“Innovation & Entrepreneurship (I&E) ”

Some thoughts & ideas from the Indian experience & perspective

by

Harkesh Mittal, Adviser & Head

National Science & Technology Entrepreneurship Development Board, &

National Innovation Project Government of India

"Asia and The Pacific Incubator Conference"

How we did Technology

Business Incubation at our

S & T Parks ?

???

Time travel to 1982………….

Initial Years (1982-1990) !!!!

POLICYMAKER

INCUBATOR MANAGER

SCIENTISTTECHNOLOGIST

POLICY MAKER’S PERSPECTIVE

• STABILITY, MAINTAIN STATUS, EQUILIBRIUM

• GROWTH, CHAOS, DIVERGENT, UNCONVENTIONAL

• WE NEED BOTH

IN THE WORLD AT LARGE DECISION MAKING HAS TO BE CONSISTENT. AND LINEAR PROCESSES OF GOVERNANCE EXIST.

THAT MEANS DECISIONS NEED TO BE CONSISTENT WITH WHAT WAS TAKEN YESTERDAY, A MONTH BACK, A YEAR BACK & A DECADE BACK……

BUT THERE EXISTS THIS WORLD OF THEIR OWN OF INNOVATORS & ENTREPRENEURS

WHO HAVE TO THINK & ACT DIFFERENTLY EVERY TIME, EVERY DAY

WE VERY POLITELY CALL IT BUREAUCRACY

POLICY ENVIRONMENT IN A DEVELOPING COUNTRY CONTEXT

WORLD OF INNOVATORS &

ENTREPRENEURS

SUPERFICIAL TENSION

INCUBATORS OPERATE

HERE

POLICY ENVIRONMENT IN A DEVELOPING COUNTRY CONTEXT

India Innovates……

• Global Problems Local Solutions, (valves)• Local Problems Global Solutions, (TB)• Local Problems Local Solutions, (RFID)

INNOVATIVE

FINANCE

IDEA

TEAM

MENTORS

NETWORKS

SERVICES

……..PIECES OF THE INCUBATOR JIGSAW PUZZLE

POLIC

Y

TEAM

IDEA

MENTORS

NETWORKS SERVICES

AN

IDEAL

BUSINESS

INCUBATOR

INNOVATIVE

FINANCE

POLICY

WHY DID WE SUPPORT BUSINESS

INCUBATION/ S&T PARKS ?

UNKNOWNCONFIDENCETEAM (EMPLOYEES)E

UNKNOWNAVAILABILITYFINANCED

UNKNOWNDEMANDMARKETC

UNKNOWNPOTENTIALIDEA/TECHNOLOGYB

UNKNOWNABILITYENTREPRENEURA

A + B + C + D + E = SUCCESS

FORMULA FOR SUCCESS:

UNKNOWN

THAT MEANS THAT WE IN A HIGH RISK SITUATIONOUR IDEA, ENTREPRENEUR, SYSTEMS ETC. ARE NOT READY TO FACE THE REAL WORLD YETWE THEREFORE NEED ENABLING MECHANISMAND INCUBATORS/PARKS ARE ONE OF THEM ??THE BENEFITS ARE MANY….. WILL COVER TOWARDS THE END.

It’s not the destination, it’s the journey……….

INDIAN EXPERIENCE

Source:CSO Statistics

US$ 650bnGDP

US$ 534Per capita income

22Languages (recognzd)

3.3 mn sq.kmsGeographical Area

35States/UTs

APROX. 1.2 bnPopulation

INDIA AT A GLANCE…….

Emerging World

India is globalising, the world is going thru a major changeResulting in a “borderless world” where seven I’s freely flow Investments, Industries, Information, Ideas,

Innovations and Individuals

INDIANS

INDIAN INNOVATION SYSTEM AND LINKAGES

ENTREPRENEURIALLEADERSHIP

New Product Development in New

Institutional Arrangements

Productivity Improvements andNew manufacturing

Processes Commercial &International Orientation of National R&D

ConsultingCompanies

Venture Capital

Provision of IT EnabledAnd Other Services

Emergence & GrowthOf Indian Software and

ICT CompaniesGrowth of

Engineering andIT Education

GeographicalClustering

ECONOMIC PRESSURE FOR SURVIVAL AND GROWTH IN GLOBAL ECONOMY

NEW OPPORTUNITIES IN THE WORLD ECONOMY

Source:R.T.Krishnan

ENABLING ENVIRONMENT IN INDIA

CHANGING MIND SET, SKILL SET & DOMAIN KNOWLEDGE OF TECHNOLOGY & ENTREPRENEURSHIPCULTURAL CHANGE STARTED “ BUSINESS FAILURE GETTING DECOUPLED FROM PERSONAL FAILURE”BOOT CAMPS PROMOTING E’SHIPBRAIN GAIN ( NEXT GENERATION OF NRIs FAMILIAR TO BOTH THE CULTURES), TELECOM INFRASTRUCTURE ONE OF THE BEST IN THE WORLD, IP PROTECTION & GOVT. POLICIES PROVIDE THE RIGHT ENVIRONMENT.NEW HIGH TECH CLUSTERS AFTER BANGALORE AT HYDERABAD, CHENNAI, PUNE ……

ENABLING ENVIRONMENT IN INDIA …….contd.

HIGH END ROLE MODELS “RAGS TO RICHS”STORIES, EMERGING SECTORS e.g PHARMA, LIFE SCIENCES, MATERIAL, DESIGN, ICT WITH DOMAIN KNOWLEDGE EXPERTS.MULTI NATIONAL FIRMS ENCOURAGING & TAPPING INNOVATIVE IDEAS THROUGH BUSINESS PLAN COMPETITIONS. INTEL, IBM, MICROSOFT, LOCKHEED MARTIN ETC. IN ADDITION TO OUR OWN.BOTTOM UP APPROACH WHERE INNOVATION AND TECHNOLOGY ARE LOCALLY DEVELOPED.

LINKING:

EDUCATION………..INNOVATION……. ……ENTREPRENEURSHIP

0102030405060708090

100

Innovation

Education levels

Innovative

potentials

EDUCATION

vs.

INNOVATIO

N

0102030405060708090

100

ENTERPRISES

Education levels

DEG

REE

OF

ENTR

EPREN

EURSH

IP

NB OB

EDUCATION vs.

ENTREPRENEURSHI

P

High

HighEntrepreneurshipLowLow

Innovation

JapanSweden

U.K.

Israel

Hong Kong

SiliconValley

INDIA

INNOVATION VS. ENTREPRENEURSHIP

19Mn 7

Mn

3Mn

5Mn 47MnIndia

Bangladesh

Pakistan

3MnIran

Brazil

Mexico

Philippines5Mn

4MnVietnam

2Mn

Turkey

Potential surplus population in working age group (2020)

China

-6 Mn

Russia

5MnIndonesia

1MnMalaysia

0Mn

Ireland

Israel

0Mn

Iraq

2Mn

-1Mn

CzechRepublic

Note: Potential surplus is based on the ratio of working population (age group 15 – 59) to total population constant; Source: U.S. Census Bureau; BCG Analysis

4Mn

Egypt

US -10 Mn

-17Mn

-2 MnUK

-2 Mn

Italy

-3 MnFrance-9 Mn Japan

-0.5 Mn

Australia

-3 Mn

Spain

-3 MnGermany

82

147

2 3 20102030405060708090

CENTRALGOVT.

STATEGOVT.

TECH.INSTS.

BANK PRIVATE NGOs

NUMBER OF BUSINESS INCUBATORS & SCIENCE PARKS IN INDIA

STEP/TBI LOCATIONS

IIM, NID, NIRMA, AHMEDABADIIT-BOMBAYPUNE UNIV. , MITCON, PUNENSIC-RAJKOT

CDC-BANGALOREBEC-BAGALKOTSJCE-MYSORENITK-SURATHKAL

IIT- RoorkeeJSSATE-NoidaHBTI-KanpurGNEC-Ludhiana

IIT KHARAGPURICICI KP, ICRISAT, HYDAnna .Univ. ChennaiPSG Coimbatore KEC-Perundurai

VIT-VelloreNIT- Calicut

NIT Trichy

VIT, Vellore

NIT-Calicut

TBI STEP

• Average Project cost : USD 1mn• DST Contribution : 50- 70%• Average number of tenants : 8-10• Average Tenancy period : 2 years• Successful Enterprises : 5 per annum• Survival rate of start-ups : nearly 70% • Legal Status : Part of host Institute/

not for• profit registered society• Self sustainability : 5-6 years

Profile of Indian S&T Park/Incubator

INCUBATION SYSTEM

Focus on IT , BT, Design, Agribusiness, Environment, Engg, New Materials Primary target : Academic and R& D institutionsA mission mode activity targeting 5 new TBIs every yearDifferent models being tried

Technology Development Board( TDB)- Encourages development and commercialization of indigenous technologies and adaptation of imported technologies PROVIDES SOFT LOANSProgramme Aimed at Technological Self Reliance(PATSER)-Financially supports industry’s efforts in development of indigenous technologies Technopreneur Promotion Programme (TePP)- Supports individual innovators for prototype development/processes Home Grown Technology Program( HGT)-Assists in commercialisation of indigenous technologies National Innovation Fund: For grass -root innovatorsTechnology Development Fund for BiotechnologyPharmaceutical Research and Development support Fund

GOVERNMENT SUPPORT TO INNOVATION AND ENTREPRENEURSHIP

Bio-ITPark

Investor Community

Government & Support Agencies

Research Institutes & Universities

InternationalKnowledge/

Tech Collaborations

Industry Flow of Capital

Target Segment

Integration & Knowledge Exchange

Flow of Knowledge

Nurturing & Policy

Support

Mixed Initiative- Setting up of Bio-IT Park

Department of IT and Dept of Biotechnology have envisaged the creation of a Bio-IT Park and STPI has been entrusted as a nodal agency for this purpose. The park is proposed to be in the form of a Public-Private Partnership model.

INCUBATION FUNDAN INCUBATION FUND RS 10 M (US$230,000) GIVEN TO 10 INCUBATORS AS GRANT FOR SUPPORTING EARLY STAGE START-UP COMPANIES IN THE INCUBATORTHIS FUND TO BE USED AS LOAN OR EQUITY IN THE COMPANY BY THE INCUBATORTHE REVENUES ON THE FUND WILL BE PLOUGHED BACK TO THE FUND FOR FUTURE SUPPORT

IstG F B

I

FISCAL INCENTIVES & SERVICE TAX EXEMPTION

THE INCUBATOR AND INCUBATEES GET SERVICETAX EXEMPTION IN 2007-08 BUDGET

• Exemption of Service Tax on all services provided by the Incubator

• Exemption of Service Tax for the incubatee for three years Provided the business turnover does not exceed Rs 5 m (US$115,000)

• Modification in Act to allow incubators to hold equity.

IInd G F B

I

INCENTIVES FOR STPI INCUBATEES

Approval under single window clearance mechanism100 per cent foreign equity permittedImports in the STP units are completely duty freeExemption of local taxes for domestic purchasesThe sales in the domestic market are permissible up to 50 per cent of the exportsExemption from corporate income tax for a block of 10 yearsMinimal export obligation with positive Net Foreign Exchange

GOVERNMENT INSTITUTIONS SUPPORTING ENTREPRENEURSHIP AND BUSINESS INCUBATION

Ministry of IndustryMinistry of Science and TechnologyMinistry of Information technologyFinancial InstitutionsMinistry of Human Resources DevelopmentState Governments

The Biotech Park Policies

Benefits enjoyed by Export Oriented Units (EOU) extended to Biotech Parks100% FDI permitted through automatic routeBTP units exempt from payment of Income Tax Export proceeds to be realised within 12 monthsBTPs allowed to retain 100% export earnings in the EEFC account

A STRONG R & D AND INNOVATION BASE IS DESIREABLE FOR A INCUBATION PROGRAMME.MATCH THE INSTITUTIONAL STRENGTH, THE ENVIRONMENTAL STRENGTH FOR SUCCESSFUL INCUBATION PROGRAMME.DEVELOP A CLASS OF MANAGERS AND THE INCUBATION MANAGER SHOULD BE GOOD GOD. ENABLE HIM TO SPEND MORE TIME WITH CLIENTS. COMPENSATE HIM/HER SUITABLY.CREATE EARLY STAGE FUNDS WITHIN THE INCUBATORS

KEY LESSONS LEARNT ……

BUILD MUTUAL LEARNING & NETWORKING SYSTEMSPROVIDE OPERATIONAL AUTONOMY & FLEXIBILITY TO INCUBATOR/PARKPROVIDE LINKAGES WITH INNOVATION PROGRAMMESSET REALISTIC AND PRAGMATIC TARGETS, DON’T RAISE THE EXPECTATIONS PARTICULARLY OF POLICY MAKERSA SUPPORTIVE AND PARTICIPATORY MANAGEMENT. TREAT INCUBATOR AS A DYNAMIC VENTURE ITSELF.BUILD A REVENUE MODEL EQUITY, DEFERRED PAYMENT, SWEAT EQUITY, POOL COMPANY ETC.BUILD MENTOR NETWORKS WITH FACILITY TO PARTICIPATE.

KEY LESSONS LEARNT …… CONTD.

SOME THOUGHTS TO SHARE ….

HIGH TECHVS. LOW TECH

IT IS ANY TECH THAT

MAKES BUSINESS SENSE

WHAT TECH IS OUR CORE

COMPETENCY ?

IT ACTUALLY DOES NOT

MATTER WHAT TECH IT

IS……

IT, BT, NT, DESIGN,

MANAGEMENT,

INFRASTRUCTURE ETC.

ENTREPRENEURSHIP IS NOT INNOVATION; NOR IT IS TECHNOLOGY IT IS MONETIZING THESE……..

IS IT

MAGIC ???IS IT

LOGIC ??? OR

PhysicalInfrastructure

Connectivity to

New marketsand

Others

Intellectual Infrastructure

EducationTrainingSkillsKnowledge

NetworksResearch

InstitutesSocial Visionand The Will

Cultural Infrastructure

Risk CultureInnovationAmbienceVenture MindSocial Recognition& Reorgiztn

FinancialInfrastructure

Venture FundInnovation

FundIncubation

FundProject

FundTech. Dev.

BridgeFund

Business and Social Environment

Business Incubators PerformanceBusiness Incubators Performance

Technology Business Incubators ProfileBI

InvestmentAfter

5 to 7 years Tax Revenue to Governments ( Profit, Turnover, Manufacturing Taxes)

Innovation : New products / processes

pobJ s 030 er m l n .

I n v e s t m e n t

Government& Society

Community

Regional Development

Human Development

HOME WORK

HARD WORK

SMART WORK

TEAM WORK

NET-WORK

SUCCESSFUL BUSINESS INCUBATORS SUCCESSFUL BUSINESS INCUBATORS SUCCESSFUL BUSINESS INCUBATORS REQUIRE ONLY SOME sum OF THIS REQUIRE ONLY SOME sum OF THIS REQUIRE ONLY SOME sum OF THIS

………………………………………WORKWORKWORK

www.nstedb.com

www.techno-preneur.net

www.incubatorsnetwork.com

www.dst.gov.in