Even six years after it started, Airtel’s ₹200-crore venture capital fund is lying idle.
Though the company has received over 150 proposals from start-ups since the fund was launched in 2008, no investments have been made by the fund. The ‘Airtel Innovation Fund’ was launched to provide seed capital to start-up firms developing applications, technology and content for the telecommunications sector.
The telecom major had earlier said that it will shortlist entities with interesting ideas and probably pick up an equity stake in these ventures.
The ideas received by the company included applications for mobile TV, M-commerce, wireless security, m-advertising, healthcare and social networking. But none of them made the cut.
“The company has a standing approval from its Board to evaluate proposals and invest in them if they meet our benchmarks. While we encourage proposals, there is nothing we are actively pursuing at the moment,” said an Airtel spokesperson.
The fund was started at a time when telecom companies were looking beyond voice telephony for the next big killer app.
It was clear that mobile operators such as Airtel had to have a host of innovative applications if they were to make money by offering data services on 3G networks.
Partnering for growth However, six years on, the scenario has changed a lot. With Internet services offered by companies such as Google and Facebook gaining popularity, telecom companies are finding it easier to partner with these players to drive data usage instead of investing in new start-up firms.
Also, with the rise of open application stores, developers are not dependent on telecom companies anymore.
Airtel had started the fund when the entire value-added services ecosystem was controlled by the telecom companies. Having a nursery of new ideas would have fit well with that game plan.
“It is also important to keep in mind that India now has a robust Angel Investor and Venture Capitalist ecosystem, and that start-ups and entrepreneurs are tapping them as well for their funding requirements,” said the Airtel spokesperson.
Incidentally, the Government is also looking to set up a venture capital fund with a billion-dollar war chest to promote local technology firms.