Universities should take stakes in start-ups that originate on their campuses: Aditya Birla Group Chief Economist

NARAYANAN V Chennai | Updated on July 24, 2020

Ajit Ranade, President & Chief Economist, Aditya Birla Group.   -  Business Line

Besides investing on incubating and nurturing start-ups, universities must also pick up stakes in start-ups that originate on their campuses, in order to benefit when they scale up big, said Ajit Ranade, President & Chief Economist, Aditya Birla Group.

He was speaking at a panel discussion on ‘NEW AGE’ Industry-Academia collaboration, which is part of a virtual conference titled, ‘The Emerging Economic Scenario: Identify and Create Competencies’ organised by SRM Institute of Science & Technology (SRMIST) and Federation of Indian Chambers of Commerce & Industry (FICCI) on Thursday.

Citing that some of the world’s greatest companies like America’s Google or China’s Lenovo have all been born and incubated at university campuses, Ranade said, “Imagine, how much benefit Stanford University must have got for taking a small stake in the relatively unknown company called Google.”

Sharing an Indian example, the economist said the Society for Innovation & Entrepreneurship (SINE) at IIT Bombay, which provides incubation to start-ups, also has an arrangement to pick up stakes in start-ups so as to benefit from their future growth.

“Eight out of 10 start-ups will not succeed, but the two that succeed will more than pay off for all the investment that you made in all the 10 start-ups,” Ranade said, adding, “This kind of orientation and mindset should be encouraged both at the academia and industry sides.”

“Instinctively, we feel that academia must be in ivory towers, in full pursuit of knowledge and without any pursuit of profit. But that is simply not workable. We have found the right mix ― the incubators, the commercial orientation, IP creation,” he added.

Noting that innovation and knowledge will be the key determinants of success in the future, Mohandas Pai, Chairman-Manipal Global Education, who also moderated the event, said, “Industry and academia should come closer in this digital era because academia is an entity that creates knowledge, while industry is an entity which creates knowledge and also uses that knowledge to provide products and services to consumers.”

Professor Tan EngChye, President-NUS, Singapore, listed four core strengths of the university’s education model which includes presence of an industry advisory committee on all its programs, appointment of veteran industry practitioners to teach industry-related courses, industry internship and co-work model and a compulsory one-year attachment of students with start-ups across various parts of the world.

“To promote entrepreneurial spirit, we send our students to start-ups at various places like Silicon Valley, New York city, Toronto and Tel Aviv. These students will spend one full year attached to start-ups and they learn a lot,” the professor said, adding, “We have been refining this programme for the last 20 years, and in last 10 years, our graduates in this programme have started more than 700 companies and raised $600 million in the last five years, which is about 10 per cent of the money raised by start-ups in Singapore during this period.”

Highlighting that universities could not cope up with the speed at which latest developments are happening in industry, Andreas Schleicher, Director, Directorate of Education & Skills, OECD, argued that rather than universities providing second-hand education on higher skills, it is better to get students first-hand experience, be it from the start-ups or by walking into some big industry in the form internship or combined work program.

During his speech, V Ramgopal Rao, Director at IIT Delhi, highlighted that out of 31 unicorn start-ups started by Indians or prople of Indian-origin across the world, 16 are founded by IIT alumni.

“Big start-ups like Flipkart, Zomato or Snapdeal, all are from IIT alumni. If we had a 4-5 per cent equity in these companies, we wouldn’t have really needed to go back to the government for any of our funding,” Rao said, adding, “But that’s a mistake that we did at some point in time, and we don’t want to continue doing that mistake anymore.”

Professor Rishikesha T Krishnan, Director at IIM Bangalore, pointed out that India too had seen several good ideas that have come out of academia and went on to become commercially successful.

Citing the example of Rotavac vaccine developed by Dr MK Bhan of the All India Institute of Medical Sciences (AIIMS) in collaboration with Hyderabad-based Bharat Biotech, Krishnan said, “But the challenge here is that, it takes a long time for the commercialisation to happen. I think, in this case while the research went back to the 1980s, the actual commercial product came out only a few years ago.

“So, we need to look at how we can accelerate the process of going from the lab to the market,” he added.

Published on July 24, 2020

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