A file photo of IIM Ahmedabad. The premier management institution believes it will receive more support from firms once the new companies Bill makes it mandatory for them to invest 2% of their net profit in corporate social responsibility. Photo: Mint (Mint)
A file photo of IIM Ahmedabad. The premier management institution believes it will receive more support from firms once the new companies Bill makes it mandatory for them to invest 2% of their net profit in corporate social responsibility. Photo: Mint

(Mint)

Incubation centres at IIMs help start-ups find their feet

IIM-Ahmedabad has successfully funded, mentored 80 start-ups in last 4 years, more than 15 of which are social enterprises

Ahmedabad: Sumit Dagar, founder of Kriyate Design Solutions Pvt. Ltd, introduces himself as an interaction designer and a sci-fi short-film maker on his website, but he has recently been in the media limelight for inventing the world’s first Braille smartphone.

Dagar is collaborating with the Indian Institute of Technology, Delhi, and LV Prasad Eye Institute in Hyderabad to develop a prototype of the smartphone for visually-impaired persons.

“If all goes as planned, I will be ready to launch my product in a year or two," Dagar told Mint over the phone.

Kriyate was one of the 16 innovations that got shortlisted for the Technology for Impact Accelarator initiative by Aarohan Ventures, a division for social enterprise incubation set up by the Centre for Innovation Incubation and Entrepreneurship (CIIE) at the Indian Institute of Management, Ahmedabad (IIM-A) in March.

The initiative is a partnership with US-based venture fund Village Capital and provides funding to early stage start-ups.

IIM-A’s incubation centre has successfully funded and mentored over 80 start-ups over the last four years, more than 15 of which are social enterprises. The premier management institution believes it will receive more support from firms once the new companies Bill makes it mandatory for them to invest 2% of their net profit in corporate social responsibility or CSR activities.

CIIE has invested about 14-15 crore in start-ups and picked up as much as 10% equity in these.

“Since 2009, CIIE has funded more than 80 start-ups, with a survival rate of more than 95%. Additionally, CIIE has reached out to over 30,000 start-ups and budding entrepreneurs and has mentored over 2,000 start-ups through the MentorEdge network," said Shashank Rastogi, director (operations), CIIE.

Chaired by Prof Rakesh Basant, a founder member and IIM-A professor, CIIE supported more than 15 social enterprises but it was only recently that it decided to rebrand itself as Aarohan (meaning ascent).

“Aarohan, which was formed after three years of research, not only provides early stage funding but also provides hand-holding support as well as aims at creating the whole support ecosystem which is nonexistent today," said Rastogi.

Other start-ups backed by Aarohan include MediAngels, the world’s first online hospital that seeks to provide services through phone and Internet. The site allows consultations with specialists from around the world and the exchange of information with them through medical reports and live chat.

“Aarohan has given us a good platform to directly interact with the right kind of investors. It has given us a great networking opportunity," said Debraj Shome, co-founder of MediAngels.

SuryOn, another such start-up, has developed the solar-powered Apollo Mobile Phone Charger. Pappilon Software Solutions Pvt. Ltd has developed HealthBooth, a kiosk that can perform five-minute health checks for just 50.

NanoPix, an image and video-processing product company, focuses on products in the agricultural and medical device fields.

“While most incubators worldwide do not have a great track record, CIIE has been a success and the reason for this, is that it is well integrated with the economy or mainstream. It is very professionally managed and this has enabled them (CIIE) to take some hard decisions," said professor Ankur Sarin, who teaches public policy at IIM-A

CIIE, though a non-profit venture, has a business model.

“Our expectation is much less than the venture funds who may expect anywhere between 20-30% RoI (return on investment). Ours would be around 10%, but this figure could always change. Also, we invest at a stage when a VC (venture capital firm) may not be interested to put money in an innovation," said Rastogi.

Take the case of Sombodhi Ghosh and his friend Jaydeep Mandal who were planning to start their own social enterprise in 2010. Ghosh quit his job as business analyst with a leading Bangalore-based information technology (IT) firm in 2011 to start his own firm, Aakar Innovations Pvt. Ltd.

Though he was “initially opposed to the idea", his company now makes sanitary pads for just 2 per unit, at least 40% less than the cost of similar products available in the market produced by multinational companies, said Ghosh.

Like many other start-ups, his company faced problems of scalability. “I wanted my enterprise to be profitable and wanted the benefits to be passed on to the women entrepreneurs at the village level who would be paid on a commission basis," according to Ghosh. This is when he approached IIM-A’s incubation centre.

“You meet the best of the minds at IIM-A and you get the right kind of mentoring. Today, I am ready with a business plan to reach out to 6 million rural women in the next five years and create 10,000 jobs with my product. For this, I will install about 1,000 machines across villages," said Ghosh. The overall project cost is about 40-50 crore.

Sarin, cited above, said, “It will take another five years or so before one can say that the innovations supported by Aarohan are worthy of being called social enterprises."

IIM-Bangalore has a similar incubation centre under the N.S. Raghavan Centre for Entrepreneurial Learning (NSRCEL), which was set up in 1999. The incubation activities commenced sometime in 2001.

“We have incubated 46 enterprises so far, including 11 that are currently being incubated. The number of enterprises mentored runs into several hundreds. Every month, the centre mentors over 25 enterprises/entrepreneurs," G. Sabarinathan, associate professor, finance and control, and chairperson of NSRCEL, said in response to an e-mail query.

Sabarinathan said funding was not the primary activity of the centre “as the centre believes the provision of funds should ideally be done by the equity/capital markets". He didn’t give any details about the start-ups funded by NSRCEL.

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