Ever wondered what is common among the companies likes Facebook, Microsoft, Snapchat, Yahoo, Dropbox? Apart from being the top IT companies, these companies were founded as a college project by their founders. Another similarity among these companies is that all the companies have a non-Indian base. Does that mean Indian students do not have enough great ideas? The answer is – No. In fact, India, in today’s date is budding with start-up ideas. According to a report by NASSCOM, every day, 3-4 startups are born in India. But, 90% of the start-ups fail in their first few years. The reasons among many are – Lack of – Innovation, Skilled workforce and Funding.
Thankfully, Indian government has acknowledged the importance of Start-ups in Indian economy. Among many initiatives taken by the government for encouraging the start-up culture – one is Schedule VII of Companies Act, 2013.Section 135 of the Companies Act, 2013 lists permitted CSR activities, and by a key recent amendment, ‘contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government’ qualify as a CSR expenditure. 2% of average net profit of companies is mandated to be given to CSR initiatives – one of them is “contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government”. These technologies incubators help startups to survive in initial struggling years with funding, office space, networking etc. Indian government has identified close to 100 technology incubators. Unfortunately, hardly 5 companies out of 460 spent their CSR quota on technology incubators. This inhibition by corporates needed to be understood and tackled.
Where is the “Social” aspect
CSR has always been understood as a contribution towards upliftment of society at large. While eradicating poverty, promoting education, gender-equality etc. are self-explanatory aids to Society, technology incubators, on the other hand, are finding it hard to make a place in this category. Corporates do not see any direct impact on Society by funding technology incubators. What is considered ‘social’ doesn’t fit into the spectrum of technology.
Contribution or Investment
Many organizations might invest in Technology incubators which help startups in Research and development. Some of these R&D might generate a profitable insight for the investing organization. This is a grey area which can be tweaked by organization for their own profit and it needs further detailing by government. As companies do not want to be involved in any “not-so-clear” area of CSR, this is a major setback for technology incubators and the startups working with them.
Spirit of Competitiveness
Another interesting school of thought for not investing in area is that this initiative kills the spirit of competitiveness. The whole Start-up ecosystem works on this. Angel investors provide funding and they want a return on their investment. Hence, people working on these startups put their heart and soul to make it work. On the other hand, if startup under technology incubators get easy money with no fear of generating ROI for investors, this would be a waste of resource for the investing company.
Government has approved only about 100 technology incubators for this initiative. Many organizations are not aware of what these incubators actually do. As this is government supported, these is a limited participation from these education institutes to market themselves to the potential investors. Government has played its part by publishing the list of these 100+ technology incubators along with the education institute name. Some effort is now required from these institute to educate the funding organization about their work.
Having acknowledged the challenges, we cannot ignore the fact that if the corporates are better aware about the technology incubators and if there is way in which technology incubators can be made accountable then this initiative can become a breakthrough for India Start-up ecosystem.
Another way of channelizing this money for greater good can be encouraging start-ups which offer solution to any social problem. For example – cheap water purifier solution, biotechnology solution for better seeds that require less water, solution for connecting government school with high quality internet so that students can learn from across the world.
The education institutes recognized for this initiative can also take the charge. All these institute have a great Alumni base who work in many of these potential investor companies. This alumni base can be leveraged to generate awareness about the work of these technology incubators. Additionally, some NGOs might also need to come forward to help these institute get some funding.
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