Startup Centre-of- Excellence- YES BANK T-Hub Caselet
“Impressive.. these guys can be rockstars”, a thoroughly impressed Jay Krishnan emphatically stated to the YES BANK team looking at the Startups working on their projects at CatalysTT-Hub’s T-Hub’s state of the art entrepreneurship infrastructure infrastructure in Hyderabad. The CEO of T-Hub, a unique ecosystem for technology startups, was a ‘serial entrepreneur’ himself – therefore few countered his observation that the startups hard at work at a ‘ hackathon’ being hosted at T-Hub were working towards something special, something ground-breaking. Jay was speaking to the YES BANK team, led by their head of strategy & Innovations, on how the two organizations could take their partnership to the next level. YES BANK, India’s largest Greenfield bank and a startup success story had established themselves as a pioneer in technology and innovation in the last 13 years. Their partnership with T-Hub, T-Hub, was a step in the bank and its founder’s vision of creating an ena bling entrepreneurial ecosystem for financial technology startups around the country. After flagging off their partnership with a MoU in April 2016, the two teams had assembled at CatalysT- T-Hub’s T-Hub’s dedicated building for startups in Gachibowli, Hyderabad to to
I.
Brainstorm on the next steps in the partnership Way forward in setting up the FINTECH ecosystem ecosystem that they planned to create Marketing strategy to popularize the planned ecosystem among startups and techpreneurs in the country India’s Startup Revolution Revolution
It has been a frenetic decade for India’s startups – from a ‘fairytale for the few’ to ‘everyday success stories’ startups have been ‘front and center’ in the Indian economy. Such has been the pace of emergence of startups in the country, India today is amongst the top five countries in the world in terms of number of startups – the last 10 year have also seen more than 10 unicorns or billion dollar startups emerge in India. According to NASSCOM, India has moved to 3rd position in number of startups with the fastest growing base of startups worldwide. While the United States stands head and shoulders above all with 83,000 + startups, India with 66% of its population under the age of 35 and an average age of 28 for entrepreneurs has the perfect demographic dividend to boost its
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momentum. NASSCOM predicts that the pace of startup launches will increase from 3-4 every day in 2015 to 6-7 every day by 2020. We are literally at the Gladwellian tipping point with growth, demographic dividend, capital, acquisitions acquisitions and above all ‘entrepreneurial energy’ all converging. All key indicators point towards an inflexion point – opportunities in the domestic market, increased access to mentors, greater M&A and consolidation clearly depicts the emergence of a new ecosystem. At this pace by 2020 more than 11,500 startups are expected to be established in India creating employment for more than 250,000 people.
Fig 1: Comparison Comparison of the Top 5 ‘Startup Nations’ in the world world - source KPMG ‘ Startup Systems’
Fig 2: Startup Ecosystems Ecosystems globally – source NASSCOM 10,000 startups
Overall, the Indian economy appears a thriving yet under-penetrated market driven, with a huge scope for exponential growth. Increased penetration of internet, booming technology has been at the core of driving businesses. India, especially with its renewed focus on ‘ease of doing business’ has seen huge interest from global investors an d VCs despite lingering operational, regulatory and taxation issues.
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II.
Government Support for Startups: Creating an Enabling Ecosystem
In August 2015, the Government of India created a unified policy framework to help India leapfrog the USA as the number one one startup destination. The campaign titled” Startup India” aimed at helping startups with funding and other requisite support. Some of which included:
III.
Loans under the scheme would be given for Greenfield projects in the non-farm sector Intention of the scheme is to facilitate at least two such projects per bank branch Ease out the existing regulatory regime for startups and is considering extending tax incentives to them. The Department of Industrial Policy and Promotion (DIPP) is currently working around a clear definition for startups to ensure that the regime is available to businesses. The scheme is expected to benefit at least 250,000 borrowers in 36 months from the launch of the Scheme. Hold one fest at the national level annually to enable all the stakeholders of Startup ecosystem to come together on one platform. Hold one fest at the international level annually in an international city known for its Startup ecosystem. The fests shall have activities such as sessions to connect with investors, mentors, incubators and Startups, showcasing innovations, exhibitions and product launches, pitches by Startups, mentoring sessions, curated Startup walks, talks by disruptive innovators, competitions such as Hackathon, Makerspace, etc., announcements of rewards and recognitio recognitions, ns, panels and conferences with industry leaders, etc. Innovation Centers at National Institutes: Using Established Frameworks to Boost the Ecosystem
Research & Development lie at the core of the creation of any entrepreneurial system and in order to augment R&D efforts the Government has proposed to set up/scale up 31 centres (to provide facilities for over 1,200 new Startups) of innovation and entrepreneurship at national institutes, including: Setting-up 13 Startup centers: Annual funding support of INR 50 lakhs (shared 50:50 by DST and MHRD) shall be provided for three years for encouraging student driven Startups from the host institute. Setting-up/ Scaling-up 18 Technology Business Incubators (TBIs) at NITs/IITs/IIMs etc. as per funding model of DST with MHRD providing smooth approvals for TBI to have separate society and built up space.
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Fig 3: Startups Centers & Technology Business Incubators
IV.
Incubators, Accelerators – Vital Cogs to Sustain India’s Startup Ecosystem
In addition to enabling regulations and growing access to funding, the emergence of numerous incubators and accelerators has been key to the burgeoning entrepreneurial activity in India. While these terms have been used somewhat interchangeably, accelerators as the name suggests help increase the speed of business of an idea- shape a ready product concept and make it ‘ business ready’. Incubators on the other hand nurture early ideas, facilitate prototype creations. Globally, the lines are somewhat blurring with the focus on creating ‘comprehensive ecosystems’ combining the ethos of incubators and accelerator. Exhibit 5 highlights the working of an accelerator, taking you through the typical cycle of YCombinator – an American seed Accelerator which will help in understanding the phases of a typical acceleration journey V.
YES BANK: India’s First Greenfield Greenfield ‘Startup’ ‘Startup’ Bank
YES BANK was founded in 2004 on the ethos of Professional Entrepreneurship and a differentiated approach of Knowledge Banking to provide comprehensive sector specific and customized financial solutions to sunrise sectors of the economy. Characterized since its early days by contagious positive energy and swift decision making, especially in adversity YES BANK stood out due to its consistency in delivering to shareholders stakeholders, customers and employees alike. Influence in large by its Founder, Managing Director & CEO Mr. Rana Kapoor, the bank has consistently reached new heights in its drive to emerge as the “Finest Quality Bank of the World In India”. At the core has been Mr. Kapoor’s mantra of ‘visualize, strategize and actualize’ which actualize’ which has seen it emerge e merge as one of the country’s startup success stories The 1st phase of YES BANK’s lifecycle from 2004 -2010 was characterized by ‘entrepreneurship’ and involved building strong capabilities in the wholesale banking segment with a comprehensive product suite, suite, which leveraged the ‘Knowledge Banking’ approach while Page 4 of 13
building a strong human capital team on the ‘Owner -Manager-Partner’ -Manager-Partner’ philosophy. By 2010, YES BANK was recognized as one of India’s fastest growing banks in the previous 5 years and emerged as the Largest Largest ‘Small’ Bank in our country, India. From 2010 -2015, YES BANK lived the ‘Version 2.0’ phase during which the focus was on expanding the Retail Banking capabilities by drawing upon the Wholesale Banking franchise through a B2B2C approach for client acquisition acquisition and business generation . While the previous version was about ‘entrepreneurship’, in Version 2.0, YES BANK focused on further institutionalizing its systems, processes and controls gearing itself for orbit shifting expansion. The Bank built a strong platform in terms of its Brand, Distribution via Branch and ATM footprint, Technology, Human Capital as well as Risk Management. This well calibrated growth strategy resulted in YES BANK establishing itself as the Largest ‘Medium’ Sized Bank in the coun try with a balance sheet size of over ` 100,000 Crore. FY 2015-16, 2015- 16, marked the 1st year of the next phase of YES BANK’s growth cycle of 2015 to 2020. The vision for YES BANK is to establish itself as a meaningful ‘LARGE HIGH QUALITY’ Bank by employing a focused foc used 2-pronged 2-pronged strategy of ‘Deepening Mind Share’ and ‘Growing Market Share’ VI.
T-Hub – Bringing Global Entrepreneurial Entrepreneurial Excellence to India
T-Hub is a unique public/private partnership between the government of Telangana, 3 of India’s premier academic institutes institu tes (IIIT-H, ISB & NALSAR) and key private sector leaders. It stands at the intersection of the start-up, academic, corporate, research and government sectors. Founding Partners:
Indian School of Business NALSAR -(National Academy of Legal Studies and Research IIIT Hyderabad - The International Institute of Information Technology, Hyderabad (IIIT Hyderabad) Government of Telangana
A. Vision
T-Hub is designed for technology-related start-ups, and its mission is to catalyse the creation of one of the tightest and most vibrant entrepreneur communities in the world in order to encourage and fuel more start-up success stories in India. We will do this in the following ways: Attract the best start-ups and entrepreneur organizations from across the world to Hyderabad. Work with an extensive network of partners to help entrepreneurs launch and scale innovative companies. Equip innovators and organizations alike with the entrepreneurship skills required to succeed, using methodologies that transcend traditional learning.
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Link, educate and promote all entrepreneurship-related entrepreneurship-related stakeholders in Hyderabad and Telangana, including start-ups, investors, incubators and accelerators, research centers, startup resources etc. in order to facilitate faster connections between talent, ideas and capital.
Figure 5: T-Hub Model Model for Startups
VII.
YES BANK T-Hub Centre of Excellence
In April 2016, YES BANK, inked a Memorandum of Understanding (MoU) with T-Hub to create a Centre of Excellence, to enable the Indian startups across segments; with primary focus towards Financial Technology (FinTech) space. As per the agreement, YES BANK and T-Hub would be setting up a World Class Centre of Excellence (CoE) for FinTech startups at T-Hub. This association will help create a conducive business environment and support system for a large number of FinTech startups. In addition, YES BANK will offer its various products and payment gateways and open APIs to the startup community. Apart from FinTech, YES BANK will also work closely with startups in segments such as Agri-Tech, Healthcare, e-Commerce, loT etc. A. KEY HIGHLIGHTS OF THE PROGRAM
Will provide an open environment for startups to innovate. Will allow to build on its APIs to conduct internal tests to the startups to commence operations effortlessly Page 6 of 13
Will ensure the project complies with applicable banking laws, rules and regulations – KYC, AML/PML Will offer its various products, payment gateways and other business enablers ; as relevant; to assist the on-boarded startups to commence operations easily Will offer quick proof of concept option to the on-boarded startups to prove their business and technology models. Will provide investment banking advisory support to startups who wish to raise money and scale their business Will work with corporates/partners including Govt. in this space to create impact in its sector. Will explore partnership with a private or govt. entity based on common goals, synergy and which helps in furthering f urthering the innovation innovation quotient under the Centre of Excellence
B. Brainstorming Center @ CatalysT – T-Hub
The T-Hub CEO, board of directors and the YES BANK team were deep in discussion now, brainstorming on the future roadmap. Ideas were being tossed around in the room, with some of the opinion that the initial focus should be on creating Advisory Council – a group of mentors – experts to guide the startups which were inducted in the CoE, while some felt the process of identifying the correct startups should take precedence. They finally decided to create a joint joi nt ‘crack team’ which had been entrusted with 1. Innovation Innovation Strategy to leverage leverage the relationship relationship between YES YES Bank & T-Hub and to create a holistic innovation program (innovation lab+ incubator + accelerator + showcase) a. Highlight phase wise the steps to be taken by the CoE, including i. Process for identifying the startups to be inducted in the startup ii. Map for the kind of support to be provided to theses startups in the incubator & accelerator iii. Ways in which the ‘business ready’ startups could be utilized by YES BANK/T-Hub or showcased to relevant stakeholders iv. Collaborations Collaborations with other technology leaders, incubators etc. to accentuate the program v. Proposed mentors for the Advisory Council of the CoE b. Budgets in each phase and expected outcomes 2. Detailed Marketing Strategy and implementation program to promote the CoE initiative in a cluttered an disorganized disorganized market a. The strategy would be for the period of April 2017 – March 2018 and should have a defined budget b. Should focus clearly on the ‘target audience’ of startups. Entrepreneurs and other key stakeholders in the startup ecosystem Page 7 of 13
3. How YES BANK could use T-Hub’s T- Hub’s other FINTECH CoE programs for its startup strategy As a member of the crack team you have to share with the YES BANK and T-Hub board a vision document. The document has to be in word/pdf within 1000 words (excluding exhibits and excel sheets) in Book Antiqua font 11.
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Exhibit 1 – Mapping India’s India’s Startup Boom: Source NASSCOM
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Exhibit 2: Global Startup System Rankings: Source NASSCOM
Exhibit 3: Mapping India’s Startups Startups:: Source NASSCOM
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Exhibit 4: Incubators and Accelerators in India: Source Zinnov Research
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Exhibit 5: Y-Combinator: Source Y-Combinator Website
Y Combinator provides seed funding for startups. Seed funding is the earliest stage of venture funding. It pays your expenses while you’re getting started. Some companies may need no more than seed funding f unding.. Others will go through several rounds. At YC there are four different stages: 1. Idea 2. Building the first version of the product 3. Getting users, feedback, and traction (validation that people really want what you’re building) 4. Demo day (presenting in front of investors and press to raise your seed round and get publicity) Y Combinator’s goal is to get people through the firs t phase to the point where startups built something impressive enough to raise money on a larger scale. Then Y Combinator introduces entrepreneurs to later stage investors— investors—or occasionally even acquirers. What happens at Y Combinator Combinator?
At YC the team works with entrepreneurs on their ideas converting ideas into making things people want. They usually identify the direction in which a small idea should be expanded, or the point at which to begin attacking a large but vague one and make it more descriptive. Secondly, they help founders deal with investors and acquirers - Make introductions - Teaching founders how to pitch startups to investors and how to close the deal - Not only advise but protect interest of founders - Jointly create a ‘business ready’ produc produc t/service FORMAT Y Combinator has a novel approach to seed funding: they fund startups in batches. There are two each year, one from January through March and one from June through August. During each cycle they fund multiple startups. Applicants fill out a form with their idea followed by an interview to select them for the program. Most of the founders in each startup startup they fund (and always the the CEO) are expected to move to the Bay Area for the duration of the three month cycle. During those three months they host a dinner once a week at Y Combinator, and at each dinner they invite an expert in some Page 12 of 13
aspect of startups to speak. Typically speakers include startup founders, venture capitalists, journalists and executives executives from well-known well-known technology technology companies. companies. About ten weeks in, a Demo Day is hosted where all the startups can present their products and services to a specially selected audience. Ten weeks turns out to be enough for most groups to create a convincing prototype. prototype.
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