Being a start-up backed by marquee funds will no longer be enough to seek a placement slot at the Indian Institutes of Technology.
Before the IITs begin their final placements this December, start-ups will have to furnish their balance sheet and annual reports of the past three years to the premier technology institutes.
According to sources at the IITs at Kharagpur, Kanpur, Mumbai and Guwahati, the institutes have decided to introduce certain due diligence measures before allowing start-ups to participate in placements.
The measures include steps like review of the balance sheet of the past three years, study of the annual report and independent feedback from industry experts, as well as alumni employed in the past by these start-ups.
While implementation of each of the steps will be at the discretion of the individual IIT, a unanimous decision to increase filtering and due diligence of start-ups was taken recently under the All IITs Placement Committee (AIPC), which meets on a number of occasions every year to discuss various aspects of conducting the placement process.
“The kind of experiences that each of the IITs have had in the past and for the welfare of our student community, it has been decided that we will enhance due diligence measures on start-ups. We will study their financial standing, the kind of industry and sector that they are in and their annual reports. We will also speak to our alumni hired at these organisations,” said a placement committee member of one of the IITs.
It is under the AIPC that the IITs are collecting and comparing information on student experience with start-ups.
Apart from alumni, the IITs say they will also reach out to independent analysts and investors to understand the longevity or credibility of a start-up. The AIPC has left it to the IITs to decide on the degree of due diligence.
“We have decided to be more cautious in our approach to inviting start-ups on campus. We have decided to contact start-ups that have a credible name and have been in existence for over three years. Also, firms which promised and did not issue offer letters last year will not be invited this year,” said an official from the IIT in Mumbai. The IITs argue that they are aware of the hiring policies of regular recruiters, but with start-ups they are not very sure.
“We think applying more due diligence will go a long way to secure the future of our students. We have received interest from over a dozen companies so far, and the interest from start-ups has increased. Some start-ups, which have approached us, are a few months old with fresh funding from investors. We will take a decision shortly whether to invite young start-ups,” said an official from one of the IITs on the condition of anonymity.
Citing recent reports of Housing.com planning to lay off some of its employees, a placement committee member of one of the older IITs said, “This is one of the reasons why we are emphasising on due diligence. Many times the start-ups themselves don’t judge their requirements properly while hiring. Sometimes, down the road they change their requirements.”
