The Punjab Cabinet on Wednesday cleared the establishment of Punjab Innovation Mission and Punjab Innovation Fund to help the start-ups in the state.
The government has proposed to set up an Innovation Fund of Rs 150 crore to invest in early-stage start-ups in Punjab. The government’s participation in this fund will be a maximum of 10 per cent of the corpus, i.e Rs 15 crore.
The establishment of ‘Punjab Innovation Mission and Punjab Innovation Fund’ was one of the key recommendations of the Group of Experts (GoE) under the chairmanship of Former Deputy Chairperson, Planning Commission, Montek Singh Ahluwalia.
This fund shall be managed by an Asset Management Company, comprising investors of global repute, and the first chairperson of the Mission and the Fund would be Clix Capital chairman and Genpact founder Pramod Bhasin.
Bhasin told the virtual Cabinet meeting that he will raise the remaining Rs 135 crore investment amount from Punjabi business and investors, the diaspora as well as public and private financial institutions.
The Punjab Innovation Mission would go a long way in developing a vibrant innovative ecosystem for entrepreneurship by leveraging capital, policy and technology through collaboration with investors, industry, government, academia and start-ups and by facilitating collaboration among the various incubators and accelerators in Punjab, an official spokesperson said after the Cabinet meeting.
The two pillars of the Punjab Innovation Mission will be Pollinator (diaspora outreach, challenges/hackathons, incubator trainings, connecting all stakeholders and incubators) and Accelerator (mentorship and acceleration of start-ups). While the Mission will be sector agnostic, it will focus on some thrust sectors like agri-tech, food processing, healthcare, pharma, bio-technology, life-sciences, IT/ITES, gaming & sports, arts & entertainment, etc.
The Mission would be set up at Kalkat Bhawan of Mandi Board at Mohali, where two floors (almost 12000 sq.ft.) will be provided along with access to all its common facilities and shared space, on long-term lease for at least 15 years. This space would be provided free of cost for the first three years. The activities of the Mission would be supported by the Start-up Cell in the Industries and Commerce Department, Invest Punjab and Punjab State Council for Science & Technology.
In order to encourage the participation of private individuals in the Punjab Innovation Fund, the state government has decided to cap its return at 10%. Any return over and above 10% on government’s contribution will be ploughed back into the Punjab Innovation Fund, and will be used to meet the operational expenses of the Fund.
The state government has also decided to guarantee 20% of the principal amount invested by the first five investors into the Punjab Innovation Fund at the end of the fund’s cycle, to further encourage private investment.
The maximum total cap of this guarantee will be Rs 2 crore per investor, and it will add to a maximum possible liability of Rs10 crore for the government. This has been done by the government in recognition of the fact that such investments in start-ups by the Innovation Fund will necessarily be subject to market risks, especially in the early stages of this venture.