Former Bell Laboratories President Arun N Netravali is setting up a $250 million venture capital fund, which will focus on funding start-up firms in the US outsourcing research and development projects to India.

Netravali told Business Standard in an interview on Wednesday: "At present, only big companies are outsourcing to India. The challenge is to get the smaller companies to do so. The idea is to close the fund by the end of the year. A part of the money has already come in."

The company, called Omni Capital, includes a senior banker among others, but Netravali refused to divulge their names.

Netravali, an alumnus of Indian Institute of Technology, Bombay, who studied in the US before joining Bell Labs, acknowledged that US companies would be chary of outsourcing R&D to India, fearing pilferage of ideas.

But he said as a technologist he would be better placed to persuade them to outsource work to India.