Scientists Turn Entrepreneurs

 Image: Sameer Pawar

The technology marketplace can be ruthless. Electrical engineering professor Preeti Rao woke up to it two years ago, when she went looking for a licensee for a melody extraction technology from her lab at the Indian Institute of Technology, Bombay. Large phone makers showed interest, but the terms they offered were far from fair. They wanted to own the intellectual property (IP). Not willing to let go the ownership of technology which has broad applications in the digital audio space, Rao and her students decided to set up SensiBol Audio Technologies. Today, they are courted by a handful of music and entertainment companies for acquisition or strategic investment.

As he narrates the SensiBol story, Sushanto Mitra, chief executive of the Society for Innovation and Entrepreneurship at IIT-B, doesn’t hide his happiness. For the last five years, his job has been to encourage academics on the campus to identify opportunities in their labs to set up ventures.

Unlike in the US, where technology buyers abound, Indian companies have often licensed technologies from abroad, even copied them, but never bought or co-developed with researchers. So the only way left for an inventor to take his idea forward is to tailor it to the market himself, he says.

Since early last decade, the money spent on science and technology has increased manifold (from about $1.5 billion in 2002 to about $3 billion in 2011; it will reach $8 billion in 2017). “Research output is higher. Because there are not enough buyers, researchers are getting frustrated; they will be compelled to take their work to the market. You’ll see more of this happening,” says Soumyo Mukherji of the department of biomedical engineering at IIT-B. He has co-founded NanoSniff to commercialise cardiac diagnostics (see pg 61).

These are early but promising signs, says Mitra. “When some of these [academics] become millionaires and ride Porsches, the wives of others will needle them to go in this direction,” he jokes.

A serious stab at this change was taken eight-nine years ago when HP Khincha, head of the Society for Innovation and Development at the Indian Institute of Science (IISc) in Bangalore, floated the idea of faculty entrepreneurship with funding agencies. Subsequently, the Department of Scientific and Industrial Research sent out a circular that academics choosing to start companies could go on a sabbatical and rejoin their institutions at the same position.

Different institutions responded differently. The IITs made it easier for the faculty to file patents, take equity, and set up incubators. At IIT-B, academics get 70 percent of the proceeds of commercialisation that comes to the institute. In case of IP transfer to the startup, the institute doesn’t get in the way, but opts for equity. Some institutions even proactively scan the submitted PhD theses for potential IP. Private universities like the Vellore Institute of Technology are reducing the teaching load of academics if they start a company.

Khincha believes this will bring a cultural change in institutions. Academics will look at their research with an application lens. It will positively impact student-professor relationship, not just churn out conforming professionals.

The industry will benefit if these stories goad them to factor sponsored or collaborative research as a key input to their business decision, says Mitra.

Others believe it can teach a thing or two to teachers as well. “The scientific community is small…Setting up a venture is the best way to learn and grow. Venture capitalists are incredibly smart people and know things which I, sitting as a director, would never know,” says Rajesh Gokhale, director of Institute of Genomics and Integrative Biology, who’s co-founded Vyome Biosciences.

But the defining benefit of this process, says Khincha, is that it’ll bring “acceptance of failure”. This was earlier not possible with government money since there is no mechanism to undertake risky ventures or write off failed ones.

“The government is not in the business of risk-taking, whereas, as investors, we think of risks right from the start,” says Sandeep Singhal, co-founder of Nexus Venture Partners. Nexus has led two rounds of funding at Sedemac from IIT-B. He sees change occurring at various levels. Companies, big and small, are looking for cutting edge technology and IP, which will eventually lead them to collaborate with academics. There is also a lot more “education and push from the government to make accessible the possibilities of commercialisation”.

There may not be a central rule governing all institutions, but improved funding and infrastructure have raised expectations. When the research budget was Rs 20 lakh, you published papers, but when it’s Rs 20 crore, you don’t publish 100x papers. At IIT-B, which has at least half a dozen faculty-led enterprises, there’s some amount of peer pressure to start a company, says V Ramgopal Rao, who has co-founded NanoSniff.

The recent explosion in student innovation plan competitions is another trigger. Many students involve their professors. The investor sees a long-distance runner in a professor and is happy to attach more value to such ventures.  In August, the entire top management of ICICI Bank assembled to evaluate innovation proposals from students. The bank has tied up with 100 engineering colleges in India in its search for innovative solutions in banking and financial services, including ATM technology. While multinationals like Microsoft, IBM and Intel have been honing entrepreneurial talent on campuses, a few Indian companies are joining them.

Still, there’s no substitute for experience; no, not even talent-exuding youth. It’s known that if you stay in a research area long enough, you get insights into limitations of current technology. That opens up new business opportunities for researchers.  

To bring you this special package, we’ve combed each of the premier technology institutes across the country and handpicked a set of ventures that reflect the diversity of opportunities on offer. By no means is it a flood of ideas turning into enterprise as yet. With support from private venture capital (VC), these academics are now starting to tread into new product territory.

If government money is available, startups should take it. After all, VC money comes with “strings attached”, says Kumar Shiralagi, managing director at IndoUS Venture Partners (IUVP) in India. After having funded 20-odd startups in India since 2007, IUVP backed its first academic-led startup in August. “The VC industry itself is just about 10 years old in India. It’s now beginning to attract academics. When other professors see this, they will come too.”