It’s been long since I wanted to talk about my thoughts on Business incubators in India and the role it plays/should play in nurturing entrepreneurship. Though none would like to agree, there is clearly a disconnect between what ‘wannabe’ entrepreneurs expect out of it and what incubators currently deliver. This is evident from the interactions we have on a daily basis with many of them.
I’ve been in one of the early incubators in the country for more than 2 years. My decision to join a business incubator right after my graduation, was mostly to know about what it really takes to be an entrepreneur and whether am capable enough to deliver. I just didn’t wanted to get stuck in a routine job. So for me this was a mitigated risk and not a blind jump. I am now an entrepreneur and they have played a major role in it.
But, what really is a Business incubator and what it means to a startup ?
Different business incubators in India operate on different models.
1) Majority of the incubators are attached to a technical university/college and they provide access to the infrastructure resources and human resources of the institute. Now, the advantage of this setup is that it ‘encourages’ the students of those institute to dirty their hands with technology and its applications. They are given a peep into the world of entrepreneurship too, mostly through lectures, conferences, workshops etc.
Now the disadvantage of this setup is that ‘Professors’ run the show. There is more of technology and less of business. Lots of theory and less of practice. In short, the incubatees over there develop technology, thinks it is great, make a team and jump into the business without knowing what it takes to run a company in this competitive dirty market. Issue: Emphasis only on technology.
(some of these incubators attached to India’s premier institutes are open to only students of the same institute. Frankly, I still don’t get this logic. May be am tooo naive to understand the technical logic of these premier institutes for analysing the success chance of an incubatee)
2) Other set of incubators are associated with Management institutes. Now they bring a different set of skill sets. These incubators too are run by so called experienced professors. Most incubatees are MBA grads who have ‘sacrificed’ their lucrative placements and want to start a business and call themselves an entrepreneur. Coz u know, nw thts a fashion..a trend.
They love ‘charts, tables, presentations, bullet points’. They bring flashy market reports, figures, studies. They can talk well. They dress well. They have good experience in corporate sector too. Most convinces investors too. So they go ahead and start a portal, hire a CTO (u knw, these people are MBA grads and they think anything can be hired, including technology) and within couple of years they vanish like a fart in the air. Reason: Emphasis only on business part. Not on execution, not on technology, not on long terms.
3) Now there are these corporate types. They have HUGE plans. They think BIG. They hire E&Ys and Mckenzies of the world to do a feasibility study, invests crores, setup a huuuge infrastructure with common facility of equipments, cubicle space on lease etc. Now definitely this is a dream incubator for an entrepreneur specific to that field. You get all the necessary facility ready from day one. But there is a catch, they are only for ‘proof-of-concept’ study facility or belovedly known as ‘product development’ space. None gives a damn about ‘commercialization’. For them, incubator is setup for nurturing Idea. Not the idea generator. After developing the idea, let the entrepreneur goto hell. None cares. These work on lease model and also equity model. Well, only issue is that there are hardly any takers. Unfortunately E&Ys of the world couldn’t predict this. Reason: No pragmatic approach. Plans are in virtual reality.
4) There are few other models too. Working on remote mentoring/ only facility/ no facility, no mentoring, only money models too. I dont include them in the definition of business incubation. (my personal opinion)
So as an entrepreneur what do we expect from a business incubator ?
My take on Business Incubators:
- Should be run by a seasoned entrepreneur. This is a must. Scientists, professors should support in their respective areas of expertise.
- Mentoring is more important than facility space.
- There is no ‘one stop’ incubator. Incubator should have infrastructure required for product development (or should have workable tie-ups with such providers) specific to the area they operate in.
- Funding is mandatory. This does not mean mere ‘connecting to VCs or angels’. By funding I mean, putting pure risk money on ‘potential projects’ having prospects of huge returns. There is no dearth of this fund (DST has done an amazing job in this. Prof. Mittal spearheads this.)
- Responsibility of incubator should not end with incubatee completing the product development. Actual hand holding is required during 1st year of commercialization. Most misses this critical step.
- Business incubation is NOT charity. It should have a feasible business model (however long the gestation period is) and this should be well communicated to all stakeholders. Forming a section 25 company is the first step for this.
- For me, grooming program at NL introduced me to the basics of marketing, finance, legal, technology, team-building necessary for running a venture. This program gave confidence to the student in me to take the decision to be an entrepreneur. (this point could be optional)
To wannabe entrepreneurs reading this post: Sorry to disappoint you. Ideal conditions never exist. So incubator with all above mentioned features doesn’t exist. However, there are few who still are doing mindblowing job. Spot them, evaluate them, meet the people who are running the show and only then take the decision to join. Business incubators helps in a big way during the early stage, dont miss it.
To ecosystem care takers: Lots of hype, lots of noice, lots of campaigns…ideally all these should have contributed to lots of ‘quality startups’. But bitter truth remains, quality is missing from last statement. The earlier you realize this, the better.
Disclaimer: These thoughts are just my personal opinion and in no way reflect opinions of any organization am associated with now or in past. This is just a teaser. I want to post a series of what worked and what didn’t work in an incubator. Tune in.
If you think I got totally carried away or was factually wrong. Kindly comment and correct me. Am open to a debate on this.