If all goes according to plan, Karnataka will soon have a Rs 1,000 cr fund conceived on the Israeli model which has successfully spawned many startups, to help create 1000 startups in the next 7 years.
The proposal by Karnataka Information Communication Technology Group 2020, submitted to the government earlier said that the fund must have a contribution from both central and state government and banks and private equity funds.
Among other things such as infrastructure development activities, the report also proposed to spend Rs 146 cr to build incubation facilities, launch business plan competition, give startups subsidized memberships to industry bodies, provide access to events and roadshows and partner with Nasscom. Part of the infrastructure development activity includes providing free wi-fi in Bangalore.
The ICT Innovation fund (ICTIF), comprising of an R&D fund, seed fund, growth fund and a debt fund will be managed by a group of people including internal project evaluation committee, an investment committee and the board of state run venture fund Kitven.
The panel also recommended that the government must set up a Rs 10 cr Karnataka brand equity fund in line with the Indian Brand Equity Foundation to promote and create international awareness of Karnataka’s capabilities.
The other recommendation is to partner with Nasscom to create 250 startups in 24 months and also stipulate that 20% of all state government purchases should be made from startups registered with the entrepreneurship cell of the government.
What could go wrong?
With state elections round the corner, governance is likely to take a backseat. And then, there is the risk of the new government scrapping the whole deal. However, one clever part of the report is that it suggests setting up of a Section 25 company to implement the recommendations. This means, even if the elections are on, the company can continue to function. Of course, you’d need the government to approve the expenses.