NEW DELHI: Reliance Industries will partner technology giant Microsoft to incubate startups with seed capital , mentorship and technology “on a scale never attempted before”, according to a person with direct knowledge of the developments. According to him, RIL chairman Mukesh Ambani is keen that the company refresh its entrepreneurial spirit and engage fully with the country’s fast-evolving startup ecosystem.India’s largest private company with interests in petroleum, retail and telecom is keen to focus on startups and technology that are spawning billiondollar businesses in India.Reliance will operate through Gennext Ventures , an early stage venture capital firm it set up in 2010. The corporate VC arm has disclosed investments in two firms so far — Covascis Technologies Pvt . Ltd and Videonetics Technology Pvt. Ltd.The exact nature of the tieup is not known but the person cited above was certain that the startups, once identified, will be funded through RIL and there will be no limit on investments as at the seed stage, such companies require only .`50 lakh-.`2 crore.The Reliance-Microsoft start-up model is based on Y Combinator in the US, an American seed accelerator that provides capital to kickstart ventures, advice and connections in exchange for 7% equity. Y Combinator invests in the range of $120,000 (about Rs 75 lakh) and at the end of 2013 had funded 500 companies in 30 different markets, the most prominent being Dropbox, a free service that lets users store photos, documents, and videos and share them easily. Emails sent to RIL and Microsoft did not elicit a response.There are three reasons why corporates globally and in India are ready to fund start-ups, said Rajesh Sawhney, founder of GSF Accelerator, a company that invests in early-stage startups and is backed by 30 entrepreneurs.“R&D spends are going down, large companies are struggling to innovate (for instance Facebook, Whatsapp, YouTube even Google were independent start-ups that scaled globally and not spun out of large corporations) and finally they are struggling to get startups,” he said over the phone. “Globally, only Silicon Valley has been able to solve this problem and companies like Cisco, Facebook, Google are the biggest acquirers of startups.”It will be a challenge for corporates to replicate Y Combinator, according to him. A big reason for its success is its independence, stemming from not being attached to any corporate.Large Indian companies have been slow to recognise the potential of startups, he said, welcoming the move by Microsoft and RIL to join hands as any new source of funding and mentorship is great for new ventures, he said.According to the managing director of a venture fund who didn’t want to be named, “Microsoft has seen over the last decades startups steal its thunder literally under its nose. For example, it missed the social media wave. The best way for large corporations to catch up is to look closely at startups. Doing it in-house becomes tough as attention is always on the core, larger business. Hence funding and mentoring startups is the way out for large corporations to at least ensure they don’t miss out on new developments.”The selected startups will be provided a mentor, an industry veteran to guide the fledgling business. According to people familiar with the development, Microsoft India will provide ready access to its business units within India and overseas for piloting the incubatee companies’ products and services.“It’s much easier to start a company now as costs have come down via use of services like cloud and startups can take their ideas global via apps, much like WhatsApp did,” said the person cited earlier. The success of ventures such as Flipkart, Makemytrip and inMobi have only fuelled entrepreneurial activity in India.Microsoft operates accelerators in nine countries including the US, UK, Brazil, France, Germany, Israel, China and India, where the programme has mentored close to 50 startups.According to the person with knowledge of developments in RIL, a recent study by Harvard Business School highlighted that a majority of incubators in India lack the experience or skills to mentor entrepreneurs and have sprung up to capitalise on the financial incentives offered by the government to promote incubators. Even the credible ones operate just one centre while a few have up to three. But most are either based out of the top six cities in India or are associated with a particular college or university, such as the Indian Institutes of Technology and the Indian Institutes of Management, and hence do not cater to a majority of aspiring entrepreneurs. These are some of the gaps that the Micosoft-Reliance venture seeks to bridge.