India's Biotech Capital Spreads its Wings
Incubators, govt grants help Bengaluru's biotech startups broaden horizons, but lack of risk capital restrains them
Ezhil Subbian had worked on her company for a year in San Francisco before deciding to move to Bengaluru in 2013. Her startup, String Bio, was based in a state-of the-art incubation centre in San Francisco. String Bio needed a good home in Bengaluru quickly. The city had been generating biotech startups for a decade and a half, but it had only one incubator when Subbian moved, set up by the Department of Biotechnology in 2012. Not surprisingly, it was full.
Among India's major cities, Bengaluru has the longest history of biotech startups.The first one, in modern terms, was formed at the end of the 1990s. Since then, for over a decade, a few startups were formed every year. They were in two or three related areas -drug discovery, biotech services, bioinformatics... It was almost as if drug discovery was all there was to biotech.After more than a decade of startups, the city had seen only one truly successful exit by the founders -the agri-biotech firm Metahelix. It was an exception to the rule.
But in 2014, immediately after Subbian moved to Bengaluru, C-Camp was teeming with startups of all kinds. There was a company with a computational approach to drug discovery, one trying to develop fuel from seaweed, one making a technology platform to develop antibodies. One company was developing new methods of tissue engineering, another developing a novel method of imaging. Within a year of setting up the incubation centre, biotech had expanded in scope, with entrepreneurs chasing different kinds of problems.
A coincidence no doubt, but one welcomed by the biotech industry and policy-makers. “It is a question of talent availability,“ says Shrikumar Suryanarayana, CEO of Sea6 and honorary executive director of C-Camp. “Companies that came first have been shedding people who have started their own companies.“
String Bio found a home soon in the Bangalore Bioinnovation Centre (BBC), a new incubation centre set up by the Karnataka government. This is now full of a variety of startups, from those developing fertility treatment technology to companies developing new aromas and flavours. “It is a natural evolution,“ says S Ramaswamy, former CEO of C-Camp and professor at the Institute for Stem Cell Biology and Regenerative Medicine (InStem). “People have realised that biotech touches every aspect of life.“
C-Camp recently did an analysis of what its incubation and funding has achieved so far. In the first round of incubation, 15 startups had been given `6.5 crore worth of government grants, along with mentoring. These companies have subsequently raised `109 crore, and are in the process of raising another `150 crore. Some of them are trying to solve difficult problems. Some have just launched commercial products.A few are chasing big, global markets.
C-Camp started in 2009 as a provider of technology platforms. Incubation started in 2012, and soon after that the Department of Biotechnology (DBT) started its Biotech Ignition Grant. C-Camp became a partner of DBT to manage this grant, meant for companies or individuals to prove a technology. Almost immediately C-camp started getting several applications for incubation. “Many applications contained very good ideas,“ says Taslimarif Syed, director at C-Camp.
It was a big moment for biotech entre preneurs in the country. The Biotech Ignition Grant provided `50 lakh over 18 months. Entrepreneurs could now start their initial R&D more easily, and often get the technology ready for more funding.With early funding now in place for entrepreneurs, C-Camp was full by 2013. Some of the initial incubatees have gone on to raise substantial amounts of money. Some of them have got investments from prominent individuals in the city. Some others got investments from large companies.
Sea6 Energy, an IIT biofuel startup, tweaked its business model to make products for agriculture. It has raised `45 crore so far, including `35 core last year from Tata Capital. Theramyt Novobiologics, a biologicals company, raised $ 6 million in 2013. In 2015, the company was restructured and the new firm Zumutor ¬ headquartered in the US ¬ raised another $6 million from a set of investors including Aarin Capital and Accel Partners. And, yet, funding was difficult, especially from India. Three of these companies had to go to the US to raise money. “We had to move to the US as most of our partners and markets were there,“ says Kavitha Iyer Rodrigues, CEO of Zumutor.
Then, there's Bugworks, which began life as two companies, one in India and the other in the US. As it raised money from the US, the two companies merged, and made the US its headquarters. And Aten Porus Life Sciences, currently being incubated at C-Camp, is also raising money in the US.
Funding is available for firms after the first stage, but not so easily from angel investors or venture capitalists. It is still hard to get money from an angel investor over a cup of coffee across the table. Bugworks worked hard initially to raise money in India before being forced to look at US investors. However, Indian investors are now beginning to get in terested in biotech. Bugworks is in the last stages of raising bridge money from an Indian angel investor before a big VC round later next year.
C-Camp is now full, and is planning to expand by building more lab space. At least 10 companies are waiting to be incubated, and among them are some stem cell companies. Commercial stem cell technology is in its early stages in the country. Since C-Camp rubs shoulders with InStem, it is a natural destination for stem cell companies. India is yet to see enough number of stem cell companies working at the cutting edge. “We want to attract deep stem cell companies,“ says Syed.
Physical presence in C-Camp is not a requirement for funding or mentoring a startup. Sai Siva Gorthi, a professor at the Indian Institute of Science (IISc), got the Biotech Ignition Grant and used C-Camp's network to launch his company Shanmugha Innovations. It is developing a device to detect malaria from a drop of blood, a process that can speed up diagnosis of this disease. Scientists are not natural entrepreneurs. “C-Camp held mentorship sessions every six months,“ says Gorthi. “We made presentations and they gave valuable insights.“ They learned about market dynamics, got help in registering the company and filing patents, and tips on pitching to investors. BendFlex in the BBC also found mentoring invaluable. It did not apply for the Biotech Ignition Grant, but got `10 lakh from the Ministry of Small and Medium Enterprises. And it has developed other sources of revenue, which includes an education kit for making flexible machines and a new method of cell culture that allows for circulation of media. Revenues early in life is rare in the biotech startup world.
Companies spend several years developing technology, and then more time tackling regulations and the markets.String Bio is also on such a path now.
String Bio spent the first year in the Institute of Genomics and Applied Biotechnology (IBAB), a small research and teaching institution promoted by the Karnataka government. It was right next to the Centre for Human Genetics (CHG), another small research institution promoted the state government. String Bio set up shop there as the BBC was coming right next to these two institutions, within the same campus. After three years of existence, it is about the test the commercial waters.
The two incubation centres are at either ends of the city, separated by 35 kilometers and often two hours of driving. C-Camp has better academic facilities around it: two prominent research institutions in the National Centre for Biological Sciences and InStem, and another in the Indian Institute of Science not too far away.The BBC has two academic institutions in IBAB and CHG, but both are small. It has biotech companies nearby, including Biocon. An institute for synthetic biology is coming up in the vicinity, and the cluster has the space to expand. “We will create a warm shelf for companies to expand,“ says Jitendra Kumar, managing director of the centre. “That is how science parks evolve.“
C-Camp has 13 companies resident on its campus. After expansion, within a year or two, it can take another 15. The BBC has 16 companies, and another eight are moving in soon. Even after a year or two, the two incubation centres together cannot hold more than 60 companies. Considering the state of the industry, and the presence of so many academic institutions in Bengaluru, seasoned entrepreneurs think that the city needs twice or thrice as much incubation space, not to speak of space for companies to expand after incubation. Venture capital money will be welcomed as well.
Dec 22 2016 : The Economic Times (Mumbai)