Depending on the first round of funding eHealth TBI may consider multiple series funding, says Prof Shivaram Malavalli, Chairman & Managing Director of the company. In an interview with Neha Pandey Deoras, he reveals, his company plans to fund up to 100 start-ups over the next financial year. Prof Malavalli says that there is a huge opportunity in the early-stage funding to scale up blue-chip incubates. Edited excerpts:
Is eHealth TBI looking to raise Rs 100 crore ($18 million) early-stage VC fund?
We are looking to raise at least Rs 100 crore with another Rs 50 crore as a green shoe option. So far we have, in principle, secured a commitment for Rs 30 crore. For the remaining amount we expect to tie-up with investors by the first quarter of financial year 2013-14. We realise that the size of the fund is small compared to the opportunity, we expect our unique process model and business model to be a catalyst to growth of innovation led entrepreneurship.
There is a significant gap in early stage funding and this presents a huge opportunity in early stage innovation funding. In the last 3 years we ourselves created a pipeline of such companies and other more than 90 like-minded incubators are also looking at this early stage fund to help scale up their blue-chip incubatees. While Centre of Innovation and Entrepreneurship (CIE at IIM, Ahemadabad) has created a sector specific fund focussed on Clean Technology, there is still a huge gap in the early stage sector agnostic innovation funding.
Who are the investors helping eHealth TBI raise the money?
We are still at a preliminary stage in the creation of this fund, and it will not be appropriate to name our investors till we have closed the fund.
How does the company plan to use the funds raised?
eHealth TBI plans to use the money to fund 10-20 start-ups in the first round and depending on the success, we may go in for multiple series funding the final goal of scaling 100 companies. These start-ups will essentially be growth companies requiring early-stage funding.
We also believe that these start-ups also need a holistic infrastructure and mentoring support. For this we have now increased our infrastructure to 8,000 square feet of space recently, and another 20,000 square feet is being added immediately with a long term goal to add 100,000 square feet in multiple locations. We have also created a neutral (can be used by any participant in the ecosystem) electronic platform ‘quantumtunneler.com’ that provides 360-degree mentoring support in addition to integrating major innovation promotion programs under one roof.
How is this fund different from the Seed Support Fund you are already operating?
Our early stage fund is being branded as ‘SeedSurge’. Currently this is a program, and a Seed Support Fund is supported by the Technology Development Board (TDB) of the Ministry of Science and Technology. We plan to spin this activity off into an early stage venture capital fund as soon as we close the fund. But regulatory processes like creation of the management company, trust, Securities and Exchange Board of India (SEBI) approval and so on, will take around two to three quarters. The fund’s investment committee has been evolved to include key players like the TDB, Government of Karnataka (represented by Commissioner of Industries), SIDBI, YES Bank and Corporation Bank.
How many start-ups have been supported till now? What is target like in the next year?
Till now, around 30 start-ups have been assisted by eHealth TBI of which five have scaled up their activities, significantly. Over the next financial year, we plan to support 100 start-ups.
How much has the government's invested in eHealth TBI?
We are a Section 25 (non-profit) company sponsored by Department of Science and Technology. We are the Technopreneur Promotion Programme (TePP, now renamed PRISM) outreach Centre for Department of Scientific and Industrial Research (DSIR) and cumulatively we have tied up about Rs 5 crore for various activities of the incubator.
Do you prefer start-ups only in education and healthcare sectors?
We started out with those in the education and healthcare space but we currently have start-ups across sectors and this is mainly because most government programs require us to be sector agnostic. This has resulted in an interesting outcome and our USP today is a multi-disciplinary ecosystem of companies who supplement and complement each other.
From which sector(s), other than education and healthcare, do you see incubatees at your facility?
We have a large number of embedded system companies operating in our incubator in addition to, other specialisations in ICT, Material Science, Clean Technology, Nano Technology, Robotics and Precision Manufacturing, all of which have applications in diverse industry segments for Areospace, Automobiles, Infrastructure and so on.