Hyd vying for larger slice
The pearl-city, Hyderabad is fast turning as the nerve centre for ‘startup revolution’ in the country. It is auguring to leap-frog other cities like Bangalore, Pune and Gurgoan as the city is endowed with research institutions and knowledge centres.
The pearl-city, Hyderabad is fast turning as the nerve centre for ‘startup revolution’ in the country. It is auguring to leap-frog other cities like Bangalore, Pune and Gurgoan as the city is endowed with research institutions and knowledge centres. Added to that is the committed government geared to team up with academics and encourage young brains in its drive to provide jobs and spur growth index. As part of its obligation the TS government has hiked venture fund target to Rs 600 crore from Rs 100 crore, expecting larger share in Modi’s Rs 10,000 crore innovation fund
Innovation thy name for startup and science and technology are the major catalysts in the development and growth of the bubbly sector, the Startups. Hyderabad is the third city after Delhi and Bangalore, which is fastening its seat belt for takeoff with the Startups voyage.
Recently the Department of Science and Technology (DST) along with Administrative Staff College of India (ASCI) conducted a workshop in Hyderabad, aiming to discuss the issues that blocking the sun-rise sector from growth and suggest norms enabling Modi government to incorporate in its forthcoming startup policy.
Science and Technology always led manufacturing landscape with greater focus on small and micro enterprises (SMEs). Of late, it has given space to IT and e-Commerce. “We receive 8 out of 10 funding proposals from e-Commerce space,” says Sampath Iyengar, PE Fund Manager.
All the speakers participating in the workshop agreed that India need to lay greater emphasis on science and technology to achieve higher growth of production. They felt, the need of the hour is to promote a science and technology ecosystem to make the country globally competitive. And perhaps, we may even tailor the eco-systems from successful domains like Israel, Japan, South Korea, etc.
For instance, the Telangana government had already signed an MoU with UK-based Ledmac Ltd to get the best of international incubation services to startups in Hyderabad.
In fact, the government of Telangana put it first step by creating a huge facility with all the necessities and more in the form of T-Hub. It is a 70,000 sq ft building with supplies including uninterrupted power, water and high speed connectivity, thus claimed to be country’s largest incubation centre inaugurated by Tata’s patriarch Ratan Tata in November last.
State’s IT Secretary Jayesh Ranjan says that with the run-away success of the T-Hub, the government now finalising plans for the second phase with higher ticket value, which will be five time bigger than the T-Hub, near Raidurg, closer the Hitec City in Hyderabad. Officials reveal that the government now considering similar initiatives even in the other tier 2 cities and towns in the state like Warangal, Nizamabad, Nalgonda, etc., with a view to provide sustainable employment to the fresh techies from engineering colleges in the state.
Ranjan says, “We have built the effective ecosystem for startups, which other states may emulate in future.” He pointed out that the T-Hub has created space for mentors at an affordable rental costs. Besides, the state has roped in educational institutions like ISB, IIIT, IIT-H and Nalsar Law University as part of the mentor group. “The goal is to create a Silicon Valley in Hyderabad.”
Despite of all these initiatives and pro-active measures by the State government, the city of Hyderabad buzzing with startup fever still has to upgrade its stature in terms of sustainable ‘Venture Capital’ culture.
In the opinion of venture capitalists, the startups are still in honeymoon phase, they need to come out of the hang-over. The governments need to identify a new financial product to fund the startups and different from the existing models of venture, angel or seed capital routes as many may not suit the present eco-system says Iyengar.
“Passion, disruption and innovation require risk capital and in contrary the venture funds look for quick returns”, points out Iyengar. He suggests that the banks must come up with sector specific funds and governments guarantee them.
Iyengar get support from former advisor to Department of Scientific and Industrial Research (DSIR), Dr AS Rao, who proposes that the government should come up with grants to promote and sustain the startup culture in the country.
He argues, “We have no provision for experiment in schooling, college or at research levels. Hence, at least, now the government should provide grants for experiments.” He suggested that the promotion of research startups that is the institutions which are in the business of producing patents are encouraged, with grants.
The experts opined that the biggest gap in the ecosystem for startups in Hyderabad, lack of funding institutions. In fact, the startups will get proper mentoring only through the financial partners. Even in Silicon Valley, the Sand Hill road is popular as it houses biggest venture funds.
Of course, even the government is also understood the importance, and it had planned to create a Rs 100 crore venture fund and even subscribed Rs 10 crore as its share. Ranjan further said that two big financial institutions (not willing to reveal the names) have also committed Rs 20 crore each thus taking the total fund to Rs 50 crore. He further added that the size of the fund is now raised to Rs 600 crore.
As part of its promotional exercise, the government is trying to bring in the big names in global industry to T-Hub. Accordingly, the IT wizard Satya Nadella of Microsoft is expected to visit T-Hub in the last week of December, and address the budding entrepreneurs.
The government planners plan to create clusters of innovation around verticals such as Healthcare, IoT (internet of things), smart cities, Agro-tech and Fintech (financial technologies) and the likes.
Apart from T-Hub, there are incubation centres promoted and run by the academic institutions like IIT-H, ISB, BITS (Pilani) Hyderabad, etc., which will be brewing centers to the T-Hub.
Centre’s package for start-ups
To tide away the financial trouble, the officials are working out plans to utilise the central government package of corpus fund. The Finance Minister Arun Jaitley had announced a start-up fund of Rs 10,000 crore to enthuse the startup ecosystem in the country. Officials feel, with the T-Hub and bubbling young entrepreneur activity the state will qualify for major share, at least Rs 1,200 crore.
Besides, the SIDBI’s Make in India Loan for Small Enterprises (SMILE) scheme with an allocation of Rs 10,000 crore with a special emphasis on 25 sectors for startups. Let us hope the state government will be able to garner a major portion from these funds, enabling financial liberal support to the young techies of the state.