Startups in India: How incubators can help
The Financial Express , Jul 18, 2016
With the rise in the number of startups and growing interest in entrepreneurship and the need to recognise good incubators, the Centre has certified 20 private organisations as incubators under the Startup India Action Plan. The Federation of Indian Chambers of Commerce & Industry (FICCI), the Associated Chambers of Commerce & Industry of India (Assocham), Indian Software Product Industry Round Table (iSPIRT), National Association of Software and Service Companies (Nasscom), Indian Electrical & Electronics Manufacturers’ Association (IEEMA) and Indian Angel Network and All India Biotech Association (AIBA) are among them.
Young startup founders are not that experienced. Their businesses too demand a certain depth of expertise in areas like technology, marketing and creating value proposition. Here, incubators can assist them in their initial phase of development by providing these various services. In India, it is estimated that there are about 200 startup incubators of which, about 50% are set up in non-metro cities—outside NCR, Bengaluru and Mumbai. According to the industry body Nasscom, there is a 40% year-on-year growth in the number of incubators.
Commenting on the development, Rajat Tandon, vice-president at Nasscom said, “This (government recognising 20 incubators) is the first step towards certification process. We would be assessing and determining the nature of the startup and defining the innovation aspects. Like in Israel, Singapore and other countries, with the government support the startups can benefit in many ways with such initiatives. It will be a learn as you grow approach for us too.” As of last week, the government has certified about 160 companies as startups, including Phoenix Robotix, Snapchai Productions, Cheetah Logistics, among others, giving them the tax benefits.
Explaining the need for more incubators in India, Apoorv Ranjan Sharma, co-founder and president of Venture Catalysts said, “In the past, we have witnessed many funded startups shutting down shop due to lack of guidance, business consulting and mentoring. Startups are having high mortality rate of around 75-80%. Hence, setting up a good incubation programme becomes very vital for helping the early stage startups, to reduce the chances of startup failures.”
Sharma, who holds a doctorate in incubation, says, “There are mere 200 incubation centres in India to cater to 4,500 odd startups. That is too less a number when compared to US, Singapore and China. To put India on the global innovation map, there is much needed push required to set up more technology business incubation centres to breed and nurture increasing number of startups. The public private partnership (PPP) model will be indeed a game changer.”
Beyond helping startups in building a sustainable business environment, startup incubators also share both tangible and intangible resources such as equipment, office space, services such as accounting, computing and legal services and provide the much needed help in raising seed funding, mentoring and training.
Last week, the Kerala government launched what it claimed as the world’s first online incubator —SV.Co—exclusively for college students to help them take up entrepreneurship. The programme, modelled on technology incubators in the Silicon Valley, US, offers both regular and virtual incubation with regular incubatees being situated at its physical campus while virtual incubates can use the address of Startup Village for business communications.
Big corporates are also setting up incubator programmes to help the emerging startup ecosystem. For instance, Tata Group launched T-Hub, online payment giant Paypal setup PayPal Incubator, tech giant Infosys, as part of the Infosys Innovation fund, launched Infosys Incubator in March last year.
Hemant Singh, co-founder and chief strategy officer at Houssup, an e-commerce platform for interior design incubated in Startup Oasis Rajasthan, said, “Starting a new business is similar to giving birth to a baby. As the baby is kept under parental super vision during the initial years, every startup needs a lot of guidance, support and positive energy during its formative months. Before reaching the incubator, Houssup was just a vague idea in the minds of founders. The incubator helped us to discover the immediate pain points of the customers which we could not have known before talking to so many people. Later, incubator also helped us making a business plan and how to pitch the startup to investors.”