IITBHF and IITBAA (http://www.iitbombay.org)

Nurturing success IIT style

lIT Bombay's business incubator boasts of an unmatched success rate

by Priya Ganapati

Excerpts from article - the full text is in copies of India Abroad on the newsstand.

Priya Ganapati in Mumbai

As a cocoon for high technology start-ups, the business incubator at the Indian Institute of Technology, Bombay, is spartan; in some ways, even tacky. Its yellow, wall-to-wall cubicles have tinted brown doors that open into tiny rooms with functional plastic chairs and laminated tables. Yet, nestling within these frugal confines is an invaluable track record: one that many venture capitalists throughout the world would love to have on their books today. Two out of the nine start-ups nurtured at the incubator during the last two-and-a-half years - Righthalf and e-infinitus - have been bought out by Stratify (formerly Purple Yogi) and Cisco, respectively. The third, Myzus, will have $600,000 in revenues this year. Herald Logic, another venture, says it too is expecting revenues of a few hundred thousand dollars.

"The success rate here is unmatched. These are definitely not the average statistics anywhere. We have had no failures. The only 'failures' we believe are companies which had a different plan when they came into the incubator and later changed their course to suit market reality. But that is something we are comfortable with, and even encourage," says Dr Deepak Pathak, head of the Kanwal Rekhi School of Information Technology, on the fourth floor of which is the business incubator.

The business incubator was set up in early 2000, by Dr Pathak, egged on by Nandan Nilekani, Chief Executive Officer, Infosys Technologies, and Kanwal Rekhi, founder of The Indus Entrepreneurs, both of whom are lIT Bombay alumni. Nilekani and Rekhi felt students of lIT Bombay who wanted to start their own companies should have a support system within the campus itself. Around the same time, a few undergraduates were busy launching two companies - Myzus and Righthalf (then called iportia.com). "The incubator started off as a pilot project in the Kanwal Rekhi School of Information Technology and the then empty faculty cabins were given to us. It was about 600 square feet of space, hilt it offered all the facilities we were looking for," says Roshan DeSilva, CEO, Myzus.

...

"Today, if I have a technical problem, I can just walk into any faculty member's house and he will help me solve it. Also, thanks to campus-wide licenses, I can use many of the software products that would otherwise cost me thousands of dollars," says Vishal Gupta, founder of Herald Logic. Likewise with DeusCo. How else could Ramashish Bhutada, the 24-year-old founder of DeusCo and graduate of the Kanwal Rekhi School of IT, afford the luxury of spending two years on research and refining his idea, without even writing a business plan?

For the space and resources it leases out to the start-ups, lIT Bombay holds a 3 to 5 percent stake in the companies. For the first year, all facilities in the incubator are offered free, but firms are encouraged to move out at the end of a year. The unmatched success rate of the IIT business incubator is directly linked to the strict pre-screening processes that ensure only the best of the breed are filtered in. Applicants go through three rounds of verification before they are taken on. While non-lIT graduates are welcome, the incubator has so far nursed only IIT Bombay students.

"We have a very strong system of evaluating the start-ups that come to us. First, Dr

Pathak evaluates the idea. Then, it is sounded out to a few friends in the venture capitalist community. A committee of professors from the campus evaluates the technology being used by the start-up. Based on this we decide if the venture should be a part of our incubator," says Dr Rajendra K Lagu, project director of the business incubator.

Despite their sound technology background, revenue-generating business model and innovative ideas, companies at the incubator are not finding the going very smooth. Herald Logic bagged its first client within three months since it began operations. Two years later, it has still not found a venture capitalist to back it. Embedded Robot Technologies, founded by Randeep Singh, is trying to develop vision systems and vision-based intelligence for robots. Singh has not found a single venture capitalist in India willing to invest in his idea. He has now turned to Singapore-based venture capitalists who are willing to give funds on the condition that he target the security systems market, rather than robot systems. The incubator itself is more flexible than ever. While earlier start-ups had to move out of the incubator after a year, now they can stay on till they find funding.

Meanwhile, there is hope yet: a singlepage, typed paper stuck to the tinted glass door of e-infinitus declares: "We have moved," and mentions the new address. And that little note says it all for the rest of the companies in the incubator.

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