As the start up culture grows and evolves rapidly in India, incubators in collaboration with educational institutions look to provide new companies a springboard to stability.
Today, a number of students from different educational sectors and institutions have unique ideas of how to solve a problem, target a certain market segment and accordingly run a successful and profitable business. Although jobs with established companies continue to remain popular, an increasing number of students are attempting to give flight to their ideas and build something from scratch. While the genesis of a new entrepreneurial venture is an innovative idea, the journey from inception to conception and finally consolidation is an arduous one, especially for students who are just starting out. Often, the strength of an idea is not enough to sustain a venture in this competitive and ruthless business environment. It is imperative that at such times, an idea receives appropriate help and guidance. That’s where an incubator can provide assistance.
An incubator is a formal organisation designed to help new businesses that are just getting started with regards to different factors like capital, office space etc. “Its sole purpose is to help entrepreneurs solve some of the problems commonly associated with running a start-up, and help accelerate their growth,” said Chandra Mauli Dwivedi, Director, NL Dalmia Institute of Management Studies and Research, that has recently started an incubator for their students.
Apart from physical infrastructure and capital, these incubators also help nascent ventures to network with relevant industry professionals as well as potential investors. “Hardcore tech start-ups struggle to get funding or industry attention because of the long gestation period. We try to build an environment to help in these areas,” says Poyni Bhatt, Chief Operations Officer, Society for Innovation and Entrepreneurship (SINE), the business incubator at IIT-B.
In addition to providing fully equipped office space at subsidised rates, SINE’s location at the IIT campus makes it easier for start-ups to access labs and other technical facilities. Such business accelerators help the overall economy of the country by contributing to employment.
“Developing skilled entrepreneurs will not only engage the youth, but also accelerate employment,” says Ajay Ramasubramaniam, Director, Business Development, Zone start-ups, an incubator run jointly by the Bombay Stock Exchange and Ryerson University, Canada.
Incubators associate with a start-up for a fixed duration. For example, SINE provides assistance to a start-up for a period of three years, during which it provides an investment of Rs 20-25 lakhs in the form of a loan or equity. “After every round of investment the company receives, we try to help liquidate the stock,” says Bhatt.
According to Dwivedi, the type of association depends on the start-up idea. “Normally the tie-up is for a year, at the end of which, students are expected to take the model out of the campus to the market place. If the idea is promising enough, equity in the venture can be worked out,” he says.
So how does an incubator decide which start-ups to back every year? “We look for students with relevant passion, focus and relevant industry expertise. Complementary business, technical or even design skills also help,” says Ramasubramaniam. The business plan also plays a crucial role and is generally scrutinized by an internal as well as an industry specific external team. “We look for a plan that innovatively delivers the product or service to the market as well as the financial and human resource implications of the plan,” adds Dwivedi.
Stakeholders believe that the start-up scenario in the country has drastically changed both quantitatively and qualitatively. “The maturity of start-ups has increased in terms of understanding ideas, business plans, what it means to raise money from outsiders etc. It is a more vibrant ecosystem as compared to 2003,” says Bhatt.
Urjas, a student start-up that began under the aegis of SINE focuses on renewable energy technology for the masses. Since its inception in 2012, the company had to undergo a few permutations, during the course of which, the incubator’s help came in handy. “Such quantum changes can be painful. We received the much needed mentorship, emotional support as well as resource backing from SINE,” says Pradeep Podal, Founder, Urjas.
It is evident that incubators have played a significant role in encouraging student entrepreneurs. While the association may not be permanent and vary from a case to case basis, every arrangement looks to provide a suitable ecosystem, wherein a new business venture can thrive and flourish.