Mutual Benefits Drive Big Companies Sheltering Startups

Reliance Industries Ltd’s push forward in new areas such as telecom and retail is being helped in part by the start-ups it’s helping incubate.
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The Jio Phone is the latest introduction by Reliance JioInfocommLtd’s to target the 500-million-strong feature phone market and expand the user telecom operator’s user base. And, the web browser for the Rs1.5KJio Phone was designed by a start-up named ‘Widely’ that is being mentored at GenNext Hub, the start-up platform RIL launched with Microsoft Ventures in 2014. So far, 52 firms have graduated from the hub, while 11 companies are currently being mentored there.
“It’s an equity-free model,” said AmeyMashelkar, mentor-in-residence, at GenNext Hub. “The agreement that we sign with them (the start-ups) says we have an option (and not a right) to invest. And they have an option to take money from us. In fact, many start-ups come to us for the mentoring (rather) than for funding.”
For start-ups at GenNext hub, a four-month-long immersive programme aims to provide them with access to funding opportunities, business mentors, and technical experts, among other resources. In addition to the mentoring programme, GenNext Hub has launched the “Scalerator” programme that is aimed at providing an opportunity to high-growth startups looking at RIL as a potential client through facilitated discussions between startup founders and RIL leaders.
GenNext Hub’s main focus is to foster technology startups in the areas of Retail, Telecom, Mobile Apps, Fintech, Messaging, Healthcare, Cloud Services, SME Solutions, Media, Industrial IoT or Consumer IoT, with a specific focus on Machine Learning, Deep Learning, Analytics, SaaS, Augmented Reality and Virtual Reality, among others.
Indian Conglomerates working with Startups
The participation of large Indian corporates in providing financial backing to startups is growing, where they are tracking disruptive technologies in their own sectors.On the other hand, these startups are taking this opportunity to work with one of India’s largest companies, something that would otherwise have been difficult for them.
“We first worked closely with the Jio app teams to get three proof-of-concept projects which were executed for three months from May to July 2016. The successful pilots paved the way for the partnership,” said Manish Lachwani, chief executive and co-founder of HeadSpin, an app monitoring startup that has worked at GenNext Hub.
Another way it helps Indian companies by attracting the best talent to run businesses.
“Corporate activity in the startup space is growing and we are seeing more of them become aware. Whether it is older corporates or large corporates, they’ve now understood that they have to keep a watch in their own sectors for startups that are disruptive,” said Neha Singh, co-founder at research firm Tracxn.
Partnerships, accelerators and incubators are becoming more common in corporate India. Taking a cue from large global companies such as Microsoft, Walmart and others, Indian corporates are focusing on R&D in the hope to get their hands on disruptive technologies.
Some major developments:
- GenNext Hub — RIL has partnered with Microsoft Ventures to launch a start-up accelerator. Last year, RIL chairman MukeshAmbani proposed to launch a Rs5,000 crore start-up fund called Jio Digital India Startup Fund to invest in digital businesses.
- Tata Capital Innovation Fund — a sector agnostic venture capital fund run by the Tata Group’s financial services arm Tata Capital
- Infosys Innovation Fund — IT firm Infosys has set aside $500 million to invest in technology start-ups
- Wipro Ventures — the strategic investment arm of Indian IT giant Wipro which has a corpus of $100 mn
- Startup Garage — Tech Mahindra and Mindtree are looking to encourage own employees
According to Neha, there are four broad ways Indian companies are looking at the startup sector today: Track startups in their space and forge partnerships; setup accelerators and incubators to nurture startups, funding and acquiring startups in order to become future ready and setup a dedicated fund to actively make bets on new-age companies.
“The smartest technology talent now prefers to join startups and the only way to keep on the cutting edge of both technology and the explosive wealth creation taking place is to invest or incubate these businesses (startups),” says Haresh Chawla, partner at India Value Fund.
Indian corporates are experimenting with digital projects to avoid being disrupted by startups. However, large companies should stop looking at startup investments as hedging their bets and treat them more as value enhancers.