Universities-driven venture development model can target to create innovation districts around their campuses and attract capital, industry, small businesses, and government participation by thinking global but acting local.
By Amber Malhotra
The world needs to relook at how ventures are planned and built. The historical model of venture capital and private equity is made on the assumption of infinite growth. It is opportunistic and works on the premise: fail fast and winner takes all. It is akin to a derby race where time, acceleration, and coordination between the horse and jockey is key. The lucky one on a given day is the winner. This transactional model is based on customer acquisition and the capital allocation for sales, marketing, facilities, and human resources. In the last 25 years, the model had its winners and losers. While in today’s world, where the internet has democratized businesses, we still have a few large corporations that not only dominate the world of business but also are more powerful than sovereign nations.
The Way Forward
The instability in the social equilibrium in this capitalist world is visible today across the globe. Today, therefore, is the time to align financial underwriting not just based on the financial return and stock market indexes, but cradle-to-cradle approach. Therefore, venture development rather than venture capital is the way forward.
Venture development is a collaborative effort between stakeholders bringing intellect, capital, and execution. Historically in advanced economies like the US, the technological commercialization of offices in universities played this role to some extent. This was further extended to setting up of technological parks around university settings, where commercialization happened, and startups were created. It took the US many years to bring perfection to this model. The emergence of Silicon Valley, also known as the mecca of unicorns which nurtures innovators and their innovations, is a result of the same. Here, physical proximity engulfed the whole region as a mindset for innovation and entrepreneurship.
Micro Innovation Ecosystem
Historically, India kept its academic and research institution separate and there is hardly any example of our prominent institutions or universities making an economic impact in the geographical area they are based in. We need to change this and make higher education institutes or universities central to our economic story, where research, academics, industry, capital, and government work together to create economic and social development models for the geographical area they are situated in. This will be the beginning of a venture development model in India as a micro-ecosystem for innovations, development of entrepreneurship, and employment opportunities for many.
Let us look at five areas — housing, education, healthcare, energy, and mobility — where we need to get our acts together and get the basics right before we become smart. These areas are critical for the long term sustainability of the Indian economy. We have one of the youngest populations in the world and need to keep them productive, healthy, and appropriately skilled.
Our housing shortage on an annual basis is millions of units. We have fewer hospital beds per person than global standards. We do not have a skilled workforce that fits today’s industry needs. Our energy needs from habitat, industry, and mobility will keep on increasing. How does one address such a scale in a world, where technology is disrupting livelihoods?
Today, the US faces its own challenges, as unfortunately, it could not create an equitable model of development. Therefore, the US too needs new thinking and a fresh approach. It is where there is an opportunity for both India and the US — not at government levels, but at universities and city levels to leverage each others’ capabilities for the benefit of their respective communities.
We need to co-develop solutions in India, but for specific locations, with abilities to impact regions around them. Partnering with the US institutional partners by leveraging their research and development capabilities, and processes for innovation and commercialization with local India operating partners can help create an effective ecosystem of entrepreneurship and employment that is location-specific.
Rewarding Intellectual Capital
The mantra therefore for India for the next 50 years is to focus on developing and investing in the creation of intellectual capital that helps in creating world-class solutions. Universities-driven venture development model can target to create innovation districts around their campuses and attract capital, industry, small businesses, and government participation by thinking global and acting locally.
Our institutions need to develop a culture of rewarding the development of intellectual capital and create pathways for its commercialization. This can be achieved by venture development — a process with a prerequisite of a strong programme to make it successful.
Institutions and industries, should invest in developing specific programmes around problems that a respective region is facing, be it education, health, housing employment, etc. This will help to encourage a path where the winner doesn’t take all, instead, multiple entrepreneurs create millions of jobs. It is about creating a mindset akin to Silicon Valley, which is more equitable in wealth creation for long-term sustainability.
(Amber Malhotra is the CEO & Managing Partner at the US-based venture development firm Sam Circle Venture. Views expressed are the author’s own.)