`INTRA'PRENEURS -
Mahindra Plans to Nurture Startups in its Backyard
Group
to offer seed funding and incubation facilities for employees at its `corporate
garage'
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to defence conglomerate Mahindra Group is joining the startup bandwagon by
helping aspiring entrepreneurs among its employees build startups in-house with
seed funding and incubation facilities.
“It
is a very natural step for us to take on the task of incubating newage startups
within our sectors and possibly in entirely new areas as well,” said Anand
Mahindra, the group chairman who, along with an investment committee, is busy
pouring over a dozen applications received in the past several months.
“And
happily, there is growing support in business academia for this notion that a
‘corporate garage’ may well be an ideal host environment for startups,” he told
ET.
Having
launched its first startup, SmartShift, a mobile app that enables cargo owners
to connect with transporters for intra-city logistics, Mahindra Group is all
set to start two more startups in the farm and car services space.
Anish
Shah, group president for strategy, said the $16.9-billion conglomerate looks
to incubate 10-15 startups within the next one year.
“What
we feel is that the new innovation could come from what we call corporate
garages,” said Shah, who joined the group last year from GE Capital. “If we can
combine the pluses of passion and speed of startups with the wisdom of
corporates it will be a powerful combination.” Mahindra is primarily interested
in funding startups in the digital, ecommerce and analytics space apart from
ones that can add value to its existing businesses in automotive, farm
products, holidays, real estate and information technology, he said. Some
employees of the group who are keen to turn entrepreneurs may have to resign as
part of owning the startup company that will be funded by the group.
India
is in the middle of a startup boom with the success of a number of new-gen firms
such as Flipkart, Snapdeal, Ola and InMobi prompting hundreds of young
graduates and professionals to start their own business, helped by increasing
interest of international venture funds in the country's technology
startups.Venture capital investors pumped in a record $4 billion, or about `.
26,000 crore, in Indian startups between January and September.
Indian
conglomerates and high net-worth individuals, too, have joined the bandwagon to
cash out of the digital economy.
Reliance
Industries and diversified Aditya Birla Group have acceleration programmes that
aim to gain access to new ideas, talent and technology . RPG Group has set up a
venture capital fund to invest in startups, while JSW Group has floated a ` .
100crore fund to invest in startups.
“Economy
is moving fast and you got to be nimble. There are going to be new ideas that
create value, that will threaten our and others’ existing businesses,” said
Mahindra’s Shah. “We want to play in the startup space by creating a startup
ecosystem that allows us to leverage our strengths and create value for
entrepreneurs and our shareholders.” Shah said the difference now from the
group’s earlier approach is to be truly hands off. The group is on a lookout
for office space to open a startup incubator to house these startups.
The
plan is to initially provide a series of seed funding, which is typically less
than $1 million each, to startups and later seek funds from outside investors
to scale up the business. Mahindra may consider exiting some startups and remain
shareholders in others, Shah said.
Bharat
Banka, founder and former CEO of Aditya Birla Private Equity, said, “This
strategy makes Mahindra's startup ecosystem an experimental lab against just
being an incubator as its whole operations available to aspiring entrepreneurs
to test their ideas.” Banka, who now advises corporates and fund houses,
besides being an active mentor and investor in startups, added, “It’s also a
smart way to retain talent, which otherwise might leave to start up on their
own.” Shah said Mahindra Group is aware that building a self-sustaining startup
ecosystem is not an easy task and would let unsuccessful startups fail. “The
risk involved is that we are putting a lot of capital and may not get the
expected returns. But we are going to learn about new technologies, newer ways
of doing business and what works and what does not,” he said.
|
Megha
Mandavaia
|
ET19NOV15
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