| The Indian Institutes of Technology (IITs) are planning to soon have a venture capital fund (VCF) on their campuses.
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| IIT Bombay is in talks with Infosys Technologies, Tata Consultancy Services, Wipro and other major IT players to seek help to start a venture capital fund. IIT Madras, too, is considering setting up a VC fund on its campus. IIT Delhi, will explore the option in future, it says.
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| These premier institutes are looking for VC funds as they are the main source of capital for seed stage ventures. Typically, funds that make seed stage investments would have a fund size of not more than Rs 250 crore ($50 million).
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| VC funding is different from other institutional capital because its provisions are customised to the needs of the receiver and the skills of the provider and requires close, ongoing and a face-to-face interaction. SEBI records indicate there are 72 registered domestic venture capital fund and 37 registered foreign venture capital investors.
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| The lack of funding for start ups when a concept is being proved is a major gap that needs to be plugged. A venture capital funding is a viable option at it is more likely to come from high net worth individuals who have domain knowledge and are willing to take a chance.
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| Said an IIT Bombay professor, "Such funds need to be encouraged. We need an early bird venture capital for early funding. Raising some funds helps in getting small amount of loan by closely scruitinising the project."
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| IT companies have been approached by the IITs as these companies are already on the campuses and lend credibility to the campus. Also, they are familiar with the bright ideas the IITians might come up with thus would not mind lending their names to the project. The IITs are also seeking financial help from alumni's to sell them to the corporate world.
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| "We are hoping that we will have support of venture capitalist at the early stages that we want," said M S Ananth, director, IIT Madras. IIT Madras is also in the process to set up an incubator which will operate as an independent company and finance projects of the students.
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| The institute is also setting up a research park along with 35 companies. At the research park, the institute would reserve space to accomodate start ups by students and faculty.
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| At IIT Delhi, funding mechanism is available, "but in future we would explore the idea of a venture capital fund as there is a direct relationship between entrepreneurship and VC funding," said Surendra Prasad, director, IIT Delhi.
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| The idea to set up a venture cap fund was mooted by the planning commission in July this year. A committee was formed to discuss issues to promote "technology innovation and venture capital" consisting members like Nandan Nilekani, MD, CEO and president of Infosys Technologies, Romesh Wadhwani president and chairman, Wadhwani foundation, USA.
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| The committee had also recommended that the government through the Department of Human Resource Developemnt, Universities grant Commission and All India Council for Technical Education, shoud encrouage all science departments and technical education and training institutions to include entrepreneurship and new venture managemnt in the course curriculum. |
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