Large companies are the new startup garages, not universities, says Anand Mahindra

Large corporations, and not necessarily reputed tech schools like IITs or MIT, are the new startup garages as big businesses race to stay relevant, Mahindra Group Chairman Anand Mahindra has said.

"The new garage is not necessarily in the MIT or Stanford or the IITs. It is in fact, back in large companies. The cycle has turned, where large companies are not turning obsolete," Mahindra said.

Large corporations are emulating startup ecosystems within themselves, he added.

"In a sense, what we are doing is putting up a Silicon Valley inside a company," added Mahindra.

A corporate garage, unlike a dedicated venture capital or private equity fund, also has the advantage of being more flexible and staying invested for a long-term, he said.

Terming the domestic startup ecosystem as "extremely robust", Mahindra said even though it trails the US and Israel at present, India is set to become the "hottest startup spot in the world."

"You are only going to see more action. Whether it is about unicorns or cockroaches, you are going to see plenty of action," he said.

Mahindra said people who launch startups within his group are called "intrapreneurs" and are spread across various verticals, including Tech MahindraBSE 1.39 % and the flagship auto company Mahindra and MahindraBSE 7.40 %.

The close to USD 20-billion diversified group has a dedicated entity called Mahindra Partners that acts like the group's venture capital and private equity arm, and invests in companies both within and outside the group.

"They have been given a notional allocation by our board. We have a very different approach. It is not a fund, because when you operate as a fund there is a point at which it is redeemed," he said.

Mahindra Partners' website says it is a $900 million PE and VC division of the group. Tech Mahindra, the country's fifth biggest software exporter, has also earmarked $200 million for investments in startups.

Image credit: Indiatimes