Ratan Tata has now delivered a green flag to a unique initiative where Tata Trust will help startups in India which are high-risk and have a dubious business model in which no other investors ingest funding. Moreover, following the same ambition, a fraction of lab-style incubators for startups will be fastened across India.
Tata Trust’s FISE or the Foundation for Innovation and Social Entrepreneurship is both a social impact fund as well as a business incubator, which was set up 18 months ago and has funded nearly two dozen startups across businesses that range from cleaning the Ganga to building low-cost robotic exoskeletons for disabled workers. FISE is also supported by the government’s Department of Science and Technology (DST).
The key objective of Ratan Tata and FISE is to fund those kinds of startups and business models which no other investor will normally touch with a barge pole.
Additionally, Tata Trusts has also announced ₹500 million funds for startups and ₹300 million to these incubator labs, besides the ₹100 million from DST.
According to Manoj Kumar:
When no one else gives these startups funds, we do. So, you could say our model is to fund high-risk, uncertain return business models.
Unlike other funding institutions like venture capital and angel investors, FISE does not assist micro-finance startups or an e-commerce fashion platform which other venture capitalists will jump at.
FISE instead helps ideas having a social impact, for example, a portable MRI machine that can deliver reports at one-fifth of the cost or an easily accessible world-class toilet.
Manoj Kumar further explained in a business daily that he was being told by Ratan Tata when they were planning the venture, that:
If you want to have a deep and irreversible impact on a social scale, then you have to try different things, and not use the same approach again and again.
Besides all this, FISE’s is also setting up an incubator facility — Tata Smart Energy Incubation Center — a 40,000 sqft facility in Delhi’s Rohini, which is expected to be launched next month, along with a health-care facility as well.
Thereafter, at least one lab will go live every six months for two years.
-said Kumar, adding that each centre will be either industry or theme focussed.
Briefly pre-yesterday, Haryana state government has also advertised the plan to set up a startup incubator called Global Start-up Village, which will be India’s magnanimous startup hub and will be established in Gurugram in next couple of years.