Indian Institute of Management Bangalore has set up an independent and not-for-profit entity, IIMB Innovations, to raise funds for incubating startups. The new entity will also take a 5% stake in all startups that will be incubated by IIM-B post April 2009.
The new company has an initial corpus of Rs 1.25 crore which has come by way of a grant from the department of information technology. It can raise grants from other agencies as well.
This move will increase the incubation centre strength of the institute’s NSR Centre for Entrepreneurial Learning, named after Infosys co-founder and joint managing director N S Raghavan, which was set up in 2002 with a grant from the former Infy honcho.
Such a vehicle, which can take 5% stake in startups and divest it at a later stage, would help the institute create a pool of capital for sustainable entrepreneurial development.
Nearly two dozen startups, that were incubated at NSRCEL, have graduated or transitioned to the external world. At least two of them, Mango Technologies and Ziva have already received first round funding from Ojas Ventures.
NSRCEL chief operating officer A Suryanarayanan told VCCircle, “the new vehicle will allow us to take stakes and raise funds. We will now be able to seed-fund some of the companies. Since it is a not-for-profit model, it will not function like your typical VC. Incubation and early stage investing has a high risk element. But, with our vast faculty experience and partnership connect to startups, we hope to improve their chances of survival.”
The NSRCEL today boasts of a fresh crop of start-ups who are into diverse fields with a slant towards technology, thanks to the ecosystem of Bangalore. IIM-B has also experimented with the concept of virtual incubation with Belgaum’s Vayavya Labs, which is into embedded software.
The institute has seed-funded three new entrants Metaome (a bioinformatics company), Redforce Labs (which is building authentication systems for financial institutions) and Radifinity (which creates asset tracking solutions) from the corpus. The new entity, which can invest up to a maximum of Rs 25 lakh per case, will seed-fund startups that are into IP creation.
Typically, companies which are incubated at NSRCEL enjoy the campus feel and the infrastructure apart from getting nurtured by India’s top-notch B-school faculty.
At a subsidised cost, incubatees have access to office space that can seat four to 12 persons, communication links, access to business angels who are part of NSRCEL network and other services like IT hosting, logistics, marketing, statutory compliances, finance and legal support.
Besides, the brand name IIM-B helps many of these startups when they scout for potential talent, customers and even funding.
The startups spend about 18 months on campus before they transition out. The current incubatees, who are all new entrants, at NSRCEL include Amagi (working on democratising TV advertising); Crafitti Consulting (an innovation consulting firm); Fleet Xchange (a market platform for transportation industry); Just Books (a library); Meshlabs Software (that is in social networking space); NextGen PMS (into energy and environment management); Radifinity and Vayavya Labs.
Mr Suryanarayanan said, the centre would look at increasing the batch strength of incubates and scale up virtual incubation.