The success of technology-rich products and approaches, like nanotechnology or clean technology, in the “value conscious” Indian marketplace depends on a strong commercial plan from development to market adoption. As investors in cutting-edge technology, this has been one of our key lessons at Nexus Partners.
This was reaffirmed last week in an article on how the Centres for Excellence in Nanoelectronics at the Indian Institute of Science in Bangalore and the Indian Institute of Technology in Mumbai had developed a platform for nanotech micro-engines. Simply put, that means an engine on a chip.
The entire stadium and complex for the Commonwealth Games in Delhi 2010 has been painted with nano-metal enhanced paints from I-Can Nano paints.
The obstacles mentioned in the article included: Indian technology development being driven by pure science rather than engineering; and the desire of India Inc. to adopt off-the-shelf products rather than license innovations and provide the engineering talent for development.
The lack of success stories that next generation innovators can emulate and inadequate financial support for development also are real hurdles to market testing and entry. These issues are a recurrent challenge that seems to prevent Indian entrepreneurs from garnering the right support, either market-based or financial, for their ideas.
This all hit me since the goal of Nexus is to “fund innovation coming out of India in technology, processes and business models.” In 2005, we began feeling fairly sure that there was real innovation in India and it was possible for innovators to begin commercialization, or in other words bring their products from the lab or development phase to the market, at lower costs before taking their business global.
One large opportunity for Indian entrepreneurs is to look at ways to substitute expensive parts that are currently imported. The nanotech article spoke about how Pricol, a global supplier of automotive products, that has licensed the micro-engine platform for developing sensor applications (used to measure various operating parameters in a car), to replace technology that was being imported from Japan. If the replacement is successful, I am sure this will be a win for both the CENs and Pricol. One of our portfolio companies, Sedemac, has been successful with getting diesel generator manufacturers to adopt its engine control technology by replacing imported parts.
Entrepreneurs should not look to the government to bring new technology to market through mandating the use of new products and technology at government departments or public sector units. The government has to focus on scale, on significantly enhancing quality, and on reducing the cost of delivery of services it provides to the masses. Most public sector undertakings today operate in competitive environments and have to answer to public shareholders. Therefore just like any private sector enterprise, they will only adopt a new technology if it gives them a competitive advantage or increases returns to their shareholders.
From a team building standpoint, technology entrepreneurs could set up their own company or partner with a more business oriented entrepreneur who is equally passionate about the technology and its applications and who brings relevant experience to the table. However, commercialization requires significant capital, and unless you or your partner has that capital, there will be a need to approach an investor for financial support.
For that, apart from a technology development plan, you need to have a concrete approach to sales and marketing with clear milestones, the likely costs to get to each milestone, and the potential market size that you can target assuming you are successful. You will have to have a clear value proposition for the initial customers to take a bet on your technology and your company being successful. As an innovator going on your own, this would be the first test of your selling skills, which will become more important than your technology development skills as you build your business. If you are not too keen on that transition, it is best to find a partner who is a natural salesperson.
Conversely, as entrepreneurs who have identified a technology innovator to partner with you should ensure that the innovator can provide necessary support for development as you get market feedback and have to make changes in the technology or develop it further. All the challenges mentioned at the start of this article are real, so get ready for the long road ahead.
–Sandeep Singhal is co-founder Nexus Venture Partners, a venture firm with $320 million under management. Nexus has an active portfolio of over 20 companies across several Indian industries including technology, consumer services, media, outsourced services, the Internet and mobile, alternate energy and agribusiness.
By Sandeep Singhal