IIT Bombay appoints CEO to further its incubation cause

In a bid to increase private sector investment for its incubation projects, the country's premier engineering institute — Indian Institute of Technology (IIT), Bombay — has recruited an investment banker as Chief Executive Officer of the Society for Innovation and Entrepreneurship (SINE), its incubation centre.

All the seven IITs have incubation centres but only IIT Delhi had a Managing Director so far to oversee its unit. Now it's the turn of IIT Bombay.

Sushanto Mitra, the newly-appointed CEO of SINE, has spent several years as an investment banker. His earlier stints include working at Techcap India and Meghraj Financial Services India. "We are looking at a plan that will institutionalise private sector investment into these companies," says Mitra. IIT-B Director Ashok Misra expects SINE to contribute Rs 4-5 crore to the institute's exchequer.

Currently, SINE's corpus has been contributed by IIT-B, the government of India and IIT alumni. With participation from the corporate world, SINE wants to increase this corpus to Rs 10 crore. This will then allow the centre to invest at least Rs 40 lakh for each firm. SINE invests Rs 10-12 lakh in each company currently.

The incubator is also expanding its portfolio from its current 17 companies to 50 over the next two or three years. Since its inception in 2004, 32 companies have incubated at IIT-B, of which just four have folded up. IIT-B's incubation model is equity-cum-royalty based.

The institute takes an 8 to 10 per cent stake in each of the firms that it incubates. Once the company gets funding, IIT-B liquidates part of its holding. In case of a product, once the company is formed the patent is then transferred to the name of the company. Each company is allowed to operate from SINE premises for three-years.

"So far we have been self-sufficient. IIT has created enough money to sustain SINE. While we do get Rs 10-30 lakh through the equity sale once in a while, I am hopeful that we will also have a firm that will make SINE earn in crores," said Misra.

Apart from primary funding of Rs 10-12 lakh, SINE provides incubating companies with subsidised infrastructure — at one-third the market price each firm gets a set-up of six PCs. IIT Delhi, too, has a managing director who oversees the institute's Technology Business Incubation Unit which was founded in 1998. The institute invests around Rs 15 lakh for an incubating IT firm and has a corpus of around Rs 2 crore. Students from the institute get most of their ventures funded through government programmes.

IIT Delhi picks up stakes of 5-10 per cent in the incubating companies and exits after five years. So far, around 19 companies have begun operations at IIT Delhi with another five in the offing. "The institute is looking at creating separate funds for separate ventures. For instance, IT projects will have separate funds for themselves," said a professor from IIT Delhi.