chair
Professor of Entrepreneurship at IIM-B: "It's not just money
that draws people to us. What we offer is an environment and a network
in which entrepreneurship can bloom."
Indeed. Take the case of Brain League, another
NSRCEL beneficiary. Founded by Arun Kishore, a second year PGSM
student at IIM-B, and Kalyan Chakravarthy, a visually-challenged
entrepreneur and a doctoral student at the National Law School of
India, Brain League offers intellectual property rights (IPR)-based
services and hence did not need so much capital as mentoring. Says
Chakravarthy: "Being just 27-year-olds, both of us needed somebody
we could consult in full confidence, and that's what we have got
at NSRCEL." Brain League already has three clients (Bangalore
Genei, a biotech company, Dr. Reddy's Labs, and Chira Electronics,
which is into circuits and panel designs) and hopes to be on its
own within a year.
Thinking Out Of The Campus
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"We want to ensure
that business schools go beyond producing students with just
employability skills. We want to nurture and create entrepreneurs"
K. Ramachandran
Professor Of Entrepreneurship And Strategy/ ISB |
Initially, NSRCEL started by offering cash awards
to the best business plans of IIM students, who would partake in
an annual competition meant for the purpose. However, within two
years, the centre realised that while the plans sounded great on
paper, few of the winning students wanted to pursue them. Instead,
"they were looking for the glory of winning the competition,"
says Manimala. So instead of giving the winning students cash, the
centre decided to fund their business plans. When that didn't yield
the desired results either, the centre broadbased its scope to fund
anybody with a good business plan.
NSRCEL, though, isn't the only one doing so.
At ICFAI's entrepreneurship centre, the funding is not just open
to all, there's no upper or lower limits to it as well. Funding,
which comes from the institute's internal accruals, is decided case
by case.
Still, not an easy task by any means, as iced
has discovered. Set up just a year back, the centre has invested
in two companies, one of which-ModeFin, a financial software services
firm-has shut shop. The other, Goose Technologies, which makes tools
for project management software, is said to be doing well. (Goose
promoter Debashish Patnaik chose not to speak to BT for the story.)
IIM-B, too, has its share of startups that
are close to some kind of an inflexion point. One such is SeNet
Communications. Founded by Prasanna S. Bidare, an alumnus of Indian
Institute of Science, the company is expected to hit the market
with what it calls "esat-200", a multi-layered secured
zone shell to communicate on IP net. Says Bidare, who was a senior
director at San Jose-based Cypress Semiconductors before he founded
SeNet: "My vision is to build a world-class product company
out of India."
There are two other 'incubatees' that NSRCEL
has managed to spin off. These are EmbedX, a product-development
company based on Ediface (embedded device interfacing framework
and computing environment), and Meta-I Technologies, which is a
niche ITEs player. Says Manimala: "It's only a matter of time
before world-class companies come out of India. The ingredients
are just right." Adds Gupta of iced: "Academic institutes
provide the right kind of environment and I see more companies springing
out of campuses."
No doubt, the business ideas that the B-schools
get to nurture are typically those that are considered either too
risky or too long term by regular venture capitalists. Still, it's
conceivable that not too far into the future, one of the b-schools
may actually have the pleasure of having fathered a Google or Cisco
of India.
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