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India Needs More Incubator Funds

Posted on Tuesday, Feb 27th 2007

Yesterday, I spent an hour chatting with Subrata Mitra, one of the Partners at Indian seed fund Erasmic, which has been in the news recently for attracting Google as a Limited Partner.

I have been writing often about the Indian seed investment situation: Concept Arbitrage, Venture Capital in India, Too Much Money, Too Few Deals
.

The situation has got even more acute, with more, more, and more money chasing India, and simply not enough deals to absorb the interest. A VC mentality “India is booming, let’s send $200 Million to India” prevails at the moment in Silicon Valley. The grass, washed by the monsoon rains, seems infinitely greener in India, than the dry California hills along Highway 280.

The truth is, India is still very busy being the back-office of multinationals. It is downright impossible to hire senior management for startups, luring them away from $100,000+ packages. As a result, just as I had predicted, Erasmic is running an incubator in its Bangalore office. Their four partners are essentially “running” their portfolio companies.

Just the opposite of what Cal said in his article about Canada, that the serial entrepreneur in Canada is old and grey, the Indian entrepreneur is young and green. And hence, they need adult supervision.

Nothing wrong with the model so far, right? Larry and Sergei, their VCs thought, needed adult supervision too. All through the nineties, young and green entrepreneurs ruled. In web 2.0, they are ruling again. VCs have become used to it by now.

With one exception. In the valley, adult supervision CAN be hired. Eric Schmidt was hired to plug the perceived naivete in the Google founders. In India, however, adult supervision has become very difficult, near impossible to hire.

This leaves a gap. I asked Subrata how this gap is to be filled? Seems like a chokepoint … His answer was, “We need more hands-on, small seed funds like ours.”

Actually, let’s go a step further. India needs Incubator Funds. 3-4-5 Partners with solid entrepreneurial experience, rolling up their sleeves, with strong ties to the valley, experience of the cultural nuances of the country, with strong understanding of product and strategic marketing, up-to-speed, current.

In some cases, these Partners would need to come up with ideas for new ventures, and recruit teams around them. Vinod Khosla used to do this at one time. This is not the job of analysts, bankers or professional fund managers.

LISTEN ALL YE VC GLITTERRATI WHO ARE ANNOUNCING BIG INDIA STRATEGIES : TAKE $25 MILLION FROM YOUR INDIA FUND, AND CREATE AN INCUBATOR WITH A GROUP OF EXPERIENCED ENTREPRENEURS, WHO CAN ACTUALLY MAKE A PIPELINE HAPPEN.

Or else, you will continue running around in circles, going from retail to hotels to real estate, never actually building the technology industry that your original charter has been. You will drive up the valuations of those few deals that will bubble up to being fundable, and thus corrupt the market.

This isn’t working. The entrepreneurs need help.

Further Reading: Entrepreneur Sujai Karampuri’s article on why India needs technology product companies.

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Funny story about an Incubator that I approached sometime back. After presenting my B Plan I was asked what do I expect from them. My answer was mentorship, introductions to VC’s and basic facilities. They interpreted it as I wanted to “park” myself there and I got panned for it.

I am still wondering what did I say wrong. :)

Rajiv Tuesday, February 27, 2007 at 3:17 PM PT

My dear Rajiv,

When I first started doing startups in India in 1994, people did not even understand the concept of Venture Capital. Sweat Equity was a foreign word, and the Reserve Bank of India did not allow stock options to be issued … to get a freaking loan from a government financial arm was already a madhouse procedure.

I am sure your incubator experience was sad. But let’s also look at some of the progress that has been made in the last dozen years, especially, in the last 3.

A venture capital industry HAS emerged. This is very good news. Entrepreneurship has become glamorous, desirable, exciting. The media celebrates it. Parents don’t mind so much if their child goes into “business” and not “service”.

We still need to tweak the models. But at least we are headed in the right direction.

And, your incubator was most certainly not run by seasoned entrepreneurs, as I am proposing in my thesis.

India has momentum. Momentum, typically, is a good time to get things done.

Sramana

Sramana Mitra Tuesday, February 27, 2007 at 3:30 PM PT

I agree. This is the best time to do your own stuff in India. Things are falling into place slowly. And its going to get better. We are the lucky one’s in fact.

The one thing I would like to add is the Indian culture, in general, does not really tolerate failures. Failures are looked down upon. We cannot wear our failures as a badge of honor as it happens in the Valley. That just increases the pressure on entrepreneurs. Part of the game I guess.

Rajiv Wednesday, February 28, 2007 at 1:18 AM PT

I welcome the suggestion and moves being made in this direction. More such incubation funds are definitely going to help Indian Technology companies. The structuring of these incubations is very important. Few things have to be kept in mind.

Not many entrepreneurs start their own stuff without having a vision of where they want to take the company. To assume that each and every first-time entrepreneur is a complete novice and that he needs guidance in all steps is something comes more often in India than in US. One thing that I noticed when I came back to India four years ago is what I call ‘Indian-parent syndrome’. I saw the Indian managers looking over each of their engineers to see and guide on what exactly they do. They micro-manage. They tend to believe that if they don’t show up for few days, the group will not perform. It’s like the Indian parent who never lets go of his kid and assumes that he needs to make decisions on each of the kids’ major decisions. May be its true that the youngsters need guidance, may be its not true. How will you know unless you give them the free rein, let them fumble, let them fall once or twice, so that they learn their lessons? I wouldn’t want to be part of an incubation center mainly because of this reason. From my experiences working with Indian advisors, VCs, ex-entrepreneurs, I fear they will curtail our way of taking this company forward. Most of them assume (without even meeting us) that we don’t know anything and that we have lot of limitations. Not that we don’t need advice. We need lot of help, advice and support. We know our limitations; we know what we don’t know. We know what we can’t do on our own. We want to see those ‘having been there, having done that’ people to associate with. But they are a rare commodity in Bangalore. We entrepreneurs (some of us at least) have a pretty good vision of where we want to go. Sometimes this vision is bigger than the advisors and VCs that we meet. What do we do then? When I meet a person of a vision bigger than mine, I would like to associate myself with him. But what if someone wants to guide you, hold your hand and teach you the ways of life, even when you know that his vision is much smaller than yours?

Most Indian advisors and VCs (not all of them) tend to believe that they need to micro-manage and guide these young and novice entrepreneurs. They think that it is their duty or mandate to guide them and make sure they don’t make mistakes. I say, ‘Make mistakes! Make tons of them! Just don’t keep repeating them, that’s all!’ Incubation funds should ensure that each company gets their space and freedom to do make mistakes and learn from them. As long as they do not cross this line, they will be able to foster many technology companies.

They need to tie up with institutions, companies, potential customers, etc, to allow these incubation companies access to facilities, licenses, test equipment, field beds, etc. These will be helpful in research and development of the product. Opening up loans, getting STPI registration done with out hassles, etc, are few things that come to my mind.

There are many advantages to such incubation funds and will come as a welcoming thought if done right. If done wrong, they will be another chapter that will be written as to ‘why India cannot do it’ (once again).

Sujai Wednesday, February 28, 2007 at 1:38 AM PT

sm,

rather than use the term incubator, i’d propose we ask what problem are we trying to solve?

in oregon we have a very large chip company with several thousand very intelligent dedicated employees and executives. this company dominates its sector; its chips are the heart of an entire industry and ecosystem of applications suppliers. every so often we have a person or team that wants to leave to start “their own thing.” they have IQ. they have technology and they have passion…but often they lack a sense of the “problems that need to be solved.” they come to us asking where they can apply their talents.

this sense for the problem (aka: know what the questions are derived from domain expertise & understanding the “pain”, etc) is often more important than the technology (aka, the answers).

in some ways, this is more about “exposing” this richness of talent to real world experiences, needs and gaps. smart people are really good at solving problems: but what are the problems?

running an idea crucible is even harder work than an incubator…but it may be what is needed

dave chen Wednesday, February 28, 2007 at 2:12 AM PT

Sujai,

The key is setting milestones and metrics that help those who are guiding and those who are being guided, aligned.

It’s not about micromanaging. It is, however, very much about knowing, at any given point, what are the next big milestones.

And then, holding the entrepreneur accountable for achieving them.

Also, startups are vulnerable. Making some mistakes would be okay. But repeated major mistakes would kill a fragile company.

Sramana

Sramana Mitra Wednesday, February 28, 2007 at 2:34 AM PT

Dave,

Yes, absolutely, the Indian entrepreneurs don’t have a good idea of what problems to work on, which is why, I suggest putting some experienced hands at work, those who do know how to identify and ferret out problems … and then put together a team+technology to derive the solution, and a strategy to market it.

At this rate, the chasm between the problems and entrepreneurs will persist.

Sramana

Sramana Mitra Wednesday, February 28, 2007 at 2:36 AM PT

Very interesting discussion. I started posting a comment, but then it turned out to be too long, so I posted it on my blog.

To summarize my points:

1.Indian startups don’t really need the sort of risk-averse adults that occupy the top posts in most Indian IT Service Providers.

2.VCs coming to India should not limit themselves to the IITs and IIMs, and should interact with academics and research students from reputed departments all over the country-to create the momentum.

3.Startup teams should look beyond ‘traditional’ channels of hiring to get the right team at the right price in place.

More on my blog http://kumarsbol.blogspot.com/

Kumar N Wednesday, February 28, 2007 at 4:32 AM PT

From the above discussion between Dave and Sramana, I see a palpable danger in both of your assumptions. Let’s get this straight. Entrepreneurs come in different sizes and shapes with different vested interests. But some of us agree that they have certain common ingredients in various proportions. According to me, they are as follows:

Entrepreneurs focus on bringing in a positive change in their lives or the lives of those around them by solving a problem that they see affecting them and those around them. While doing this they really enjoy the journey, they have fun with it. Their passion to make this work overrides all other seemingly painful issues. And they want to make sure they are rewarded for their successes in the right way.

Some don’t see the problem at all because they are guided by other things. Some do see the problem but they do not know if it is a problem worth solving given their time and energy. Is it a problem faced only by a selected few or is it something faced by many people? If indeed it is a problem worth solving, is there a solution? If there is a solution, will someone pay for it for the price you are asking? Sometimes, a good solution to a genuine problem may be too expensive. To come up with an affordable solution to a problem faced by good size population and translate it into an organized way of delivering it constitutes a good business idea. Dave has simplified the problem from what he has seen with few entrepreneurs. He has taken one case which doesn’t apply to all entrepreneurs.
Sramana, you say:
Yes, absolutely, the Indian entrepreneurs don’t have a good idea of what problems to work on,
I am not sure if I agree with your statement here. If I were to go by this statement and believe it to be true, then I wouldn’t encourage anyone to invest in India. First, I don’t think the first-time entrepreneurs go around looking for problems to solve. We may not be actively looking for problems. It so happens that we face a problem and then some of us go about trying to put together a solution. Some of these problems are faced by many people – that’s when it turns into a big size market. Second, not every solution can be turned into a business either. A lady was asking me yesterday if a certain technology can solve certain problem. I said technology can solve lot of problems but are you going to pay for it? Solving a problem is not just enough. It has to be a viable business idea. Sometimes a better technology may not pass as a good business idea, while a very simple improvement may turn out to be a massive business idea.
I may tend to agree that some of us first-time entrepreneurs may not have a sense for what constitutes a business idea and what doesn’t. But to say that ‘Indian entrepreneurs don’t have a good idea of what problems to work on’ is a sweeping statement that I do not subscribe to. I don’t think such a statement applies to any society in general (not just Indians). Indians will solve the problems they face in their lives. They may not necessarily be dealing with problems faced by Americans or Africans, for example.
Sramana, you say:
which is why, I suggest putting some experienced hands at work, those who do know how to identify and ferret out problems … and then put together a team+technology to derive the solution, and a strategy to market it.
That’s asking too much from advisors and VCs. First, this belief assumes that entrepreneurs do not know how to identify and ferret out problems. To be very honest, if I think that a bunch of entrepreneurs don’t even know what the problem is, you should stay away from them. Second, you say that these entrepreneurs constitute simply the ‘team+ technology’, because the experienced hands are driving the rest. This doesn’t constitute entrepreneurship at all. Instead, it’s like creating a new division within a big company. It’s more like ‘hire the team, provide the tools, and then ask them to solve your problem’ with guidelines on how the solution is going to be. I am not sure if any of the entrepreneurs either in India or in US would agree work in a model like that. Most first-time entrepreneurs quit their job to work on an idea where they genuinely feel the problem for which they believe they have a solution. “Refining the idea” has to be confined to see how to make it a viable business. And those entrepreneurs who do not see the problem will have to fade away and that’s a good process of weeding them out. And those entrepreneurs who can’t turn a good solution into a business idea will need all the help in honing their strategies. Some fail, some succeed.
But to believe that they need a holding hand in identifying the right problem is a little bit too much to ask for.
Also, many a times, a problem or its solution, or its viability is not obvious to everyone. If it was obvious then there would be many people doing it. And if it was that obvious many well-established companies would be spawning divisions or product groups to work on it. Most often, entrepreneurs chase an idea which they believe is the right idea. Some fail, some succeed. This is something the VCs have to live with. And this is what entrepreneurs are ready for.
What the VCs can do is only save those ideas with good solutions to real problems from fading away. If indeed the solution is not a viable business even VC cannot help much. However if it can be turned into a good business, VCs and advisors should come in, take care of nurturing right practices, open up opportunities, etc.

Sujai Wednesday, February 28, 2007 at 6:58 AM PT

Sujai,

I’ll do a separate post on what an Indian incubator should look like. I think, there are certain classes of problems that the Indian entrepreneurs can and have been identifying, and going after. My entire Concept Arbitrage series profiles such ventures. I think, the Consumer Internet problems fall in this general category.

However, technology entrepreneurship is a somewhat different challenge. Even here in Silicon Valley, we see the “solution looking for a problem” phenomenon very often. In India, I suspect, this is rampant.

Thus, Dave and I are referring to “problem” as a problem that is a viable business idea, not just a niche problem which is potentially a feature, not a company.

But more on this later.

Thrilled to see all your voices speaking up loud and clear.

Sramana

Sramana Mitra Wednesday, February 28, 2007 at 12:41 PM PT

Sramana,

Once a Prof of IITKGP told me ‘imagination is the limit not the technology’. At the same time understanding the ‘pain’ or ‘wishes’ of the market doesn’t always matures into a successful venture because of not having access to the people having technology solutions to those pains or wishes or not having enough leadership to drive the whole thing to a successful venture. To have a successful venture around the clear and obvious issues faced in India currently needs bigger start up budget and bigger number of people with the same vision and passion to make it successful. Just to give an example, everybody knows how hard it is to get ones kid into a ‘good school’. The ‘good schools’ are limited and whatever small number of such schools exists, for 50 vacancies in the school 5000 students apply for those positions. Also all of those 5000 student’s parents don’t mind spending very good amount of money to secure a position.

Now I feel there are a huge number of people I know of personally who can given opportunity and administrative support, come up with excellent plan to setup a good school and build career of a big number of students (In fact I plan to do that someday personally.). A start up incubator system doesn’t help there. Mostly a Goenka or Tata can do it. When we are talking about a start up under incubator environment we are talking in general about some ‘killer application’ or some technically excellent solution which has enough ‘technology barrier’ or can generate enough ‘market lead time’ and can maintain that lead time to stop biggies or copy cats to come up with similar thing in very short period of time.

We are targeting a specific section of people for incubator based start ups with specific types of ideas. Unfortunately, a person with a very good idea may not always have the other right skills to do something substantial. The shortage of Incubator Funds is making it very hard for people to venture and even fail and learn.

Personally I am not a strong believer of incubation except for when it is run by a university or institute like IITs and IIMs in India, where fresh mind with ideas and talent can do experiments and have a right to fail before they come up with something unique and having a great business value. These are more of scholarship nature rather than start up incubation.

Santanu Bhattacharya Wednesday, February 28, 2007 at 4:01 PM PT

Santanu,

There is a BIG difference between non-profit and for-profit. Non-profit takes social entrepreneurship, and need to be funded by Foundations. Gates Foundation is doing a lot in Education in the US, and I believe Narayan Murthy’s Foundation has a charter for education in India.

You are right, we’re discussing technology ventures here. And for-profit ventures.

And IMHO, Indian educational institutes do not have the full expertise to build technology companies either. I have had many conversations with Prof. Ashok Jhunjhunwala at IIT Madras on this. KGP is trying, but I know some of the players, and I have my reservations about their skill set and ability to drive meaningful successes.

We have a very specific gap in India right now, which can be filled with a very specific set of expertise, and we need some very high profile early successes, that can set in motion a whole new generational movement.

Just like in bringing new products to market, one needs reference customers, we need “reference successes” amongst Indian technology entrepreneurs of the same scale that Narayen Murthy has been for the IT Services sector.

Sramana

Sramana Mitra Wednesday, February 28, 2007 at 6:06 PM PT

Sramana,

This discussing seems to be unfolding at an interesting time. The finance minister in his union budget 2007-08 has been supportive of tech incubators (tech biz incubators to be exempted from service tax) in an otherwise mixed bag of proposals for the venture community (Pass-through benefits to be limited for certain sectors only).
I agree with you thoughts on incubators as entrepreneurship in India still needs to evolve and more incubators can play an important role in the entire ecosystem. However, the role for such incubators will be more challenging. It would have to be seen if these institutions hand pick on the best ideas presented to them by young lads from top notch colleges or they also go after relative raw ideas (which might need some tweaking). Also, they would have to be more consultative in their approach. That is, they need to be more approachable. I know of several (or atleast some) young men/women who have ideas (good/bad/average yet to be seen) and skill to take those ideas ahead but do not know the potential of such ideas.
Unless that happens, a twenty or thirty something Indian would continue to service the multinational and be happy with his/her salary (which is not too bad these days-:))
In short, the idea is to educate the young minds on how to convert vision into actions, identifying various business metrics (since only good ideas do not account for good businesses), success strategies, etc.
-Amit

Amit Shanker Thursday, March 1, 2007 at 12:03 AM PT

To my understanding schools are surely profitable now a days. Besides, there are so many ‘by-products’ of a school having being able nurture the best and being able to have together some of the top most minds in the society. That is a different discussion altogether and I know you have/had some vision of doing something in the education space too. But it can’t be done from a start up incubation mode and these are obvious pains which has business as well as social impacts in a very very large scale.

Santanu Bhattacharya Thursday, March 1, 2007 at 12:29 AM PT

Interesting moment for this topic, as Amit says; a few weeks ago I was at a round table in Bangalore discussing “enablers and disablers” to innovation in India. Incubator funds and interestingly, most of the stuff we’re discussing here came up at some point in the discussions.

Equally interesting, that the past few days I’ve been talking to a set of mid-level managers in my sphere of work and not one of them would want to “risk” a start-up against the “prestige,” security and perks of a multi-national. Its so reminiscent of parents encouraging government jobs over the private sector two decades ago.

My contention to the participants at the round table – especially the business editor of a prominent business daily – was why does Narayanamurthy continue to dominate the successful entrepreneur section. Could we not find one more compelling success story ? And why can’t we romanticize the brave who, maybe in the conventional sense, “failed ?” I got silence, a few nods and a set of lame excuses. Why blame parents, spouses and peers, when the glitterrati are shy.

I think its time the successful entrepreneurs take the reins over from the press. I’m going to sound romantic, but so be it, if I say that for every interview they give, they should take a promising entrepreneur alongwith and turn the spotlight on them. Maybe in our approval seeking social structure, that could be just the push needed to effect a thought change. Narayanmurthy should stop telling the Infosys story; instead let him tell about the ones in the making.

Most senior management talent in India today is financially capable of sustaining a years venture / risk, especially the ones who have returned from the US. Many have worked in Silicon Valley start-ups and know the game. I think its social acceptance that holds them back.

The good thing, as Sramana mentioned, is the environment is ready than ever before. Finance minister has taken some positive steps to encourage incubation ( though the FBT on ESOPs is silly ). The IITs and RECs can provide the ideas/talent; a little selling can get the management talent.

Soubir Bose Thursday, March 1, 2007 at 6:35 AM PT

For the moment, let’s not depend on OLD MEDIA to create these stars. We can do it ourselves. I am more than happy to offer my platform to profile entrepreneurs who have interesting stories right here.

I agree, we just need to take the reins over from the traditional press, and make things happen.

The traditional press will take some time to wake up. I have tried working with some, without success.

Sramana Mitra Thursday, March 1, 2007 at 1:56 PM PT

I totally agree with Sujai’s comments. I need people like you on the team. Where are they ?:).
On a related note, have had a chance to discuss with some mid-level managers. Most of them are in the ‘outsourcing/MNC’ mode and dont/cant think of the potential of startups/ideas. They look at ‘what is’ instead of ‘what can be’.

But the whole startup situation(consumer Internet/mobile and related success stories) will only get better going forward inspite of the structural shortcomings being discussed in this thread, because as they say, necessity is the mother of invention(read – innovation).

Vish Friday, March 2, 2007 at 3:48 AM PT

[...] to hire senior management for startups, luring them away from $100,000+ packages.” Go read her insights and recommendations on what needs to happen in the incubator [...]

Atanu Dey on India’s Development » India Needs More Incubator Funds Sunday, March 4, 2007 at 1:36 AM PT

[...] I promised entrepreneur Sujai Karampuri that I would write a piece on what an Indian Incubator Fund should look like, in response to the discussion in my previous piece, India Needs More Incubator Funds. [...]

Sramana Mitra on Strategy » Blog Archive » Indian Incubator Fund : Specs (Part 1) Sunday, March 4, 2007 at 8:51 AM PT

Iam Leo from NirmaLabs (business incubator)

Very interesting thread. Excited to see discussions related to an early stage funding scenario coming to India whch is the need of the hour now. I think somekind of tax sops to investors (early stage angels) might be a pragmatic option to attract “serious” investments. By serious investments I mean people who can really contribute to your venture by way of other help and ofcourse financials. I may not just goto a investor who just want 40% growth returns and nothing else(mutual funds will be better for them). I would rather goto an investor who is ready to spend substantial time and effort in guiding us and then demanding a gud chunk of returns.

Also I wish there are few risk takers who can trust individuals who can convince them about the potential of biotech related products.. atleast someone who can understand that..biotech is not everything about drugs,gene and DNA…

Leo Thursday, March 8, 2007 at 9:14 AM PT

Very interesting discussion point. Thanks Sramana for taking this up.

I myself have just started a venture and facing all the need of guidance and mentoring in many of the issues we never even thought before starting. In my opinion, start-ups can be classified into two categories – technology driven / innovative and others. Most of the time we talk about start-ups in the areas of innovation / technology – I want to focus on start-ups not driven by innovation / technology, I mean start-ups undertaking some field where they cannot differentiate by innovation but by being one of the first people (but not the first) to enter a growing field.

Take for example somebody starting a company to provide research solutions to firms abroad (Knowledge Process Outsourcing (KPO)). Now, there are companies in this space, but the market seems to be so huge that many more can enter, seeing this somebody starts a company. With this background, the probability of getting mentorship and capital decreases even further. You are not having a new idea, what you have is a zeal to do something you loved to do and be good at it, but I must say, VCs / mentors don’t find that very interesting to invest into as its replicating what other people are doing. Though the business plan / model is available by looking at existing players, but still lot of help is needed in terms of sales connections, negotiations, thought-leadership etc., but its missing.

Agreed, in recent past many institutions have opened up providing incubation to start-ups in India, but sadly they do it for technology start-ups only. What about others?

Naveen Sharma Saturday, April 7, 2007 at 12:40 AM PT

Dear entrepneurs,

I am a recent grad in biotech field. I need advice regarding an idea to start a venture in biotech field with focus on Indian biotech market. Can someone give me pointers reg. where I can get some advice, talk about my idea and discuss various things associated with it etc?.
Thank you,
Umesh.

Umesh Tuesday, May 1, 2007 at 9:59 PM PT

India Needs More Incubator Funds…

Yesterday, I spent an hour chatting with Subrata Mitra, one of the Partners at Indian seed fund Erasmic, which has been in the news recently for attracting Google as a Limited Partner.

I have been writing often about the Indian seed investment situati…

Anonymous Friday, August 24, 2007 at 6:55 AM PT

Hi, Sramana. I’m a product manager from the US who is interested in training, mentoring, and coaching product managers in India. I’m planning a trip to Bangalore in November. I have been trying to figure out how to let small organizations know about my services. I offer a special package to start ups and will work for stock instead of cash.

Any suggestions?

Star Gazer Consulting Thursday, August 30, 2007 at 5:54 AM PT

You can contact Nasscom’s emerging business area. Anand Deshpande, CEO of Persistent, I believe, runs it.

Sramana

Sramana Mitra Thursday, August 30, 2007 at 10:20 AM PT

In my experience the first 12-18 months of a new business should focus

(a) getting the right core team … with the right values and bonding

(b) getting a few foundation clients to test/learn/refine the value proposition

(c) identify the quickest path to profitable & loyal customers … and a break even business model

Too much money is like too much chocolate or Cartoon Network for a 2 yr old … keeps him/her busy, makes him/her happy, is great fun … but destroys teeth and the brain (pun intended).

This is especially true for first time entrepreneurs, even if they are “experienced” from the corpo world … as a start up takes different skills from a job.

In fact, constraints and obstacles for a good team in the early days brings out their best … and enhances their chances of creating a truly innovative business model …

Sridhar Turaga Wednesday, November 7, 2007 at 9:57 PM PT

[...] Things have obviously come a long way. Last summer, I did a body of research on the Indian entrepreneurship scene, as I watched huge amounts of capital finding its way to India. Through that work, I also came to the conclusion that there is way too much money, and not enough fundable deals, and that India needs more incubator funds. [...]

Early Stage Technology Entrepreneurship and Incubators in India |Indian startups, India Business Monday, November 19, 2007 at 5:31 AM PT

Sramana,

I am a budding entrepreneur who would like to get into an incubator to take my patented product to next level.
In my research I narrowed down to NirmaLabs, Ahmedabad as they are funding upto 20 lacs and also is run by seasoned entrepreneurs.

Do you have any suggestions on this ?

Nikhil Saturday, November 24, 2007 at 12:23 AM PT

We started incubating companies way back in 2001, one of our earliest experiences that we as an incubator and our companies faced was lack of capital and most importantly lack of entrepreneurs with the fire in their belly to make things happen.

This has evolved over a period of time, but we still are grovelling in the same issues, several incubators have been funded by the government, I was on the Department of Science and Technology where we saw to it that funding was provided for unfortunately funding was given to universities (I tried to explain to the board that we need “entrepreneurs” to run incubators not “babus”) they didn’t get it.

IndiaCo during our incubation days had no grant and government support but we were a healthy profitable company that was run by professionals.

Incubators in India need to be re-invented.
Funding of start-ups has to evolve and lastly entrepreneurs have to have the fire to build a great company!

Put these together and you will get your answers!

Rahul Tuesday, February 17, 2009 at 2:00 AM PT

Nikhil,

Most incubators will not get it, best you use them as cheap space!

Rahul Tuesday, February 17, 2009 at 2:06 AM PT

Rahul rightly mentioned that “Government of India” along with other funding authorities including the World Bank (InfoDev) appear to be of the mindset that:

- Incubation is a “Subject matter of Institutions”
- “Private Incubator” is not a viable business model (Given their prior bad experience of dealing with private Incubators)

Rahul’s IndiaCo was among a very few private initiatives supported as private incubator in the early days, but now for a startup incubator its extremely difficult to have that kind of support.

We have just started with our Incubator initiative and have faced what Rahul just mentioned in his post. We don’t wish to even attempt to change this mindset of the authorities, we have rather changed our strategies to suit the present ecosystem.

Best,
Ashish Chamoli

Ashish Chamoli Tuesday, April 21, 2009 at 10:10 AM PT

It has been rightly said that India is still seeking the protection of foreign multinationals.
We have trenmendous energetic manpower waiting to become successful entrepreneurs.But the officials of Government of India right from Commissioner level to village level are target oriented and not entrepreneurship oriented. They want to finance 50000 person with a meger amount of Rs 10,000/- each claiming that Ten Thousand Entrepreneurs are established.
GARIBI DOOR HO JAYEGI because they have financed 50 Thousand Hungrypreneurs and not the real entrepreneurs.Target is good to announce in Parliament that 50 thousand hungry people are financed under the umbrella of entrepreneurship.

Dr.Mrs Sushma Joiya Thursday, October 14, 2010 at 1:25 AM PT
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