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What are the different types of technology business incubators (TBI) in India? How do they compare in terms of operations and outcomes? What are the long term implications of the TBI movement?
A scholarly treatment of these questions are provided in the book Technology Business Incubators in India: Structure, Role and Performance by IISc professor MH Bala Subrahmanya and research associate HS Krishna.
See also my reviews of the related books The Startup Community Way and Startup Accelerators: A Field Guide, as well as the Startup Guide book series featuring entrepreneurship ecosystems in cities like Barcelona, New York, Johannesburg, Cairo, and Singapore.
Here are my takeaways from this 150-page monograph, summarised as well in the table below. Prof Bala’s earlier book is Entrepreneurial Ecosystems for Tech Startups in India (see my book review here).
See also YS’s Startup Hatch section, with profiles of over 30 accelerators, incubators, coworking spaces, and makerspaces in India.
The authors begin with an extensive literature review on the importance of entrepreneurship for economic growth, and the role of technology business incubators (TBIs) in supporting regional development, increasing local innovation, economic revitalisation, and diversification.
TBIs can strengthen university-industry interactions and startup ecosystems. They play an important role in helping startups during their early and vulnerable years. They are a link or bridge between technology, domain expertise, entrepreneurial acumen, and seed/growth capital.
The many forms of TBIs also include research parks, knowledge parks, industrial parks, technopoles, and seedbeds.
While incubators help startups in formative stages, accelerators help already existing startups grow fast and scale-up (often in fixed-time cohorts). The rise of the digital economy spurred the accelerator movement, marked by the launch of Y Combinator in 2005.
Coworking spaces launched in San Francisco in 2005, and can be regarded as a milder form of an incubator (without financial support for startups). Another trend to watch is the rise of virtual incubators, particularly in the ICT sector, the authors observe.
TBIs offer technological, managerial, financial, and social foundations for startups. They provide startups with services such as office space, shared resources and services, and access to external networks. Hardware and ‘soft’ infrastructure are a mix of common and specialised offerings, the authors show.
Mentorship is provided in tech and business domains, e.g. R&D expertise, business plans, and fundraising. Thus, TBIs accelerate and shorten a startup’s learning journey, and provide credibility in the early stages. The aim is to make startups grow “as healthily and quickly” as possible.
TBIs conduct promotional activities to attract potential startups and showcase their achievements. This includes content creation, social media activities, and brand building.
TBIs in India
The authors trace how TBIs in India first emerged through the initiatives of NSTEDB (National Science and Technology Entrepreneurship Development Board), formed in 1982. Its schemes included STEPs (Science and Technology Entrepreneurship Parks).
REC Tiruchirapalli set up the first STEP in India in 1986. According to NASSCOM data, there were 335 incubators in India in 2019. Government agencies supporting incubators include DST, MeITY, Ministry of MSME, NITI Aayog, ICAR, AIM, and NSIC.
Some of the notable TBIs mentioned in the book are ALEAP Incubator, IIITH-CIE, IKP Knowledge Park (Hyderabad); C-CAMP, SAP Labs Accelerator, Microsoft Accelerator (Bengaluru); and Research Park of IIT Madras (Chennai).
Some of the above corporate accelerators generate significant revenue, the authors observe. Though many TBIs have large product and service output, low patent intensity probably reflects the fact that some of these products are not new to the global industry but are being introduced to the Indian market for the first time.
Research and findings
The authors first compiled a TBI database for the leading startup hub cities of India: Bengaluru, Chennai and Hyderabad. In 2017, questionnaires were used to gather data from 114 entities on their objectives, services, occupancy, and graduation.
The final analysis, with exhaustive statistical research, was based on complete data from 65 entities. They comprised 31 incubators, nine accelerators, and 25 coworking spaces.
It was found that the majority of the TBIs in the three cities emerged in or after 2011. Some of the authors’ findings including the fact that all the TBI CEOs are STEM graduates or more. Most had industry experience, but not all had startup experience.
Some TBIs are sector or tech agnostic, but some accelerators promote the corporate’s own products and services through their startups, thus expecting alignment in strategy. Many TBI facilities are under-utilised, and have excess seating capacity.
The road ahead
“Technology-based firms lay the foundation for new wealth-creating industries. Therefore, there is a need to develop appropriate policy and programme mechanisms to help create and develop regions that enable new technology startups,” the authors advise.
More CSR support for TBIs is gaining ground in India. The authors advise more support for faculty- and student-led startup ventures on campuses.
Notable models to watch include student hostel-centred clubs at IIT Madras for students to experiment with ideas, which then feed into the Nirmaan pre-incubation cell. Students can get grants and are allowed to defer placements as well.
The book opens the door to analysis of TBIs in other large and smaller cities in India, longitudinal studies, and comparative studies between TBIs in other cities of the world. More analysis of players like makerspaces will help, and the role of alumni networks in strengthening new startups in TBIs.
In sum, this is an informative book for policymakers and researchers in entrepreneurship. A vibrant and healthy startup pipeline can be supported by TBIs, which is particularly relevant in the pandemic era and beyond.