I have always thought that investors had the easier end of the bargain. They had people coming to them to present their proposals, which they would evaluate based on their knowledge and accept or reject. All that changed since we put in place a Student Project Grant at VIT University, Vellore.
The premise was that there are a lot of engineering students who have great ideas that they wish to pursue but are unable to find the base seed money that they need to get off the ground. We thought if this support was provided they could get going. We had planned to support between 5 and 10 student projects. Bare in mind, we were just trying to stimulate the eco-system not profit from it!
Well... It was not all that simple. What was even more surprising was that we faced problems with sourcing quality proposals!
In the first round of call for proposals, we got 24 proposals out of which 4 were given the grant. In the next round we got 33 proposals, out of which we have still to approve even one. Looking at the odds we might have to seek a third round.
The first challenge was that most proposals although extremely great research projects but did not make good business proposition. They lacked any kind of validation (Technical, Consumer, etc.).
50% of the proposals were rejected for this reason alone.
Then there were proposals which were extremely great on paper, but we did not feel that the students would be able to execute the Project that they were proposing with the kind of resources, financial and otherwise at their disposal.
This ensured that another 35% of the proposals left aside.
Then can the few which seemed interesting enough. There was a possibility that those projects could see the light of day. The ability to execute was there, but we felt that there was a lack of sincerity. In the sense that I had my doubts that they would follow through on it.
This took out about 7% of the proposals.
With that gone, we have a very small basket of proposal that we are actually supporting. Not to mention, there is money left behind in the grant.
So the fun does not end there. So, we went like, this needs an eco-system boost and there needs to be more exposure and education about Startups and what is possible. We setup The Blueprints Club as a means of reaching out to students and giving them learning and support.
Guess what happens?
We get a dozen students who are actually working on a real product and even have a prototype ready! They are just too vary of trying to do a real business with it. I got to see some real amazing stuff, which may be ripe for commercialisation; if only the students would be willing to take a plunge! We tell them there is grant available.
At this point you get three categories for students:
Those who wanted to apply for the grant, but did not really bother about it
Those who will go ahead with a startup idea ONLY if they get the grant
Those who don’t want the money at all; all they need is inspiration!
This got me thinking, is this the same problem that most VC Funds face in India. People with ideas and probably capabilities as well, just lacking the inspiration or the courage to go out there and build a business!
Is this really the problem that confronts VC investors in India?