DARE - Because Entrepreneurs Do

A business incubator is not about chickens, but it has everything to do with ‘hatching’—hatching the dreams of entrepreneurs into stable businesses.

N. N. Shreejith nominated by a leading business publication, as one of ‘India’s Most Promising Entrepreneurs’ is a shining example of well-hatched dreams. In an interview, Shreejith states that challenges of starting an innovative venture were overcome only because his venture ROPE was incubated at Rural Technology and Business Incubator (RTBI) located in IIT, Chennai.

Business incubators like RTBI provide resources to young companies, helping them survive and grow through the vulnerable start-up period. According to Poyni Bhatt of Society for Innovation and Entrepreneurship (SINE), IIT Mumbai, “A business incubator plays the role of an accelerator to start-up ventures”. While 4000 incubators exist worldwide, the incubation model is adapted to meet a variety of needs from fostering commercialization of university technologies to increasing employment in economically distressed communities to serving as investment vehicles. Bhatt, Chief Administrative officer of SINE, one of India’s major incubators, notes that, “Various incubators have different focus areas as a value addition- some focus on high quality physical infrastructure, some on technology support, some have higher strength in providing academic and research inputs and so on. At SINE we try to focus both on infrastructure as well as soft support like business advisory and mentoring, access to business network, facilitation for funding, and also experience sharing between the incubates”.

Before we get into the depths of the role of business incubators, let us step back to the 1950’s Watertown city in New York, where it originated. An exodus of manufacturing industry to the South and the West coast of the US made this city face considerable job loss. An incubator serving local poultry-growers closed down too. This vacant building was refurbished by then Mayor Frank Mancuso, to encourage entrepreneurs to use the building as a place to get their businesses started. To encourage entrepreneurial activity at any cost, Mancuso, now known as the ‘father of business incubators’ charged minimal rent for this warm workspace and provided access to a telephone. Even with such limited resources, a number of new start-ups emerged from the building, and the program was successful enough to attract the attention of the local press. When asked, “What is going on here?” by a media person, Mancuso replied, “I don’t really know what to call it…we used to incubate chickens in here, and now I guess we’re incubating businesses”.

With focussed efforts to beat downsizing today, the US President Obama symbolises the modern-day Mancuso. Obama’s recent announcement to fund a national network of business incubators to the tune of $250 million has brought the spotlight back on business incubators.

India has over 40 business incubators as per 2007 figures compiled by the National Entrepreneurship Network (NEN). Commenting on their potential to spur economic growth, Pravin Gandhi of SeedFund and governing board member of SINE, points out that, “It is necessary to raise awareness amongst the entrepreneurial community about ‘What Business incubators Do’ and ‘What Incubators Don’t Do’ “.

What Business Incubators Do?
Today, these facilities don’t just offer affordable rental space, but also, onsite support services and technical assistance (including financial and legal advice) until the entrepreneur eventually ‘graduates’ or leaves. “The attributes of a good incubator”, as Bhatt of SINE mentions, “are a combination of infrastructure, process and people designed to nurture start-up (with potential of high growth) businesses. Also, the totality of the incubator makes it a network of individuals and organizations from which one sources technologies. That is why you find most incubators associated with academic and research institutes, although there are some private incubators backed by VCs or industries too”.

Key elements of a successful business incubator

Bhatt summarizes the role of business incubators as, “A shared office-space facility that provides its incubatees with a strategic, value-adding intervention system through mentoring, business assistance and monitoring. Thus new venture development process is facilitated, while simultaneously making ventures aware of major risks and minimizing the cost of potential failures”.

We were working, living, eating with fellow entrepreneurs. There are similar stage companies around you and although each venture is unique in its own right, most of the early stage problems are similar if not the same. You learn from each other's mistakes. And finally, the backing of a corporate group like Nirma gave the venture a lot of credibility—it helped a lot in getting co-founders for my venture. - Govind Agarwal Founder, Anaxee Technologies

I joined NirmaLabs right after my graduation as I wanted to know what it really takes to be an entrepreneur. This much-needed awareness was provided through the 7-month grooming program offered by the incubator. It introduced me to the basics of marketing, finance, legal, technology and team building. This experience came handy when I started Axio Biosolutions after spinning off from the incubator in 2008 - Leo Mavely Founder & CEO, Axio Biosolutions

Leo Mavely, founder & CEO, Axio Biosolutions, agrees. He recalls, “I joined NirmaLabs right after my graduation as I wanted to know what it really takes to be an entrepreneur. This much-needed awareness was provided through the 7-month grooming program offered by the incubator. It introduced me to the basics of marketing, finance, legal, technology and team building. This experience came handy when I started Axio Biosolutions after spinning off from the incubator in 2008”. Leo’s Axio Biosolutions was started to provide quality and affordable life-enhancing medical solutions and he is convinced that, “The initial seed fund provided by NirmaLabs to develop a proof-of-concept gave the much needed financial security to carry out product development. And, access to a wide network of entrepreneurs, technocrats, academicians, suppliers helped me build my initial core team to raise further rounds of finance and find other associates for the company”. Before summing up the role played by the incubator, Leo reveals that Axio’s first product-a medical device dressing to stop profuse traumatic external bleeding- is going to be a first-of-its- kind in India. “Dot points to summarize the incubator’s role for me would include Awareness & knowledge about running a start-up, Mentoring, Validation of idea, Funding, Space to operate and Network”, Maveli adds.

Comments (1)

Subscribe to this comment's feed

Interesting....
written by Sundar, November 01, 2009

Running a commercial incubation service, with interests in the "old economy" space, am often struck by how few there are of our ilk. Most of the incubation stuff in India it seems works on an "academic" center, or in the technology space.

As for the VC'/PEs, they seem most interested in maximizing their returns, rather than in providing the eco-system that will sustain their investments.

Thoughts?

report abuse

vote down

vote up

Votes: +1