While it is too early to draw conclusions, there are initial indications that the incubator has been successful in persuading IITians to take up entrepreneurship as a career option. Take, for example, Vishal Gupta. Once the entrepreneurship bug bit him, Gupta turned down full scholarships from Cornell and the University of Southern California; instead, he turned his thesis on rules-based event engines for fingerprinting into the core technology of a startup he launched at IIT Bombay called Herald Logic. The company develops software that enables companies to monitor key parameters of their business. For example, if a fund manager’s performance falls below that of the market index, Herald Logic’s software can trigger alerts to those responsible for running the organization.The company was launched with $2,000 from Gupta’s father’s retirement money; it now sustains itself on its own revenues. Gupta says that the IIT Bombay incubator was a huge help in the initial cash-strapped days; the exchange of “war stories” with other incubated companies, he says, accelerated his learning process. Moreover, he adds, the IIT branding opens doors that would otherwise be closed to most startups and is an invaluable help in marketing the company and its products.
Another graduate who refused the blandishments of the corporate world is Reapan Tikoo, co-founder of Powai Labs, a startup that builds simulation accelerators for the electronic design automation industry. Tikoo, who earned a master’s degree in management from IIT, was offered a high-paying job as a production executive in the entertainment industry. He opted instead to convert the business plan he wrote for his degree into a real-life enterprise.
The incubator would not have been possible in the past, Phatak says, due to cultural reasons. He cites “a change in the mind-set” in India toward a more entrepreneurial outlook: “wealth generation is considered good,” Phatak says. “These conditions did not exist in India during the 1980s.”
Kanwal Rekhi, the IIT Bombay benefactor after whom KReSIT is named, adds that the phenomenal growth of Indian information technology services companies such as Infosys and Wipro-which have come within striking distance of the billion-dollar mark by riding the outsourcing wave-has also made an impact on the Indian psyche. Entrepreneurship, especially in the technology industry, is now firmly established as a viable career option in India.
Both Rekhi and Phatak agree that the incubator has a long way to go before it replicates the entrepreneurial record of U.S universities like MIT and Stanford. However, several successful entrepreneurs and professionals who made it big in the west are now helping out by contributing time and money. Anna Lee Saxenian, a professor of city and regional planning at the University of California, Berkeley who studied immigrant Indian and Chinese entrepreneurs in the high-tech industry, calls this phenomenon “brain circulation.”
Rekhi himself is the former CTO of Novell and founder of The Indus Entrepreneurs, an organization that promotes entrepreneurship. Other mentors to the incubator include Nandan Nilekani, CEO of Infosys, one of India’s most successful software companies; Rakesh Mathur, who sold the e-commerce company Junglee to Amazon.com; and Suhas Patil, co-founder of Cirrus Logic.
The IIT brand name may give its students a head start but obstacles still remain. The venture capital ecosystem in India is still nascent. Indeed, says Phatak, venture capital in India is more of a glorified loan rather than a true risk. “The nature of VC funding in India does not match the ethos of funding in the United States, where VCs are involved in mentoring, giving ideas, and helping hire CEOs and CTOs,” he says. In India, he explains, venture capitalists “make you feel they are more interested in protecting their capital than in taking a true risk.” Gupta of Herald Logic says that building a product company in India is difficult because technology adoption within Indian companies is slow. “You are in the midst of laggards, trying to find early adopters,” he says.
Despite these challenges, R. K. Lagu, the IIT Bombay electrical engineering professor who is in charge of the incubator, says that there is great interest. “The incubator started as an IT incubator but now faculty and students from other disciplines have also become interested,” says Lagu. He adds that initially, most business plans were from final year undergraduate students but in the last two cases it has been a faculty-student combination.
Powai Labs’ Tikoo sums up the attitude of IIT Bombay’s entrepreneurs when he says, “There was a time when India did exports through cheap labor, but that time has gone. You cannot build an Infosys today with any amount of capital. The next ten years will belong to technology R&D based product companies out of India.”
Tikoo adds that 20 years ago, the United States was the place to be for technological entrepreneurs. But now, he says, growth and investments are happening in India. “This is where the action is. It would be foolish to miss this opportunity by being out of India.”