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The trade body for Indian IT software and services industry, Nasscom, plans an India Innovation Fund which will provide angel funding to technology start-ups, says a report. The fund will have an initial corpus of Rs 100 crore ($25 million), which could be increased to Rs 150-200 crore ($37.5-50 million) in the next two years.

Nasscom plans to set up the fund through a public-private partnership. It will be managed by professional fund managers, while the government's role will be limited (why government at all when Nasscom can do it alone?). Apparently the fund will allow private investors to acquire stakes in the professionally-managed PPP fund.

Kiran Karnik, president, Nasscom, has been quoted as saying: "We want this fund to concentrate on start-up firms focusing on innovating technologies. We are not looking at stage-B funding for somebody who is already established and looking at further growth."

The fund will be raised from contributions from across the industry, financial institutions and companies. Karnik said Nasscom is talking to institutions like ICICI too.

A Boston Consulting Group-Nasscom report on innovation - Indian Innovation Report 2007 - said by focusing on innovations, Indian IT/ITeS firms could target a potential revenue of $175 billion by 2012 against the projected revenue of $124 billion. The industry had registered revenues of $39.6 billion last year.

Indian Innovation Report 2007

The BCG-Nasscom report on innovation in Indian IT industry found the following problems (see release)

Problems:

# Insufficient mentoring and networking support for start-ups and entrepreneurs

# Lack of entrepreneurs focused on IP development in emerging technologies

# Lack of knowledge sharing between IT-ITES firms and key user industries

# Severe lack of funding at the seed / start-up stage

# No platforms for all stakeholders to interact with each other

# No market-place for innovation trading in India

# Tenuous partnership between industry and academia

# Lack of meaningful collaborations between industry and research institutes

What the report suggests:

1. Scale up existing innovation initiatives

2. Set up an ‘Indi Innovation Framework’- a. Indi Innovation Certification Program; b. India Innovation Fund; c. Thematic Innovation Platforms

3. Government should create a National Innovation Policy; establish a National Innovation Commission

4. Establish Innovation clusters of research institutes, academia and industry

5. Government should implement bold changes in policies related to innovation such as patents, business environment, venture capital and commercialization of domestic technology

6. Collaborate with international educational institutes to increase quality of local research