'TCS, Infosys must fund start-ups'

Many venture capitalists have called for more local pooling of capital to build venture capital funds which can nurture a software products ecosystem.

They also urged Indian software companies who have huge piles of cash to also contribute to the corpus, along the lines of Intel Capital or Cisco Capital, which will make a whole lot of difference.

Speaking at an interactive discussion on building software products organised by Nasscom at IIM-Bangalore, Sridhar Mitta, chairman, e4e Labs, said: "Recently, I was having a discussion with a few VC funds in Taiwan and they were curious as to why the successful Indian software companies did not come forth to set up a corpus to fund promising software product firms in India."

"If Indian companies themselves are not interested in funding Indian start-ups, how will overseas funds get the confidence to fund them? It is high time that companies such as Infosys, Wipro and TCS gave thought to this and worked out a strategy to start a venture fund."

He added that TiE (The Indus Entrepreneurs) - Bangalore Chapter is initiating a lot of work in this field and is starting a mentoring programme. The N S Raghavan Centre for Entrepreneurial Learning (NSRCEL) at the IIM-Bangalore is also working out similar methodologies to start an incubation centre for software entrepreneurs.

On this concept of setting up funds with a local capital pool, Manik Arora, partner, Battery Ventures said: "It is a pretty good idea. There are some efforts from Infosys and TCS to engage with start-ups; it may or may not materialise. On the overall, it is an idea worth pursuing."

Seconding this Sanjay Anandram of JumpStartup said: "If the top 10 software services companies in India come together with a $1 million each, there will be a decent corpus to fund a dozen smart start-ups. This allocation of $1 million will hardly affect these large firms' balance sheets, nor will it affect their EPS. They can fund start-ups which will further the cause of the Indian software story and I feel the time is ripe for such a move."

Elaborating NSRCEL efforts in incubating software product entrepreneurs, S Sundararajan, chairperson of this cell said: "We are in advanced discussions with a large corporate to partner with us in our efforts to further this cause.

Our panel members will initially screen the idea and if found good enough they will be able to meet the venture capitalists with authority, having been already passed an initial hurdle of getting the idea accepted."