What is their role in the entrepreneurship ecosystem in India ? Can angels/VC firms work with incubators ? It looks like at Nirma Labs they have had three batches so far ( I do not know how many entrepreneurs) and so far none have actually made it to the angel/VC stage where they have repaid the incubation loan. The repayment of the incubation loan from the angel/VC round seems a bit odd. A model where the loan converts to equity seems much better. I am just wondering whether the Nirma Labs model can be made more entrepreneur/angel/VC friendly.
I want incubators to work so this is not intended as a criticism. Kudos to Nirma Labs for making their model transparent. If we can have a productive dialog it could help. I have heard about an IIT – Delhi incubator and an NS Raghavan incubator in Bangalore and some government incubators but I do not know their models.
If any of the incubators want to have a dialogue with me I would be happy to engage. I do not have much expertise with incubator models so if there any others who are reading this and have comments they are more than welcome.
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IIIT – The Indian Institute of Information Technology, Bangalore has a good incubator as well. It is in its early stages. We met Mr. S. Sadagopan, who walked us through the institute’s plans.
Given India’s strengths in IT and given that there are many IT knowledge workers, who may not come from a prestigious institution like IIT, IIM, REC or a foreign university, this is a good breeding ground for entrepreneurs.
IDEA: Why not seed IT education institutions like NIIT/Aptech with an entrepreneurship/incubator program?
-Shiva Venkatraman
Sloan Fellow 2006
shivav@sloan.mit.edu
ISB also has an incubation cell – http://www.isb.edu/wced/index.html
I have worked with them in limited capacity and they are very helpful
I’ve done quite a bit of survey on incubators in India for a proprietory initiative.
The startups in IIT-B have basic infrastructure support provided by the Institute and a fair degree of guidance from the faculty and seniors. Mostly the faculty act as mentors. This is a good model so far as it is economic. It suits specific Govt. / Public Sector sponsored projects or those commissioned by individual corporates on a pre-financed basis. So no requirement for working capital and no risks assumed. The assignment gets completed, the mentor and team members split the proceeds ( net of incubator’s charges )and all rights including IPs developed belong to the sponsor. There are a few success stories too.
The flaw that I have found ( from an investor / VC perspective ) in this faculty driven model is that –
(a) the mentors being essentially academics, are not quite state-of-art in terms of hands-on industry knowledge and experience. They work to a current client’s mandate and no further.
(b) The founders being ( previous / current ) students, are often `controlled’ instead of `mentored’ by the faculty with their own dated opinions towards risk. While this acts as a good filter, many creative young minds get demotivated.
(c) Most project teams set the client’s current mandate as the milestone instead of an investor / industry defined time-to-market ;
(d) Founders often desert their project midway and hop on to other lucrative job offers out of listlessness if not frustration, especially since they have little to lose anyway.
(e) Marketing strategies purely dependent on their limited network ( of seniors who are in similar field and willing to help ) for helping them with product rollouts, marketing and early stage customer acquisitions.
While incubators in STPIs like Technopark ( Trivandrum / Kochi ) provide only infrastructure support for which they charge a nominal lease rent. I am not sure whether they seek an equity stake. But the project teams here are essentially people with some experience. They know the business but are very guarded towards equity dilution thro VC participation….even at the cost of scale up capital.
We may have to wait a while to replicate global incubator models. I am working towards one.
You can check out the model of IIT Bombay Incubator (http://www.sineiitb.org/). They are always interested in working with angels, though again success rate has been low and it now supports angel funded companies also, I presumed that incubators taken in startups and help them till they get funding!
There is also one in IITM, named TeNET. They have a fund attached to them named Ventureast and they offer both funding and technical support.
There seems to be something seriously wrong with product companies here in India. most of them are under-funded and can’t expand, and that is required to go out and face the world.
It’s a discussion all by itself.
http://www.leadstep.com/BusinessBlog/2006/06/why_indian_companies_fail_part.html