Ratan Tata, the chairman of global business conglomerate Tata group, has given a go ahead to a new initiative where Tata Trust will help startups in India which are high-risk and have uncertain business model in which no other investors do funding.

Additionally, under the same initiative a number of lab-style incubators for startups will be established across India.

Tata Trust's FISE or the Foundation for Innovation and Social Entrepreneurship is both a social impact fund as well as a business incubator, which was set up 18 months ago and has funded nearly two dozen startups across businesses that range from cleaning the Ganga to building low-cost robotic exoskeletons for disabled workers. FISE is also supported by the government's Department of Science and Technology (DST).

The key objective of Ratan Tata's Trusts and FISE is to fund those kinds of startups and business models which no other investor will normally touch with a barge pole.

Additionally, Tata Trusts has also announced ₹500 million fund for startups and ₹300 million to these incubator labs, besides the ₹100 million from DST.

According to Manoj Kumar, who serves as Tata Trusts senior advisor, FISE’s objective is not profit or valuation, but to brush up and polish startups to help them take where others will be interested.

"When no one else gives these startups funds, we do. So, you could say our model is to fund high-risk, uncertain return business models," Kumar said.

Unlike other funding institutions like venture capital and angel investors, FISE does not assist microfinance startups or an e-commerce fashion platform which other venture capitalists will jump at. FISE instead helps ideas having social impact, for example a portable MRI machine that can deliver reports at one-fifth of the cost or an easily accessible world-class toilet.

Manoj Kumar further explained in a business daily that he was being told by Ratan Tata, when they were planning the venture, that -- "If you want to have deep and irreversible impact on a social scale, then you have to try different things, and not use the same approach again and again".

The above development was first reported in Business Standard.

Besides all this, FISE’s is also setting up an incubator facility -- Tata Smart Energy Incubation Center -- a 40,000 sqft facility in Delhi’s Rohini, which is expected to be launched next month, along with a health-care facility as well. Thereafter, at least “one lab will go live” every six months for two years, said Kumar, adding that each centre will be either industry or theme focussed.

Earlier yesterday, Haryana state government has also announced the plan to set up an startup incubator called 'Global Start-up Village', which will be India's biggest startup hub and will be located in Gurugram in next couple of years.

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