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.
Hari Pulakkat
Dec 22 2016 : The Economic Times (Mumbai)
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