Innovation & Entrepreneurship (I&E) "Asia and The Pacific Incubator Conference" Some thoughts & ideas from the Indian experience & perspective by Harkesh Mittal, Adviser & Head National Science & Technology Entrepreneurship Development Board, & National Innovation Project Government of India
How we did Technology Business Incubation at our S & T Parks????
Time travel to 1982.
INCUBATOR MANAGER SCIENTIST TECHNOLOGIST POLICY MAKER Initial Years (1982-1990)!!!!
POLICY MAKER S PERSPECTIVE STABILITY, MAINTAIN STATUS, EQUILIBRIUM GROWTH, CHAOS, DIVERGENT, UNCONVENTIONAL WE NEED BOTH
POLICY ENVIRONMENT IN A DEVELOPING COUNTRY CONTEXT IN THE WORLD AT LARGE DECISION MAKING HAS TO BE CONSISTENT. AND LINEAR PROCESSES OF GOVERNANCE EXIST. THAT MEANS DECISIONS NEED TO BE CONSISTENT WITH WHAT WAS TAKEN YESTERDAY, A MONTH BACK, A YEAR BACK & A DECADE BACK WE VERY POLITELY CALL IT BUREAUCRACY BUT THERE EXISTS THIS WORLD OF THEIR OWN OF INNOVATORS & ENTREPRENEURS WHO HAVE TO THINK & ACT DIFFERENTLY EVERY TIME, EVERY DAY
POLICY ENVIRONMENT IN A DEVELOPING COUNTRY CONTEXT SUPERFICIAL TENSION WORLD OF INNOVATORS & ENTREPRENEURS INCUBATORS OPERATE HERE
India Innovates Global Problems Local Solutions, (valves) Local Problems Global Solutions, (TB) Local Problems Local Solutions, (RFID)
MENTORS SERVICES IDEA INNOVATIVE FINANCE POLICY TEAM NETWORKS..PIECES OF THE INCUBATOR JIGSAW PUZZLE
IDEA MENTORS SERVICES POLIC Y AN IDEAL BUSINESS INCUBATOR INNOVATIVE FINANCE TEAM NETWORKS
WHY DID WE SUPPORT BUSINESS INCUBATION/ S&T PARKS?
A ENTREPRENEUR ABILITY UNKNOWN B IDEA/TECHNOLOGY POTENTIAL UNKNOWN C MARKET DEMAND UNKNOWN D FINANCE AVAILABILITY UNKNOWN E TEAM (EMPLOYEES) CONFIDENCE UNKNOWN FORMULA FOR SUCCESS: UNKNOWN A + B + C + D + E = SUCCESS
THAT MEANS THAT WE IN A HIGH RISK SITUATION OUR IDEA, ENTREPRENEUR, SYSTEMS ETC. ARE NOT READY TO FACE THE REAL WORLD YET WE THEREFORE NEED ENABLING MECHANISM AND INCUBATORS/PARKS ARE ONE OF THEM?? THE BENEFITS ARE MANY.. WILL COVER TOWARDS THE END. It s not the destination, it s the journey.
INDIAN EXPERIENCE
INDIA AT A GLANCE. Population States/UTs Geographical Area Languages (recognzd) Per capita income GDP Source:CSO Statistics APROX. 1.2 bn 35 3.3 mn sq.kms 22 US$ 534 US$ 650bn
Emerging World India is globalising, the world is going thru a major change Resulting in a borderless world where seven I s freely flow Investments, Industries, Information, Ideas, Innovations and Individuals INDIANS
INDIAN INNOVATION SYSTEM AND LINKAGES ECONOMIC PRESSURE FOR SURVIVAL AND GROWTH IN GLOBAL ECONOMY New Product Development in New Institutional Arrangements Consulting Companies Venture Capital Source:R.T.Krishnan ENTREPRENEURIAL LEADERSHIP Provision of IT Enabled And Other Services Productivity Improvements and New manufacturing Processes Emergence & Growth Of Indian Software and ICT Companies NEW OPPORTUNITIES IN THE WORLD ECONOMY Commercial & International Orientation of National R&D Geographical Clustering Growth of Engineering and IT Education
ENABLING ENVIRONMENT IN INDIA CHANGING MIND SET, SKILL SET & DOMAIN KNOWLEDGE OF TECHNOLOGY & ENTREPRENEURSHIP CULTURAL CHANGE STARTED BUSINESS FAILURE GETTING DECOUPLED FROM PERSONAL FAILURE BOOT CAMPS PROMOTING E SHIP BRAIN GAIN ( NEXT GENERATION OF NRIs FAMILIAR TO BOTH THE CULTURES), TELECOM INFRASTRUCTURE ONE OF THE BEST IN THE WORLD, IP PROTECTION & GOVT. POLICIES PROVIDE THE RIGHT ENVIRONMENT. NEW HIGH TECH CLUSTERS AFTER BANGALORE AT HYDERABAD, CHENNAI, PUNE
ENABLING ENVIRONMENT IN INDIA.contd. HIGH END ROLE MODELS RAGS TO RICHS STORIES, EMERGING SECTORS e.g PHARMA, LIFE SCIENCES, MATERIAL, DESIGN, ICT WITH DOMAIN KNOWLEDGE EXPERTS. MULTI NATIONAL FIRMS ENCOURAGING & TAPPING INNOVATIVE IDEAS THROUGH BUSINESS PLAN COMPETITIONS. INTEL, IBM, MICROSOFT, LOCKHEED MARTIN ETC. IN ADDITION TO OUR OWN. BOTTOM UP APPROACH WHERE INNOVATION AND TECHNOLOGY ARE LOCALLY DEVELOPED.
LINKING: EDUCATION..INNOVATION. ENTREPRENEURSHIP
EDUCATION vs. INNOVATION I n n o v a t i v e p o t e n t i a l s 100 90 80 70 60 50 40 30 20 10 Innovat ion 0 Education levels
100 90 80 70 60 50 40 30 20 10 0 NB OB Education levels ENTER PRISES EDUCATION vs. ENTREPRENEURSHI P DEGREE OF ENTREPRENEURSHIP
High INNOVATION VS. ENTREPRENEURSHIP Japan Sweden Silicon Valley Israel Innovation U.K. INDIA Hong Kong Low Low Entrepreneurship High
Potential surplus population in working age group (2020) -17Mn US 5Mn Mexico France Spain Germany -3 Mn UK 0Mn Ireland -3 Mn -3 Mn -2 Mn -2 Mn Italy -1Mn Turkey Iraq 2Mn Israel 2Mn 0Mn 4Mn Czech Republic Egypt Ira 3Mn n China Pakistan Russia -6 Mn 19 Mn 7 Mn 47 Mn India -10 Mn Bangladesh 1Mn Malaysia 5Mn 4Mn -9 Mn Japan Philippines Vietnam 3Mn Brazil 5Mn Indonesia -0.5 Mn Australia Note: Potential surplus is based on the ratio of working population (age group 15 59) to total population constant; Source: U.S. Census Bureau; BCG Analysis
NUMBER OF BUSINESS INCUBATORS & SCIENCE PARKS IN INDIA 90 80 82 70 60 50 40 30 20 10 0 CENTRAL GOVT. 14 STATE GOVT. 7 TECH. INSTS. 2 3 2 BANK PRIVATE NGOs
STEP/TBI LOCATIONS TBI STEP IIT- Roorkee JSSATE-Noida HBTI-Kanpur GNEC-Ludhiana IIM, NID, NIRMA, AHMEDABAD IIT-BOMBAY PUNE UNIV., MITCON, PUNE NSIC-RAJKOT CDC-BANGALORE BEC-BAGALKOT SJCE-MYSORE NITK-SURATHKAL IIT KHARAGPUR ICICI KP, ICRISAT, HYD Anna.Univ. Chennai PSG Coimbatore KEC-Perundurai NIT Trichy VIT-Vellore VIT,Calicut Vellore NITNIT-Calicut
Profile of Indian S&T Park/Incubator Average Project cost : USD 1mn DST Contribution : 50-70% Average number of tenants : 8-10 Average Tenancy period : 2 years Successful Enterprises : 5 per annum Survival rate of start-ups : nearly 70% Legal Status : Part of host Institute/ not for profit registered society Self sustainability : 5-6 years
INCUBATION SYSTEM Focus on IT, BT, Design, Agribusiness, Environment, Engg, New Materials Primary target : Academic and R& D institutions A mission mode activity targeting 5 new TBIs every year Different models being tried
GOVERNMENT SUPPORT TO INNOVATION AND ENTREPRENEURSHIP Technology Development Board( TDB)- Encourages development and commercialization of indigenous technologies and adaptation of imported technologies PROVIDES SOFT LOANS Programme Aimed at Technological Self Reliance(PATSER)- Financially supports industry s efforts in development of indigenous technologies Technopreneur Promotion Programme (TePP)- Supports individual innovators for prototype development/processes Home Grown Technology Program( HGT)-Assists in commercialisation of indigenous technologies National Innovation Fund: For grass -root innovators Technology Development Fund for Biotechnology Pharmaceutical Research and Development support Fund
Mixed Initiative- Setting up of Bio-IT Park Department of IT and Dept of Biotechnology have envisaged the creation of a Bio-IT Park and STPI has been entrusted as a nodal agency for this purpose. The park is proposed to be in the form of a Public-Private Partnership model. Target Segment Integration & Knowledge Exchange International Knowledge/ Tech Collaborations Industry Bio-IT Park Investor Community Flow of Capital Flow of Knowledge Research Institutes & Universities Government & Support Agencies Nurturing & Policy Support
Ist G F B I INCUBATION FUND AN INCUBATION FUND RS 10 M (US$230,000) GIVEN TO 10 INCUBATORS AS GRANT FOR SUPPORTING EARLY STAGE START-UP COMPANIES IN THE INCUBATOR THIS FUND TO BE USED AS LOAN OR EQUITY IN THE COMPANY BY THE INCUBATOR THE REVENUES ON THE FUND WILL BE PLOUGHED BACK TO THE FUND FOR FUTURE SUPPORT
IInd G F B I FISCAL INCENTIVES & SERVICE TAX EXEMPTION THE INCUBATOR AND INCUBATEES GET SERVICE TAX EXEMPTION IN 2007-08 BUDGET Exemption of Service Tax on all services provided by the Incubator Exemption of Service Tax for the incubatee for three years Provided the business turnover does not exceed Rs 5 m (US$115,000) Modification in Act to allow incubators to hold equity.
INCENTIVES FOR STPI INCUBATEES Approval under single window clearance mechanism 100 per cent foreign equity permitted Imports in the STP units are completely duty free Exemption of local taxes for domestic purchases The sales in the domestic market are permissible up to 50 per cent of the exports Exemption from corporate income tax for a block of 10 years Minimal export obligation with positive Net Foreign Exchange
GOVERNMENT INSTITUTIONS SUPPORTING ENTREPRENEURSHIP AND BUSINESS INCUBATION Ministry of Industry Ministry of Science and Technology Ministry of Information technology Financial Institutions Ministry of Human Resources Development State Governments
The Biotech Park Policies Benefits enjoyed by Export Oriented Units (EOU) extended to Biotech Parks 100% FDI permitted through automatic route BTP units exempt from payment of Income Tax Export proceeds to be realised within 12 months BTPs allowed to retain 100% export earnings in the EEFC account
KEY LESSONS LEARNT A STRONG R & D AND INNOVATION BASE IS DESIREABLE FOR A INCUBATION PROGRAMME. MATCH THE INSTITUTIONAL STRENGTH, THE ENVIRONMENTAL STRENGTH FOR SUCCESSFUL INCUBATION PROGRAMME. DEVELOP A CLASS OF MANAGERS AND THE INCUBATION MANAGER SHOULD BE GOOD GOD. ENABLE HIM TO SPEND MORE TIME WITH CLIENTS. COMPENSATE HIM/HER SUITABLY. CREATE EARLY STAGE FUNDS WITHIN THE INCUBATORS
KEY LESSONS LEARNT CONTD. BUILD MUTUAL LEARNING & NETWORKING SYSTEMS PROVIDE OPERATIONAL AUTONOMY & FLEXIBILITY TO INCUBATOR/PARK PROVIDE LINKAGES WITH INNOVATION PROGRAMMES SET REALISTIC AND PRAGMATIC TARGETS, DON T RAISE THE EXPECTATIONS PARTICULARLY OF POLICY MAKERS A SUPPORTIVE AND PARTICIPATORY MANAGEMENT. TREAT INCUBATOR AS A DYNAMIC VENTURE ITSELF. BUILD A REVENUE MODEL EQUITY, DEFERRED PAYMENT, SWEAT EQUITY, POOL COMPANY ETC. BUILD MENTOR NETWORKS WITH FACILITY TO PARTICIPATE.
SOME THOUGHTS TO SHARE.
HIGH TECH VS. LOW TECH
WHAT TECH IS OUR CORE COMPETENCY? IT IS ANY TECH THAT MAKES BUSINESS SENSE IT, BT, NT, DESIGN, MANAGEMENT, INFRASTRUCTURE ETC. IT ACTUALLY DOES NOT MATTER WHAT TECH IT IS ENTREPRENEURSHIP IS NOT INNOVATION; NOR IT IS TECHNOLOGY IT IS MONETIZING THESE..
IS IT LOGIC??? OR IS IT MAGIC???
Business Incubators Performance Intellectual Infrastructure Physical Infrastructure Cultural Infrastructure Financial Infrastructure Education Training Skills Knowledge Networks Research Institutes Social Vision and The Will Connectivity to New markets and Others Risk Culture Innovation Ambience Venture Mind Social Recognition & Reorgiztn Venture Fund Innovation Fund Incubation Fund Project Fund Tech. Dev. Bridge Fund Business and Social Environment
Innovation : New products / processes I n v Jobs 30 0 e s per Human Development t Regional Development m e ml n. n t Community Government & Society BI Investment After 5 to 7 years Tax Revenue to Governments ( Profit, Turnover, Manufacturing Taxes) Technology Business Incubators Profile
HOME WORK HARD WORK SMART WORK TEAM WORK NET-WORK SUCCESSFUL BUSINESS INCUBATORS REQUIRE ONLY SOME sum OF THIS WORK
www.nstedb.com www.techno-preneur.net www.incubatorsnetwork.com www.dst.gov.in