Indian entrepreneurs have by now familiarised themselves with various entities that go into creating a robust start-up ecosystem.
Anyone starting a business can now access a variety of mentors, incubators, seed investors, larger venture capital (VC) firms and accelerator networks.
But if there are an opportunistic and mass approach to ‘encouraging’ entrepreneurship, there are also odd incubation efforts that stand out for staying small.
Seed capital firm FutureIP took on four start-ups nearly four years ago and mentored them all to profitability.
Sudhir Sarma, Founder and CEO, FutureIP, says: “We ensured a few things right at the outset. Each of our incubatees worked in a different area and weren’t in direct competition with each other. We stuck to the technology products and services space, but did not ignore an interesting area like ‘energy’. This was, of course, also dictated by the profiles of people we had on board.”
FutureIP’s ecosystem comprises Eco Positive, an eco energy and clean technology company, and FlamencoTech, JaMocha and Serviceberry, which are focused on technology.
FutureIP was founded by Sarma in 2009 and was born out of Sudhir Sarma and Bala Chitoor’s exit from Network Solutions (Netsol), a network integration company that Sarma started in 1993.
Good goingFor Sarma and Chitoor, however, investments and returns weren’t the only agenda.
The start-ups in the FutureIP ecosystem have been mentored and over a period of three-and-a-half years, each of them now sports its own list of high-profile clients.
“For VCs and funds in general, the success rate today is only 10 per cent, but in our case, each one of the companies is cash positive and doing well,” remarks Sarma.
In the first half of the last decade, Network Solutions saw two significant acquisitions.
In 2001, Intel Technologies bought a part of Netsol. IBM later acquired all of Netsol in 2005.
To attract that kind of attention was big, according to Sarma.
“As folks who came out of Network Solutions, we realised why two Fortune 50 firms were interested in us. We were not purely a services company.
“We actually created a lot of intellectual property (IP). So in effect, the larger companies that bought us would be able to scale up,” he shares.
Own business ideasThe brains behind each of the start-ups nurtured by Sarma and Chitoor were all people who were interested in their own business ideas rather than other corporate jobs after Network Solutions.
Over a period of five years, the FutureIP ecosystem has grown to 60 crores worth with all the companies put together.
Around 120 people now make up the ecosystem spread across various start-ups.
Sarma, who was named among the Top 20 entrepreneurs of the year in 2001 by Ernst and Young, says: “Besides initial funding, we continue to help with the initial access or connect to customers and we mentor the start-ups so that the pressure on them is not just about returns. In fact, as product development was going on in early days and we began making our initial pitches to the market, we weren’t making much money. As an ecosystem, we’re clear that the focus on IP must remain.”
When Communications and IT Minister Ravi Shankar Prasad met IT industry headhonchos earlier, he also highlighted the Government’s intent to make India a destination for software products.
An increase in seed investments and highly focused incubation then becomes the need of the hour.