INCUBATION ZONE. Rural Technology and Business Incubator: seeding start-ups

It was established in 2006 in the Indian Institute of Technology – Madras to support rural and socially inclusive start-ups.

Rural Technology and Business Incubator has so far incubated over 40 companies of which eight have moved out.

Spread over 3,500 sq ft at the IIT-M Research Park, the RTBI’s focus is to incubate companies that leverage information and communication technologies to come up with products and services that benefit the rural population and the under-served segment of the population. The ventures need not necessarily be started by alumni of IIT-M but should have a strong technology connect to the institute.

The RTBI incubates ventures in the fields of agriculture, healthcare and education. The ventures are allowed to be at the incubation centre for five years, though in some cases it can be for a longer period since the projects have a longer gestation period.

According to Suma Prashant, Director, RTBI, the incubator gets on an average four proposals a month, but has been admitting five to seven start-ups every year. This year that number could go up to 10.

Over the years, there has been a change in the profile of the companies seeking admission into the incubator. Earlier, it was the excitement of doing something for the rural population that was the motive for the entrepreneurs. Now, the entrepreneurs have a clearer roadmap for the venture and a thorough business plan and model.

On the criteria for selection, Prashant says the RTBI has a set of parameters for basic clearance, but it is largely intuitive after numerous interactions with the entrepreneur, on whether to take him or her on board. The RTBI helps the entrepreneurs through the entrepreneurship forum at IIT-M and has regular visits by mentors; MM Murugappan of the Murugappa group is one such, she says.

Apart from infrastructure at the incubator, the RTBI helps start-ups in accounting, secretarial, legal and intellectual property rights. It picks up a stake of 2-9 per cent, depending on the nature of the business and the level of technology support that is required from IIT-M. The maximum it will invest in a venture is ₹25 lakh.

Prashant explains that if co-development of technology is involved, the incubator’s stake will be on the higher side compared to a company where the technology is at an advanced stage of development.

The RTBI gets a loan from the government which it uses to invest in start-ups. It is looking at a funding pool that can be resuscitated and given to other companies at the incubator, according to Prashant. There are newer kinds of ventures coming to the incubator, she says. For instance, there is a company that is into dairy management looking at the entire value chain. There are companies that are looking at the energy space, particularly solar, and developing indigenous products such as solar air-conditioning and solar refrigeration that can be used in rural areas.

The RTBI, according to her, has not exited any of the start-ups incubated by it. It has not yet framed an exit policy simply because the companies take a longer time to develop and grow.

On the start-up scene, she says that as much as setting up of start-ups need to be encouraged, “we should encourage people to join them. Mushrooming of start-ups encourages people to take an aspect of a problem or a need and deep dive it. That is exciting,” she adds.

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