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IIM-A forms company to invest in firms it incubates
By siliconindia
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Wednesday, 24 September 2008, 16:39 IST
Ahmadabad: Center for Innovation and Incubation and Entrepreneurship (CIIE) of the Indian Institute of Management, Ahmadabad (IIM-A) has formed a company named CIIE Initiatives under section 25 of the Indian Companies Act, 1956 which will enable the firm to buy stake in the companies that incubates by investing its time and resources.
While IIMs and IITs who have similar centers cannot hold equity in companies they incubate, IIM- Ahmadabad is now able to own stakes."The only mechanism by which they work is a service model under which they charge for their services but do not share the risk," Rakesh Basant, IIM-A faculty member and chairperson of CIIE, told Business Standard.
"By setting up this company we will also be able to share the risks in the companies we incubate. Instead of shares, the company will direct the proceeds from sale of shares to IIM-A," Basant explained.
Samir Barua, Director , IIM-A will also be the Chairman of the new company's board and the other members will be directors.
Moreover, the company has also created at least two seed funds with government help to finance the activities of companies it incubates.
Basant also mentioned that an IT fund of Rs 1.50 crore is being set up with the help of the department of information technology and Rs 1.25 crore science fund will be financed by the department of science and technology. "We are also planning to set up a renewable energy seed fund,"he added.
The company is in talks with several companies to finance the seed funds. It has also plans to invite entrepreneurs on its board.