Ritesh Arora and Nakul Agarwal, computer science graduates from the Indian Institute of Technology, Bombay, started Quarkrank Pvt. Ltd in 2006 straight out of college.
They spent nearly two years developing a technology that would automatically analyse and generate a summary of thousands of reviews posted on the Internet. But they had little knowledge in running a business. Then last August, they found a team of eight consultants that worked with them for four months to develop a business plan. For free.
Hands-on approach: Stephen Ross School of Business’ director of the office for the study of private equity finance David Brophy
The eight consultants were students of the Stephen M Ross School of Business, University of Michigan. They worked with Arora and Agarwal as part of a programme to connect B-school students with start-ups, based on an idea that students training for management roles should experience solving real-life business problems.
“They provided a lot of insight into possible applications for our product, and specific ideas on how to approach online users in the market,” says Arora.
As the Indian start-up scene is hotting up, schools with a focus on entrepreneurship are taking notice. In 2007, start-ups received venture capital funding of $928 million (Rs3,776.9 crore), more than three times the $275 million they received in 2005, according to a study by DowJones Venture Source.
B-schools are now scouting for projects that would give their students exposure to the challenges of building companies in diverse geographies.
Ross School’s programme, for instance, was mostly restricted to US-based start-ups since its inception four years ago, with exceptions such as Quarkrank. Now the university will formalize a partnership that will give start-ups in India direct access to such consultancy services.
Starting this academic year, it will tie up with Mentor Partners, which works closely with and often funds early-stage start-ups in India and the US, to source more Indian start-ups for its programme.
Mentor Partners, in turn, will act as “supermentors”, guiding each team. At the end of the term, the teams will present their business plans before venture capitalists.
“Our aim is to accelerate the path to commercialization. We’ve seen several companies in India that have the technology and make for great projects for the class,” says David Brophy, Ross School’s director of the Office for the Study of Private Equity Finance, where he teaches the course to about 150 students every year.
France’s premier business school, INSEAD, is following suit. Starting this year, it is scouting for Indian companies for Project Clearinghouse, a platform that plays matchmaker between start-ups and its management students in Fontainebleau and Singapore.
The B-school, which has 17 electives on entrepreneurship, has already received five projects from start-ups here since it called for submissions in March. It did not disclose names citing confidentiality terms.
INSEAD students will work on short-term projects, typically six weeks, to solve specific issues faced by entrepreneurs. “For example, (students) can do market research for validation of a product idea, or prepare a dossier on market conditions and competition for the start-up,” says Chad Myers, executive director, Rudolf and Valeria Maag International Centre for Entrepreneurship.
Such programmes, B-schools believe, are mutually beneficial. Start-ups, smaller in size and often working on shoestring budgets and limited resources, cannot engage consultants typically used by larger corporate houses.
First-time entrepreneurs can find themselves out of depth while dealing with the financial or marketing side of the company. A team of student consultants preparing to take on management roles might be better-equipped in such situations. For start-ups, this gives them an opportunity to tap into the university’s resources and network of contacts including plugging into venture capital firms. “If we like the idea, we might fund the company,” says Vish Narayanan, founding partner, Mentor Partners.
B-school students often end up opting for careers in the company they worked with, or join others in similar businesses, says Ross School’s Brophy. For example, a student at the Indian School of Business (ISB) in Hyderabad, which has a similar programme, worked on a project on real estate warehousing for a large corporate.
At the end of the course, he found the field interesting enough to join another real estate company to set up warehousing for them.
ISB’s initiative, called the Experiential Learning Programme, had 75 such projects last year from a batch of 420. Unlike the others, this programme is not restricted to start-ups and includes a fee to be paid by the company.
However, “we are seeing greater traction from start-ups this year,” says V. Chandrasekar, executive director, Wadhwani Centre for Entrepreneurship Development, ISB.