1. Effective Incubation Ecosystems for Creating Telecom Entrepreneurs Prof Rekha Jain Executive Chair IIMA Idea Telecom Centre of Excellence (IITCOE) Indian Institute of Management Ahmedabad India

2. Need for Public Funding  Public funding is necessary in early stages for R&D at least in IT and Telecom (more so for rural) USA (NSF, SIBR), Japan, UK, Finland  Seed funding and VC markets in telecom need to be developed Support and finance the next generation of highly innovative and fast- growing Indian telecom companies focusing on democratizing telecom  Creation of test beds (Chinese national test beds, Finland, 4G and future technologies)  Need for Indian IPR: Huge equipment imports Need to promote ventures developing low-cost telecom solutions.  Leverage a unique combination of best-in-class technology and business knowledge 2

3. Need for Further Innovation in Telecom  Start-ups synonymous with innovation commercialization  No telecom-focused entrepreneurship effort in the country - pockets of excellence; need for more concentrated effort  Very few VC funds investing in telecom start-ups – especially with rural focus (e.g. Sloka Telecom struggled for 5 years to raise funds before they had to sell it off to Mahindra British Telecom)  Very high entry barriers created due to unaffordable testing facilities and operator terms  Issues like low rural penetration, limited power availability and high ROI for rural set-up need “smart amalgamation of technology and business model” innovation 3 Need to create an ecosystem to promote telecom start-ups

4. Creating Telecom Startups in India - Why TEDC @IIMA? 4 ACCESS TO IDEAS & TECHNOLOGIES SCREENING & EVALUATION TRAINING & MENTORING INCUBATION & INVESTMENT FUND RAISING & HANDHOLDING Access to over 15,000 ideas Partnership with ~ 30 incubators Power of Ideas, Innovatorx et al Strong team of over 15 full time Over 500 subject matter experts More than 15000 ideas evaluated Over 1000 aspiring entrepreneurs Mentored. Countrywide mentoring Sessions. Virtual Incubator Over 300 grant, debt and equity Investment made by CIIE team Structured as a SEBI VC fund Around 100 start-ups being actively supported. CIIE Deals to help raise funds. Angel network Most Other Incubators Incubators are local – spinning off internal technologies. Exclusive rather than inclusive. < 100 ideas Comprised of “academicians” rather than “entrepreneurs”. Limited market input Faculty mentoring typically rather than industry led; 4-5 faculty Physical incubator! Most incubators don’t do funding -No experience of equity funding - Structured as Society No fund raising support – no Angel networks or platform to Support networking IIM Ahmedabad’s Incubator is the only NATIONAL & INCLUSIVE INCUBATOR providing mentoring, training, incubation, funding and fund raising support to aspiring entrepreneurs

5. TEDC - Objectives  Build and leverage the existing infrastructure (physical and technical) to provide support to innovators and entrepreneurs  Leverage the human resources and expertise existing in research institutes in India  Spin-off technologies being developed by innovators into viable enterprises  Attract the best brains and existing institutions to collaboratively work towards solving problems of mass applications beginning with rural India 5

6. TEDC – Leveraging IIMA’s Expertise Steps Involved in Incubating New Ventures Generate Good Ideas Select the Best Incubate and Mentor Train the Team FundingAccelerate Access to most Ideas across India Partnerships with all major b-plan and Idea competitions Strong linkage with Over 30 incubators All TCOEs and technical institutes accessible Very strong ecosystem comprising of evaluators to select the best ideas in an online manner. Power of Ideas managed by CIIE Over 350+ mentors across the country to handhold start-ups under MentorEdge Experience of evaluating over 15,000 ideas over the last 3 years. Incubated over 30. Experience in training and skill development of entrepreneurs Very strong early stage investment experience – right from prototyping grant, managing equity investments to raising angel/VC rounds Ability to attract best-in-class people Top research team to document best practices. Enable policy decisions IIMA’s LEADERSHIP IN ENTREPRENEURSHIP PROMOTION + IIMA and TCOEs STRENGTH IN TELECOM RESEARCH AND POLICY 6

7. Telecom Entrepreneurship Ecosystem 7 Building an Inclusive Ecosystem for Promoting Telecom Entrepreneurship NEED ASSESSMENT TECHNOLOGY INNOVATION TRAINING & MENTORING INCUBATION & FUNDING OPERATIONAL HANDHOLDING Expert network comprising of industry, policy & academic stalwarts Network of technical institutes; b- plan competitions and innovators Provide active training and mentoring support Provide office & tech infrastructure, grant/debt/equity funding Active handholding in converting technologies into viable businesses Board, Committees Technology Institutes, CDOT Mentor Edge, Industry, CDOT, TCOE Incubators, CDOT, CIIE IIMA “Efficient management & coordination of the initiative is the key. CIIE with its functional expertise and TCOEs technical expertise best positioned to lead”

8. TEDC - Activities  A unique incubation and innovation Centre to promote development of breakthrough telecom innovations  Support training of entrepreneurs, mentoring, R&D, commercialization of innovations etc  Physical incubator to be created at CDOT and CIIE – to house innovative ventures; receive mentoring, training, infrastructural support; infrastructural commitment from CDOT/CIIE and financial commitment from DST  India Telecom Innovation Fund as a separate VC Fund to be managed by TEDC partners Concept-to-Prototyping funding (up to Rs 25 lacs per company) Prototyping-to-product funding (up to Rs 50 lacs per company) Product-to-commercialization funding (~Rs 2-4 Cr per company) 8

9. 9 Governing Structure Governing Board Investment Committee Technical Committee Operating Team Governing Board (GB) gives the strategic direction to TEDC by defining focus areas, policies et al Technical Committee (TC) helps provide technical inputs to supported entrepreneurs. Also, TC validates the technologies before investment / support decisions IC takes the Investment and Divestment Decision Operating Team comprising of the CIIE team will provide scouting, due-diligence, validation, mentoring and related support Secretary (DOT), Chairperson, TEDC Cmdr Jena, Convener, TEDC Prof Rekha Jain Prof Ashok Jhunjhunwala Industry Representative Prof Bhaskar Ramamurthy Prof Abhay Karandekar Executive Director, CDOT TCOE Industry Representative Prof Rakesh Basant Sandeep Singhal (Sequoia) FA, DOT Industry Representative

10. 10 Operating Structure TEDC IITs NITs Engg Colleges Innovators Entrepreneurs Governing Board defines areas of focus 1 Invite applications, assign projects 2 CIIE and TCOE carry out due diligence 3 Investment Committee Technical Committee Prototyping Funds Product Funds Commerciali zation Funds Funds provided to teams based on stage 4 Incubation Mentoring Training Fund Raising Expansion Customized support based on needs 5

11. Summary  Detailed vision and operational plan for TEDC has been created  Established Trust @ IIMA already registered with SEBI for operating TEDC  Creation of a physical incubator at CDOT under TCOE-CC has been approved  Best ideas and innovations across the country have been sourced  Strong network of mentors has been created  Aspiring entrepreneurs are waiting for support TWO YEARS SINCE WE’VE BEEN DISCUSSING TIME FOR US TO GET MOVING NOW! 11

12. Thank You 12

13. Telecom Entrepreneurship Development Center 13 Cell phone manufacturers Network providers IT service providers Regulators Mobile service providers Incubators TEDC A unique PPP model led by DOT, IIMA and TCOE-CC TCOEs Rural Telecom Incubation Ecosystem Test Beds Office Infra Mentors Angels Training India Telecom Innovation Fund Tech. Inst Aspirants CDOT

14. (Rs. in Crores) Year 1Year 2Year 3Year 4Year 5TotalSource Concept-to- Prototype3340010USOF/DOT Prototype-to- Product5780+20+320+5 USOF/DOT+ TEDC efforts Product to- Commercialization610+1014+120+160+2230+60 USOF/DOT+ TEDC efforts Total1420+1026+120+180+2560+65 USOF/DOT+ TEDC efforts  TEDC seeks Rs 60 crore commitment from DOT/USOF over the next 5 years and shall raise an additional Rs 65 crore from private investors  Expenses of TEDC shall be managed through a 3.5% p.a. management fee on the Fund  Infrastructural support funded by NSTEDB, CIIE, CDOT TEDC - Budget 14

15. TEDC - Processes 15 Inception drivers Posture - market - institutional Governance processes governing board selection committee Incubation Scope - technology - market Organizational form Facilities & resources database software testing office computer Management processes mentoring funding networking performance review Post-incubation advisory support exit triggers Pre-incubation selection process limited funding support proposal review Context Inception drivers & incubator posture and scope Incubation Stages governance & management processes

16. venture Investors: USO Fund Private and Public investors “TEDC” -Training -Innovation -Incubation -Knowledge creation - Policy advocacy - ITIF Advisors: CIIE, IITCOE, TCOE-CC venture Investment into fund + Active strategic support Proceeds from fund investments People, expertise, resources Mgmt fee Seed/incubation phase seed-funding, incubation support etc. Equity + investment rights. Early-stage/expansion phase venture Department of Telecom USO Fund Financial support + policy insight Rural telecom + living std. improvement Investment Committee Advisory board TEDC – Operational Structure TEDC – Physical Infrastructure at CDOT & IIMA Funds housed in the Trust created by IIMA’s CIIE Physical Infra and Fund managed by CIIE, IITCOE and TCOE-CC 16

17.  December 12, 2008 Seminar: Request from DoT to develop a proposal  Proposal submitted to DoT through TCOE-CC  Proposal has been discussed at various levels Meetings with Secy, Additional Secy, Jt. Secy, Administrator (USOF) Discussion with CDOT Governing Council Meetings Telecom Commission meeting requests TEDC Creation – Action So Far 17

18. Summary  Detailed vision and operational plan for TEDC has been created  Established Trust @ IIMA already registered with SEBI for operating TEDC  Creation of a physical incubator at CDOT under TCOE-CC has been approved  Best ideas and innovations across the country have been sourced  Strong network of mentors has been created  Aspiring entrepreneurs are waiting for support TWO YEARS SINCE WE’VE BEEN DISCUSSING TIME FOR US TO GET MOVING NOW! 18

19. Background Slides 19

20. Background  Increasing role of ICT in economic growth, especially in developing countries  Transformational effects  Inequities between urban and rural telecom services  Special solutions required: Specific conditions  Innovation is critical: technology and business models Framework for Incubator Design Innovation ecosystem 20

21. Introduction  How conditions can be created to incubate new ventures that focus on targeting rural telecom  Factors that foster high-tech incubation in general, and the special challenges presented by incubation for rural telecom in India  Role for rural telecom incubators in India and how the government might make them effective. 21

22. Introduction  Role of startups in the innovation process Imperative to build innovation ecosystems  Support incubators for nurturing high-tech entrepreneurship  Special requirements for telecom entrepreneurs  Public funding (special requirements, geographic scope) => Incubators?  Model of Incubation Design and elements of Innovation Ecosystem 22

23. Introduction: Study  Importance of incubation system for BOP welfare: how developing countries could create conditions for supporting rural telecom  Reasons to choose India for the study Vast population at the BoP Huge differentials in benefits: urban and rural India (Oct’13)Teledensity (%) Urban144.3 Rural42.0 23

24. Method: Incubators NameLocation Indian Institute of Technology, (IITD)New Delhi, India Rural Technology Business Incubator (RTBI), Indian Institute of Technology, Madras@Chennai Chennai, India Indian Institute of ScienceBangalore, India ICICI Knowledge ParkHyderabad, India International Institute of Information TechnologyHyderabad, India Tata Consultancy Services Co-Innovation Network Mumbai, India Cambridge Innovation Centre (CIC)Cambridge, USA 24

25. METHOD: Interviewees IndiaUSTotal Officials supporting incubation 13215 Entrepreneurs10414 Angels022 Total23831 25

26. Indian Innovation Landscape  Government Role Supporting R&D and indigenous manufacturing: Weak C-DOT: Spurty contribution DoT set up seven Telecom Centres of Excellence (TCOEs) in public-private-partnership mode that helps to  Nurture innovation and entrepreneurship  Effective solutions that bring significant benefits to the BOP 26

27. Indian Innovation Landscape Contd..  Market information: Poor  Capital intensive testing: No access to expensive test facilities  Research-Incubation linkages Universities are one of the sources of new technology development: Weak Entrepreneurs who develop innovative products and services must negotiate with large international players: No institutional support 27

28. A Framework for Incubation Design 28

29. A Framework for Incubation Design  Drivers of Incubators Deriving value from knowledge generated at parent institutes by transforming it into commercial applications. e.g. TCS COIN  Posture Market-oriented posture: where the incubator and its start-ups are forced to face the market (for products and services, and capital) Institutionally-oriented posture, where start-ups do not need to begin by convincing angels and VCs of the commercial attractiveness of the venture 29

30. A Framework for Incubation Design Scope: Institution, individual Technology focus NarrowBroad Market Focus BroadICICI Knowledge Park International Institute of Information Technology, Hyderabad TCS Co-Innovation Network Indian Institute of Technology, Delhi Indian Institute of Science, Bangalore Cambridge Innovation Centre NarrowIIT Madras, Rural Technology Business Incubator 30

31. A Framework for Incubation Design  Facilities and resources Basic services in varying degrees Specialized Resources: Market databases, special test beds (wet laboratories), access to legal advice on development and protection of intellectual property rights in the life sciences and biotech industry. 31

32. A Framework for Incubation Design  Governance processes: Difference in the structural mechanism for governance Governing BoardsSelection Committee More formalLess formal Legally-constituted bodies, exercise direct authority over the incubator Somewhat diffuse authority and responsibility More stable membershipLess stable membership 32

33. A Framework for Incubation Design  Management Processes Mentoring Networking 33

34. Incubator’s Posture OrientationInstitutionalMarket ObjectiveCommercialize internally- generated technology Commercialize externally generated ScopeGuided and bounded by parent institution’s activities Defined by market GovernanceHeaded by faculty member Likely to have selection committee Headed by professional manager Likely to have governing board Managemen t Processes Less likely to attract VCs, angels and seasoned entrepreneurs to apply market test to ventures More likely to attract VCs, angels and seasoned entrepreneurs to apply market test to ventures 34

35. Creating Effective Rural Telecom Incubators Cell phone manufacturers Network providers IT service providers Regulators Mobile service providers Technology incubators Telecom test beds Rural Telecom incubators Tier 2 technology institutes Telecom centres of excellence Telecom ecosystem Rural Telecom Technology incubation network Telecom technology network Rural access network Incubation Ecosystem 35

36. Creating Effective Rural Telecom Incubators  Telecom testing facilities  Rural market data  Leveraging rural, technology and incubation networks Rural access network Telecom technology network Technology incubation network 36

37. Creating Effective Rural telecom Incubators  Seed Funding Funding could be provided from  Universal Service Obligation Fund (USOF)  Rural development funds  Regional development funds  Market Tests To make them interact with groups of experienced players in other regions, or perhaps, even in other countries 37

38. Conclusion  Developed a framework for incubation design  Public funding is necessary to stimulate innovation and entrepreneurship for rural telecom.  With appropriate governance and management structures, incubators could be encouraged to develop market-oriented postures.  Creating an ecosystem in which they can leverage the power of three kinds of networks that provide access to technology incubators, telecom centres of excellence and second-tier technology institutes is critical 38