Knock on the government’s door - you will be surprised by what you find
A technology entrepreneur in India is faced with several challenges (and opportunities) while he sets out to create a technology startup.
Apart from identifying the right idea and the right markets and being able to recruit the right team, the most crucial challenge an entrepreneur faces is raising money for the new venture. There are widely known sources of funding for technology startups that one can think of, such as venture capitalists, angels, banks, and friends and family. But, an often-overlooked source of funding, particularly in the early stages of a startup, when private investors hesitate to invest due to the high risk of failure associated at that stage, is government funding. Through an array of programs and initiatives, the government offers funding for technology startups, from early-stage development to full-scale commercialization, which entrepreneurs could take advantage of.
Issues with Technology Start-ups
Getting a startup off the ground is strewn with challenges and difficulties. It is more so in the case of a technology startups as there are specific set of challenges associated with them that need to be overcome. There is always a risk of the technology idea on which the start-up is based (technology risk) will fail or not deliver to the desired level. Also, technology startups will need more resources and infrastructure even at the early stage of development. For example, a software solutions company can start product testing or product development with very little investment and infrastructural support, whereas a material science technology startup will need laboratory facilities to even test their idea and for product development, and these facilities are lot more capital intensive and need a much greater upfront investment.
Since idea testing and product development is such an involved process in the case of technology startups, it also extends the time-frame in which the first product/products can reach the market. Which means, an investor, who invests at an early stage of a technology venture, has to wait for a much longer period to see the returns materialize. From a private investor’s point of view, all these factors add up to a significant and in many cases an unacceptable level of risk. And hence, funding is that much hard to come by for an early-stage technology startup. So, traditionally, entrepreneurs have turned to their own funds, or to the support of friends and family or to sheer ingenuity and resourcefulness to take their venture ahead.
But, there are government funding sources that have been set-up to specifically support and fund technology-based startups that could be exploited. These funds could be used right from idea validation stage to the full-scale commercialization stage. There are various needs at each stage of technology commercialization and new-venture development that need to be understood before one can fully understand and exploit the funding landscape and funding opportunities offered by the government. The following section gives a brief outline of the various stages involved in starting and growing a technology startup.
|Technology Development Funds|
|Department of Scientific & Industrial Research (DSIR)||Phase I: Micro Technopreneurship Support (TS)||Rs. 75,000 subject to 90% of approved project cost|
|Department of Science and Technology (DST)||Instrumentation Development Programme||Up to Rs 35 Lakh sanctioned in recent projects|
|Department of Bio-Technology (DBT)||Small Business Innovation Business Research Initiative (SBIRI) Phase 1||Upto Rs 1 Crore, upto Rs 50 Lakh as grant and rest as soft loan|
|Department of Bio-Technology (DBT)||Small Business Innovation Business Research Initiative (SBIRI) Phase 2||Soft Loan upto Rs 10 Crores|
|National Research Development Corporation (NRDC)||Support to Inventors||Rs 2 lakh|
Stages of Technology Commercialization/New Venture Creation
Figure 1 illustrates the five stages of technology commercialization and new venture creation. The first stage is where the entrepreneur recognizes an opportunity that could be exploited by identifying a problem and a corresponding solution for that problem. The next step is the idea validation stage, where the do-ability or proof of concept of the technology is studied by experiments and tests. The third stage is the prototyping and demonstrating the technology at a lab scale. The next step is where the process is scaled up to commercial scale, and all the hurdles of setting up a plant etc. is overcome. The fifth and the last stage in the new-venture creation process is commencing commercial production and getting the product to the customer.
|Funds for Patent Protection/In-licensing|
|Department of Scientific & Industrial Research (DSIR)||Phase II: Supplementary TePP Fund (STF)||Rs. 7,50,000 subject to 90% of total project cost|
|Department of Scientific & Industrial Research (DSIR)||Phase II: Seamless Scale-up Support for TePP projects (S3T)||Rs. 45,00,000 subject to 50% of total project cost|
|Ministry of Micro Small Medium Enterprises (MoMSME)||Support for Entrepreneurial and Management Development of SMEs through Incubator||Rs 6.25 Lakhs|
|National Innovation Foundation (NIF)||Micro Venture Innovation Fund (MVIF)||up to Rs 10-15 Lakhs|
|Ministry of Micro Small Medium Enterprises (MoMSME)||Assistance for Grant on Patent/ GI Registration through the National Manufacturing Competitiveness Council (NMCC)||Rs 25,000 for domestic patents and Rs 2 Lakh for foreign patents|
|Ministry of Communication and Information technology (MIT)||Support International Patent Protection in Electronics and IT (SIP-EIT)||50% or upto Rs 15 Lakh for filling International patent|
|Council of Scientific & Industrial Research (CSIR)||New Millennium Indian Technology Leadership Initiative (NMITLI)||Grants for Public Institutions and Soft Loan for Private Sector Companies. Few Crore Rs.|
written by Detroit, September 11, 2010
written by Reuben Dantes, July 08, 2010
written by M A J Jeyaseelan, January 19, 2010
written by anil k gupta, December 07, 2009
written by Vikram S Puri, December 06, 2009
written by A.S.Rao, December 05, 2009
written by M A J Jeyaseelan, December 05, 2009
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