University Incubation Centres: Centerstage for Start-up
Prof. Bhagwati Prakash
India is currently considered the third largest start-up ecosystem in the world with 3rd largest number of technology driven startups, trailing behind only the US and UK.1 The startups can revoutionise employment scenario in the country and enhance the growth rates of industry and commerce, as well usher India in an era of double digit growth. Further, out of the total incubation centres facilitating and inspiring youth for establishing their own start-ups in the country, about 56% are located and operating from universities. Thus, the university run incubation centers have been supporting entrepreneurship and promoting startups in the country in a big way. The incubation centres operating in the universities have supported 58% of the total incubatees of the total incubatees facilitated by different incubators in the country.2 The universities fueling the startups movement in the country are, playing key role in creating new ventures, adding value in the national income and generating fresh employment potential. It is in addition to what these universities have been contributing in the traditional teaching, research and industrial collaborations3. This incubation model being portrayed by some of the universities, needs to be replicated across
the country, not only in the universities alone but, in majority of the colleges as well. Today, India has been experiencing second highest spate of youth idleness after South Africa, as 30.8% youth between the age of 15-29 years are neither employed and nor any educational and training programme4. These 30.8% No employment education or Training (NEET) youth can be said to be unemployed.
Table 1
Source : OECD
1. including US, Japan & European countries
in the year 2016, alone 6000 start-ups were launched in the country. 5 The number is likely to get halved in 2017, in want of requisite support sevices. A more worrisome feature of India’s new-found startups movement as per a recent IBM and Oxford study is that “90% of the start-ups in India fail within the first five years of their inception.”6 It is even more worrisome that failures happen more because, as per the study of FICCI, “where only 8.3% of the start-ups included in the FICCI sample are reported to be successful in getting external funding. A strong ray of hope to enhance external funding is that the startups which have been the part of an incubator or accelerator, 24 percent of the such startups have been able to get external funding. ”7 Thus the survival rate of startups can be raised 3 fold by facilitating outside funding from Angel investors, Venture capital funds or Private Equity Providers with the support of incubators. So incubation centres, if spread across the universities and colleges in country can do a yoeman service in this regard. It (Problem of non-funding) is a major concern with regard to funding is that vis-a-vis the global trend that very low proportion of start-ups are getting funded in India. For example, the percentage of global start-ups that are able to successfully raise capital in the grocery tech, healthcare & consumer healthcare, and smart home & home improvement are 41, 52 and 36 percent respectively. The corresponding percentage for outside funding for Indian startups are 5, 10and 11 percent8.
In fact the angel investors, venture capital funds, private equity providers and even the accelerators are mostly confined to tier 1 cities in the country. In the tier-1 cities also, they are mostly concentrated into the 3 major metros viz. Delhi, Mumbai and Bangalore. University and college level incubation centres, if spread across the country, can inspire even the local business persons (who hitherto had never thought of doing so) to act as angel investor(s), facilitate development of angel investor-networks, and also invite angel investor networks and venture capital funds from outside. Therefore, every university and larger colleges, willing to incubate their students as well as their alunini and outside youth, should take the initiative to set up incubation centres on the campuses. Even, the colleges in semi- rural areas too should come forward. The ministry of the micro small and medium enterprises even has a start-up support scheme for traditional industries. Thereby, even clusters of indigenous artisans can be strengthened, if colleges, Panchayati Raj institution and NGO’s also come forward in incubating youth for establishing startups. The scheme
entitled, “Revamped Scheme of Fund for Regeneration of Traditional Industries” 9 was launched with the objectives to organise traditional industries and artisans into clusters to make them competitive and provide support for their long term sustainability, including marketing. Financial assistance up to Rs. 8 crore is provided for any single specific project with follwing limits :
(a) Heritage clusters of 1000-2500 artisans @ Rs 8 crore per cluster.
(b) Major clusters of 500-1000 artisans @ Rs 3 crore per cluster.
(c) Mini clusters of up to 500 artisans @ Rs 1.5 crore per cluster.
Indeed, there are more than 50 government schemes for supporting start-ups in the country. Besides, the passing out and yet to pass out youth from colleges and universities need to be sensitized as well about establishing their own start-ups. They also need to be trained about the steps involved in getting a firm established for startup, getting it
registered as a start-up, developing business plan, executing the same, seeking the benefits of available govt schemes, getting funded and complete roadmap for it. University and college level incubation centres are the best means to inspire and enable youth to begin their own startup ventures. There are unique schemes with equity support
up to Rs 50 lacs, marketing purchase of raw material, loan guarantee export and so on. The university and college level incubation centres can best guide the aspiring incumbant to successfully establish their startups and avail the benefits of various schemes. Self financed institutions-both the self financed universities and self financed colleges, with inherent flexibities should proceed faster without loss of time, as they have lesser procedural formalities to fulfill, and especially when around three fourths of engineering, MBA and MCA seats in the country are in the private and self financed institutions. So, they need to provide funds liberally and steadfastly for setting up incubation and acceleration centres in the country. The public funded elite institutes, including the institutes of national importance already have fully vibrant incubation centres.
The 50+ schemes10 of various ministries of the Union Government are being enlisted here
under :
Ministry of Electronics And Information Technology (MeitY)
1. Support For International Patent Protection In Electronics & Information Technology (SIP-EIT) 2. Multiplier Grants Scheme (MGS) 3. Software Technology Park (STP) Scheme 4. Electronic Development Fund (EDF) Policy 5. Modified Special Incentive Package Scheme(M-SIPS) 6. Scheme To Support IPR Awareness Seminars/Workshops In E&IT Sector Ministry of Agriculture And Farmers Welfare 7. NewGen Innovation And Entrepreneurship Development Centre (NewGen IEDC). 8. The Venture Capital Assistance Scheme
Ministry of Micro, Small And Medium Enterprises (MSME)
9. Credit Guarantee 10. Performance & Credit Rating Scheme 11. Raw Material Assistance 12. Revamped Scheme of Fund For Regeneration of Traditional Industries (SFURTI) 13. Single Point Registration Scheme (SPRS) 14. Aspire – Scheme For Promotion of Innovation, Entrepreneurship, And Agro-Industry 15. Infrastructure Development Scheme 16. MSME Market Development Assistance 17. National Awards (Individual MSEs) 18. Coir Udyami
Yojana 19. International Cooperation (IC) Scheme 20. Credit Linked Capital Subsidy For Technology Upgradation 21. Bank Credit Facilitation Scheme
NITI Aayog
22. Atal Incubation Centres (AIC) 23. Atal Tinkering Laboratories (ATL) 24. Scale-Up Support To Establishing Incubation Centres
Ministry of Skill Development And Entrepreneurship
25. Udaan Training Programme For Unemployed Youth of J&KMinistry of Heavy Industries & Public Enterprises
26. Enhancement of Competitiveness In The Indian Capital Goods Sector
Ministry Of New And Renewable Energy (MNRE)
27. National Clean Energy Fund (NCEF) Refinance 28. IREDA Scheme For Discounting Energy Bills 29. Bridge Loan Against MNRE Capital Subsidy 30. Bridge Loan Against Generation- Based Incentive (GBI) Claims 31. Loan For Rooftop Solar PV Power Projects 32. Credit Enhancement Guarantee Scheme 33.Dairy Entrepreneurship Development Scheme 34. 4E (End To End Energy Efficiency) 35. Pradhan Mantri Mudra Yojana (PMMY) 36. Stand Up India 37. Sustainable Finance Scheme 38. SIDBI Make In India Soft Loan Fund For Micro Small And
Medium Enterprises (SMILE) 39. Startup Assistance Scheme 40. Growth Capital And Equity Assistance