[ This article is part of a new series called Startup Hatch, about incubators and accelerators in the startup ecosystem. ]
Vellore Institute of Technology’s Business Incubator (VITTBI) is bringing the entrepreneurial buzz to places outside mainstream startup ecosystems in India. It identifies growing opportunities in India’s economic boom, plugs entrepreneur gaps in building startups, and connects them to the broader investor community, as explained by A. Balachandran, General Manager, VIT-Technology Business Incubator.
Balachandran has over two decades of techno-commercial experience and has been in charge of the incubator since its inception in 2003. He has mentored and assisted a number of startups and many innovators in the last 10 years. Balachandran successfully executed a project under the World Banks’ infoDev program for incubation capacity building initiatives, and coordinated a Youth Entrepreneurship Skills Development Initiative project supported by UNIDO. He is a certified mentor in the National Entrepreneurship Network (NEN). He is also coordinating two seed funds supported by the Technology Development Board and the NSTEDB division of the Department of Science and Technology, TIFAC-assisted Technology Commercialisation Facilitation Agency initiative, and Ministry of Micro, Medium and Small Industries.
Q: What was the founding vision of your incubator, and how is it supported?
A: VIT-Technology Business Incubator (VITTBI) was envisioned as a support system for creation of knowledge based startups by being a focal point of various interventions and being a catalyst for promotion of technology entrepreneurship in the region. The value proposition of VITTBI is anchored on three important components of the innovation and entrepreneurship ecosystem, namely, knowledge, networks and access to markets & finance.
Q: How many companies did you start off with, and which ones do you have now?
A: In 2003-04, we started with two companies and currently we support 8 companies (7 under incubation and 1 under soft-landing program). See Table 1 for details.
Table 1: Projects under Incubation at VITTBI
A UAE firm Smithline Reinforced Composites FZC is being supported under the soft landing program for setting up their manufacturing unit near Vellore.
Q: What would you say are the Top Three drivers for Indian startups?
A: 1. Favourable market conditions: increase in technology product/service adoption rates, increased in affordable surplus income in the growing middle class segment.
2. Improving ecosystem advantage: increase in angel funding, availability of seed funding & innovation grants through business incubators, access to formal and informal mentoring support through institutions and voluntary groups, large pool of trained talent availability, and increased support from family.
3. Ever growing demand in infrastructure, healthcare, food processing and education sectors provide a multitude of opportunities for startups.
Q: What are the key challenges faced by startups in India, and how can you help bridge the gap?
A: 1. Inability to convert an idea to an opportunity and address the market requirements.
Most founders seem to be obsessed with the technology and believe that it will make wonders. However, in reality, technology’s role in a successful business is less than 10%. We address this by arranging structured coaching / workshop sessions so that the companies get to understand and refine their business plan after validating the assumptions.
2. Inability to overcome obstacles due to lack of resources.
As the startups that we come across start their activities with either no funding or very minimal funding, we suggest to them various options to build the business frugally (building a minimum viable product / prototype). Most recent initiatives use the campus resources (talent / infrastructure) to test the ideas and then pitch to investors. Even if the fundraising attempts get delayed, there is no severe cash burn that adds to the challenges in the initial days. Also, we have been facilitating access to various grants (innovation grants from DSIR / startup grants from MSME) and also fund ventures to meet the seed stage needs through soft loans.
3. Ecosystem challenges.
Since well developed ecosystems like Bangalore, Noida, Chennai or Pune could meet the requirements of only limited number of startups (3-4,000 startups), startups from other regions require local support providers like incubators / accelerators. Also, even these well developed ecosystems can offer very limited support for firms in biotech / pharma / food processing or manufacturing sector startups. We in a way act as a single point channel for our incubatee companies to get the required technology / infrastructure support from the campus facilities.
Q: What is the selection criteria for startups in your incubator?
A: The business must be technology based and preferably innovation focused (with technology feasibility). The founder(s) should commit their full time to the business. They should anchor the technology development activities (physical incubation preferred) at VITTBI to qualify for funding. They should have market orientation and commercial viability.
Q: What support and services do startups receive in your incubator?
A: The Incubation support includes the following services: subsidised office space and access to campus facilities; assistance in product / technology development and testing; seed funding; facilitation in raising government grants, angel and venture capital; facilitation in mentoring / business development / marketing. We also provide soft-landing facility for firms from abroad, and training & capacity building in the innovation and entrepreneurship domains.
VITTBI provides seed funding (through TDB and DST grants), innovation funding through TePP program of DSIR, incubation grants through MSME and technology commercialisation support through TCFA program of TIFAC, and facilitation to raise angel investment through various angel networks.
VIT has several ecosystem partners in its network and some of the partners are: National Entrepreneurship Network, Entrepreneurship Development Institute, The Indus Entrepreneur (TiE), Indian Angels Network, Chennai Angels, Silicon India, Indian Science Parks and Business Incubators Association (ISBA), Asia Pacific Incubators Network, Global Business Incubators Network promoted by infoDev and many other developmental institutions and agencies.
Q: What kinds of IP are being created by your startups?
A: So far about four product applications have been filed by the incubatee companies.
Q: How would you differentiate from the other incubators in the field?
A: Through our customised service offerings, very flexible terms, and empathetic approach, and non-commercial nature of services with a focus on enterprise success.
Q: What would you define as success for your incubator?
A: Our success depends on our ability to create firms that would succeed in the marketplace and this would be on a continuum.
Q: How do you compare and contrast India’s incubators with those of other countries like the US and China?
A: In my opinion, incubation is a mature industry (with well defined systems and processes) and well recognised in USA. In India, the number of incubators is absymally low and despite their role in meeting the needs of startups they are not very visible. In China, the numbers and size of incubators are very large, but there is a thin line of separation that differentiates between business incubation and SME development.
Q: What are your plans for the coming 3-5 years with respect to new startups?
A: To address the requirements from new age startups, we will have to consider some hybrid approaches (combining good practices of Business Incubators and Business Accelerators) and to focus on creating more value added services.
Q: What are your recommendations to the startups and entrepreneurs in our audience?
A: Though you perceive venturing as a lonely and challenging journey, you are not alone. There are many many agencies, individuals, and support systems willing to assist you. Take the first step and reach out!
[Follow YourStory's research director Madanmohan Rao on Twitter http://twitter.com/MadanRao]