Funding dreams

Updated on: Monday, February 07, 2011

I have this business idea, it is unique, has the potential to scale up, but I need some funds to take it forward. Sounds like a familiar conversation you have had with a friend or heard from a classmate who has dropped out of placement to pursue his or her entrepreneurial ambition?

Campus ventures/student start-ups are no more a new phenomenon. With a lot of emphasis on innovation and entrepreneurship as a career option, there certainly seems to be a great deal of advantage in supporting the idea. However, funding such budding ventures and incorporating a company has still not taken off in a big way in India.

The funding organisations have their own doubts. There is little guarantee that a student with a start-up venture formed in college will continue with the business after graduation. India is still an unproved market for entrepreneurship. For people to get time and money in a venture is a huge issue. “The eco-system is weak,” says Indus Khaitan, general partner, The Morpheus (www.themorpheus.com). In the last batch, the company received 200 applications, of which about 15 were from college students who were about to graduate or those in their third year. A total of seven were shortlisted and offered “a seed grant of Rs. 5 lakh for each start-up and the necessary hand-holding”.

“We look whether the business has a potential to make Rs. 1 crore revenue in 18 months. If a business has to be scalable such standards have to be kept. Even if it is a start-up formed by students, we are particular that the founder is full-time,” he says.

Kuruvindum, a boutique investment entity with its primary focus on early-stage investment in innovative technology driven start-ups, has similar concerns. “It is difficult in Indian colleges to get permission for a break where a student can take a year or more off while keeping the option of coming back for his/her graduation at a later date,” says Rahul Dev Gupta, CEO, Kuruvindum (www.kuruvindum.com).

Also, there is the parental and societal non-acceptance issue about entrepreneurship. Seeders (www.seeders.in) that helps start-ups rub off their initial inhibitions and convert ideas into reality, says working with young start-ups has its advantages too.

Abhishek Rungta, Founder-CEO, Indus Net Technologies, says start-ups are full of energy, take more risks and are comfortable with new technologies.

Incubation centres in colleges are, by far, helpful in giving a platform for young start-ups, but India needs more. “Increasingly many colleges are having their own incubation centre, but it mainly offers non-financial support,” says A. Thillai Rajan, associate professor and coordinator, MSME Incubation Fund, IIT-Madras. He says the proportion of students venturing out is less. “Once we have a few Indian success stories of ventures scaling up from colleges a lot more initiatives will be seen,” he adds.

Another concern for students is identifying a good mentor. With the entrepreneurship wave only set to get bigger in India, there are going to be more companies and colleges willing to offer seed funding as well as guidance.

Mr. Gupta adds that students are still welcome to approach an early stage-investment company if they have a viable business idea. “But do not expect a million dollar as funding and try not to be too early to start a venture. Start developing an idea in the second or third year of college and be ready to take the leap in the final year,” he says.

Funding dreams

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