Published on March 16, 2020
Ahmedabad: A working paper titled ‘Incubators in India — A Multilevel Study’ by IIM-Ahmedabad (IIM-A) says that the period from 2015 to 2018 recorded a rapid expansion of startup incubators and three states — Gujarat, Maharashtra and Karnataka — set up most of them.
The study carried out by IIM-A assistant professor Neharika Vohra and CIIE.CO partner Supriya Sharma says that compared to metro cities, the growth rate of incubators in non-metro centres was very high. Analysis of the incubators also suggested that over 60% of the Indian setups were housed within educational institutes. The rest were supported by businesses, industry bodies, or ministries.
“Gujarat followed a similar model. The majority of universities/institutes have an incubation centre, most affiliated to government schemes,” said Vohra. “Many of them are channelling the state government’s support such as the availability of Rs 10 lakh for product development and an equal amount for marketing products.” Vohra went on to say: “Our estimates tell us that there may be over 180-200 startups that received such support. In terms of sectors, we see startups in pharma, industrial manufacturing, education and energy sectors among others supported by these centres.”
Sharma said there is value in enabling potential entrepreneurs get a closer brush with the process of setting up and running a business — without the glamour or heroism attached to it.
“We find initiatives like SSIP hold immense promise as they enable students/alumni experiment, build and fail fast while pursuing their degree/course,” she said.
Of the 284 incubators covered in the study, 90% were set up after 2000 and 70% of them were set up between 2008 and 2018. Government and sectoral push along with favourable business climate could be the possible reason for the spike, said researchers.
Business advice, connection with mentors, domain experts and assistance with fund-raising were found to be the most common services whereas assistance with branding and support with physical infrastructure were the least common. The study found wide disparity between incubators in terms of activities, policies and support.
What startups want
The researchers interviewed startup founders to understand their needs in the incubator ecosystem. Some of the needs included connecting with specialized mentors and subject experts, help in connecting to customers and vendors, and advice on branding and brand building and better processes to remain engaged. The study also found the presence of incubators lopsided and recommended more in northeast, east and central parts of India.
Need for better assessment
‘Given the diversity among incubators, relevant performance metrics need to be devised to measure the performance robustly by incubators, policy designers, and researchers of incubators. New ones can be assessed on startups they are able to attract whereas mature ones may be evaluated on the success of supported startups as well as the ability to generate resources and become sustainable, the study said.