Fledgling Flight Path


Last month a retired IIT professor asked me to meet a youngster he was mentoring. The boy had just graduated from one of the NITs in Assam and was convinced he had developed something exciting in the area of self-healing materials. These are polymer matrices with the ability to repair themselves when ruptured, and, as one may expect, are currently at the cutting edge of a host of important applications from medicine to aerospace. He had made a very small quantity of the stuff—less than a kilogram—in the lab and he was excited about taking it to market with his own start-up. As he furiously scribbled polymer chains on his notepad, explaining his concept, I was conscious of mixed feelings. Pride that a college in a Northeast hill state was actually producing passionate students of science and engineering fired up to do something on their own. But also apprehensive about how this bright young man would cross the chasm that has claimed so many would-be entrepreneurs in India-the notorious ‘valley of death’.

This evocative phrase was first used in the US sometime in the 1990s by policymakers to describe a serious problem: how can technology development and innovation in our universities and research institutions be successfully taken to market? It’s an enormously important question for India.
Picking up the business newspapers these days, one can be forgiven for thi­nking that India has pretty much solved the problem. Filling these pages are gushing sound bites of how this or that hot new app or e-commerce venture are pulling in millions of dollars of VC funding (‘rupee’ is not the fashion in these reports). These local dreams are further fuelled by other reports of start-ups less than a year or two old being acquired by Google or Facebook, and the staggering valuations of companies like the taxi service Uber ($17 billion), or our home-grown Flipkart ($3 billion).
This, in itself, I have no quarrel with. Who is to say these numbers are just spin by dream merchants out to raise fresh rounds of capital from other investors? And these start-ups surely have their place in the new economy towards which urban India is transitioning. But I do have an issue with a troubling side-effect of their dominating the business press: it takes the eyes of the government and public away from the very different problems innovation start-ups face in the ‘real’ economy.

To place the problem in perspective, take the youngster above. He needs to locate scale-up equipment, re-engineer it, spend many anxious hours on product and process trials, and invest in downstream processing and quality testing machinery—some of which can be very expensive. Product development at some point will likely require multi-disciplinary teams from areas such as mechanical engineering, chemistry, polymer processing, and so on. This is the lab-to-pilot-to-commercial scale problem so central to ‘commercialisation of technology’ (COT) world over. His only hope is an innovation-friendly, multi-disciplinary environment only an academic institution can provide. With the help of ropes provided by others (usually members of his college faculty), he is inching his way slowly to the valley floor.

Let us say he is lucky in his choice of college and that he manages to reach the bottom. He is exhausted but elated (though sobered by the sight of dead bodies of those that didn’t make it). But hardly has he taken a few more steps than he sees before him a big, fast flowing river that fills the valley floor. This is the river of market risk: one of the most treacherous waters to navigate.

He has made a product, perhaps even a great product, after enormous effort and expenditure of creative energy. But can it be offered at a cost that is viable to a customer? How to establish the value proposition across a vast array of industries and applications? How to even get a foot in their door? Let us not forget that customers will put the product through their own—often extended—evaluations. How will he support himself through this period? VCs will find such a business model either of too long a gestation or too risky or too capital-intensive. Bank funding is there only in name for first-time entrepreneurs. And the actual process of obtaining a loan are now so tortuous and the terms of repayment so stringent as to be practically useless. This, then, is that part of the valley where the poor chap needs help the most. But he is now almost completely alone.

The valley of death looms for IT/ITES start-ups too, but to a much less extent. Infrastructure needs are limited-equipment mainly to computers-and the regulations far less taxing. The ecosystem of urban India provides talent and angel investors to back them. But it is in manufacturing and product innovation that we have a huge untapped opportunity in rural India. With a massive population in excess of 500 million in the employable age, we face an employment challenge of huge proportions, for which the solution cannot lie in IT.

I recently attended an expo inside the Rashtrapati Bhavan grounds in Delhi where an astonishing array of innovations from rural India were displayed: low-cost tillers, soil-health diagnostic kits, fruit sorters using low-cost digital imaging, and so on. The innovators were from modest backgrounds, educated at local schools and colleges, who had somehow struggled to get through the first descent. If they succeed in crossing the valley, they will likely employ those who most need productive employment opportunities: rural and semi-urban youth in their local areas.

This is exactly what I have done in Mysore, where my company does research and innovation in special composites. We have built a shop floor that is boundary-less, with a seamless integration between R&D and production to minimise time-to-market for new products. Crucially, almost all our talent pool in R&D and manufacturing is from neighbouring towns and villages. These people do not speak fluent English, but are bright and technically very capable, and anchored in the locality. In other words, perfect for a company like ours. But it has taken time and patie­nce to build the company and I have to say I have been luckier than most. India desperately needs a long-term approach to capacity building in COT.

Only the central and state governments acting in concert to a well-defined COT policy framework can do this. Of course, the Department of Science & Technology (DST) does try to do its bit to support grassroots innovation, but to put matters in perspective, their total budget for 2014 is Rs 3,500 crore, of which support for COT forms only a small fraction. Needless to say, this is a drop in the ocean for a country of our size and the hopes and aspirations of its thousands of potential entrepreneurs. The DST programmes are also are of limited use in assisting the start-up in the final phase of spinoff, where commercial factors are paramount.

There is a bit to go before bridging the chasm. Till then, our real economy start-ups will be doomed to ride into the valley of death with cannons firing all about them.

Article Link : http://www.outlookindia.com/magazine/story/fledgling-flight-path/292052

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