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Incubators

How Incubators are Shaping the Indian landscape

The emerging incubator ecosystem in the Indian landscape is a welcome shot in the arm for the starry-eyed startups
How Incubators are Shaping the Indian landscape
Image credit: Shutterstock
CEO, Afthonia Labs
4 min read
Opinions expressed by Entrepreneur contributors are their own.

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According to the NASSCOM India Startup Ecosystem report, India has retained its position as the third largest Startup Ecosystem in the world.  More than 1,200 startups came up in 2018, including eight unicorns, taking the total number to 7,200 startups, NASSCOM reported. Considering the scale of the Indian market, even average startups can find a viable market even with average ideas and poor quality. However, on the flip side, India with its diversity and wide-ranging issues also offers a fantastic test base to develop a robust and innovative product.

In this dynamic and complex landscape, while an increasing number of entrepreneurs are emerging, a report by IBM Institute for Business Value and Oxford Economics found that 90 per cent Indian startups fail within the first five years. The emerging incubator ecosystem in the Indian landscape is a welcome shot in the arm for the starry-eyed startups.

For first time founders, having a competent mentor or incubator support can spell the difference between boom or bust. Stepping in from the proof of concept stage, incubators make possible access to industry experts for these aspiring entrepreneurs to test the veracity of their business models and products. Providing a safe testing ground to further iterate and innovate within a nurturing ecosystem, entrepreneurs can be groomed and nurtured through knowledge sharing with peers apart from infrastructure support.

India’s Incubation Opportunity

As India’s startup system continues to troop ahead in quality alongside quantity, the Nasscom-Zinnov report on Indian Startup Ecosystem (edition 2018), indicates several factors -- like rise in unicorns, young demographic, first to the world ideas, revival in investments, evolved investors and adoption of new technologies -- which position India as a huge opportunity ground in the startup world attracting the attention of serious accelerators and incubators like Google Anglepad, Entrepreneur First, Sequoia and more.

Evolution in the startup space has seen the incubator ecosystem keep focused pace alongside. Comprising of government-backed academic institute-based technology incubators, MNCs, private home-grown business incubators started by industry veterans and startup accelerators supported by companies and VC funds, the I&A space is burgeoning in India reaching 210 in 2018, with a y-o-y growth of 11per cent .   

Apart from incubators providing cohort-based direction and mentorship to help these young founders build scalable and sustainable businesses they also help startups benefit in other ways such as:

  • Credibility: They provide credibility to startups opening avenues for finding investors. Getting the right valuation and capital access at the right time is made easier with their network of investors and venture capitalists. This is a big challenge for Indian startups where incubator intervention is welcome. As a global study by Capria VentureBasecamp of 200 accelerators indicates that while the top global funding success rate was 75per cent -plus, the average stood at 35-40per cent , and India’s was a measly 5-8per cent .
     

  • Insight: Incubators can also help startups navigate the complex statutory and regulatory space and help access the relevant government schemes and finances available for them.

  • Access: Their access to global influencers can broaden the horizon for startups who otherwise would have remained restricted with a more local or regional focus. These influencers can help modify their perspective and help with expansion in global markets.

The rise of support ecosystems that act as enablers for Indian startups is a growing trend with state governments funding their own Incubators. Atal Innovation Mission is setting up 101 incubators, of which 30 are already operational. With the recent push for bilateral A&I missions from South Korea, France, UK and the European startup ecosystem, there is enough evidence to suggest that incubators can play that critical catalytic role in shaping the Indian startup landscape which is poised for its next phase of growth by making the space safe and supportive for innovation and disruption.

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