ISB to create capital network for startups

The Indian School of Business (ISB) is creating a capital network to provide seed money to prospective entrepreneurs. The institute will also help entrepreneurs in refining their ideas and business plans.

Speaking to Business Standard, Krishna Tanuku, executive director of Wadhwani Centre for Entrepreneurship Development at the ISB, said the move was aimed at creating an entrepreneur ecosystem that will aid in standardising the approaches in preparing business plans, pitching with funding agencies and scaling up the projects.

“Currently, There is no systematic approach by the prospective entrepreneurs for funding. Investors also exercise caution in investing new ventures fearing loss of capital. Though the Indian Venture Capitalists Association gives seed money to some startup companies, the magnitude of the activity is small,” he said.

ISB will also build an information system on the opportunities available in entrepreneurship and their marketable value.

The institute has a $17-million (Rs 85 crore) fund supported by search engine major Google and two other companies – Omidiyar and Soros – to assist startup ventures. The fund, set up nearly six months ago, is assessing about 30 business proposals to provide the seed capital in education, health and energy and other growth-oriented sectors.

The fund is open for entrepreneurs from outside the ISB as well. On an average, it will give seed money in the range of Rs 5 crore to Rs 10 crore based on the recommendations of the fund’s advisory board. ISB will also define the role of the government in promoting entrepreneurship in education and health and also list out the challenges in them.

According to Krishna Kumar, senior economist of RAND Corporation, a non-profit organisation which did a survey on entrepreneurship in India, many entrepreneurs struggle with finances and paper work.

RAND also launched an SME-level survey to identify innovation in the information technology sector in Bangalore, pharmaceuticals in Hyderabad, auto components in Chennai, manufacturing in Indore and distribution and retail in Mysore.

According to Tanuku, ISB is now honing the business plans of about 20 entrepreneurs, who are not affiliated to ISB. It has plans to make this mentoring channel a permanent feature from next year and will work out a revenue model to make the project self sustaining.

The institute will also take up with the government agencies to divert a portion of the funding given to the MSME sector to institutions like ISB and others for research.