To hatch a business idea
Jyoti Pande Lavakare / June 25, 2011, 0:41 IST
Incubators play a major role in accelerating the growth of start-ups and their presence in India is growing
In the past year that I’ve been away, I’d forgotten the brilliance of the Bay Area sunshine — and the energy and passion of its people, most of whom are, were, or going to be entrepreneurs. But the brief week that I’ve spent back here this month brings it all back with vivid clarity.
I hear it in the voice of Ken Novak, a cloud computing consultant and computer scientist from Yale who lives in the Bay Area (and is an entrepreneur several times over), as he talks about sustainable energy, smart grids and wireless and sensor networks — his triple passions. I see it reflected in Rekha Pai’s face as she talks glowingly about her new job at Juniper as an “intrapreneur” and I can sense it when I speak to two other friends, recent recruits to the now gigantic and still-growing Google world. The entrepreneurial bug has even gotten one of our safest, most stable friends, who left his first job at Intel this year – finally, after 20 years – for a fuel cell technology company in its early growth stage.
These people may not be the Steve Jobs and Bill Gates of the area, but they’ve been infected by the same entrepreneurial bug that infects much of the Valley.
True, you can no longer call Google or Juniper start-ups, but these companies and others like them are trying to retain their start-up culture in different ways — one of which is by encouraging intraprenuership (which basically means being entrepreneurial within a larger organisation). Intrapreneurship has been around even before the American Heritage Dictionary formally acknowledged intrapreneur to mean “a person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation.” And in fact, Rekha’s job involves exactly that — she joined Juniper to manage its new businesses incubation, a unique opportunity entrepreneurial companies are creating internally as they super-size.
Keen not to lose their advantage as innovators and entrepreneurs, these companies encourage innovative thought and new business ideas to be hatched into products or services within the confines of their now-big businesses. But that’s there. In India, we’re still seeing first-time start-ups being hatched by business incubators externally — which brings me back to the overall theme of this piece.
My column last month began painting the landscape of the Indian entrepreneurial ecosystem by focusing on the gyaan or knowledge space, with the promise to focus next on the action or implementation space that straddles the commercialisation of their innovations: that is, once the idea and business plan are in place and our domestic start-up czars begin to apply their acquired knowledge in the real world, creating companies, launching products and testing the market.
This is where government-sponsored business incubation labs (like those at some of the Indian Institutes of Technology and management) and virtual incubators like the one set up privately by the Indian Angel Network fit in.
Incubation of start-ups in India has grown sharply over the years. This is one area in which the government’s department of science and technology and its National Science and Technology Entrepreneurship Development Board (NSTEDB) has been leading the charge.
Business incubators – programmes designed to accelerate the successful development of entrepreneurial companies – can have many different missions and approaches. They can offer their services in exchange for equity, a fee or as grants-in-aid. But their common denominator is their dedication to identifying and building emerging companies to bring them quickly to self-sufficiency and profit.
Incubators facilitate faster growth through business support services and resources that could include access to physical office space and amenities, educational programmes, mentoring, and legal and professional services developed and orchestrated through incubator management and its network of contacts. Though most incubators offer their clients or partners office space and shared administrative services, the heart of a true business incubation programme is the services it provides to start-up companies. Most of this can be done virtually, like the Indian Angel Network Business Incubator does.
“We provide end-to-end support to the incubated companies in their journey from idea to enterprise and beyond,” says IAN spokesperson Padmaja Ruparel.
An entrepreneur today has many more resources, which is why both serial entrepreneurs as well as incubators are multiplying so rapidly. The NSTEDB has catalysed several Science and Technology Entrepreneurs Parks (STEP), Entrepreneurship Development Cells and technology incubators. In fact, to coordinate and promote activities of rapidly multiplying incubators, the Indian STEP and Business Incubator Association (ISBA) came up in 2004 as a registered professional body. The ISBA website has everything an Indian entrepreneur needs to begin commercialising his innovation, including a detailed template of a business plan.
And to encourage rural grassroots entrepreneurship, the government has set up the National Innovation Foundation (NIF). The biggest institutional help it offers to rural innovators is getting their intellectual property (IP) patented, something even the savviest of Indian entrepreneurs sometimes overlook. Respect for IP is one critical difference between entrepreneurs in India and the West.
“In India, start-ups first create the business model and then look to protect their intellectual property,” says Shaleen Raizada, CEO, SanShadow Consulting, whose company helps new businesses protect their IP. It is exactly the reverse in the Bay Area, where a start-up will begin by protecting the IP of its business before even creating its formal business model, she says. This is an integral part of early-stage implementation where financial, regulatory and IP advice and institutional support can be of critical importance.
Clearly, entrepreneurs and incubators must select each other carefully. Entrepreneurs need incubators that provide them real value without having to give up an unreasonable amount of equity. And incubators need start-ups that have great ideas and feasible business plans with highest growth potential. Both need to check each other’s track record, graduation policy, and management and staff qualifications, so that when properly aligned, chances of success are magnified.