Hyderabad: Computer science focused educational research institute International Institute of Information Technology (IIIT)-Hyderabad is starting a new accelerator focused on technologies such as artificial intelligence, natural language processing, machine learning, augmented reality and virtual reality.
These technologies, incidentally, are focused around research areas of the premier educational institute.
“The ecosystem around IIIT-Hyderabad should be able to leverage the goldmine of the institute,” said Vasudev Varma, dean (research and development) at IIIT-Hyderabad.
The model is similar to one in the US where research universities spawn startups centered around technologies they develop.
IIIT’s accelerator, named Avishkar, will be a six-month program. An investment committee comprising of IIIT-Hyderabad Foundation, 50K Ventures, T-Hub and other venture capitalists will select 10 startups during the first year.
Each of the selected startups will receive Rs.10 lakh seed funding. IIIT-Hyderabad and 50K Ventures will co-invest Rs.5 lakh each.
Interestingly, the seed funding would be provided in the form of a convertible note. This means that the selected startups would receive Rs.10 lakh at the beginning of the program. No stake would be picked up at this stage. The equity would be defined only when the startup raises subsequent round of funding (after graduating from the accelerator) from angel/venture capital investors or potential acquirers.
“With a convertible bond, time is not wasted on valuation,” Sanjay Enishetty, founding partner of 50K Ventures, said. Startups, as a result, can focus on developing solutions.
The startups at the accelerator would “create world class technology with higher entry barriers in quickest possible time,” said Varma.
“Most of the startups we have today are focused on solving fairly shallow problems. Nobody is solving the deep problems today. IIIT-Hyderabad is in a unique position to do that today,” Srinivas Kollipara, chief operating officer of T-Hub said.
T-Hub, the biggest incubator in the country started by the Telangana government, would act as a facilitator by connecting Avishkar startups with mentors and investors. Marketing firm CoCreation Consulting India Pvt. Ltd. would help the startups with commercialization and market fitment strategy.
IIIT-Hyderabad Foundation, which runs the Centre for Innovation and Entrepreneurship (CIE), Hyderabad’s biggest incubator until it was overtaken by T-Hub located in the same campus, is now re-imagining itself, said Ramesh Loganathan, board member of the foundation.
“We should complement and support what T-Hub was doing,” Loganathan said. “Deep tech served as a good fit. IIIT-Hyderabad would like to be the deep tech accelerator for T-Hub.”
About nine of the 28 startups currently at CIE are already working on complex technologies. The centre has supported 92 startups since 2008 of which 10 successfully raised external funding of Rs.23 crore while four have seen exits.
But at a time when the investment climate seems bleak and established startups are finding it difficult to raise follow-on rounds, would deep tech startups evoke investor interest?
Kollipara and Varma say the timing could not have been more right.
“I think this winter coming is good for people like us,” said Kollipara. Startups solving the next big problem will now catch the eye of smart investors, he said.
Startups working in areas of speech recognition, machine learning and artificial intelligence, touted as the future of technology innovation, are potential acquisition candidates for unicorns, pointed out Varma. He cited the example of a startup at CIE working on speech recognition of Indian languages.