Startups, entrepreneurship and incubation – in Hyderabad, the first thing that comes to one’s mind when you hear these words is T-Hub, which has become immensely popular since its launch over two years ago.
But even before the idea of T-Hub took seed, there was an incubator and a group of individuals working out of IIIT-Hyderabad that carved the foundation of the now fast-growing startup ecosystem of Hyderabad.
One of the first incubators in the city, the Centre of Innovation and Entrepreneurship (CIE), which turns 10 this year, has nurtured over 200 startups till date. It has invested Rs 3 crore in 30 of these startups while engaging 17 of them with the research labs at IIIT-H.
“When we started, there were hardly any incubators in the city, perhaps none I think. We started initially with the aspiration that it will be for our (IIIT-H) students, our professors and alumni, but very quickly we realised that was not happening. To be able to cater to the startup ecosystem, we decided to be an open incubator, becoming the only academic incubator that was open to all,” recalls Professor of Practice (Co-innovations) Ramesh Loganathan, who was also the acting chief innovation officer for Telangana before RedBus founder Phanindra Sama took over.
Even before the partition happened and the current Telangana government took over, CIE has been working with startups, not just in the technology space, but from all industries. CIE is an early-stage startup incubator that takes in startups right from the idea stage, allowing them to nurture and grow their idea at their launchpad with structured mentoring from the CIE team and professors from the university.
Being one of the only startup incubators at the time, Ramesh says that at peak they had nearly 100 startups working on various ideas out of their launchpad labs. “That’s when the new government took over. In our first meeting with KTR, I remember us saying that we aren’t taking anymore startups because we don’t have space and KTR responding that space was the easiest problem to fix. And that’s how the idea of T-Hub actually took seed that day and CIE played a major role in initially structuring T-Hub.”
Srinivas Kollipara, who was then the COO of IIIT-H foundation, went on to become the COO of T-Hub. “Without this (CIE) there wouldn’t be a T-Hub,” Srinivas said during the 10-year celebrations of CIE.
Riding on this momentum, T-Hub has become the largest startup incubator in the country and Hyderabad is today home to 36 incubators and co-working spaces, with two more coming up soon.
Focus on Deep Tech
Once T-Hub, which focused on Telangana startups, was created, CIE decided to create a niche and went on to focus on Deep Tech. It also put in place a structured process that gives startups access to research labs and professors specialising in those fields for advice at a nominal charge.
“There aren’t enough incubators catering to deep tech. So that’s the path forward now for CIE. We are getting more and more startups in the space and providing them with whatever support we can. We also started a co-creation model where a lab and the startup can create a product using deeper technologies,” Ramesh adds.
Currently, out of the 80 startups being incubated at CIE, nearly 40 are deep tech and the number is growing every month. By early next year, CIE aims to become a full-fledged deep tech incubator.
As a deep tech incubator, CIE will launch three verticals – Medtech, Blockchain, and Media and entertainment.
MedTech has also begun its first cohort of startups and another cohort will begin in August. It will soon start one for Blockchain and has also partnered with blockchain major Ripple to strengthen its expertise in the area.
“We need to grow our strength, which is research. We have also sent out proposals for startups in media tech, given our expertise in language technologies. We are looking at online media, news media, etc. Will have more special programs in specific technologies,” Vasudeva Varma, Dean R&D, IIIT-H said.
Challenges to overcome
But the journey has not been without challenges. Having worked with early stage startups over the past 10 years, Ramesh says that while Hyderabad is slowly getting recognised as a startup destination, Bengaluru still takes the cake when it comes to attracting large VCs and influencers.
“While we have our challenges to deal with, which we are, the single largest problem is that the influencers and VCs are not making an effort to understand our ecosystem. We may not house unicorns such as Flipkart, but for every Flipkart there are hundreds of other good startups. Maybe discovery is a problem for them here,” Ramesh says.
To solve this, CIE along with other players in the ecosystem is trying to get information out. IIIT-H is looking to open up its research to startups to bring about new use cases. In fact, on Friday, a directory of deep tech startups was launched by Phanindra. This directory will cover various milestones achieved by startups, including funding.
Ramesh says that this directory can be used as the anchor around which VCs and influencers can be attracted.
Ramesh and other active members of the Hyderabad startup ecosystem have also created an independent seed fund network to solve the problem of lack of early stage funding. While it holds about Rs 2 crore at a time, the fund will invest only Rs 20 lakh in each startup. The fund is also looking at alternative investment funds (AIFs), post which it will look to invest up to Rs 25 lakh per startup.
While the startup ecosystem in Hyderabad continues to grow, there is a lot more to be done for it to become the startup destination of India as envisioned by the current government.
While speaking at the 10-year celebrations of CIE, IT Secretary Jayesh Ranjan said that the focus should be on licensing technologies and on creating new products. Given the experience CIE has, he appealed to CIE and to startups to play a more prominent role in supporting the ecosystem in Hyderabad in a structured manner.
“We need to do solid work to get to a point that when people say startups, they should look at Hyderabad in India,” Jayesh added.