A successful entrepreneur is an individual who passionately drums up resources and creativity, to unearth new market opportunities. But the ecosystem – consisting of many players, ranging from the government to universities – plays an important role in fostering entrepreneurship. Incubators offer mentors who can give you the right advice at the right time, classes that can change the way you understand how your company can operate in the world, and funding in exchange for equity in your startup. This could be an academic institution, or a funding /investing arm like an angel group or a corporate.
You know something is brewing in the world’s fastest growing large economy when specialized incubators, ranging from student entrepreneurs, biotech and agriculture to connected mobility start cropping up to help startups across the country. As of December 2016, there were over 140 incubators and accelerators in India – over four-fifth of which were either academic or independent.
As India continues to mature as a startup hub, Incubators/Accelerators (I/As) have a big role to play in this growth by supporting and nurturing budding entrepreneurs and startups with strong mentorship, providing necessary technical support, generating funds, among others and thus, helping them in their sustainable growth. However, all incubators are not created equal.
Many of the incubators are known to fail due to reasons including, but not limited to, lack of top-quality mentors and professional staff, little to no communication regarding intangible benefits like mentorship and misuse of incubators for routine work than real contribution to success. According to a study published in SSRN Electronic Journal, Indian Incubators have created a positive impact on and have been contributing towards economic growth of India. However, there are many traits of successful incubators which can still be imbibed for better and more efficient working.
Apart from a program’s alumni, mentors, culture-fit, coursework and location, there are numerous other factors which make an incubator great. The following list throws some light on the same:
- Survival Rates: Most accelerators provide startups the tools and network to survive for 12 months. The more the number of startups surviving after a year, the better an incubator might be considered.
- Valuations and Exits: If companies coming out from an incubator’s programs are receiving higher valuations than their competitors, it is a job well-done (at least on the part of the incubator).
- Fundraising Rounds: Even though fund-raising is never a proof a business success, it can very well be a good proxy for it. The more companies are able to reach their funding goals post the program, the better an incubator can be considered.
- Networking Opportunities: A good incubator has top-level mentors and knows how to engage them to be effective. It also has people who can keep up with-the trend and can help entrepreneurs with latest developments – be it in research or partnerships.
- Community Approach: Only some incubators go through the pain-staking and time-consuming task of creating a helpful community of founders. But the ones which do experience multi-fold returns in the long run.
- Multiple Mentors: Although it can turn out to be a double-edged sword, it can present a richer opportunity for the founder. An incubator also benefits its startups by allowing both the founders and mentors to choose which ones they want to work with.
- Centre of Authority: A centre of authority, one who commands the respect of founders, mentors and partners and who is more of a facilitator than an operating participant can be a big boon for all the stakeholder involved, in the long run.
All these, along with proper alignment of economic interests of all the participants involved can take an incubator a long way. An incubator in which most of these traits are prominent is the Indian Angel Network. It is Asia’s largest network of Angel investors keen to invest in early stage businesses, which have potential to create disproportionate value. With over 400 investors across 10 countries, IAN has invested in 100 odd companies, these are spread across a variety of sectors: Education, Healthcare, QSR, E-Commerce, Gaming, Semiconductor, Robotics, Manufacturing, etc.
However, incubators are not the only ones coming ahead to help startups. There also organisations like NASSCOM. In 2013, NASSCOM started its ‘10,000 Startups’ initiative, to aid the growth of 10,000 startups in the country over the next 10 years. In the five years since its inception: nearly 300 start-ups have been incubated; $40.7 m funding has been raised; and 2,470 startups have been impacted, of which 330 received funding, and the rest have received mentorship.
As it goes without saying, there are a thousand roads to make your startup great and incubators are just a part of it. Just like the beauty lies in the eyes of a beholder, it is up to the founder to see which incubator suits their startup the best.
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