By Aneesh Khanna, Early-stage startup coach & consultant
Introduction
The Indian Entrepreneurial ecosystem is going through exciting times. There are over 1.15 lac registered startups under DPIIT (Department for Promotion of Industry and Internal Trade), as on 31 st December 2023. Tier II and III made up 50% of these startups. In the early stages of an Entrepreneur’s journey, there are a few critical things, like mentoring, expert advice, access to small capital to create an MVP(Minimum Viable Product), converting Proof of Concept to a prototype, help with understanding startup legal compliance, co-working infrastructure, access to hardware/software labs, networking with potential seed stage investors etc. Incubators play a key role at this stage of the Entrepreneur’s journey, in providing infrastructure, mentoring, financial support and access to networking.
At this point of time, there are over 900 Incubators across the country. An incubator’s main the goal is to produce successful startups that will leave the Incubation program, being financially viable and independent. These incubator graduates have the potential to create jobs, revitalize communities, commercialize new technologies, and strengthen the overall economy.
Role of government through startup India
Central government schemes are available to create Incubators, under the following structure and focus areas:
1) TBI (Technology Business Incubator) under DST (Department of Science and Technology)
a. Objective is to promote New Innovation, Speedy commercialisation of Technologies, and mentoring to startups in areas of legal, financial, technical, and Intellectual Property.
b. Setting up a TBI is usually done by an academic institution or a non-profit legal entity with affiliation to an academic Institution. The current sectoral focus areas of TBIs are manufacturing, agriculture, healthcare, clean tech, energy, water and the Internet of Things (IOT).
c. Currently there are over 90 TBIs set up across the country.
2) BioNEST, through BIRAC(Biotechnology Industry Research Assistance Council), under DBT (Department of BioTechnology)
a. BioNEST was launched with a vision that focussed on fostering a biotech innovation ecosystem in the country.
b. BioNEST provides Incubation space, advanced equipment, technical & business mentorship, networking opportunities and mentoring for IP, Technology Management, Legal & regulatory compliance etc.
c. Currently there are 75 bioincubators in 21 States/UTs, supported through BioNEST. BioNEST covers partnerships with 377 academic institutions, enrolled 1800 Incubatees, with over 800+ Products/Technologies that have been commercialised and 1300+ Intellectual Property (IP) filed.
d. BIRAC also created a SEED (Sustainable Entrepreneurship and Enterprise Development) fund, which supports the BioNEST Incubators. The Incubators provide ‘Space, Services and Knowledge’ & the SEED program provides the initial capital to the incubatees. The grant is seen as a ‘bridge’ between the promoter investment and Angel/Venture Investment or debt through commercial Banks.
i. 16 BioNEST Incubators have access to the SEED Fund
ii. SEED Fund provides up to Rs 30 lacs
iii. Rs 36 Cr available with the Incubators
iv. 122 Startups have received Investments till date
v. 78 of which have had follow-up rounds of close to the tune of Rs 500 Cr
3) TIDE 2.0 (Technology Incubation and Development of Entrepreneurs), under MEITY (Ministry of Electronics and Information Technology)
a. TIDE 2.0 promotes tech entrepreneurship through financial and technical support to incubatees engaged in supporting tech startups primarily engaged in using technologies such as IoT, AI, Blockchain, Robotics, etc.
b. There are 51 Tide 2.0 Incubators, supporting 2000 tech startups
Grants and Seed Funds through Incubators:
Being an Incubatee, also opens doors to various Grants and Seed fund opportunities under some of the Central Government programs like:
a) SISFS (Startup India Seed Fund Scheme) – Upto Rs 20 lacs as a grant for Proof of Concept or Prototype development. Upto Rs 50 lacs of investment for Market Entry and commercialisation through convertible debentures or debt linked instruments.
b) NIDHI SSS (Seed Support Scheme) – Upto Rs 50 lacs as investment
c) NIDHI EIR (Entrepreneur in Residence) – Rs 30,000 per month given to aspiring or existing Entrepreneurs
d) NIDHI Prayas – Rs 10 lacs of funding to turn Proof of Concept into Prototype
Other notable Incubators across the country:
a) IIM Bangalore’s NSRCEL Incubation Centre for Startups & Entrepreneurs has incubated over 1400 startups since inception
b) T-Hub (Collaboration between the Telangana government, 3 academic institutions, and the private sector) – Incubated 647 startups, which have cumulatively raised over Rs 9000 Cr in funding, with 38% of incubatees being in raising additional funding
c) Venture Catalysts – A Private sector Integrated Incubator, with a focus on seed-stage investments and support. Have backed over 100 startups. Incubators provide that first step for young aspiring Entrepreneurs, through access to Infrastructure, mentoring in Finance, IP, Legal frameworks, and a small grant/investment to move from ‘Idea’ to ‘Proof of Concept’ to ‘Prototype’.
The acid test for the success of the Incubation ecosystem in India will impinge on:
a) Quick commercialisation and movement from being Incubatees to running their startup with a strong product market fit.
b) Follow up funding rounds, to scale the startup’s products and services, and successfully take their IDEA to Enterprise Journey.