Missed Ola, Housing.com deals 'cost' IIT Bombay Rs 450 cr

IIT Bombay incubates 55 start-ups at present; it has an annual budget of about Rs 340 cr

Indian Institute of Technology (IIT) Bombay, mentor to 55-odd start-ups founded by its students, could have been richer by at least Rs 450 crore had it invested in Ola Cabs and Housing.com. Calculations suggest if the institute had acquired six per cent stake each in Ola and Housing.com (both founded by its alumni) when the companies were set up, as it has in the case of many other start-ups incubated at its Society for Innovation & Entrepreneurship (SINE), IIT Bombay's stake in these two firms would now be valued at Rs 450 crore, substantially higher than its last year's annual budget of about Rs 340 crore.

The calculation is based on the valuations of Ola and Housing.com at Rs 6,000 crore and Rs 1,800 crore, respectively.

"Traditionally, IIT Bombay has invested in technology-based companies. In retrospect, looking at how Housing.com and Ola Cabs have done, we could have invested in them," said Ajeet Khurana, chief executive, SINE, IIT Bombay.

None of the top five start-ups launched by IITians - Flipkart, Zomato, Ola Cabs, Housing.com and Inmobi - were incubated at IITs. Students with valid business propositions can incubate their ventures at IITs after they graduate from the institute. This year, IITs have introduced a deferred placements policy, allowing entrepreneurs to return to the campus for placements after three years in case their venture fails to take off. IIMs already have a similar facility in place.

Ola Cabs and Housing.com founders started these ventures right after graduation-a fit case for incubation at IIT. But others such as Flipkart, Zomato and Inmobi were launched once their founders, after working at other companies, decided to turn entrepreneurs.

Khurana said IIT Bombay didn't view itself as an investor. "We see our exits as a source of income, not as investment returns." IIT Bombay dilutes a third of its equity in its portfolios when the start-ups raise funds.

Though SINE, which has annual revenue of Rs 70 lakh-1 crore, is part of IIT Bombay, it is a financially-independent entity. "Our primary interest is to promote entrepreneurship and nurture business ideas. We do not look at our start-ups as money-generation tools. We want them to do well, as they benefit the economy at large and generate jobs," said Devang Khakhar, director of IIT Bombay.

Housing.com was launched in 2012 by a group of graduates from IIT Bombay, including Advitiya Sharma. Recently, Japanese giant Softbank, along with other investors, pumped in $90 million into Housing.com to acquire minority stake. According to reports, the company was valued at Rs 1,800 crore at the time of the latest funding.

Sharma said, "During my time, the infrastructure and other facilities provided by IIT Bombay, as part of incubation, was at a nascent stage. That's why we decided to go out and set up on our own. The recent success of Ola, Housing and other start-ups has brought more maturity in the attitude of IITs towards start-ups."

Taxi service aggregator Ola Cabs, another start-up IIT Bombay didn't invest in, was valued at Rs 6,000 crore when it raised $210 million from SoftBank.

The company was founded by Bhavish Aggarwal and Ankit Bhati, alumni of IIT Bombay. Since its launch in 2011, about $280 million has been deployed in Ola by investors such as Softbank, Tiger Global, Matrix Partners India and Steadview Capital.

In 2007, Sachin Bansal and Binny Bansal, alumni of IIT Delhi, had founded India's largest e-tailer, Flipkart. While Deepinder Goyal and Pankaj Chaddah, also IIT Delhi alumni, founded popular restaurant-searching portal Zomato in 2009, mobile advertising platform Inmobi was launched by IIT Kanpur alumni Naveen Tewari and Abhay Singhal.

"IITs need to be proactive, rather than reactive. Nowadays, students in their second and third years at IITs are launching start-ups. So, IITs need to become faster to catch the bus," said Housing.com's Sharma.

Start-ups incubated at SINE include Covacsis Technologies, which raised funds from Reliance Industries' Gennext Ventures, along with other partners. Recently, Wegilant Net Solutions, which provides IT security solutions, raised Rs 1 crore from a group of investors, including Ravi Gururaj of HBS Alumni Angels, Gaurav Sharma of Yahoo! India, and Vishwanathan Ramachandran (formerly with GupShup).
IIT-B: GIVING IT A GO

• In 2011, IIT Bombay alumni launched Ola Cabs, valued at Rs 6,000 cr
• In 2012, IIT Bombay graduates launched Housing.com, valued at Rs 1,800 cr
• If institute had acquired 6% stake each in Ola, Housing, it would be worth Rs 450 cr
• IIT Bombay incubates 55 start-ups at present
• Start-ups incubated by IIT Bombay include Covacsis Technologies and Wegilant Net Solutions
• IIT Bombay has an annual budget of about Rs 340 cr
• Flipkart, Zomato, Ola Cabs, Housing.com and Inmobi were founded by IITians; these were'nt incubated at IITs