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March 31, 2005

Nirma Labs: An incubator that advertises and charges fees

While the incubation programs at several of the country's business schools are figuring out their model, NirmaLabs, located in the Ahmedabad, Gujarat based Nirma University campus, has come up with an unique model that actively seeks out and markets itself aggressively to entrepreneurs. NirmaLabs is taking out prominent advertisements campaign in leading business magazines as part of its efforts to seek out "individuals (and) groom them to be a global player in select high tech fields, and incubate them to create viable high tech ventures by providing a nurturing environment and needed support."

More from the NirmaLabs web site:
NirmaLabs is a not-for-profit Section 25 Company set up by Nirma Education and Research Foundation (NERF). NirmaLabs has been established with an objective to nurture talented individuals in their pursuit of high-tech, knowledge-based wealth generation. NirmaLabs has a corpus of over Rs. 5 crores earmarked to incubate promising individuals and projects. The Department of Science and Technology, Government of India, has decided to support NirmaLabs as one of their Technology Business Incubators...

Selection ProcedureEntrepreneurially inclined bright engineering / science graduates or MBA with 2-3 years of experience, aspiring to make a mark in the high-tech arena are eligible. M.Tech/M.E. without experience are also eligible. Individuals with a remarkable academic record, sound technical knowledge, good business sense, conviction and strong perseverance are identified through a specially devised selection procedure. Freshers with outstanding achievements may also be considered.

Financial Structuring
..Each project funding will be treated as a loan to the project from NirmaLabs. Repayment of the loans by the incubated ventures will sustain NirmaLabs’ activities and reduce the need for recurring funds.

As the concept of NirmaLabs is based on grooming individuals and not specific ideas, direct candidates are expected to pay for the grooming exercise (Rs. 50,000), and also for use of facilities, lodging and boarding (Approximately Rs. 46,000).

The rights to intellectual property, for NirmaLabs funded projects belong to NirmaLabs and will be assigned to the start-up company when it is venture financed. When a NirmaLabs funded project is ready to be spun-off as a “start-up” company, the equity structure will be as shown below:

The other unique feature of NirmaLabs is the concept of a “Pool Company” to create a mechanism to share success. The Pool Company has a 5% equity in every start-up company incubated/funded by NirmaLabs. Every start-up company is given equity in the Pool Company. As the number of incubated enterprises grows, this pool will become larger. Thus, any enterprise which makes it big will yield more gains for the rest of NirmaLabs incubated start-ups.

* The NirmaLabs' "Grooming Program" curriculum:
1. Entrepreneurship: Madhu Mehta
2. High-tech Entrepreneurship: B H Jajoo
3. Creating Entrepreneurial Organizations: K Thyagrajan
4. Challenges of Entrepreneurship: Madhu Mehta
5. Designing Break-through Products: Madhu Mehta
6. High-tech Marketing: B H Jajoo
7. Entrepreneurial Finance: Vishnu Varshney & Bharat Kanani
8. Emerging technology trends in ICT: Saumil Shah & B H Jajoo
9. Legal aspects of global business: M C Gupta
10. High-growth strategies: B H Jajoo & Madhu Mehta
11. Intrapreneurship:. B H Jajoo
12. Business Ethics: K Thyagrajan
13. Managing with a global mindset: K Thyagrajan

“What brought me to NirmaLabs was my desire to start something on my own. After my studies I was struggling to freeze on the right idea and then to take the initial steps to make a business out of it. I would honestly recommend NirmaLabs to anyone, who passionately wants to become an entrepreneur. I feel the grooming here will allow a person to select the right idea, plan well for the idea and take it to commercialization in the best possible way. My grooming here will help me avoid many of the early mistakes that kill early entrepreneurial ventures,” the web site quotes Madhukar Pai, a graduate from the first batch of NirmaLab's "Grooming Program".

NirmaLabs is currrently conducting roadshows across major cities in India to enroll entrepreneurs for its second batch.

UPDATE: Business Standard has an article about the NirmaLabs program.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.