Startups in India Are Now Getting Support from High-Tech Companies and Venture Capital Firms

Bosch, IBM, and Infosys are providing funding and mentorship opportunities

13 March 2017

Looking to launch a startup in India? Entrepreneurship is a risky path, and India has reported mixed success with startups. But their survival rate is expected to improve with help from the government and a growing list of large, global, brand-name tech companies investing in their ideas and talent.

India’s startup ecosystem is being fueled by a mix of government-sponsored initiatives including Startup India–Standup India, Digital India, Make in India, and Skill India. More broadly sponsored groups include the Indian Angel Network, an organization of early-stage investors, and Startup India Hub, a platform to help entrepreneurs connect with private investors and venture capital firms. Other growing sources of support are incubators, established tech companies that mentor startups and provide networking opportunities, work space, and even access to their customers, and so-called accelerators. These tend to emphasize rapid growth by reducing startups’ entry barriers into their target markets.

India’s National Association of Software and Services Companies (NASSCOM) reported a 40 percent increase last year in the number of active incubators and accelerators, with more than 30 new academic incubators established under the government’s Startup India–Standup India initiative.

PUBLIC-PRIVATE PARTERNSHIPS

Between April—when it became operational—and the end of the year, the Startup India hub received nearly 25,000 requests for information on a variety of issues including funding, government regulations, and general business guidance.

Oracle—which more than a year ago announced it would open nine incubation centers under the Digital India program and train half a million students each year in support of its campus in Bengaluru—announced in January it had short-listed five startups for the second phase of its cloud accelerator program. India is Oracle’s second-largest employer base outside of the United States. The company says it has screened more than 200 applications for the program.

Intel has been giving startups access to its maker lab in India since the beginning of last year to help them accelerate the development of their hardware and systems. Under the program, the company offers its product sets, tools, and mentorship support. Of the 17 groups Intel is working with in India, nine have launched products.

Bosch India, a global supplier of technology and services, has kicked off DNA (discover, nurture, and align), an accelerator program for startups. The program mentors companies to get them investment-ready, with a focus on enabling technologies in the Internet of Things, deep learning, analytics, the cloud, and virtual reality.

ANSYS, a computer-aided engineering software developer, gives startups free access to its suite of simulation products to help the ventures develop their products without going through time-consuming, costly, and multiple physical prototypes.

Qualcomm recently announced plans to expand its Design in India Program to “nurture some of the talented startups” in the country by investing US $8.5 million in design initiatives in mobile and IoT programs.

IBM has partnered with the India Angel Network to help boost India’s startup ecosystem across a spectrum of technologies.

Microsoft created an accelerator program in 2012 for startups in India that provides technology assistance and mentoring for entrepreneurs for four-month periods twice a year in cloud, mobile, and Internet technologies.

IN-COUNTRY INVESTMENTS

Infosys, India’s second-largest software services firm, has become a major early-stage venture fund player in the country through its Innovation Fund. Infosys reportedly pumped $500 million into the program in 2015 to invest in startups pursuing new and emerging technologies. It most recently invested in IdeaForge, which is developing unmanned aerial vehicles. Its UAVs have been deployed by India’s armed forces for surveillance and rescue operations.

There are a number of challenges for Indian startups, according to Ficci, a nongovernment business organization that has served as a networking platform for businesses and policy makers in India for several decades. In a report published in late February, Ficci said, “India has the potential to become a major hub for startups from the stage of incorporation through the stages of raising capital, hiring resources, scaling up, and making an exit,” but there is “a need to address bottlenecks to minimize failures and ensure that the startups graduate to becoming scaleups.” The report calls for the government to provide incentives to investors in startups and direct funding on the basis of monitoring and evaluation.

NASSCOM has made several recommendations to the government to assist entrepreneurs in the IT sector, including extending the income tax exemption eligibility period from five to seven years. That would allow most startups to begin generating a profit in their early years of operation. A capital gains tax exemption also has been proposed to give startups a leg up in investing in new and innovative projects.

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