Software to design cranes, RFID solutions, rollable displays, a personalised search engine and any ‘impossible’ innovation or business idea that you once had in your mind can now become a reality! Thanks to Technology Business Incubators, where innovation is literally translated from concept to commercialisation.
Knowledge-based and technology-driven developments have spurred a number of innovations at the individual as well as organisational levels in recent times. Not surprisingly, many people are thinking in terms of venturing out on their own. Unfortunately, the transition from the traditional service-oriented environment to a business-oriented one is not easy. The reactions are often mixed, and hence confusing – ranging from the concerned and supportive, to the sarcastic and downright mean. And for novices, does it really make sense to turn entrepreneurs in the technology-based domain, with so many lucrative job offers around?
Start-ups or lone ventures to create profitable products out of untested ideas or technological innovations can be a risky proposition, and in many cases, an outright frustrating experience. Besides, if one is already a working professional, it involves the loss of a secure fat wallet. It might also be difficult to find stakeholders in the first place who can lay the foundations of a flourishing business. And self-support is definitely not very wise either, unless one can afford to splurge. Here is where a Technology Business Incubator (TBI) comes into the picture.
Plainly defined, “a technology incubator nurtures young firms, helping them to survive and grow during the start-up period when they are most vulnerable”. Technology incubators are visible and vibrant entities, seen in almost every organisation concerned with science, technology and business development. Be it the government, the R&D labs of leading multinationals or even academic institutions, no one can deny their importance.
In the beginning…
An incubator combining technology with business is a technology business incubator. Incubators are part of mechanisms like science parks, technology parks, science and technology entrepreneur parks, innovation centres, a technopolis, entrepreneurship development institutes, etc, that are continually expanding all over the world to promote growth of technology-based enterprises. Though at the macro level they all appear similar, each is characterised by specific traits and has distinct objectives at the micro level. Incubation is the basic stage of a comprehensive innovation support system from where enterprises graduate to higher levels.
A typical technology incubator is a property-based institutional venture. Its main aim is to nurture and support a knowledge-based start-up, enabling it to generate commercially viable products or services. Incubators came into vogue in the early 1980s as a development policy tool in industrialised nations. UK, France, Germany, etc, adopted technology incubation as the means of promoting job-creating enterprises based on novel technological concepts and even commercialising research work at the university level. Universities like Stanford, Harvard and MIT realised the importance of promoting technology-based enterprises. The focus today is on the development and diffusion of technologies in specific areas, including information and communication technology (ICT), nanotechnology and biotechnology.
Analyses of incubator performances around the world indicate that they have a positive impact on the economy, mainly by creating jobs and wealth. They help in reducing the gestation period, promote faster growth of enterprises and reduce failure rates. The role of hi-tech incubators in wealth and job creation has been particularly notable in the US, Europe, China, Uzbekistan and Israel. Several studies have indicated that about 70-80 per cent of incubated enterprises are doing reasonably well. A rough estimate indicates that almost 4000 different types of incubators are operational across the globe today.
The Indian picture
India is a giant when it comes to service provision. That is the main reason why it stands out as a major outsourcing shore. But in this scenario, innovation and entrepreneurship have perhaps not received the boost they deserved. President A.P.J. Abdul Kalam has been quoted as saying: “Indians not only have a great learning capability but most of them also have an entrepreneurial and competitive spirit. Today, there are not enough avenues to channel this spirit constructively and productively. That is what we should aim for.”
Under the previous central government, 12 projects to promote business incubators failed to take off. The current government is seemingly more cautious, and has brought in the expertise of the World Bank, FICCI and other such agencies. But the National Science and Technology Entrepreneurship Development Board (NSTEDB) of the Department of Science and Technology (DST) and like-minded agencies are continuing to take a proactive interest in promoting the establishment of TBIs as well as Science and Technology Entrepreneur Parks (STEPs) all across India. The mantra being promoted is to 'Become a job-generator, not a job-seeker.' Leading academic institutes like IITs, IIMs and NITs have already set up successful incubation centres. With growing globalisation and increasingly liberal mindsets, incubators are gaining popularity. Even corporate organisations have entered the fray, setting up their own incubator centres.
Unfortunately, it needs a great effort to change mindsets and create awareness at the individual level -- especially at colleges, where an aspect of entrepreneurship needs to be introduced. Manisha Nene, a professor in a reputed engineering college specialises in Management Information Systems and loves to keep a constant tab on corporate happenings. Ruefully, she says, “The present day students are superficially uploaded with knowledge. And they don’t realise that there is more to them than just a regular 9 to 5 job. In many cases, companies don’t hire core talent but just elite ‘labourers’, if it can be put that way, to fill positions. The immediate need is to create awareness so that at least students know all their options.” She seems right because a random survey of pre-final and final year engineering students from local state colleges and young employees of MNCs, revealed that the terms ‘incubator’ and ‘incubation’ were alien to most of them. However, when the concepts were explained to them and the word ‘entrepreneurship’ mentioned, most responded by saying, “We have ideas, but don’t know where to go.”
A typical incubation process
TBIs can play a crucial role in turning an innovation into a commercial product. With regards to innovation, Dr Vijay Bhatkar, best known as the creator of the PARAM supercomputer, says, “By innovation, I mean using technology not only to create useful applications for the masses, but also those that are equally commercial in nature.” With commercial viability being a decisive factor for any innovation, admission to a TBI is based on strict scrutiny by a panel of experts. The technology-based company (usually a team not exceeding 20 people) becomes an incubatee or rather, a tenant under the incubator. For a certain period called the incubation (usually 2-3 years), the crucial start-up is provided with various faculties, services and even capital (venture, seed and angel). Also, one must note that venture and seed funding are not discrete incubators but provide vital support to start-ups. Typical offerings of an incubator are workspace, office services, access to specialised equipment and value-added services like management assistance, business planning, access to finance and technical assistance and networking support. These are crucial elements for any new company.
However, no regular manufacturing or commercial supply activities take place during incubation. The stress is on R&D and technology consultations with faculty experts at the host institution of the TBI. Throughout all this, rigorous inspection and analysis continues under the incubator panel. Various other catalyst factors or critical services may be provided as required. After certain criteria are met and the company is ready to be an independently sustainable entity, it ‘graduates’ as a spin-off from that incubator. Ultimately, successful business ventures that can create jobs and wealth are the final products of a typical incubator. There may be certain other specific terms and conditions attached with each incubator.
Most TBIs are under the tutelage of already well-established academic institutions or independent NGOs dedicated to promoting entrepreneurship. But when it comes to MNCs, a consultant of a leading IT company (name withheld on request), points out, “The role of top Indian IT companies is limited to outsourced service provision and not to the making of any original company-owned products or services. Perhaps, that’s why they themselves do not see the need to promote innovative start-up mechanisms like incubators for their employees.”
Promiment Indian TBIs
Some prominent Indian TBIs are:
The Business Incubator
The Business Incubator at Mumbai is run and managed by the Society for Innovation and Entrepreneurship (SINE), in the IIT, Powai campus. The eligibility criteria is however restricted to IIT Mumbai students, faculty, and other affiliates. Besides the normal physical infrastructure, the incubatee companies are provided access to departmental facilities at the institute. Seed loans, too, are provided, Along with this, the TBI provides a pool of mentors who are experts in various fields like finance, law, etc, and other networking facilities with venture capitalists, alumni and industry professionals. A normal incubation period is for 18 months. Herald Logic, DeusCo Technologies, Seclore, Eisodus, and Powai Labs are some of the spin-offs from the incubator.
The Technology Business Incubation Unit (TBIU)
The Technology Business Incubation Unit (TBIU) in IIT Delhi is managed by the Foundation for Innovation and Technology Transfer (FITT). Student-faculty led start-up companies are the most preferred category for tenancy. However, technology-driven incubation proposals from budding entrepreneurs and R&D divisions of existing units are also considered.
http://www.smallbusinessnotes.com/incubation/india.html (Note: posted by IIT Delhi only)
Profiles of incubated technology translations here include high-end IP phones, GIS-based tools, Bluetooth-enabled energy meters, and Wi-Fi/WiMAX-based products and applications.
NirmaLabs has a unique concept of a six-month ‘grooming’ period before incubation, which is very clearly “not akin to an MBA course”, as Dr Madhu Mehta, conceiver of NirmaLabs, points out. Govind Agarwal, whose company is an incubatee here, agrees. He says, “The aim of the grooming course is practical and is focused at managing yourself, unlike an MBA course that teaches the management of established organisations.” Upon grooming, incubation follows. Another striking feature is that NirmaLabs invests Rs 20 lakhs as seed capital, unlike the IITs, and a stipend of Rs 8000 is paid to members. NirmaLabs focuses on technologies in IT, telecom, electronics, biotechnology and related fields. Dr Mehta says, “We see ourselves as forerunners in creating a positive and broad ecosystem to encourage techno-entrepreneurial activities.” Companies offering RFID solutions have already graduated from this incubator.
IndiaCo is one of the earliest technology incubators in India. It basically functions as an investor and fund manager. Among its various initiatives, IndiaCo has worked extensively with small, medium and large enterprises worldwide. It has comprehensive knowledge of corporate venturing and technology transfer, and has successfully partnered with leading universities and R&D houses globally, for collaborative R&D, licensing, joint venture and commercialisation programmes. It won the ‘Excellence in Engineering & IT Award’ from the Indian Economic Development and Research Association (IEDRA) in 2006.
Other notable incubators include Agri-Business Incubator (ABI) at the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT); CIIE in IIM, Ahmedabad; the TBI at BITS, Pilani; the VIT-TBI at Vellore; the incubators at Pune and Tiruchirappalli supported by the World Bank; and the Indian Institute of Science’s (IISc) Venture with TCS—APDAP (Advanced Product Design and Prototyping). Recently, a business venture under the Philips Technology Incubator, called Silicon Hive, has also entered India.
Giving birth to a bright future
As the country’s leading technology institutes adopt the concept of business incubation, the coming days could represent a boom time for Indian technopreneurs. And that would mean more jobs, greater national wealth and, of course, lots of innovation.