The participation of large Indian corporate in providing financial backing to startups is growing, and while only firms such as Infosys and Wipro have set up dedicated startup funds, others are tracking disruptive technologies in their own sectors with clearance from their boards to sink money into startups if needed.
Majority of Indian companies track startups today, right from FinTech to retail. The idea that technology and startups with newer business models will not disrupt traditional businesses has been thrown out the window. Moreover, as these companies find it harder to attract the best technology talent, they’re being forced to nurture and back startups.
While the setting up of dedicated startup funds by corporate is not common, several large traditional companies are looking at other ways to contribute to the startup wave and reap benefits. Partnerships, accelerators and incubators are becoming more common in corporate India.
Taking a cue from large global companies such as Microsoft, Walmart and others, Indian corporate are helping foster innovation in the hope to get their hands on disruptive technologies. Reliance has tied up with Microsoft Accelerator to start Gen Next Hub, an accelerator for startups with the lure of getting to work with Reliance Group and even raise capital.
Other large corporate houses such as the Tata Group invests in startups through its financial services arm Tata Capital that runs a sector agnostic venture capital fund. The money going into this fund is raised from external sources unlike in the case of Infosys and Wipro, who have set aside $500 million and $100 million respectively.
Tech Mahindra and Mindtree have started startup garages within their existing organisation structure that allows employees to work on disruptive technologies that might not have an immediate business impact, with some ideas even being backed by capital. L&T Infotech has sought permission from its board to start investing in startups.
Tracxn, which tracks the startup industry and provides funding insights to corporate says it’s currently working with the likes of Reliance Industries Limited, Aditya Birla Group, Times Internet and Flipkart, advising them on various fronts.
So far, IT giants such as Infosys and Wipro have been the most proactive in creating funds for startups, largely due to the fast changing technology market. The products and services offered by such companies are becoming irrelevant at a faster pace and to keep up with latest advances they’re being forced to tap startups.
By Baishakhi Dutta
