Monday 9 May 2016

START UP COMPANIES AND BUSINESS INCUBATORS



Noorie Fathima,II BBA and Mrs.Y.Kavitha Assistant Professor
Department of Business Administration

Abstract: This study focuses on business incubators their role in startups. It also includes case study which concentrates on the incubation program. The aim of the study is identify the role of business incubators in developing and creating business ventures. The methodology used is descriptive and case study.

   Introduction: A startup company or startup or start-up is an entrepreneurial venture or a new business in the form of a company, a partnership or temporary organization designed to search for a repeatable and scalable business model. Examples of startups in India: Foodys.in, SensiBol Audio, IndiaCollegeSearch.com and in Chennai: Magickart, Petwish, Browntree.in

    Business Incubator is a company that helps other company or entrepreneurs to develop usually newly evolved industries or re-starters to develop and make them stable to face the competition. A business incubator in business speak is a company that helps new and startup companies to develop by providing services such as management training or office space. Incubators nurture young firms, by helping them to survive in their early stage.

   Incubators provide Infrastructural support i.e. Office space, meeting room; Platform to do networking; Management assistance and other support services, specific to incubators.

Overview of Incubation Centers in INDIA

    The incubator movement in India took off in the late 1980’s as a policy for promoting entrepreneurship and stimulating new venture creation. Which were set up under the initiative and support of the United Nations Fund for Science and Technology (UNF&ST) during (1987-1990). It was not until 2000 that India again started its Technology Business Incubator (TBI) programme with clear policy strategy. By 2004, only 15 TBI’s were established in India by the initiative and support of The National Science & Technology Entrepreneurship Development Board (NSTEDB), mostly in the institutions of excellence like Indian Institute of Technology (IITs) and Indian Institute of Management (IIMs).

    By the end of 2009, there were approximately 120TBI’s in India. Of these, 40 were established in Software Technology Parks. About 30TBIs were promoted by other government departments, banks and financial institutions. And 53 TBIs were promoted by NSTEDB of the Department of Science and Technology in collaboration with primer academic and research institute of India. The below table shows no. of business incubators in India in each state:

 

 

S. no.
STATES
Number of Business Incubation Centers
1
Tamil Nadu
8
2
Uttar Pradesh
5
3
Andhra Pradesh
4
4
Gujarat
4
5
Maharashtra
4
6
Karnataka
3
7
Kerala
3
8
Delhi
2
9
West Bengal
2
10
Haryana
1
11
Orissa
1
12
Rajasthan
1
TOTAL
 
37

 

 

(Reference mentioned:  pg. 9)

 

 

 

 

 

 

Objectives of the Study

·         To study the business incubators

·         To study the role of incubators for start ups.

Research Methodology

·         Descriptive Study

·         Case Study

Sources of data

   The data used in this study is taken from Secondary sources such as web journals, eBooks, eMagazines.

Importance of Start Up Companies

Five key reasons for encouraging start-up entrepreneurship:

  • Innovations –Startup companies are the most suitable form of implementing inventions and consequently the best mechanism for commercializing technological and other novelties. Startup companies contribute to a quick development of new technologies and the location where they operate. Large companies often buy startup companies because of technology (fundamental ingredient) that they then integrate into their business and thus keep their competitive advantage. At the same time, they provide knowledge as well as spin-off and spin-out companies to the startup environment, which wouldn’t be possible without a well- functioning startup ecosystem.
  • New jobs and economic growth – In the long term, startup companies create a large portion of new jobs and contribute to the country’s economic growth. Considering that startup companies are based on innovations, the potential of startup companies represents the healthy core of the economy. If the country wishes to encourage new employments in the long term, it is necessary for it to invest into the segment of companies that create the most jobs in the long run (in 10 years and more). Startup companies are the ideal form and opportunity for employing and activating the Y generation
  • Bringing new competitive dynamics into the economic system – Startup companies are the most dynamic economic organizations on the market, since they provide additional dynamics and competitiveness to the economic system. This means that the economy stays healthy, vital and diligent, while individual companies find it harder to fall asleep on their laurels.
  • Promoting the research-innovation system – High-tech as well as knowledge-based service startup companies are very closely connected to knowledge institutions. An appropriate entrepreneurship ecosystem thus promotes the research & development as well as research & innovation approach of knowledge institutions, companies and connecting institutions as well as contributes to the applicative orientation of research work at universities and research institutions. Meanwhile it also works as a role model and encourages students and researchers to implement their ideas via a startup company.
  • Bringing the values of proactivity into the society – Startup entrepreneurship changes the values of the society and brings a new mind-set, in line with the society based on knowledge and creativeness. The population is starting to increasingly realize that they have a responsibility for their work and career development.

Importance of Start-ups for India

·         Demographics – regions with young populations tend to produce more firms, and rates of start-up are generally higher in urban than in rural environments.

·         Unemployment– through different routes this can both encourage and diminish business start-up rates.

·         Wealth– it is expected to produce in wealthier areas more business start-up owing to higher levels of demand and greater availability of capital.

·         The educational and occupational profile of the workforce – may have contradictory effects on business start-up, as persons with superior qualifications will more likely find employment but may also have superior means with which to create their own enterprise.

·         The prevalence of small firms – it is argued that employees in small firms will aspire to own other small firms.

 

 

Role of Incubators towards Startup Companies

Factors influencing the role a business incubator can play in a region model

·         Local support

·         Promoters from different sources

·         Referring to strengths + weaknesses of the region

·         Type of services already available to businesses in the region

·         Type of R&D being undertaken from the region

Facilities and Services of a Full Fledged Incubator

A full-service incubator will offer:

·         Incubator space: offices or workshops, sometimes labs, available on a flexible, affordable + temporary basis (easy-in + easy-out), more & more: pre-incubation rooms

·         Common services: incl. secretarial support, telephone answering, common reception, mailing facilities, LAN and other office equipment, meeting rooms and (in some cases) cafeteria/canteen facilities.

·         Business counselling, namely ‘hands-on’ assistance with regard to business planning, training in management skills, access to accounting, legal-, marketing- + financial expertise, + ad hoc advice

·         Access to finance + specialist advice: some operate own seed + venture capital funds; access to specialist advice will be provided if an incubator does not have the skills + know-how itself.

Commonly Focused Organizations by Business Incubators

  Technology
Creative industries
Construction
Computer software
eBusiness and eCommerce
Arts
Services/professional
Wireless technology
Aerospace
Manufacturing
Healthcare technology
Kitchen
Internet
Advanced materials
Retail
Biosciences/life sciences
Defense/homeland security
Fashion
Electronics/microelectronics
Energy
Wood/forestry
Telecommunications
Environment/clean technologies
Tourism
Computer hardware
Media
Manpower
Medical devices
Nanotechnology
Food sector

 

Process of Incubation

                                          

Source: www.google.com (images)

 

Incubator Services

·         Help with business basics

·         Networking activities


 

Start Up: A Case Study Analysis

Startup Village is a not-for-profit business incubator based in Kochi, Kerala, India. Started in April, 2012.In January 1, 2016 Kerala Startup Missiontook over the physical space of the iconic Startup Village at Hi-Tech Park in Kalamassery. The organization aimed to launch 1,000 technology startups over the next ten years and start the search for the next billion-dollar Indian company. It focuses primarily on student startups and telecom innovation. It is India's first incubator that is funded jointly by the public and private sector. As of October 2013, Startup Village has incubated 450 startups. The promoters of Startup Village are Department of Science and Technology, Government of India, Government of Andhra Pradesh, Technopark,Trivandrum and MobMEWireless. KrisGopalakrishnan,co-founder of Infosys and an IT entrepreneur from Kerala, is the chief mentor at Startup Village. From January 1, 2016 role of MobME Wireless Solutions, the industry partner of Startup Village since its inception in April 2012,is limited to that of a provider of the Digital Incubator Platform on www.sv.com

Incubation program of startup village

Startup Village provides members with workspace, high-speed Internet connection, legal and intellectual property services and access to high-profile investors. Companies can also apply for the Startup Village Angel Fund that has been approved by SEBI. They also have access to all the workshops, networking events and contests at Startup Village. Every month, Startup Village holds a community gathering where would-be entrepreneurs can connect with investors, technology innovators and famous businesspersons. Interested founders are asked to come for an open house session that is held every Saturday at Startup Village's Kochi campus to connect with the team and brainstorm with other like-minded people. They can then apply online if they wish to enroll for the incubation program. The Startup Village is in process of setting up a similar incubation facility in Andhra Pradesh. Various companies such as iTraveller and Fin Robotics, which were incubated in the Startup Village, are now graduated companies and have received several rounds of funding.  Startup Village aims to launch 1,000 technology startups over the next 10 years and start the search for the next billion-dollar Indian company. We want to be India's number one startup destination.

 

Developer 1000 program

While India churns out more than five hundred thousand engineers every year, only 20 percent are readily employable. In order to equip youngsters in India with the best programming knowledge and make mobile technology fun and accessible to many students and future entrepreneur, Startup Village has rolled out an initiative called Dev-1000-P (pronounced Devlooop), through which they aim to create 1000 professional app developers by the end of 2013. This program is open to college students.

SVSquare

In January 2013, Startup Village and the Kerala government launched an initiative called SVSquare. Every year, the Startup Village panel would select promising young entrepreneurs from India and send them on an all-expense paid trip to the U.S. The aim is to expose Indian youth to the legendary startup environment in Silicon Valley. This will also give them a chance to interact with some of the famous tech gurus and entrepreneurs in the world.

Notable companies at startup village


Examples of Some More Incubators

Amity Innovation, Angel Prime, Ian Incubator, Villgro etc.

Villgro is on a mission to enable innovations to impact the poor through social enterprise. It was recognized as an Incubator under the Dept. of Science and Technology and Ministry of Micro-Small Medium Enterprises, Government of India. It provides mentoring, fellowship, funding and networking.

ž  Location: Chennai

ž  Founded In: 2001

ž  Focus Area: Social enterprises

ž  Funding: INR 50 Lakhs (milestone based) and is invested as equity and/or quasi-

                equity                     

ž  Notable Startups: Onebreathe, Skillveri

ž  Reach Out: mail.  

AngelPrime is a fund focused on building disruptive product companies out of India by bringing a combination of first-hand entrepreneurial experience, operating expertise and meaningful capital. It invests in not more than 3-4 companies a year.

ž  Location: Bengaluru

ž  Founded In: 2011

ž  Focus Area: Mobile internet, ecommerce and tablet/mobile app

ž  Funding: USD 200K- 600K        

ž  Notable Startups: Ezetap, HackerEarth

ž  Reach Out: Bala Parathasarathy

Suggestions

·         There is a need to develop skills of incubators.

·         Provide high quality of shared services training programs and coaching for entrepreneurs.

·         Should work along with organization to promote national development.

·         To coordinate with local regional financial institutions to provide loans and financial support

Conclusion

Business incubators support them by providing them with advisory and administrative support services. They form an important part of the support infrastructure for small and medium enterprise start-ups in INDIA. Their mission is to provide the starting companies (usually for a period of 3 years from the commencement of business) with complex support on one spot and create favourable starting conditions to enable the operation of their enterprise. The main services provided are the lease of office space, production and storage premises at prices lower than the usual commercial market prices and administration support for the companies (e.g. providing of conferences and showroom premises, certain clerical services, technical infrastructure and others). Apart from business premises, the incubators provide their clients with educational services and counselling (e.g., the creation of business plans, counselling related to the acquisition of funds for entrepreneurship, the elaboration of the marketing strategy, mediation with contacts, and the like). The extent and form of support in individual incubators varies depending on type, specialisation and capacity. This study concludes by identify the role of business incubators in developing entrepreneurship and creating business ventures.
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