Incubator guidelines

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National Agricultural Innovations Project (NAIP) Business Planning & Development (BPD) Units DRAFT REFERENCE GUIDE March 2010 NAIP Project Handholding & Mentoring of BPD Units of NARS Page 1 of 108

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Transcript of Incubator guidelines

SECTION 1 : BACKGROUND

DRAFT

REFERENCE GUIDE

March 2010

NAIP Project

Handholding & Mentoring of BPD Units of NARS

REFERENCE GUIDE FOR INCUBATORS

I N D E X

41. BACKGROUND

41.1What is Incubation

41.2Who is an eligible incubatee

52.PRE INCUBATION

52.1Submission of application

52.2Review by expert Committee:

52.3Post Admission Process:

62.4Issues to be considered by the incubatee in the Pre-incubation phase

62.4.1Personal SWOT Analysis

62.4.2Personal Objectives

62.4.3How to choose your legal form

72.4.4Business Plans

92.4.5Avoiding Common Business Plan Mistakes

92.4.6Choosing the right Business Incubator (BI)

103. INCUBATION

103.1 Period of Incubation:

103.2 Prototyping:

103.3Pilot phase and successful competition of pilot phase:

103.4Estimating financial needs during incubation phase:

113.5 Start up financing:

123.6 Issues involved during incubation

123.6.1 Accounting and Bookkeeping:

123.6.2 Treatment & Recording of Research & Development (R & D) expenditure:

133.6.3 Human Resources:

133.6.4 Legal

143.6.5 Statutory registration and compliances:

153.7Advocating the need for outsourcing of accounts, HR & Legal functions

163.8Tax exemptions for an Incubatee within STEP Incubators

164.GRADUATION

165.SUSTENANCE AND GROWTH

175.1Deciding on the next stage financing for expansion and Growth

175.2Avenues of raising the capital for expansion

185.3Issues to be considered during Growth Phase

195.4 Financial Models in Incubation

206.CONCLUSIONS

Annexes:

Annexure 01: Template of Business Plan Model

Annexure 02 : Template of Sample TePP Application Form

Annexure 03: Template of Sample BI Application FormAnnexure 04: Templates of Partnership Agreement

Annexure 05 : Application for enrollment in ABI

Annexure 06 : Monthly reporting format

Annexure 07: Incubation Agreement Format

Annexure 08: Incubation Rules & Guidelines (terms of residency membership) Annexure 09: Criteria for identifying commercial viability of a technologyAnnexure 10: Indicative tariff rates of ABI-ICRISAT for clients1. BACKGROUND1.1What is IncubationIncubation is a business support process that accelerates the successful development of start-up and fledging companies, also referred to as clients (of the Business Incubator; BI), by providing entrepreneurs with an array of targeted resources and services. These services are usually developed or orchestrated by incubator managements and offered both in the business incubator and through its network of contacts.

Business Incubation thus can be said to refer to complex services and special environment provided temporarily for start-up enterprises with the aim of improving their chance of survival in the early phase of the life span and establishing their later intensive growth.

1.2Who is an eligible incubateeThe project of an incubatee should fulfill the following criteria to be eligible to enroll under the incubation program. The criteria given below are not exhaustive and can only be an indicative one. Individual incubators may have their own selection grids which might include their incubation priority areas for incubation. For example, some of the incubators may have special emphasis for green incubation, affirmative action or thrust area focus.

The selection of entrepreneurs for membership in BI will be based on the recommendations of an expert committee specifically set up for the purpose. The general criteria for acceptance are the following:

1. The business activity proposed is in advance technology area. The company must meet the definition of a technology based company (An organization which pursues commercial applications of science / technology based innovations; employs a high percentage of technicians, engineers or scientists; or required extensive R & D to produce new products or services)

2. The proposed venture is either a company or a partnership or a sole proprietorship.

3. Demonstrate a need for incubation services.

4. Demonstrate capability for business viability and growth.

5. The business plan submitted by the entrepreneur is sound and passes the review of the expert committee.

6. In the absence of a proper business plan, the request for membership will be accepted provisionally if the business proposal looks prima-facie promising to the expert committee.

7. The business proposed should have significant technology content / employment potential / revenue generation potential / export earning potential.

8. The entrepreneurs may or may not have a track record in undertaking entrepreneurial ventures.

9. A first time entrepreneur should have the requisite aptitude in promoting the venture (The expert committee will assess this through personal interview, review of past activities, background check, references etc.).

2.PRE INCUBATIONThe enrolment into the BI programme involves the following:

a. Submission of application.

b. Review by expert committee.

c. Post admission process.

2.1Submission of application

Submission of application package includes:

a. Prescribed application form.b. Entrepreneurs business plan.c. Entrepreneurs tax returns for prior three years, if applicable.d. Venture Team Profile.e. Constitution of the incubate company.2.2Review by expert Committee:The expert committee reviews the application based on the following but not limited to the following criteria:

a. Merit of the business proposal.b. Background and experience of the entrepreneur.c. Financial viability.d. Status of the business plan, market research and feasibility studies.

e. Growth potential.f. Applicants commitment both financial and personal time to the venture.g. Business references.h. Make up of the management team.

i. To what extent is the entrepreneur developing technology, or using technology for a unique business purpose?

j. How effectively does the entrepreneur demonstrate an understanding of the environment facing the venture in its target markets, and a reasonable strategy to achieve stability and growth?

k. How clear is the entrepreneurs need for the types of services that the incubate offers?

l. Is the venture product or service based?

m. Market knowledge and experience (market, definition, markets, serviced, competition, SWOT analysis etc.).

2.3Post Admission Process:Once the decision is made to admit the entrepreneur to the incubation programme of the BI, the following activities are undertaken:

License agreement is executed between BI and the entrepreneur.

BI and the entrepreneur sign a mutual non-disclosure agreement (NDA).

Jointly set short-term objectives for the ventures performance.

Develop a written plan of work for the venture with milestones.

Set up the ventures financial management and budgeting systems.

Identify mentors, consultants service providers or resource centers to assist the entrepreneur in achieving his goals.

This marks the enrolment of the incubatee into the BI programme.2.4Issues to be considered by the incubatee in the Pre-incubation phaseChoosing to be an incubatee is a big decision and should be viewed seriously. While the rewards seem self-evident, the challenges are substantial also. Following are the list of issues to be considered by the incubatee in the pre-incubation phase: Personal SWOT analysis. Personal objectives. Deciding the legal form of the business. Business Plans. Avoiding common business plan mistakes. Choosing the right Business Incubator (BI).The first step involved in the process is to undertake a Personal SWOT analysis. 2.4.1Personal SWOT AnalysisA personal business SWOT analysis involves looking at the strengths, weaknesses, opportunities and threats you bring to running a business. Each of these factors needs to be carefully considered as it applied to your personal situation in order to assess the best path in business for the incubatee. Opportunities and threats relate to the world you live in. While it is important to consider what is happening in your immediate environment, dont leave out major world trends either.

This should be followed by a determination of ones Personal Objectives outlines as below:

2.4.2Personal Objectives1. Writing down your personal goals for the business.2. Income level expected.3. Targeted growth level.

With the above in place one has to decide upon the legal form of business best suited to meet the above objectives

2.4.3How to choose your legal formTo operate a business legally, one needs to meet all the laws for operating a business in India and the local laws. One of the first decisions that you will have to make as a business owner is how the company should be structured. This decision will have long-term implications. In making a choice, you will want to take into account the following:

The size and scope of business, the level of control, structure, businesss vulnerability to law suits, tax implications of the different ownership structures.

When organizing a new business, one can choose to operate as: a sole proprietor If you want to be by yourself. a partnership If you want a simple business and tax structure with more than one person.

a limited liability partnership. a limited company If you want to limit your personal liability for debts.

2.4.4Business PlansAsk my business expert for advice on what is most important for the success of a business and the vast majority will cite writing and using a business plan as a critical component for success. Almost every lender will require some type of plan before lending any money to a business. A well written business plan is the story of how you are going to run your business. It is your opportunity to chart the path for where you want to go.

Your business plan establishes your checkpoints and goals along with setting a timeline for accomplishing certain objectives. The essential components of a business plan are:

i) Executive SummaryIt provides a concise overview of the entire plan along with a history of your company. This section tells your reader where your company is and where you want to take it. Its the first thing your company is and where you want to take it. Its the first thing your readers see. Therefore, it is the things that will either grab their interest and make them want to keep reading or want to put it down and forget about it.

Contents of the Executive Summary:i).The Mission Statement:The mission statement briefly explains the goal of your business. It should be as direct and focused as possible and it should leave the reader with a clear picture of what your business is all about: Names, qualifications and experience of founders and the functions they perform.

Number of employees. Location of business and any branches or subsidiaries.

Description of plant or facilities. Products manufactures / services rendered. Banking relationships and information regarding current investors.ii)Market Analysis:The market analysis section should illustrate your knowledge about the particular industry your business is in. It should also present general highlights and conclusions of any marketing research data that, you have collected: An industry description and outlook

Target market information

Market test results.

Lead times

An evaluation of your competition.

iii)Organization and Management:Organizational structure: Create an organizational chart along with a narrative description of what the chart means. This chart should lay out the structure of your company.Ownership information: This section should also include the legal structure of your business along with the subsequent ownership information it relates to Management profiles and board of directors qualifications

iv)Marketing and sales strategies:Marketing is the process of creating customers. The marketing strategy should be part of an ongoing self evaluation process, and unique to your company. An overall marketing strategy will include:

Market penetration strategy. Strategy for growing business. Channels of distribution strategy. Communication strategy. Sales force strategy. Your sales activities.

v)Service or product line:Describe your service or product, emphasizing the benefits to potential and current customers. Focus on the areas where you have distinct advantage, Identify the problem in your target market for which your service or product provides a solution. Give the reader hard evidence that people are, or will be, willing to pay for your solution versus others. Overall this section should include:

A detailed description of your product or service

Information related to your products life cycle

Research and development activities you are involved in or are planning to be involved in

vi)Funding request:In this section, you will request the amount of funding you will need to start or expand your business. You include your current funding requirement; your future funding requirements; your future funding requirements over the next five years; how you will use the funds you receive; and any long range financial strategies that you are planning that would have any type of impact on your funding request.

vii)Financials:The financials should be developed after youve analyzed the market and set clear objectives: Historic financial data: The historical financial data you would want to include would be your companys income statements, balance sheets and cash flow statements for each year your have been in business.

Prospective financial data: All business whether start up or growing will be required to supply prospective financial data. Each years documents should include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. Finally, include a short analysis of your financial information. Include a ratio and trend analysis of all of your financial statements (both historical and prospective).

2.4.5Avoiding Common Business Plan MistakesOften you may hear about what a business plan needs to contain. While including the necessary items is very import, you also want to make sure you dont commit any of the following common business plan mistakes:

a. Put is off: Dont wait to write a plan until you absolutely have to.

b. Cash flow casualness: Cash flow is more important than sales, profits or anything else in the business, but most people think in terms of profits instead of cash. Unfortunately, we dont spend the profits in a business. We spend cash. So, understanding cash flow is critical.

c. Idea inflation: Plans dont sell new business ideas to investors. People do. The plan, through necessary, is only a way to present information. Investors invest in people, not ideas.

d. One size fits all: Tailor your business plan, action plans, financial plans, marketing plans, and even personnel plans to its real business purpose.

The financial projections in the Business Plan during the pilot phase, that should not exceed 15 / 18 months, should be on a monthly basis. Since no income is envisaged during this period, the cumulative cash deficit on a month-on-month basis would be the quantum that needs financing. Determining this need is very crucial. Most of the times the incubatee is not in a position to raise the funds through own capital. The source for this pre-pilot and pilot phase funding shall be by way of seed financing or seed support. Generally this is financed by the Business Incubator (BI). The seed funding is generally given by the BI by way of soft loans or outright grants or a combination of equity and soft loans.

2.4.6Choosing the right Business Incubator (BI)The next crucial step is to identify the right business incubator based on the lien of business, its legal form etc. Certain additional criteria to be considered by an incubatee while choosing his business incubator could be:

a. One to one counseling facilities in development of the business plan.

b. Networking support.c. Assistance provided by the technical and domain experts.d. Infrastructure support in terms of providing the Seminar hall, power back up etc.

e. Laboratory and testing equipment facility, mentoring support and facilities of funding support.

f. Level of provision of management guidance, technical, assistant and consultation.

3. INCUBATION

3.1 Period of Incubation:The period of incubation is generally for 2-3 years.3.2 Prototyping:This phase involves proof of business concept including prototyping:

prototype typically simulates only a few aspects of the features of the eventual business proposal and may be completely different from the eventual implementation.

Prototyping has several benefits: The incubatee and incubator can obtain feedback from the users early in the business proposal.

3.3Pilot phase and successful competition of pilot phase:When an organization has selected a new technology, products, process or concept, a pilot project best demonstrate the potential in the opportunity.

New Technological Advancements

New Environmental Initiatives

New Product Launches

New Process Deployments

Pilot project employs the best industry and project leaders who develop, deploy and evaluate new processes and technology that benefit and advance business, industry and the environment.

Pilot or prototype design projects need to be managed in ways which are very different from conventional projects. Pilot or prototype projects have as their primary objective the creation of a first version of something, either in the workplace in general, or inside an organization which has never done such a piece of work before. As such, it is difficult to judge what their scope, size and work flow of the organization should be. In fact, this type of project is often undertaken for the very purpose of acquiring the type of experience needed to set or estimate such traditional project management parameters.

3.4Estimating financial needs during incubation phase:Financial Management is the process of managing the financial resources, including accounting and financial reporting, budgeting, collecting accounts receivable, risk managements, insurance for a business. The financial management system for a small business includes both how you are financing it as well as how you manage the money in the business. In setting up a financial management system your first decision is whether you will manage your financial records yourself or whether you will have someone else do it for you. Some accounting firms also handle bookkeeping functions.

While poor management is cited most frequently as the reason why business fail, inadequate or ill timed financing is a close second. Whether youre starting a business or expanding one, sufficient ready capital is essential. It is not, however, enough to simply have sufficient financing; adequate knowledge and meticulous planning are required to mange it well. These qualities ensure that entrepreneurs avoid common mistakes like securing the wrong type of financing, miscalculating the amount required, or underestimating the cost borrowing money.

3.5 Start up financing:Finding the right financing that fits with a business goals is a continuing challenge for almost every small business. For startup businesses this can be one of the biggest hurdles in getting off the ground. Some entrepreneurs can be incredibly creative in finding ways to fund their ideas. Many consider another job as a way to fund their personal business.

Using personal funds is very common, partly because few banks will loan to people who do not risk some of their own funds. However, in the long run, most businesses will need external funding of some type. The conventional wisdom in starting a business is that it is no one will loan money to a startup. With no history and no assets, one either needs to have savings, friends and family who are willing to help or an angel.

Financing your business is often the critical component to success. The hardest question to answer is what kind of capital should you seek? Often we are not aware of options available to us or dont have the time to explore what is possible. It turns out there are a vast menu of choices each with their pluses and minuses.

The some of the options available during the Incubation stage are as listed below:

Bootstrapping. Seed funding by way of loans / grants by Business Incubation (BI). Borrowing from friends and acquaintances.

Angel investors / small business investment companies.

Bootstrapping: Using personal or gamily funds to finance a business is called Bootstrapping the business. Bootstrapping can involve personal investment by the founders, their family and friends and / or the owners foregoing salary. It is wises for every business owner to have atleast some personal funds at risk since that shows other potential investors that you are committed to the success of the business.Seed funding by way of loans / grants by Business Incubator (BI): Generally the Business Incubator (BI) makes available seed funding in the form of grants or softloans or partly by way of equity and partly by way of soft loans. The Technology Development Board (TDB) and National Science and Technology Entrepreneurship Development Board (NSTEDB), Department of Science and Technology (DST) has been providing the seed funding to the Technology Business Incubator (TBIs). This funding is available to meet the financing needs during the Incubation phase. The amount available by way of seed funding is generally upto Rs. 50 lakhs. It is available either as equity, or as a softloans or a combination of both.

Borrowing from friends and acquaintances: These are funds borrowed from friends and acquaintances with some commitments towards repayment period and interest. However, because of the risks involved there are limitations to this method of fund raising.

Angel investors / small business investment companies: This source is available only if the project is very innovative and can attract the attention of Angel Investor.

3.6 Issues involved during incubation3.6.1 Accounting and Bookkeeping:Bookkeeping refers to the daily operation of an accounting system, recoding routine transactions within the appropriate accounts. An accounting system defines the process of identifying, measuring, recording and communicating financial information about the business. So, in a sense, the bookkeeping function is a subset of the accounting system. A bookkeeper complies the information that goes into the system. An accountant takes the data and analyzes it in ways that give you useful information about your business. They can advise you on the systems needed for your particular business and prepare accurate report certified by their credentials.

The common mistake committed is to pay inadequate attention to this very important function of allocating. The general notion is that accounting is taken care of by installing the tally software and appointing a person to do the data entry. The term and finalization is done with the help of the Chartered Accountant just before the statutory tax filing date. The important aspect of getting real time and useful business information for informal decision making is lost sight of.

The following points merit consideration:

Defining and using accounting software suited to the business.

Defining the chart of accounts to get customized information and reports

Defining the accounting procedures and controls.

Proper review mechanism.

3.6.2 Treatment & Recording of Research & Development (R & D) expenditure:The accounting of R & D expenditure needs to adhere to the defined Accounting Principles and Standards.

Research is original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding.

Development is the application of research findings or either knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes systems or services prior to the commencement of commercial production or use.

Research Phase: Expenditure on Research should be recognized as an expense when it is incurred since at this stage an enterprise cannot demonstrate that an intangible asset exists from which future economic benefits are probable. Therefore, this expenditure is recognized as an expense when it is incurred. No intangible asset arising from research should be capitalized as an asset. In simple terms it means that this is a loss which needs to be recognized by debiting to the profit and loss account.

Development Phase: Expenditure during the development phase can be capitalized and recognized as an asset if, and only if, an enterprise can demonstrate all of the following:

a) The technical feasibility of completing the intangible asset so that it will be available for use or sale.b) Its intention to complete the intangible asset and use or sell it.c) Its ability to use or sell the intangible asset.

d) How the intangible asset shall generate probable future economic benefits. Among the other things the enterprise should demonstrate the existence of market for the output of the intangible asset or its capability to be used internally.

e) The availability of adequate technical financial and other resources to complete the development and to use or sell the intangible asset.

f) Ability to measure the expenditure attributable to the intangible asset during its development with reliability.

The cost of development (the value with which it will be capitalized as an asset) will include expenditure on materials and services used or consumed in generating the intangible asset, salaries, wages and other employment related costs directly engaged in generating the asset, any expenditure like patenting etc. and overheads that can be allocated on a reasonable and consistent basis like depreciation, insurance premium, rent borrowing costs etc.

3.6.3 Human Resources:Human Resources refer to the labor, physical and mental abilities that the people in your organization contribute to producing the goods and services of your business. The administration of human resources involves:

Identifying the team: Making the leap to hiring someone to help is a big one because all of a sudden you need to worry about payroll, benefits and what seems like a myriad of other details. And, this does not even take into consideration the host of problems that can arise from personality conflicts and loss of control of all the process in running your business.

Organizational Policies: Staffing

Training and Development

Policies and Procedures

Record Keeping

Wage and Salary Administration

3.6.4 Legal Patents copyrights, trademarks, wetting of contracts: Many businesses need some kind of legal protection for their business product, but have no idea what. The terms Patent Copyright and Trademark are used usually in relation to an invention, new idea or domain name.

A patent applies to an invention.

A copyright protects an original artistic or literary work.

A trademark applied to a log or other identifying mark related to the sale of goods.

To protect ones rights, it is advisable to go in for the applicable legal registration.

Vetting of contracts: It is advisable for any new or established venture to have the contracts vetted so as to avoid any loopholes in the execution of the same. The typical contracts need to be vetted are:

Building and other leases

Contract with employees, customers, suppliers

IPR

Financing and credit

Advertising

Statutory compliance

Succession planning

3.6.5 Statutory registration and compliances:1. LEGAL REGISTRATIONS

2. DIRECT TAXES

3. Income tax Act4. Permanent Account NumberPermanent Account Number (PAN) is a ten-digit alphanumeric number. It is mandatory to quote PAN on returns of income and all the relevant correspondence with any income tax authority. PAN application should be made on Forum 49A along with the address proof and identify proof.

5. Tax deduction Account NumberTAN or Tax Deduction and Collection Account Number is a 10 digit alpha numeric number required to be obtained by all persons who are responsible for deducting or collecting tax.

6.Shop and Establishment Act

It is a state legislation; each state has framed its own rules for the Act. It is applicable to all persons employed in establishments with or without wages, except the members of the employers family. This Act lays down the following rules:

Compulsory registration of shop / establishment within thirty days of commencement of work.

Communications of closure of the establishment with 15 days from the closing of the establishment.

Lays down the hours of work per day and week.

Lays down guidelines for spread over rest interval opening and closing hours, closed days, national and religious holidays, and overtime work.

Rules for employment of children, young persons and women.

Rules for annual leave, maternity leave, sickness, casual leave etc.

Rules for employment termination of service.

7.Profession TaxThe Profession Tax Act is a State Enactment. This Act is enacted for the benefit of the State for raising additional resources needed for implementing the Employment Guarantee Scheme of the State Government.

8.Provident Fund and ESIThe Provident Fund and ESI Act are applicable when the employee strength exceeds ten.

9.Indirect TaxesService TAX: Businesses rendering specified services are liable to a Service Tax. One must see the currently prevailing Service Tax rules. The Service Tax applicable as of today is at no percent plus education cess 3% on the liable value. The responsibility of payment of the tax is cast on the service provider. They are required to deposit the tax collected on monthly basis. The service providers need to get themselves registered. However for incubator operating in DST promoted incubators there is an exemption of Service Tax for first 3 years or upto Rs. 50 lakhs turnover, whichever is the least. For full information the concerned incubation manager needs to be approached. Excise Duty: Manufacturing units need to pay an excise duty on goods produced / manufactured in India. The products attract duty from 8% t0 16%.Value Added Tax: Businesses trading in goods between states are liable to change CST whereas those trading within the same state are subject to VAT. The rate of VAT / CST varies according to products and states.Directorate General Foreign Trade: Incase the company would like to indulge into import or export of goods, it has to get itself registered with the Directorate General of Foreign Trade (DGFT) as per the Import Export Procedures and obtain a unique number called Import Export Code (IEC).10.Semi-Annual Review of the Incubatee Performance

Two formal performance reviews of each company are required every year. The expert committee gauges the progress of the company against its objectives. The expert committee also evaluates the quality and impact of the business assistance provided by BI. Any further assistance in the form of mentors, consultants, service providers or resource centers required by the entrepreneur is identified during this review.

3.7Advocating the need for outsourcing of accounts, HR & Legal functionsDuring the incubation phase the constitution of the incubatee is either a sole proprietorship or a partnership firm. Business Incubation is also useful for businesses that are starting up and cant afford secretarial support and the other necessities for handling office functions. Comprehensive support for fledging business in the form of reduced rent, flexible space, shared services, access to professional services and right kind of business ambience are commonly found in business incubators. It is also advisable that a full scale setup need not be established due to the uncertain environment. In order to concentrate on its core business and to derive optimum growth of any venture it is advisable to outsource the support functions to a professional and reliable outsourced service provider.

The benefits of outsourcing as follows:

Operational from day one

Utilization of the infrastructure of the service provider

Domain knowledge expertise and proactive Consulting available as a single window solution.

Flexibility as quickly scalable, quick down sizing or up sizing possible.

On time, committed performance

Cost effective3.8Tax exemptions for an Incubatee within STEP IncubatorsSome of the benefits available to an incubatee enrolled in a business incubation program of a STPI (Software Technology Parks of India) are listed below:

Approval under single window clearance mechanism.

100 per cent foreign equity permitted.

Imports in the STPI units are completely duly free.

Exemption of local taxes for domestic purchases.

The sales in the domestic market are permissible upto 50 percent of the exports.

Exemption from corporate income tax for a block of 10 years.

Minimal export obligation with positive Net Foreign Exchange.4.GRADUATIONThe venture shall graduate from the incubation programme when any one of the following conditions is fulfilled:I. The revenue stream of the company is adequate for self-sustenance.

II. The entrepreneurs have been able to tie up investors to finance the expansion plans of the venture and the incubator support is no longer necessary.

III. The entrepreneurs have sold the venture to a longer company.

IV. Expiry of the period specified in the license agreement.

If any of the above events takes place, the venture will be treated as graduated from incubation programme and the membership in the incubator will be discontinued.5.SUSTENANCE AND GROWTHGraduation is only one of the milestones in the journey to eventual sustenance and growth. During incubation most of the entries take the form of a sole proprietorship or partnership, which entails restrictions on the quantum of capital than can be raised as well as the on the equity of management of the organization.

5.1Deciding on the next stage financing for expansion and GrowthTo enable an entity to grow adequately, it is advisable to convert it into a limited company. The following are the methods of conversion:

Normal take-over of the partnership firm by a private limited company. This is the simplest form but has income-tax implications and hence is not recommended.I. Transfer by recourse to conversion under section 47 (XIII) of the Income tax 1961. In this case the capital gain is exempt from income tax subject to following conditions:

a. All the assets and liabilities of the firm shall become the assets and liabilities of the company.

b. All the partners of the firm become the shareholders of the company in the same proportions.

c. The partners of the firm do not receive any consideration other than by way of allotment of shares in the company.

d. The partners of the firm hold not less than 50% of the total voting power for a minimum period of five years.

IIIConversion under Part IX of the Companies Act:The firm can be converted into a company by following the provisions of Part IX of the Companies Act. 1956, However, for registering the company the partnership firm needs to have a minimum of seven partners. No agreement for transfer is needed as this is a conversion under the law and all the assets and liabilities of the firm become that of the company as on the date of incorporation. It enjoys certain additional advantages over and above the earlier stated method of conversion.

The options II & III mentioned above impose certain conditions but have tax advantages and therefore are more advisable:

5.2Avenues of raising the capital for expansionRaising of external capital at the optimum cost is a major challenge in this phase and calls for Capital Structuring. The external means of finance to fund the expansion and growth involves dilution of the Promoters stake in the incubate company. Protecting the majority stake of the Promoter /s is a delicate balancing act and needs to be thought through carefully.

External funds can be raised through Grants, Loans, Investors, Angel, Investors, Equity Financing, Small Business Investment Companies (SBICs), Venture Capital, Mergers, Going Public.

The following are some of the avenues for raising external capital:

Equity Financing: The most common source of professional equity funding comes from venture capitalists. There are institutional risk takers and may be groups of wealthy individuals, government assisted sources or major financial institutions. Venture capitalists may scrutinize thousands of potential investments annually, but only invest in a handful. The possibility of a public stock offering is critical to venture capitalists. Quality management, a competitive or innovative advantage, and industry growth are also major concerns. Debt Financing: Banks and commercial finance companies are the most common sources for debt financing State and local governments also step to encourage the growth of small business in recognition of their positive effects on the economy.5.3Issues to be considered during Growth Phase5.3.1. Business Valuation: In order to obtain funding it is important to know how much your business is worth. There are a variety of methods that can be used. It is necessary to properly value ones Intellectual Property Rights (IPR) as well as other intangible assets in order to create capital in kind.5.3.2. Organizational Planning and Management: The need for professional management as a pre-requisite for achieving the targeted growth and sustenance cannot be over emphasized. Management comprises of the following important process:5.3.3. Planning: It involves determining the appropriate objectives for the business and the means to accomplish them.5.3.4. Organizing: Deals with structuring of the resources and activities of the business to accomplish the desired objectives.5.3.5. Staffing: It involves hiring the right people to do the job and rewarding them appropriately and retaining them.5.3.6. Directing: Relates to motivating employees to effective achieve the business objectives.5.3.7. Controlling: It is the process of evaluation and correction to ensure that the business stays on tract towards its goals.5.3.8. Board and Directors: A companys Board of Directors held management develop business plans, policy, objectives, and business strategy. Not all small businesses have or need a board of directors, but as the business grows and matures in the marketplace, a board can be a valuable tool to help management set the directors for growth and provide valuable insights from a different perspective and knowledge base.Directors monitor a companys financial performance and the sources of the products, services and strategy. They are expected to follow developments that affect the business, and set aside any potential conflict between their personal or individual business interests to support the well-being of the business which they serve. The most effective board of directors will be a group of professionals who bring a breadth of skills, experience and diversity to your company.

5.3.9. Corporate Governance: Corporate governance is the set of processes, customs, policies and laws affecting the way to corporation is directed and administered. It is based on the principle that companies are accountable for their actions and therefore broad based systems of accountability need to be built into the governance structures of companies. It lays emphasis on the total transparency integrity and accountability of the management. It implies a voluntary code of conduct that company directors are expected to follow in managing a company. The code contains expectations and provisions that are more extensive than any statutory, professional, or capital market requirements. The objective is to control the companys managements and to crease mechanisms to oblige executives to act in the interests of their shareholders.5.4 Financial Models in Incubation

5.4.1 Capital gains model

This model is useful for creating big impact on highly proprietary technologies. This is useful to the start-up companies with strong entrepreneurship capabilities. It requires less management support but great new technology development support from Host institute. The funds shall be invested through equity. The modus operandi of the capital gains model is:

Entry Strategy-reviewing the team, market potential, financial return and technology of the project proposal

Routes of VC funding through shares, equity, preference share, convertible debentures and royalty linked loans

Continue early stage investment in India and would be the first investors in all deals

Detailed due-diligence and decision making process to facilitate deal making

Enhance likelihood of a strategic acquisition at the time of investment itself

Exit through IPO, buy-back by the promoters, company offloading to another VC company and strategic mergers and acquisitions. E.g. Innovative ventures, Ag-biotech ventures.5.4.2 Revenue generation model

It is a kind of franchisee model wherein incremental technologies or pure services are needed. It is useful to numerous small businesses and entrepreneurs who need significant management support but does not require strong technology inputs. This basically needs investments in technology transfers, branding and marketing. The revenue generated is through Services/royalties and one time fees. E.g. Seed Ventures, farm ventures etc.

6.CONCLUSIONSBefore any conclusion is drawn, it would be interesting to take note of the number one attribute that Warren Buffet, arguably one of the most successful investors in the world, looks for in a company. It is Sustainable Competitive Advantage. Competitive advantage is what your company does better than anyone else. The sustainable part refers to your ability to continue to do those things over a long period of time. Thus it is essential to be able to develop one or more competitive advantages for achieving sustainable growth.

Not only a competitive advantage, as a term, widely overused, it is also widely misunderstood. You are not alone it you have ever wondered what a competitive advantage really in and what you do with it.

What competitive advantage is and isnt?

Often starting with what something isnt is easiest. Your competitive advantage is not a list of your strengths. Not to downplay strengths as these are important too. But if your completive advantage(s) list is only comprised of strengths it is not a competitive advantage. Key word - competitive. If you dont have a competitive advantage comprised or more than strengths, you dont compete.

The management team from a mid-sized financial services group reported that its competitive advantages were:

Good reputation in the community

Skilled staff

Outstanding team and well-respected leader

Knowledgeable

Strong client list and loyalty

Flexible and responsive

The above is just a list of strengths. It is not the competitive advantages.

A competitive advantage is something you do that is unique. The key here is to compete you have to have a unique advantage. Looking at the list from the financial services firm above, you can see that his is not a list of unique staff. Basically anyone is business today needs to achieve that level of competency just to be in the game.

Think of your competitive advantage as your organizations DNA a collection of games or assets that makes you unique. When you are true to your DNA, you are healthy, fit and successful. When you compromise your DA, you feel uncomfortable, slow and are exerting more effort than you should.

Annexure 1: Template of Business Plan Model

Annexure 2: Template of Sample TePP Application Form

Government of India

Department of Scientific and Industrial Research

TECHNOPRENEUR PROMOTION PROGRMME (TePP)

Phase-I: TePP Project Fund (TPF)

Guidelines

Eligibility

Unattached independent innovators like micro and small entrepreneurs working on new designs.

Start-up firms / incubated firms with turnover less than Rs 45 lakhs.

Independent innovators scouted, documented, mentored by various agencies like NIF,RIN,RIF, ISB, SPJIMR,CIIE, CII, FICCI, Stanford Bio Design.

Finalists of competitions like Techfest, GE Edison Challenge, Tata NEN, Proto.in, Indian Angel Network, TiE, Eureka, India Innovation Pioneers Challenge, Lockheed Martin India Innovation growth program, Innovation for India awards, Piramal Prize , Economic Times, National Geographic.

Medical doctors coming out with low cost tools.

Scope & Support

Proposals to convert an original idea/invention/know-how into working prototype/process.

Proposals to demonstrate novel delivery models to take S&T innovations to rural India.

Maximum support under this category is Rs 15,00,000/- subject to 90% of approved project cost.

Mechanism

The proposals can be submitted online (http://oscar.iitb.ac.in/TEPP) or submitted off line to the nearest TUC (TePP Outreach centre). The innovators can meet coordinators of TUCs and take their advise before submitting the application. Addresses of TUCs is given on www.dsir.gov.in.

The proposals will be screened locally at TUC and proposals with complete details will be referred to experts for evaluation. To facilitate expert evaluation, innovator is required to complete part of Technology Angel evaluation form and submit it along with application. Proposals received at DSIR end will also be forwarded to concerned TUC for counselling/ local screening.

Evaluated proposals received from TUCs are assigned to officers at DSIR for further evaluation as required.

The evaluated proposals are put forth to TSC for consideration. The TSC recommends the proposal for TePP support, which are processed for approval by TePP officials.

The applicant has to sign "Terms & Conditions" prior to the actual release of grants-in-aid.

For grant above Rs 5 lakhs, project will be divided into phases with clear deliverables at the end of each phase. The project will be continued into the next phase only if the performance in the preceding phase was satisfactory.

The first release is based on assessment of need by TePP official and subsequent releases are based on assessment by project monitoring committee/ authorized TUC.

Project completion/ closure will be reported to TSC for feedback and record.

Limiting conditions

The proposals involving software development, only patenting and for basic scientific research having no immediate commercial implications will not be accepted for consideration under TePP. Software Embedded projects and patenting along with prototype development are eligible for support. Innovative S&T delivery models will also be eligible.

Faculty/ scientist start-ups will be eligible if they have the rights to Intellectual property. Where IP is taken on license from institute, their proposals can be considered only in Phase-11 S3T category.

Student innovators making to the final of any competition are eligible but to ensure that their studies are not adversely affected, they are encouraged to take the project as full time activity after graduation.

Proposals scouted, documented and mentored by other ( other than TUCs) agencies need to be submitted with evaluation by the assisting agency.

Proposals to scientifically test the efficacy and toxicity of herbal formulations developed by innovator will be eligible for support. Process standardization will also be eligible for support after proving efficacy and non-toxicity.

The proposals from the owner of a Start-up company/industry may be considered for TePP support, if the annual turnover of the company/industry doesnt exceed Rs. 45.00 lakhs per annum.

Individuals working in organizations & having innovative ideas may apply for TePP support by furnishing a No Objection Certificate from their employer.

Manpower (like technical assistant) costs are based on actual & not exceeding 20% of the total project cost. Innovators salary and rental expenses for use of own facilities are not eligible for support.

Travel costs are based on actual & not exceeding 5% of the total project cost.

Government of India

Department of Scientific and Industrial Research

TECHNOPRENEUR PROMOTION PROGRMME (TePP)

Phase-I: TePP Project Fund (TPF)

Application form

1. Title of the proposed project:

2. a. Name of the applicant :

b. Fathers name/Husbands name:

c. Postal address:

d.Profession

( Micro & small business

(Please tick as applicable)

( Start-up

( Incubating firm

( Faculty (Doctor ( Scientist

( Housewife (Student

( Farmer

(Any other _ _ _ _ _ _ _ _ _ _ _ _

(specify)

f. Date of Birth:

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

YY /MM/DD

g. Educational status:

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

h. Experience / Employment

status of the applicant

(if employed 'No Objection Certificate' from the employer is to be enclosed. Use prescribed format)

i. Annual Income of the applicant:

(If you are an Income Tax Payer, provide your PAN No. and attach a copy of the latest Income Tax Returns you filed)

3. Brief write-up giving broad details of the original idea/ invention/ IPR/ Know how available with the individual, highlighting its originality/Novelty and the scientific principle involved therein

(Use Technology Angels evaluation form. Fill left column. And enclose as Annexure -II)

4 .Status of the work already carried out such as;

( Literature survey/patent search

(Development work done so far, including involvement of agencies, consultation with experts.

( Patenting of the innovation

( Tie-up for design, fabrication etc with any external agencies,

( Techno-economic / market feasibility studies /reports, if any,

( Consumers / users feedback, if any.

(This is an important document. Enclose documentary proof of work done by way of photographs, video clips etc. as Annexure-III. If significant prior work was not done, submit application for TS category)5.(a) End product / process / output-resulting from the idea/ invention/ innovation

(including targeted specifications, performance requirements/standards.)

(b) Major applications and users

6. Activity details:

ActivityAssisting Agency Duration

(months)

Design engineering (for product innovation) or

Research consultancy (for processes innovation)

Working model/prototype development (for product innovation) or

Lab/bench scale process development (for process innovation)

Product testing or

Process demonstration

Any others (please specify)

7) Proposed costs and time frame:Sl.

No.ItemsProject Cost* Basis of estimation/ justification

Own ShareTePP support sought

1Design / Consultancy charges

2Rental charges for facilities

3** Essential facilities that cannot be taken on rent or work sub contracted

3Material cost

4Work sub contracted

5Manpower cost of technical assistants

(Based on actual &not exceeding 20% of the total project cost)

6Testing and trials

7Travel (Based on actuals & not exceeding 5% of the total project cost)

8Any other

Total Cost

(* indicate basis of above cost with justification against each item in a separate Annexure).

(** Please attach a list of equipment/instruments etc. and with their respective costs in a separate Annexure. Please note that as far as possible, the equipment required for the project may be on rental basis unless it is absolutely essential to purchase them. The reasons for such purchase should be given.8. Any other information relevant to the project:

9. Referees (two -with complete address, phone number and e mail ID):

10. Declaration :

I declare that all the statements made in this application are true, complete and correct to the best of my/our knowledge and belief. In the event of any information, found false or incorrect, my/our candidature will stand cancelled and all my claims will be forfeited.

Place: Signature of the applicantDate:

Evaluation by Technology Angel1.Name of Expert

:

(e-mail ID, mobile no., contact address):

2.Name of Innovator

:

3.Proposal title

:

Part A ( to be filled by first by innovator and later by expert)

4.Expert comments on proposed innovation

Innovator

(to be completed by innovator)Expert

(to be completed by expert)

Description of working of the innovation

( use sketch, drawing, patent, photograph, video to explain the working)

Description of science behind the innovation.

Technology trends from literature survey and patent search.

Enclosures (relevant literature, patent, substitute products etc.)

Part B (To be filled by expert only)

5.Expert comments on proposed innovation (Part B)

Expert comments

Assessment of technology merits of proposed innovation

Technological challenges in design and prototype manufacture based on innovators known skill set

Recommendations to TePP

No Objection Certificate for faculty / students

The innovator ------------------------- is ------------- in our organisation since.. His/her current areas of research are:

His/ Her work resulted in intellectual property on ....................................... which is currently assigned to self/ institute. The organisation has no objection to the faculty/ student innovator taking his/her innovation to the market with financial support under TePP.

The complementary IP available with the institute will be licensed to the faculty / student innovator to facilitate productising his/her Intellectual property. The institute library and labs will be made available on chargeable basis to the faculty / student innovator for executing his/her TePP project. The institute will enter into bilateral agreement with the faculty/ student innovator on sharing the benefits of commercialization.

Competent authority.................................

No Objection Certificate for employees who are not researchers

The innovator ------------------------- is working in our organisation since.. His/her current areas of work are:

The organisation has no objection to the employee innovator taking his/her innovation to the market with financial support under TePP. Necessary leave will be provided to the employee innovator to carry out the development.

It is certified that employer will have no rights on the Intellectual Property owned/ generated by the employee as a part of TePP project.

Competent authority.................................

Covering letter to the TePP application

date..

To:

TePP Outreach Centre

-------------------

-----------------

Sub : Proposal for development of ..

Dear Sir/Madam

I am herewith submitting my application for support under TePP. The following documents are enclosed.

Signed copy of application,

Proof of residence,

Literature survey & patent search results,

Targeted Product specification/ process performance,

A one page description of potential user, why would he/she buy this new product and how would the innovator access the user,

Documentary proof of prior work ( video, photo, test report, TUC site report, press coverage etc)

Cost justification,

Bar chart with mile stones for project schedule.

Technology Angels evaluation form ,

.

Innovator

Government of India

Department of Scientific and Industrial Research

TECHNOPRENEUR PROMOTION PROGRMME (TePP)

Phase-I: TePP Project Fund (TPF)

Terms & Conditions for TePP Project Fund (TPF)

(to be signed by innovator after approval before release of sanction)

Name of the project

-

Name of the applicant

-

Amount approved

-

Approved project cost

-

Duration of the project

-

FINANCIAL CONDITIONS:

1.Approval of the sanctioned project and the amount being provided thereof is for the specific project sanctioned and the amount approved should be exclusively spent on the project within the project period. Any unspent balance out of the amount sanctioned must be surrendered to the Department of Scientific and Industrial Research (DSIR). However, depending on the progress of the project, unspent funds may be carried forward to the next financial year for utilization for the same project but only with the specific prior approval of the DSIR.

2.Approval of the sanctioned project and the release of amount to individual innovators employed in industry / any other organization is subject to a No Objection Certificate which should include specific permission to Technopreneur by the employer to accept the financial assistance under the programme and which should be submitted to DSIR by the innovator while applying for assistance under TePP.

3.The project will become operative w.e.f. the date on which the first financial sanction is issued by the DSIR.

4.The amount received from the DSIR would be kept in a separate account, the details of which shall be intimated to the DSIR. Transactions from the account shall only be for the purpose of the approved project. Any interest earned on the amount granted is adjustable by the DSIR, against the cost of the project. It is necessary that separate audited books of accounts be maintained for the expenditure incurred on the project and these books should be freely available to Government Auditors whenever required by them. To facilitate electronic transfer of funds please communicate to DSIR the following details of the account created: 1). Name of account holder as in bank records, 2).Account Number 3).Name of bank, branch and address in full, 4).Branch code 5).IFS code, 6).MICR Number.

5.For permanent and semi-permanent assets, acquired wholly or partly out of the grant, an audited record should be maintained in the form of a register which should be made available to Government Auditors whenever demanded. The term assets will mean: (i) all immovable property; and (ii) movable property of a capital nature where the value exceeds Rs.10,000/-. The amount will not be utilized for construction of any building / acquiring land by purchase; lease etc. / permanent asset like machinery required for augmenting general production facilities. Pilot plants, test equipments, test rigs, jigs, tools and fixtures, etc., required for building prototypes and testing the same can, however, be built/made/acquired out of the DSIR grant, if so identified in the approved project proposal or subsequently approved by the DSIR.

6.The assets, if any, wholly or partly acquired out of the DSIR amount during the course of implementation of the project, shall not be disposed off without the specific written permission of the DSIR. The sale proceeds, if any, arising out of such disposal shall be intimated to the DSIR and shall be deposited in the account maintained for the amount received from the DSIR.

The above mentioned assets acquired from the amount released by the DSIR will be deemed to be owned by the Technopreneur only after the project is declared successful by the DSIR.

TRANSFERABILITY OF THE PROJECT:

7.While the whole project cannot be transferred to any other organization, a part of the work of the project can be sub-contracted, based on needs, to a research institute or industrial unit, in which case the payment made to such organization shall be on the basis of the quantum of work done for the project without seeking any further escalation in the DSIRs financial support in the sanctioned project.

MONITORING:

8.The project will be periodically monitored by Project Monitoring Committee / authorised TUC.

USE AND LICENSING OF KNOW HOW:

9.Ownership of the IPR generated through the project, patent rights, licensing the know-how and the use of the know-how generated through the project shall rest with the individual innovator. The DSIR does not own any responsibility of disputes arising out of the IPR issues, however, the rules and regulations of NRDC or PFC of TIFAC will apply for those projects supported for patents by them.

REPORTING:

10.It is required that Statement of Accounts duly audited by a Chartered Accountant, should be sent to the DSIR, as of 30th September of each financial year, so as to reach the DSIR by 31st October of that year. The audited annual statement of accounts of the project along with utilization certificate also shall be sent to the DSIR within 90 days of the close of each financial year. Annual reports of the progress of technical and physical work content of the project shall also be sent to the DSIR.

11.A Completion Report shall be submitted to the DSIR within 30 days of the conclusion of the project. This Report shall be in two parts (i) Technical and (ii) Financial, the latter consisting of a consolidated audited statement of accounts of all monies spent on the project, from the DSIR project amount released and Certificate of Utilisation of all such monies (Annexure-I), along with a certificate from the auditors.ESCALATION:

12.Any escalation in the cost of the project above the approved cost of the project will be borne by the innovator / sponsoring agency.

TERMINATION OF THE PROJECT:

13.DSIR will have the right to terminate / close the project at any stage

-if it is convinced that the monies released have not been properly utilized, or

-appropriate progress on the project is not being made, or

-the project is not being carried out as per the terms and conditions and / or as per the nature and scope of the work as defined in the approved project proposal.

In case of termination of the project for not proper utilization / unsatisfactory progress of the project / violation of terms as given above, the entire amount of the grant together with interest, as applicable under the provision of GFR, and the amount received by disposal of the assets will be returned to DSIR.

The DSIR will have the right to recover, at any time, the entire money disbursed by the DSIR for the project along with the interest accrued, if any, as per the GFR of the Govt. of India if the project is abandoned without prior approval of the DSIR.

If the project is abandoned for any techno-economic or any reason other than the above, based on the recommendations of the monitoring committee set up by the DSIR and approved by the DSIR, any unspent money from DSIR grant released to the project as well as any interest accrued thereon and / or any amount recoverable by way of disposal of assets procured out of funds released by the DSIR shall be paid back to the DSIR.

MODIFICATION OF TERMS & CONDITIONS:

14.The above terms and conditions may be modified by the DSIR through mutual agreement.

UNDERTAKING OF THE INNOVATOR

I agree to the above terms and conditions in connection with DSIR grants to my project concerning _______________________________________________

Name:

Signature

Place:

Date:

Affix a duly attested,

latest Passport size

Photograph of the

Innovator

UTILISATION CERTIFICATES (TWO COPIES)

FOR THE FINANCIAL YEAR -------------- (ENDING 31ST MARCH)

1. Title of the project

2. Name of the Innovator

3. DSIR Letter No. & date

of sanctioning the project

4. Head of account as given in the original

sanction letter

5.Amount brought forward from the

(i)Amount

previous financial year quoting the

DSIRs letter no. & date in which the

(ii)Letter No.

authority to carry forward the said

amount was given.

(iii) Date

6.Amount received during the financial

(i)Amount

year (please give No. & date of the

(ii)Letter No.

DSIRs sanction letter for the amount

(iii)Date

7. Total amount that was available for

expenditure (excluding commitments)

Rs.

during the financial year.

(Sl. No. 6+7)

8. Actual expenditure (excluding

commitments) incurred during the

Rs.

financial year up to 31st March.

9. Balance amount available at the

Rs.

end of the financial year.

10. Unspent balance refunded to the

DSIR if any (Please give details of

Rs.

Cheque No. etc.)

11.Amount to be carried forward to

Rs.

the next financial year

(if applicable)

UTILISATION CERTIFICATE

Certified that out of Rs.______________ of grants-in-aid sanctioned during the year ________________ in favour of ________________________________________ through the DSIRs letter No.__________________ and Rs.__________________ on account of unspent balance of the previous year carried forward, a sum of Rs.___________ has been utilized for the purpose of ________________________________________________ ________________________________________________ for which it was sanctioned that the balance of Rs._________________ remaining unutilized at the end of the year has been surrendered to Government (vide challan no.______________ dt.___________) / will be adjusted towards the grants-in-aid payable during the next year / will be carried forward to the next year.

Signature of innovator

Signature of

Chartered Accountant/

with Date and Seal

2.Certified that I have satisfied myself that the conditions on which the grants-in-aid was sanctioned by the DSIR have been fulfilled / are being fulfilled and that I have exercised the following checks to see that the money was actually utilized for the purpose for which it was sanctioned.

Kinds of checks exercised.

1.

2.

3.

4.

5.

Signature of Chartered Accountant

with Date and Seal

Annexure - 05AGRI-BUSINESS INCUBATOR@ICRISATApplication for enrolment in Agri-Business Incubator

Founder 1:first name, last name, academic title

Founder 2:first name, last name, academic title

Project name:

Please describe your start-up project generally understandable and as concisely as possible (maximum 10 pages, font-size 10). Answer each of the following categories according to your current knowledge. Leave out general statements to the economic situation.

Contact Details

Address

Telephone / Mobile

Fax

Email

Web

All in italics written questions should help you to find the right answers.

Pitch Definition

(Describe in max. 300 characters what your idea / project does or will do)

1. Concept of Product/Service

(What is new about your technology? Which problem solves your project / idea? How innovative is your idea compared to todays solutions? What is your main application? etc.)

2. Founder Profile

(Project specific skills, references, business skills etc. A detailed CV should be attached (max. 1 page)).

3. Potential Market / Market Segment (your market)

(Who is your customer? How big is the market? Is the market growing or saturated? Is the market already profitable? Please indicate sources of information by using footnotes.)

4. Expected Benefits/ Additional Benefits for Potential Customer

(How will your future customers profit from your idea? What do they specifically get out of it?)

5. Competition in this Market

(How many providers are already in this market? What are the key factors for a success? Are there any entry barriers for new provider? How can you characterize your competition? How much lead / advantage do you have compared to your competitors? How fast can they offer a comparable solution? What price can be achieved? Please indicate sources of information by using footnotes.)

6. Unique Position / Positioning

(How does your planned company differ in a sustainable way from your competitors? How should you position yourself compared to your competitors? If you have to explain to somebody in one sentence what you are doing, how would you describe it?

7. Development Stage / Plan

(In which stage of development is your technology? Is there already a pilot project? Do patents exist? What kind of developing steps are still necessary to be ready for the market (technological, business plan)? What are the most important technological risks? Outline your planned project steps during tech2b) and also the time frame8. Financial Details

Actual Investment

Source of Funds

(Debt / Equity / Grant etc. Investor details)

Share holding pattern

(Name & Percentage)

Future Investment Plan

(If any please give details)

9. Property Rights

(Who has the intellectual property rights of the idea? Who is the owner of the product / development? Do you have the necessary utilization rights?)

10. Requirements of IncubationA. Infrastructure & Facilities

Office

(Space in Sq. Mts & specifies A/c, Non A/c, Shed)

Laboratory & Infrastructure

(Biotech / Molecular / Bio control / Cold Store / Green House etc.)

Facilities

(Telephone / Internet etc.)

Others

B. Technology Consultancy

(Scientific Consultancy / Tech Transfer etc.)

C. Other services Required

(Business Development / Training / Funding etc.)

11. Enclose the following

ID Proof (Household Card / Driving License / Pan Card / Passport) Company Registration details Last one year IT Returns

Brochure/Testimonials

12. Declaration

I declare that all the information stated in this application and the attachments are true.

Date:

Signature:

Name:

Designation:

Annexure 6

AGRI-BUSINESS INCUBATOR

Monthly Report for the month of _____________ 2010

1. Name and Designation :

2. Walk-in enquiries attended

S.No.Name and AddressReason of visitRemarks

3. New Membership

S.NoName and address of the new memberName of the Contact person & Mobile NumberName of the VentureRemarks Incubation Services Requested

4. Services provided to existing members

S.No.DateName of the memberService Provided

5. (a) Trainings/meetings organized

S.NoTitlePeriodLocationNo. of participant s

5 (b) Trainings/Meeting/Conferences/Symposia/Seminar participated

S.No.TiltePlacePeriod

6. Technology commercialization /Consultancy

S.NoTitle of the technology commercialized /consultancyStatus

7. Revenue generated

S.NoTitle Revenue generated in Rs

8. Tour / Leave details

a) Leave

.No. of daysNature of Leave (ML/EOL/LOP)

--

b) Tour

S.No.DatesPlacePurpose

9. Other Activities

10. Proposed work plan for the following month:

Date:.

Signature.

Annexure 7Memorandum of Agreement

between

Agri-Business Incubator (ABI) at .and

-------------------------------------- India Pvt. Ltd.

Preamble

Agri-Business Incubator (ABI) operates under aegis of the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) (Hereafter referred to as ABI) at Patancheru, Andhra Pradesh 502 324, India. ABI was established in ICRISAT with financial support from the National Science and Technology Entrepreneurship Development Board of the Department of Science and Technology, Government of India. The mission of ABI is to promote commercialization of agriculture technology and promote entrepreneurship development.

-------------------------------------- India Pvt. Ltd. (Hereafter referred to as --------------------------------------) is a company registered under the Company Act. of 1956, with the Government of India. -------------------------------------- is intending to pursue research activities in the field of Molecular Biology for the value addition of their products.

This Memorandum of Agreement (MoA) defines the scope of work, roles and responsibilities between the parties for incubator membership at ABI for the advancement of agriculture technology. The The Standard Guidelines and Regulations for Entrepreneur Members of ABI will govern this MoA for administrative, operational and financial responsibilities.

Scope of Work

In further implementation of this MoA, ABI at .. agrees to:

A) To assist -------------------------------------- for this technology.

B) To assist -------------------------------------- to develop

C) To assist -------------------------------------- on the technology front in this project by means of consultancy and / or a collaborative project.

D) To assist -------------------------------------- in developing

E) To provide guidance to -------------------------------------- their ------------products(s).

F) Assist -------------------------------------- by providing lab, greenhouse, office, land, and cold-storage facilities necessary for the project based on the availability of such space.

-------------------------------------- for its part agrees to:

A) Provide workplan to ABI and adheres to it following its approval by ABI Standing Advisory Committee (SAC). Further, it shall provide the necessary information on request by ABI without diligence and accept the terms and conditions of ABI guidelines.

B) Adhere to the biosafety guidelines of the Institute Biosafety Committee (IBSC) of ICRISAT and Government of India.

C) Carry out all the research and operations as per the standing rules and guidelines set by ABI. A copy of such guidelines will be provided.

D) Compensate ABI for its efforts in the following manner:

S. No.ParticularsTariff

(per month)Charges to Member**

(Lakhs /Yr)Remarks

1.Consultancy 50% of annual payment in advance and remaining on half yearly basis

2.Greenhouse

-1 bay of P1/regular (54 sq. m @ US $ 335/-)-Payments to be made on monthly basis on 1st of each month in advance.

-Payments can vary based on the number of bays utilized

3.Laboratories*

Molecular biology lab on sharing basis- Payments to be made on monthly basis on 1st of each month in advance.

Bio technology Lab (Molecular marker+ Genetic transformation) on sharing basis- do-

4Office and exclusive lab space for _72___sq. m with central AC in Bldg. 303GF-do-

The rentals will vary according to the Space utilization

5Utilities [Network/electricity/water/phone/ labour/Misc.]ActualAll services will be charged by ABI on actual basis

6ABI annual membership fee

E) Endeavor to maintain its areas in such a way that it gives credit to the host Institute.

F) Shall not carry out any production process or up-scaling seed production without prior approval from ABI.

G) Agree to ABI for retaining its deposit of Rs. (Rupees ------only) as advance , which will be adjusted against the final payment at the end of the agreement period.

Amendment

This MoA may be amended by express consent of both parties. Amendments will be recorded by exchange of letters between the parties. Such letters, as and when exchanged, will form part of this MoA.

Specific administrative, financial and operational arrangements will be agreed through a separate agreement and exchange of letters as required, and they will also form part of this MoA.

Duration

The duration of this MoA is for three years from ---------to --------------- and is extendable further under special circumstances and evaluation of the progress by the ABI-SAC and Advisory Board.

Termination

Either party may terminate this MoA at any time prior to the full term of the MoA period provided a written notice is given to the other party 6 months in advance. Such termination will not affect payment/consideration for any/all services, orders, materials, or facilities committed in good faith prior to the effective date of termination.

Intellectual Property

ABI and -------------------------------------- recognize the importance of Intellectual Property as a component part of the agricultural research agenda. Both parties reserve any and all intellectual property rights, without limitation discovered or produced as a result of the cooperation related to this MoA. ABI and -------------------------------------- will make available to its developing country partners results of its activities by the most appropriate mechanism, which may include seeking of statutory IP protection where appropriate. No information or invention developed as a result of this cooperation will be protected through any form of statutory or non-statutory intellectual property right mechanism by either collaborator without express written approval from the other.

The exchange of materials, if any, for research under this MoA will be carried out following the ICRISAT Material Transfer Agreement.

The parties agree that:

Neither party shall disclose the other parties proprietary property or information to any third party whatsoever (in a public disclosure) without the express prior written approval of the supplying party.

Each party, through its Principal Investigator shall promptly provide an enabling disclosure to the other partys Principal Investigator of all Proprietary Information that is related to or developed through the project.

All rights to Subject Inventions made solely by employees of either party or will belong solely to that party. All rights to Subject Inventions made jointly by employees of the ABI and -------------------------------------- will belong jointly to both the parties

Within 90 days after the disclosure by a party to the other party of a discovery the discovering party shall notify the other party of its intent to file for protection.

ABI /Seed Works must give prior written consent before any invention that forms part of the cooperation is submitted for protection. Neither party will unreasonably withhold such consent.

Either party to the other, except those specially set, grants no rights or licenses under this MoA forth herein.

The Parties shall hold in confidence all confidential information disclosed by one Party to the other. They agree not to disclose the information to third Parties, and only to release and disclose such information to individuals within the Party's corporation that are directly involved with the project, on a need to know basis.

Notwithstanding the above, the Parties agree that either Party, subject to confidentiality agreements, may share information with potential cooperators in their territories.

Each Party disclosing confidential information to other Party shall do so in a document clearly labeled as CONFIDENTIAL INFORMATION.

The term "Confidential Information" shall not include materials or information that:

Are generally known to the public.

Are already known to the receiving Party at the time of disclosure, as evidenced by verifiable written records.

Becomes known to the receiving party from a third party lawfully entitled to disclose the same and receiving party informs the disclosing party within 30 days of the receipt.

Are independently known or developed by the receiving Party.

Are required to be discovered by law

Unless otherwise agreed to in writing, all confidential information remains the property of the disclosing Party.

Notwithstanding what is contained under various Clauses of subsequent MoA, new technologies exclusively developed by the scientist/s of either side would remain Intellectual Property Rights of the Institution concerned who would be free to use its research output in any manner consistent with the objectives of the Institution concerned.

Publications

Research findings as a result of this joint cooperative work of the two parties will be published in the public interest as mutually agreed upon. Prior to publication, publishing party will submit a copy of intended publication to other party to provide the other party an opportunity to review the proposed publication for a period of 60 days to identify possible patentable subject matter or confidential information.

Research findings published by either party will give credit to the other party's contribution and, at the same time, will be entirely responsible for the conclusion and interpretations reported.

However, both parties are expressly prohibited by this MoA from filing, without the written consent of the other party, patent applications disclosing research results or any method claiming their production and/or use.

Liability

To the extent allowed by the laws and constitution -------------------------------------- agrees to defend, indemnify and hold harmless ABI from any and all claims, injuries, damages or other liability arising in tort or breach of contract and resulting from any intentional or negligent (including grossly negligent) acts of -------------------------------------- principals, officers, agents or employees arising in favor of any person or entity. ABI agrees to defend, indemnify and hold harmless -------------------------------------- from any and all claims, injuries, damages or other liability arising in tort or breach of contract and resulting from any intentional or negligent (including grossly negligent) acts of ABIs principals, officers, agents or employees arising in favor of any person or entity.

Warranty

NEITHER --------------------------------------/ABI, NOR ANYONE ACTING ON BEHALF OF --------------------------------------/ABI, MAKES ANY WARRANTY OR REPRESENTATION, EXPRESS -OR IMPLIED, WITH RESPECT TO THE ACCURACY, COMPLETENESS, OR USEFULNESS OF THE INFORMATION PROVIDED PURSUANT TO THIS AGREEMENT, WHETHER OR NOT CONTAINED IN ANY WRITTEN REPORT; OR THAT THE USE OF ANY DATA, INFORMATION, APPARATUS, METHOD, OR PROCESS DISCLOSED IN ANY REPORT MAY NOT INFRINGE PRIVATELY OWNED RIGHTS. NOR DOES --------------------------------------/ABI, NOR ANYONE ACTING ON ITS BEHALF ASSUME ANY LIABILITY WITH RESPECT TO THE USE OF, OR FOR DAMAGES RESULTING FROM THE USE OF, ANY DATA, INFORMATION, APPARATUS, METHOD, OR PROCESS DISCLOSED PURSUANT TO THE WORK HEREUNDER. CONCERNING THE 'INFORMATION AND DATA SUPPLIED HEREUNDER, --------------------------------------/ABI MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR USE.

Notices

All notices or communications to either party by the other will be delivered personally or sent by registered or certified mail, postage prepaid.

ABI:

Agri-Business Incubator

International Crops Research Institute for the Semi-Arid Tropics

Patancheru 502 324

Andhra Pradesh, India

Attention: Head, Agri Business Incubator

Phone: 91-40-30713414, Fax: 91-40-30713074

--------------------------------------:

--------------------------------------.,

--------------------------,

-------------------------------

Nothing contained in this MoA shall be construed as conferring any right to use in advertising, publicity or other promotional activities, any name, trade name, trade mark, or other designation of either party to the other party (including any contraction, abbreviation or simulation thereof) without prior written approval.

Dispute settlement:

If there are disputes related to any particular clause of this agreement or interpretation of it, settlement of this dispute will be sought first through mutual discussion between the two parties. The parties will make every possible attempt to resolve in an amicable manner all disputes between concerning the interpretation of this Agreement and implementation thereof. Any controversy, claim, or dispute arising out of, or relating to this Agreement concerning questions of fact or law, or breach thereof, will be settled or determined by the Management of ICRISAT, which shall be binding and final.

Miscellaneous

This MoA will not be assigned, in whole or in part, by either party without the prior written consent of the other party.

The failure of either party at any time to require performance by the other party of any provision of this Agreement will in no way affect the right to require such performance at any time thereafter nor will the waiver by either party of a breach of any provision hereof be taken or held to be a waiver of any succeeding breach of such provision or as a waiver of the provision itself.

If any provision of this MoA is held to be invalid, illegal or unenforceable, then such provision will be severed and will not affect the remainder of this MoA.

Neither party shall be liable to the other party for any incidental indirect, special, or consequential damage, however, caused, and on any theory of liability, arising out of or related to the work performed under this MoA.

IN WITNESS WHEREOF, the parties hereto have signed this MoA in two sets of originals.

___________________________

_________________________________

Dr.

------------------

Chairman, Advisory Board

Managing Director

ABI, / Head of the Institute

-------------------------

Date:_____________________

Date: ___________________________

Witnesses:

(1)_____________________________(2) ________________________________

Annexure 8ABI-ICRISAT Incubation Rules & GuidelinesSection 1

GUIDELINES, RULES & PROCEDURES FOR ABI-ICRISAT RESIDENT MEMBERS

Application for membership of ABI will be made to Head, ABI-ICRISAT office. The Advisory Board constituted by the Host institute, will approve the most suitable applicants for residency in ABI-ICRISAT, will evaluate all applications:

Membership of ABI-ICRISAT

1 Eligibility

Start-up & small companies in the area of Agriculture and allied sectors. An enterprise, industry association/an R&D Company who desires to commercialize the jointly developed technology through ICRISAT.

2 Admission Criteria

Amongst eligible applicants following criteria will be observed for the short listing:

a. Homology between the expertise/facilities/services available at ABI-ICRISAT / host institute and technical facilities/assistance required by the applicant.

b. The technology or services should be based on innovative concepts and should seek to develop a proprietary position in association with the host institute.

c. The entrepreneur should have adequate technical education, business experience to exploit the technology and financial capability to bring the required finances

d. The prospective ABI-ICRISAT member has to prepare and submit a written business plan prior to selection/approval process. The plan should indicate key focus, market analysis, customers, costs, pricing and cash flow forecasts.

3. Terms of Residency

a. Residency period will be normally upto 3 years, extendable by another 2 years in special cases, depending on progress of incubation. Under no circumstance, however, the total period of residency will exceed 5 years.

b. Each applicant approved for membership by the ABI-ICRISAT Advisory Board, will have to execute an Agreement for utilizing incubation services including the infrastructure facilities and shall make the payment of utilities charges as prescribed in the tariff sheet of the ABI-ICRISAT.

c. Each successful applicant, admitted as a