Companies have been struggling to get their spend on innovation right forever. While some like Apple succeed, others like Nokia don’t. So many have gone down fighting and disillusioned—clamoring for funds to take novel ideas to market or trying to get significant commercial returns from the millions already invested in research.
For small businesses and startups, finding capital for innovation can be a monumental task. because risk associated with experimental ventures is high. While for incumbents, innovation itself can be hard to integrate into their everyday operations. Big companies are relying on mergers and acquisitions, joint ventures, and licensing, with huge funds set aside to grow and consolidate, for continuous and disruptive innovation.
Source: Stanford Social Innovation Review
Part 1: India
In the first part of this series of articles on innovation grants/funds in major business regions across the world, we will look at a few major ones in India, which is the the third largest startup hub in the world and is continuing to scale fast.
Based on the volunteer Honey Bee Network (HBN) philosophy, NIF was founded in 2000 and is headquartered in Gandhinagar, Gujarat. It is an autonomous body of the Department of Science and Technology (DST).
NIF’s mission is “to help India become a creative and knowledge-based society by expanding policy and institutional space for grassroots technological innovators.”
Local communities or individuals (farmers, artisans, students, etc.) who have innovative ideas to better human existence (and developed them without any professional assistance) through technology are eligible for the fund. The organization’s database boasts over 0.2 million traditional knowledge practices, innovations, and tech ideas from close to 580 districts in India. (Read more here.) NIF's Fab Lab hosts people who come with different cost-effective ideas, helping them make it commercial with financial support and gain recognition.
Its main activities include
- Scouting, documentation and database management
- Value addition and R&D
- Business development and micro venture innovation fund
- Intellectual property management and dissemination
- Social diffusion
NIF has partnered with several design and law firms, academicians, universities, and institutions, and the Society for Research and Initiatives in Sustainable Technologies and Institution (SRISTI) and Grassroots Innovation Augmentation Network (GIAN). For creative little minds, NIF organizes an annual challenge called IGNITE.
This is one of several incentives from Modi’s government for budding businesspersons. The initiative promotes entrepreneurship by promoting, mentoring, and nurturing startups throughout their journey.
On the website, you’ll see that only startups that satisfy the definition as outlined in the annexure are eligible. The three main goals of the Action Plan:
- Simplification and handholding
- Funding support and incentives
- Industry-academia partnership and
The program will help startups manage their compliance and keep costs to a minimum; it will facilitate exchange of knowledge and guidance in an enabling environment with the help of the Startup India Hub. Government will offer a credit guarantee to encourage funding for startups and offer tax exemption on capital gain for investors. There’s even a mobile application, a collaborative platform, to make registration, tracking, compliance, and networking easy.
In early 2017, Bharat Innovation Fund gained approval from Securities and Exchange Board of India (SEBI) to function as a Venture Capital Fund. IIM Ahmedabad’s Centre for Innovation Incubation and Entrepreneurship (CIIE) created this fund to invest (venture capital, grants) at the Series A stage of the startup lifecycle. The fund focuses primarily on life sciences, agriculture, energy, water, environment, and healthcare.
The brightest of innovative minds in India can also expect to co-create with the Bharat Innovations along with seed funding. Launched by Prime Minister Modi in 2015 at the India-US Startup Konnect in California, Bharat Innovation Fund aims to promote sustainable, affordable disruptive technologies. By bringing together corporates, academia, and governments, it looks to strengthen the innovation ecosystem in India.
Although it was set up with a corpus of $100 million 2013, it expanded to $500 million by 2015. This fund offers seed capital, mentorship and tech resources to boost current capabilities, go-to-market assistance, and customer validation. The early stage startups identified to help strengthen Infosys core business or explore new areas should have a “demonstrated product-market fit” and fit into one of these areas: market intelligence, big data and analytics, infrastructure and cloud, collaboration and design, convergence of industries, disintermediation of layers, and new business models.
For projects with a social impact, it also provides important connections; for young startups, the Fund connects them to a network of incubators and accelerators along with other benefits. (Look at the some of the companies Infosys has invested in here.)
*Read about how India IT companies have been investing or acquiring startups to not be left behind in the interesting article in Quartz Media.
Tata Capital offers financial aid from $2 to $10 million to early stage startups (with revenues less than $20 million) working on tech innovations in India or abroad.
The three main objectives of this fund are:
- Create new growth opportunities
- Enhance efficiency
- Increase accessibility and affordability to the business
Tata Capital supports early, expanding, growing, and mature startups.
Another initiative, the Foundation for Innovation and Social Entrepreneurship (FISE) set up by Tata Trusts in 2016 to fund startups with social impact (uncertain business models with much risk some would say).
Established by The National Innovation Council and the Ministry of Micro, Small & Medium Enterprises in 2014, IIIF backs entrepreneurs who want to make the lives of the economically backward better, that is, ventures that promise much social impact, enable significant job creation, and, perhaps, only modest financial gains.
Bridging the gap between equitability and growth are the objectives of this fund.