NASSCOM BCG Innovation Report 2007 Executive Summary

• Execution risk – what if the execution is faulty
• Market risk – what if the market doesn’t accept the idea
Investors seem to be uncertain about which risks to take and the consequent risk aversion
has forced majority of venture capitalists to focus on funding only execution risk leading to a
major gap for seed / angel stage funding.
The India Innovation Fund promoted by NASSCOM will focus on providing risk capital at the
angel or seed stage. Some key guiding principles for the India Innovation Fund are:
• Promote innovation in emerging technologies
• Develop sustainable linkages between entrepreneurs, centres of research excellence,
and established fi rms
• Foster technology seeding and exchange of information globally
• Promote and nurture IP driven entrepreneurship
• Provide priority to commercialisation of domestic R&D
The fund will be created through a public private partnership between the government and the
private sector. This approach will allow the government to play a passive role of being a ‘limited
partner’ (supplier of capital) while the investment decisions are made by a set of professional
fund managers. The government’s funding support will ensure that investments at the riskiest
stage of business can be funded adequately by low cost domestic capital. Additionally, the fund
will also attract private fi rms to invest as it gives them access to a unique PPP fund managed
by professional managers.
By leveraging the ‘Indi Innovation Framework’ this fund will be able to eliminate several
information asymmetries that exist between the entrepreneur and the venture capital fi rms at
the seed stage of funding especially in high risk areas.
• Thematic Innovation Platforms
NASSCOM could bring together several ecosystem constituents to launch theme-based
fundamental and applied innovation platforms to provide thought leadership in themes which
are relevant to the Indian IT-ITES industry.
Fundamental innovation platforms will focus basic science themes while applied innovation platforms
will focus on themes that apply these scientific innovations to specific problem domains.
Thematic innovation platforms will serve as powerful open networks for ideas and mechanisms
for producing collaborative intellectual property. Many of these platforms would fi nd lot of
synergies with innovation clusters of industry, academia and research institutes by allowing
entrepreneurs to not only exchange ideas, but also transact IP assets. These platforms can
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