Tailoring Innovation for India

Day-to day-activities at the new incubator will be guided by i2india and Imperial Innovations, the technology transfer arm of Imperial College London. The centre is backed by governments of India and the UK, with support from various universities, research centres and industry partners.

Technovate aims to connect the best of technology innovations worldwide with urgent market needs in India, through a process of localisation, incubation and investment. Given this, the opening of the not-for profit incubator is a milestone for Imperial Innovations and its subsidiary i2india, set up in August 2008 with a brief to find new applications and new markets in India for intellectual property and know-how in the Imperial Innovations’ portfolio.

The initial idea for i2india, in which Imperial Innovations holds a 30 per cent stake, came from the Indian-born and raised entrepreneur Chris Mathias, founder of the London-based investment firm Arbor Ventures, who is i2india’s chairman.

The mission of i2india exemplifies the distinction drawn by the World Bank in a 2007 report [1], between innovation in advanced economies which the report calls “New-to-the-world” knowledge creation, and “New-to-the-market” knowledge diffusion seen in developing economies like India.

With a history dating back to 1986, a diverse portfolio of around 80 companies and a listing on the Alternative Investment Market in London, Imperial Innovations is steeped in new-to-the-world knowledge creation. Its recent, profitable exit from Respivert, an early stage drug developer, acquired by Centocor Ortho Biotech, part of Johnson & Johnson, demonstrates Imperial Innovations’ ability to capture intellectual property generated in university labs, build a commercial package around it and move it towards the marketplace.

In co-founding i2india as a sister IP commercialisation organisation in India, Imperial Innovations also aimed to become fully engaged in new-to-the-market knowledge diffusion. This involves finding new markets and new applications for technologies developed in the UK, while also catalysing the formation of start-ups in India.

According to the World Bank report, India is suffering from a major innovation deficit. “An enormous amount of existing global knowledge is not yet fully used in India,” it says. Capturing some of that knowledge and applying it to specific Indian needs offers substantial economic opportunities.

“We will build companies in India, but the technology could come from anywhere,” says i2india CEO Deepam Mishra, a machine vision expert with a long track record of IP commercialisation and start-up formation in the US. He spent fourteen years in the US, ten of them at SRI International, the independent, not-for-profit research commercialisation organisation with historical ties to Stanford University.

For Indian entrepreneurs, i2india provides access to Imperial Innovations’ portfolio of technologies and its deep well of experience in developing technology-based ventures, which ranges from early stage IP assessment through to product validation. “i2india taps into that resource,” says Brian Graves, Commercialisation Director at Imperial Innovations in London.

i2india can also draw on Imperial Innovations’ vast array of industry and academic contacts. “A key part of this is having the networks of relevant expertise,” Graves says. “If it were purely a matter of process, then anyone could do it.”

Mishra says India bears, “Almost a striking resemblance to what the London area was going through ten to twelve years ago.” Investment is mainly geared toward later stage ventures and mergers and acquisitions; whereas early stage funding remains “patchy” and the country lacks experienced, successful entrepreneurs. Much of India’s recent economic growth has been in the service arena, where Indian companies, Mishra notes, exploit labour arbitrage opportunities arising from the country’s low cost base.

“There’s very little in terms of product innovation in the country,” Mishra says. Moreover, a traditional mindset in which Indian companies focused on reverse engineering western technologies still holds sway.

The outlook isn’t entirely gloomy, obviously. “The positives are the groundswell of interest and availability of talent and the willingness of first-generation entrepreneurs to fail,” Mishra believes. The emergence of this willingness, considered a badge of honour in the US, is a recent phenomenon in Indian business. “That wasn’t there when I was entering the workforce,” says Mishra.

The main enabling factor underpinning i2india’s strategy is the country’s high rate of growth. “The slowdown here [in the global financial crisis] was from nine per cent [annual growth] to seven per cent,” Mishra notes. “That part is good.”

And the nature of the growth is radically different from that of western countries. “Ours is a needs-driven growth,” he says. The US economy, in contrast, is fuelled by, “a wants-driven growth.” i2india, therefore, is working on technologies that address basic needs, such as clean water, sustainable energy and primary healthcare. “We are looking from Indian needs backwards,” Mishra says.

He is reluctant to divulge details of specific projects, as the i2india portfolio remains early stage. But one concept the company is developing involves adapting for water purification a technology that is currently used in an unrelated industrial setting. Another involves modifying a battery-powered handheld diagnostic device, currently used in ambulances, for screening in primary healthcare. “The cost will need to be a hundred times lower,” Mishra observes. “The volumes are likely to be a million times higher.” Solar energy and biofuels are two other areas under exploration.

Not all of these projects will necessarily go the full distance to commercialisation. “The thing about innovation is it’s as much about developing a portfolio and pipeline as anything else,” says Graves. “From a very early stage, you can’t pick winners.”

In terms of technology licensing, India is as early stage as it gets. The World Bank report identified far greater levels of international IP flows into comparator countries, such as Brazil, Russia, China and Mexico. i2india is both a catalyst and a participant in the process of making this happen in India. “We’re creating the context for technology development,” Mishra says.

#1. Unleashing India’s Innovation - Towards Sustainable and Inclusive Growth, Mark A. Dutz (Ed.), The World Bank (Washington DC) 2007.