Early-stage startup incubators are institutions that help budding entrepreneurs to develop their ideas into sustainable businesses. They provide physical facilities, seed funds, network and linkages, co-working spaces, lab facilities, mentoring and advisory support. Thus they play a key role in startup ecosystem.
According to the handbook for Non-Profit Incubator Managers authored by Centre for Innovation Incubation and Entrepreneurship (CIIE), ‘incubation should be seen as the process of de-risking an idea or a start-up and helping them improve the odds of success.’
To understand more about how early-stage incubators work and why they are different from other mainstream impact investors, we spoke to Aakarsh Naidu, Ecosystem Representative at NSRCEL, an early stage startup incubator at IIM-Bangalore.
“NSRCEL is an open incubator and sector agnostic, wherein any entrepreneur who has an idea can approach us for mentoring and support.” – Aakarsh Naidu
Supported by NITI Aayog under Atal Innovation Mission, NSRCEL apart from startup incubation has a separate women startup program where they reach out to early-stage women entrepreneurs and a social program to support not for profit ventures.
“The role of impact investors is very crucial in terms of supporting social enterprises. I feel impact investors are focussed on core sectors like Education and Healthcare.There are other areas of inclusiveness which are still under served. It is this gap between intent and impact where early-stage incubators like us play a role”
The risks and odds that an early stage incubator faces are way more than that of a cohort level investor. This is because the entrepreneurs come with no experience of running a social enterprise and all they have is an idea. So how is it feasible to support such entrepreneurs who haven’t tested their ideas yet?
“It’s a long-standing saying that, if an entrepreneur goes to any other place in the ecosystem, if they are in doubt, they don’t incubate. At NSRCEL, we go the other way round, If in doubt, we incubate. The reason is, being a part of an academic ecosystem, the sustainability and the costs are already covered by the institution. That allows us to be in a space where we can experiment.”
NSRCEL follows a multi-level process where the entrepreneurs are tested and filtered out based on the viability of their ideas, their intent, grit and their belief in their ideas.
It all starts with a monthly event. NSRCEL conducts a workshop for new age and existing entrepreneurs called For Startups. This is followed by a one on one interaction with one of the mentors, who are seasoned experts, guide the potential entrepreneur through a 45min – 1 hr session. Based on the mentors’ feedback, the most promising entrepreneurs are chosen for the pre-incubation program.
Pre-incubation program – Launchpad is a 3-month program where the selected startups join a cohort. They are then taken through a structured program, where are they are exposed to various inputs right from business model canvas, lean canvas, design canvas, pitching to prototyping. The idea is to expose these entrepreneurs to a variety of inputs so that they can narrow down their focus. This is followed by the longer duration incubation program.
“Incubation is all about survival in the early stage where all the risk involved is absorbed by the incubator. We are supporting the bottom level of the funnel. That helps the entrepreneurs get a better chance at receiving funding. We are trying to build an early stage ecosystem.
As we are associated with an educational institution, an early stage entrepreneur receives better cushioning in terms of the risk involved when the idea is still not concrete.”
What Weighs More – The Business Model Or The Impact Centric Quality Of The Organisation?
NSRCEL follows a 3 ‘i’ criteria while evaluating any startup idea.
Every startup that seeks mentorship from NSRCEL is judged whether they are – Innovative, Implementable and Impactful. ‘Impact’ is given a strong weightage in the kind of ventures that are chosen at NSRCEL, which is why most of the ventures getting incubated at NSRCEL have been social enterprises.
“From a social enterprise’s point of view, the impact and the business model are closely linked. I don’t see why one should be different from the other. We evaluate the business model on the whole, that should include the impact model as well. “
The role of early-stage startup incubators is very crucial and will continue to evolve in the Indian startup ecosystem. Incubators like NSRCEL are playing a key role in de-risking and developing new ideas into operational businesses.