At a time when most people are complaining of a fund crunch, a new league of investors and VCs is emerging. Reports surfaced that seven public sector oil companies are coming together to launch a $15 Mn (INR 100 Cr) startup fund.
This development was confirmed by three officials who are a part of the process.
The seven companies are Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd, Hindustan Petroleum Corp. Ltd, Gail India Ltd, Oil India Ltd, Engineers India Ltd and Oil, and Natural Gas Corp. Ltd.
All the companies will be pitching $1.5 Mn-$3 Mn (INR 10 Cr -20 Cr) each to create the fund. The fund will be used to foster, nurture, and incubate new ideas related to the oil and gas sector.
An official, on condition of anonymity, told Livemint, “So far, seven public sector companies are part of the INR 100 Cr crore startup fund. The fund is being set up under the aegis of the Ministry of Petroleum and Natural Gas.”
This startup fund will be driven by the oil ministry and could either be housed in the ministry or each company will have a office for the fund. As per the second official, “The structure and investment policy is still in the works. Discussions are on at the board level of respective companies. Something concrete would take shape by November-December 2016.”
The PSUs are planning to target engineering and petroleum institutes to fund startups. “We plan to reach out to the IITs (Indian Institutes of Technology) and NITs (National Institutes of Technology). The startups we plan to invest in, would be selected on the basis of relevance, innovative solutions in matters of refinery, new technologies in pipeline transportation, LPG etc where we are facing issues and where we can seek help from outside,” said the third official from a public sector company.
Prior to this in August 2016, State-owned Oil and Natural Gas Corporation Limited (ONGC), launched a $15 Mn (INR 100 Cr) fund for startups. With this move, ONGC aims to nurture and incubate new ideas related to working in the oil and gas sector. The oil and gas sector has not seen innovation in a long time. Hopefully, this new found interest of the government and PSUs will pave the way for other multinationals such as RIL, GAIL, IOCL, etc. to become part of the VC club.