The entrepreneurial bug bit Rohit Nalwade while he was still a research fellow at the Indian Institute of Technology (IIT) Bombay. “I used to wake up having complete details of my products, designs and business plans floating through my head,” he says. Luckily for him, his college gave him the opportunity to realize his dreams.
IIT-Bombay’s annual business plan competition—Eureka—gave Nalwade a platform to present his idea to a panel of experts. His entry, about a product that could help the retail industry understand customer preferences using radio frequency identification technology, won an award of Rs2 lakh in 2005, giving him some seed capital. Then, the institute gave him the opportunity to incubate his fledgling company at the Society for Innovation and Entrepreneurship (SINE), the incubator at IIT Bombay which provides physical space and support services at subsidised rates to start-up companies promoted by its students or alumni.
When Rohit started out, he was one of a handful of students willing to chuck a highpaying job, and opt for the arduous existence of an entrepreneur starting things up. Today, the situation has undergone a sea change. “Now, every fifth student wants to be an entrepreneur,” says Rohit; this despite the average domestic salary at the institute going up from Rs3 lakh per annum on an average five years ago to Rs9 lakh now.
Poyni Bhatt, CEO of SINE ratifies this. “We get at least one serious application every month and we are flooded with enquiries,” she says. The demand has grown to such an extent that IIT-Bombay is planning to increase the capacity of its incubator from current 18 companies to house 50 shortly.
The situation is similar at other IITs as well. “We have had over 75 enquiries for high-technology business incubation out of which nearly 35 proposals were approved for support. Till date, we have incubated 16 companies out of which 10 have exited (the campus, having grown from concept to implementation stage) and six are currently resident. Three (more) companies will be moving in soon,” says Dr Anil Wali, MD of IIT-Delhi’s Foundation for Innovation and Technology Transfer (FITT).
IIT-Kharagpur is also creating additional space for more start-ups at its incubator. “In the two years, we already feel the need to expand our infrastructure,” says Prof. N.R. Mandal, MD of Science and Technology Entrepreneurs’ Park, the incubator at IIT-Kharagpur. He attributes the growth in entrepreneurship on campus to the fact that institutes themselves are fostering the spirit through various courses. “With many more entrepreneur role models emerging out IIT campuses, more students are opting for these (entrepreneurship) courses,” he says. Of course, it helps that IITs provide a conducive environment and ecosystem for these companies to find their feet. “The incubator not only provides companies basic necessities like office space and infrastructure, it also enables quick access to alumni, and better prospects for funding, (because) you carry the branding of being an IIT-incubated company,” says Manav Khanna, one of the founders of SecLore, an information security company, that was incubated at IIT-B. The company specialises in products such as security firewalls to protect information that is dispersed across a company’s computer network.
Funding, though, still is a problem. Most of the proposals that come to incubators are at concept or at the laboratory stage, which need to be refined, or validated, or both. “The initial fund requirement to sustain this exercise, however, is difficult to obtain (internally). Given that the incubation requires committed efforts over a period of two-three years, sustainability becomes the main issue,” says Dr Wali.
Incubators, unlike angel investors or venture capital funds, are not in a position to provide much cash to these start-ups who have to look elsewhere for seed money, to bear the cost of building an enterprise before they can seek external funds. Government agencies such as the department of science and technology and the ministry of communication and IT provide a few crores of rupees annually for each incubator, but this is usually insufficient. “The much-needed capital is either generated internally in our institute, or by contracting short-term projects with industry,” says Wali of IIT Delhi.
Nalwade’s company Consumer Vision is past that barrier. It is in the process of testing its product with a Mumbai-based retailer. The product is simply a radio frequency identification chip embedded onto cards that are given out as part of loyalty programmes. When a customer with the card walks into the store, salesmen can access his or her entire history with the store including past preferences.