Yet another Accelerator: Will EVA be a gatekeeper or a gateway?
Most things associated with start-ups lend themselves to a bubble situation at some point in time. If it was e-commerce in recent times, bioinformatics, medical transcription and virtualisation a few years ago, it’s the accelerators themselves which today run the risk of getting pricked. More than 40 accelerators have come up in the last 2-3 years and many of them seem to be struggling to become financially viable since exits the in Indian start-up market are still elusive.
This weekend one more accelerator was launched. The name is symbolic: EVA or Escape Velocity Accelerator. Founded by some serial entrepreneurs, former academicians and R&D chiefs, this accelerator intends to, well, accelerate start-ups whose business ideas lie at the intersection of biology, engineering and information technology. As for the name, apparently it symbolizes the urgency of the Indian bio-economy stuck as it is in a sub-$5 billion revenue trap. The biotech industry body ABLE wanted to cross the $5-billion mark by 2009. Five years later, according to 2014 Burrill Media report, the Indian biotech revenue is still about $4.5 billion. Once again ABLE has stuck its neck out to say it wants India’s biotech revenues to be $100 billion by 2020.
One could argue that since there’s no penalty for providing such audacious numbers why not set ambitious targets. Realistically speaking, the $100 billion revenue does look impossible to achieve but if there’s one way to move towards 20X growth, it’s through multiplying ventures like EVA itself. The entrepreneurs and investors – government and private– need to swing for the fence, hitting singles or doubles isn’t going to take them to that colossal total. Since EVA claims to be working towards this objective, it’d be interesting to see on what kinds of start-ups it focuses on“ those that will succeed or those that will succeed big time.
Some of the founders — Anand Anandkumar, Ashok Vohra, Swami Manohar and Shrikumar Suryanarayan — have been through the grind and are familiar with the regulatory and commercialization landscape which in biotech is far different from the ICT industry. Which is why EVA will provide 12-18 months of accelerated guidance and incubation as opposed to 2-4 months of mentor-ship that most other accelerators provide. The three portfolio companies so far, SKL Medtech, a medical textile company; Lucep, a consulting-cum-product development group; and Bugworks, which is hunting for new antibiotics, show that just as multi-disciplinary these ideas are, their commercialization is no less multi-national in nature.
Unarguably, the biggest advantage that start-ups at EVA would have is the access to engineering and biology labs at highly subsidized rates, access to global markets particularly Singapore, Japan and US, and a bargaining power before the Department of Biotechnology which has a few funding schemes for risky industry innovation ideas.
It was a heady launch on Saturday. The Oberoi hall crackled with energy and verve. Befittingly, Kiran Mazumdar-Shaw, the indefatigable cheerleader of the Indian bio-economy, kicked it off. Her teaser: Can we do an Uber or Airbnb in healthcare? That is, put excess capacity to better and profitable use. It makes eminent sense because not only do healthcare providers, especially in big cities, have excess capacity India is also one of the most under penetrated markets in healthcare with 80 percent of the expenses borne out-of-pocket.
I think Airbnb is also a relevant example from an accelerator’s point of view. It came to Y-Combinator, the most successful accelerator in the US (and the world) today, when it was on deathbed. Y Combinator founder Paul Graham rescued it by, what can be termed as that investor gut feel which forces ace mentors to do what they think is rationally right even though many times it feels wrong. I wonder if EVA will be able to spot the not-so-promising looking outliers?
The Department of Biotechnologies new wing that funds risky ideas, BIRAC, is headed by another indefatigable person, Renu Swaroop. A technocrat, Swaroop wants entities like EVA to help BIRAC and the govt to evaluate the commercial roadmap of risky ventures. It’s a genuine concern when the taxpayer’s money is involved but, again, as history shows, quite often the top ideas look like bad ideas initially. Can EVA escape this typical investor mindset?
Understandably, a lot more risk and patient capital needs to be put on the table. Today, DBT is the only govt agency handing out any form of risk capital. Former IIM-B director Pankaj Chandra rightly said that the political economy of innovation is poorly understood in this country. China has understood it to a great extent. Scores of private universities come up in recent times and Made in China for China has been the trigger for initial oiling of the innovation machine. But more importantly, as I have always argued, it’s the Indian STEM (science, technology, engineering, and math) community that has to lead the charge. The Chinese Academy of Science is the driving force in China. In India, the Indian Academy of Sciences and the other two Academies remain satisfied, even aloof, in their annual gatherings.
It’s always good to end, a launch event or a blog post, on a note of optimism. Multiple hat-donning DBT secretary, K VijayRaghavan couldn’t make it to the launch but his video message was played. He said people often tell the government what the problem is but if they came up with solutions, those in the government would a find a way around them. He suggested that India should pick one area, say, high end analysis of big data in healthcare and aim towards becoming a world leader in five years.
For a country that long ago missed the medical informatics bus, the buzz and business about big data may provide a second chance. However, decision makers must be aware that aiming at small wins in big data will spur entrepreneurship. Like handling the supply side of data analysis”availability of talent (big data analysis can’t be easily done by conventional IT skill sets) and human health data (big hospitals which use sophisticated machines are somewhat conjointly tied to the large med-tech suppliers).
The rather unregulated market that Indian healthcare is, it doesn’t provide incentives to the industry to invest in big data. Maybe a few incentives here and a few regulations there can help. Now that Vijay Raghavan is heading all three departments in the Ministry of Science and Technology, and which allowed him to swiftly bring an open access policy, we hope he can bring some convergence in the ideas and implementation of harnessing big data.
PS: In some ways I have grown old with the Indian biotech industry and somewhere along the way my enthusiasm ebbed. But to see Kiran Mazumdar-Shaw inaugurate initiative after initiative, narrate how she built Biocon when no bank wanted to see her, no professional wanted to work for her and nobody in the govt showed any interest, reinforces my belief that entrepreneurs are made of tensile material. I’ve interacted with Swami Manohar, Shrikumar and Ram Subramaniam (or Rams as he is called) in the past, but on Saturday watching them and other founders in white shirts with EVA embossed on their pockets and passion worn on their sleeves was exhilarating.