PSUs and CSIR become generous donors for start-ups

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IIT-Madras has reported in a research that PSUs and CSIR have been generous in supporting the government initiative on start-ups. It also shows that of the 29 States, 22 have come out with start-up policies in the last three years. Cumulatively, State governments envisage the creation of incubation space of 5.1 million square feet, 48,000 start-ups, and Rs. 34,000 crore of venture funding by 2022.

Releasing its ‘Indian Venture Capital and Private Equity Report 2017’ at TiECON Chennai 2017, the report, 9th in its series, analyzed the policy framework and support provided to start-ups by the Central and State governments and various governmental agencies.

Since 2016, at least 10 PSUs have launched start-up support programs with a total initial outlay in the region of Rs. 400 crore. CSIR expects to incubate 100 ventures in five labs, by this year-end.

“Five years ago, it was unthinkable that a PSU would create infrastructure or allocate funds for start-up ventures. But today, several PSUs and CSIR labs are aligning themselves with government’s policies on start-ups,” Thillai Rajan, Professor, Department of Management Studies, IIT-M, and Associate Professor at Harvard Kennedy School, Harvard University, told journalists. At least 30 PSFIs (public sector financial institutions) have contributed in excess of Rs. 7,000 crore to the corpus of VC (venture capital) funds.

The average round size of venture funds in which PSFIs have invested was $12 million and the average stake acquired was 22 percent, implying a post-money valuation of about $50 million.

Rajan, who has edited and co-authored the report since its inception, explained that cash-rich PSUs such as ONGC, GAIL, and BPCL are partnering with incubators such as IIT-M and other top institutions.

The 2017 report analyzed policy robustness for start-ups among States. Seven States — Kerala, Karnataka, Telangana, Andhra Pradesh, Maharashtra, Punjab, and Haryana — were found to have comprehensive policy frameworks for start-ups.

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