The Union Budget earlier this year came as a major boost for management students, especially from the Indian Institutes of Management (IIMs). The Budget suggested that corporate funding to incubators will come under the Corporate Social Responsibility (CSR) tag.
The proposal was meant to give a fillip to funding for on-campus incubators that encourage budding entrepreneurs to start their own ventures. For instance, IIM Bangalore operates an open incubator which is open to enterprises/founders that do not have any IIMB affiliation. “The idea behind designing it to be an open incubator is that Bangalore must have many entrepreneurs who have a strong tech/product development background who would benefit from their domicile inside a B-school. Many of our incubatees such as Just Books, Mango Technologies and Turtle Yogi and Ttava have been able to make significant changes to their business strategy and raise capital or sell technologies thanks to their presence at the NS Raghavan Centre for Entrepreneurial Learning (NSRCEL), says G Sabarinathan, chairperson, NSRCEL at IIM Bangalore.
So far, 35 enterprises have graduated from NSRCEL and nine are on board at present. Direct funding is not a key proposition of NSRCEL’s incubation offerings. “It does a limited amount of funding selectively based on availability of funds from patient sources such as government grants. NSRCEL’s essential approach is to make its incubatees ready for raising capital from market-oriented investors through its mentoring and incubation support. The centre has received some grants from the Department of IT and Department of S&T, both of the government of India. The centre funds a few enterprises selectively out of these grant funds. The extent of funding varies in line with the requirement of the enterprise. The extent of equity acquired in an enterprise can vary depending on whether the incubatee has received funding or not and on the extent of funding received.
Interestingly, every single company that has been incubated at NSRCEL has delivered a product or solution, says Sabarinathan.
IIM Ahmedabad’s Centre for Innovation, Incubation and Entrepreneurship (CIIE), also helps start-ups by providing mentoring, seed fund, physical infrastructure facility and networking support. “CIIE also helps them in raising funds from angel investors and venture capitalists. CIIE has supported more than 80 start-ups which are at different stages of incubation. Average investment in start-ups is around `25 lakh. Usually, investment is against equity varying from 3% to 10% depending on different factors. We usually do not support start-ups at idea level. We support start-ups where at least prototype has been developed,” says Ashwin Joshi, vice president, ecosystem development at CIIE.
IIM Calcutta and IIM Lucknow also run the Centre for Entrepreneurship and Innovation and the Innovation and Incubation Centre respectively to stimulate the development of start-ups.
We aim to make incubatees ready for raising capital from market-oriented investors through mentoring and incubation support --- G Sabarinathan, chairperson, NSRCEL at IIM Bangalore