India has a robust ecosystem for start-ups, which was indicated in the year 2020’s funding figures. According to an Inc42 report — The State Of Indian Startup Ecosystem 2020, a total of $70 bn worth of funding was recorded across 5,985 deals in India between 2014 and 2020.
By the end of 2020, the number of startups in the country reached 55,000 – which means that more and more young entrepreneurs are entering the ecosystem. Now, young entrepreneurs often enter the competition with a single disruptive idea. These entrepreneurs are either in college or have just passed out of college when they plan to turn that idea into a business.
This means that despite having a brilliant idea that solves a crucial problem and has utility value, they lack the means to commercialize it or make money out of it. And, especially in the early stages, when startups haven’t raised funds, and have limited business experience, how do they survive?
This is where incubators come to sight.
What is an incubator?
In simple words, incubators are organizations, platforms, or companies that help startups in their initial stage of business. They offer mentoring, guidance, co-working space, and funding. Incubators that comprise experienced professionals provide significant hand-holding and offer invaluable advice. Therefore, they perform a vital role in taking forward innovative ideas being cultured by budding entrepreneurs in the early stages of their business.
Let’s take a look at how incubators help these budding entrepreneurs in detail.
A ready-made support system:
Incubators provide startups with a real-life business experience as they offer support through both mentorship and investment. It begins with the incubator advising the founder whether the idea can cater to the market and customers’ needs. In essence, incubators show the path to make a market-friendly prototype of the original idea and help entrepreneurs walk it by hosting training sessions and networking events for founders. Such an environment helps startups stay afloat as they learn and grow.
The biggest cost that startups usually incur in the early stages is the cost of working space. Without in-house funding or an investor, it is hard for them to invest in a proper office or adequate infrastructure. Hence, co-working spaces offered by incubators are a good value proposition. Such spaces also help entrepreneurs in networking with other founders as well as building lasting relationships – in other words, they create a sense of community.
As incubators are well connected in the ecosystem, good ideas can find investors through them. Moreover, investors also give a chance to startups when they come through an incubator due to the investors’ faith in the incubator’s vision. As a result, startups often stick with incubators even after receiving funding – as they continue to derive some value from the association.
In a nutshell, with more startups joining the ecosystem, incubators are playing an important role in mentoring young professionals and helping them tread the right path with their innovative ideas.