Shashank Randev from 100.VC starts the discussion about ‘Future Unicorns of India’ that focuses on the importance of establishing successful start-ups. The panel members include:
Shashank Randev starts the discussion indicating that India is the third-largest start-up ecosystem in the world. There are more than 1000 tech start-ups that began their operations last year itself. The Indian start-up ecosystem is conducive for a unicorn or growing start-ups. The evaluation of over $1 Billion has continued. The country has over 305 incubators and accelerators with a capacity to enable over 5000 start-ups every year. More than 65% of incubator and accelerator programs have been added in the last five years. Out of these, 57% are active outside the tier 1 cities.
The future of unicorns is poised to rise from these innovation centers. The discussion centers around how the incubation centres are increasing the catchment area to nurture these young entrepreneurs, who will eventually grow and have been growing over the last few years.
Shashank asks Vinutha about her incubation program and how she has been supporting the start-up ecosystem:
T-Hub has been around for the last four years. They have started as a co-working space. This is a Telangana Government initiative that started in 2015. During this period, they have built themselves as an innovative ecosystem while they work with various stakeholders; right from the start-ups who are the beneficiary, to investors, mentors, and service providers. Corporates are a significant part of their overall operations too.
They work with various stakeholders that help a start-up grow by raising funds so that the start-up turns into a company that can offer employment to youth, bring revenue and wealth to the country. Many of their programs are under corporate innovation or start-up innovation.
Corporate Innovation Program: They have accelerated this program in the last 4-5 years. They work with over 35 companies spread across the country. They work with these companies to help them find innovative solutions and create a demand for start-up services.
Start-up Innovation Program: This program focuses on the other aspects like incubation and acceleration of young entrepreneurs. They have LAB32 that serves as the core incubation program for around 50 to 80 start-ups. Through a 6-months program, they help start-ups to fine-tune their products. They arrange sufficient support for start-ups at this stage. T-Hub’s role begins when the start-ups reach the ₹ 50 Lakh revenue mark.
Apart from that, they have ‘P-Angels’, an investment-focused acceleration program. They initiated ‘Trestle’ that helps start-ups explore other markets.
They also work with various international corporate companies under both these programs. They help Indian start-ups to go into different countries start-ups from other countries to enter the Indian market.
Shashank then asks Subhrangshu about the support extended by IIM Kolkata to the early-stage ecosystem in Eastern parts of India:
Subhrangshu initially discussed the Vision and Mission of IIT Kolkata, which is creating socially responsible business leaders. The incubation centre began by the end of 2014. The centre focuses on leveraging innovation to resolve the issues of common people. They focused on the ‘impact’ part rather than the valuation part. They feel that if a business idea and the person is good, the valuation will follow.
They operate in the Eastern part of India including the eight states in the North-East. In this region, it is quite difficult to gauge who wants to be an entrepreneur. They promote entrepreneurship by motivating the youngsters initially on state levels. They try to identify promising ideas, mostly grass-root level innovations. Then they help them scale-up. So, they work as ‘livelihood creators leveraging innovation’.
They have worked as the knowledge partner of five different State Governments in this region; West Bengal, Mizoram, Assam, Meghalaya, and Arunachal Pradesh. Currently, they are incubating about 150 entrepreneurs that have grass-root level innovative ideas, yet they didn’t know what a business plan is.
Shashank now moves over to Vipul asking about the role of CIIE and their close partnership with the Bharat Innovation Fund.
CIIE.CO was started as an academic centre in 2002. They work to encourage entrepreneurship in a broader perspective in the Western regions of India. Their role includes incubation, acceleration, fund-raising, venture capital, and research. So, they work from incubation to providing the growth capital to innovative business initiatives.
They scout the early-stage entrepreneurs through various well-designed programs run in their incubation centre. In the past 10 years, they have mentored over 5000 start-ups. They have incubated over 1000 start-ups and raised seed investment for about 160 start-ups.
Apart from these programs, they work with two venture funds. Bharat Innovation Fund focuses on deeptech and it has already contributed by investing in six start-ups. Another fund they manage is Bharat Infusion Seed Fund. Again, another fund called ‘Infuse’ focuses on sustainability. They have already funded 14 start-ups through this.
Shashank puts the next question to the panel: ‘What are your thoughts on India and how is India poised to see several growing start-ups? How would it impact the local market and contribute to generating jobs?’
T-Hub started from 400 start-ups in 2015, and now the number has gone up to 3000+, and the focus is on growing this number. The Telangana Government also puts massive efforts in this regard. Currently, they have different programs to support women entrepreneurs, rural entrepreneurs, skill development programs for students to promote entrepreneurship, and there are emerging technologies that help to widen the support.
Now, to push this forward, they are looking for buyers in the government sector apart from the corporate sector. Telangana Innovation Partners, including T-Hub, stand as the mediators between the start-ups and governments. Apart from the numbers, even the quality of start-ups also matters. They are focusing on taking this drive beyond metro cities and percolate across India. About 90% of start-ups are unfunded. Yet, after incubation, they need the right product-market and not the basic facilities. So, start-ups require mentoring in their early growth stage.
Shashank emphasizes the increase in government engagement in start-up encouragement and appreciates Telangana Innovation Partners. Then, he asks Subhangshu on his thoughts about prospects for start-ups in India:
The COVID pandemic has brought the ground realities before all of us. India is proud to be the third-largest start-up ecosystem. Yet, it’s time to look at the workforce. As they are government-funded incubators, they use tax-payers’ money. He would be very happy if the start-ups could create valuation and go big. Yet, the most important thing is to create livelihoods. With the same perspective, the government is spending so much money.
As an incubator, they are only interested if start-ups are earning. Again, there is a need to change the culture that talks only about funding. When we talk about ‘Aatmanirbhar Bharat’, funding should not be the only focus. The start-ups need to come up with better ideas that are grounded. It is the need of the hour to nurture a new breed of start-ups that are solving the ground-level problems. The growth should not be concentrated around big cities, and we should focus on utilizing those tier 2-tier 3 centres where the workforce is migrated during the pandemic. So, we should leverage their strengths and innovation to create self-reliant towns, villages, and blocks. And, they are committed to doing that, being a government-funded incubator.
Shashank underlines the importance of building sustainable and scalable businesses bringing tangible solutions. Then he asks Vipul about the question.
In India, most of the ecosystem is matured in the cities. We are creating good job opportunities for people with different levels of skill set. Now, to increase the intensity of job creation, we need to go deeper in tier-2 and tier-3 cities. A lot of talent exists in these regions. It is required to provide a good ecosystem to this talent to grow where they are without going to metro cities to work with companies.
So far, a lot of start-ups have come from tier-2 and tier-3 cities. RazorPay is a company that started its journey from Jaipur. Landing Card started their journey in Ahmedabad. We are starting to build ecosystems and resources on encouraging such start-ups to operate from tier-2 and tier-3 cities. Again, we need to focus on employability through these start-ups.
Governments’ initiatives to strengthen incubators and resources in these cities would boost-up the process for sure. CIIE is going deeper into smaller cities through a dedicated wing. They are in the process of starting incubation centres in cities like Jaipur, Bhopal, and Indore. The intention is to tap a potential entrepreneur early and develop job opportunities in those cities.
Shashank expresses his agreement to the point and mentions some companies that 100.VC invested in.
Next Question to the panel members: ‘What are the type of sectors and the companies that stood out through your incubation centres?’
They have worked with close to 1100 start-ups in the last five years through their various programs for incubation, acceleration, skill improvement, and so on. They have start-ups that were recognized as great solution providers by various bodies. Some of them have been acquired, and some of them have achieved good growth too.
Six start-ups have been acquired during the last 3 years through their Corporate Innovation Program. A start-up was acquired by Airtel, and another one was acquired by another big corporate company in their community. The success stories are coming up every day. Again, through their LAB32 Program, they have moved to different cities and geographies. Apart from funding, they also track the number of employment created by a start-up to encourage job creation.
As half of the population in India is aligned with Agri and allied services, a large number of start-ups from their incubation centre are coming from this domain. ‘Dehat’ is a start-up, which can be a big success story for India, comes from their incubation centre. This start-up initiated the operations from Patna. A few IIT-ans left their jobs to help farmers. They developed an IT-enabled platform and kiosk to help farmers on the input and also on the demand side. They aggregate, intervene, and help the farmers connect to the corporates taking care of the hassles. Being a society-focused business initiative, ‘Dehat’ is successful in raising ₹100 crores funding.
‘5C Network’ is another start-up initiated in its incubation centre. Their focus is to solve the problem of tier-2 and tier-3 cities. Here there are clinics, but due to lack of radiology resources, scanning takes a lot of time. They have reduced the turnaround time from several hours or days to 40 minutes. They use a cloud platform and two radiologists.
A start-up from Meghalaya is working on aromatic and medicinal plants for essential oils without even basic training in that. He deploys women across districts to grow those crops with a buy-back guarantee. Then, they create essential oils with the distribution model of distillation. The start-up carries out final testing and packaging.
They provided seed capital to about 160 start-ups. Out of them, 30 start-ups were profitable exits.
Questions from the audience:
Can being part of an accelerator program or getting trained from an incubator help while fund-raising? How important is incubation for early-stage start-ups?
In the early stage, there might be many things that are unknown to new entrepreneurs. You can work with incubators and accelerators as an extended team of mentors to resolve your queries and elaborate your business ideas with a practical approach. There may be resources that allow you to develop an idea, sitting at home. sometimes you may miss out on the things that you don’t know about. So, it is good to have interactions in an ecosystem while starting your business.
People come to IIM to recruit as they know that these are filtered bunch of people that have crossed multiple hurdles. Similarly, with a branded incubator, the entrepreneurs would need to face multiple rounds before they are accepted. Thus, the quality should be better than the average. This is the perception people would have as they look at a start-up that has been incubated by CIIE and IIMs.
The aspiring entrepreneurs need to self-assess their business models to gauge the gaps in it. Accordingly, they can choose the accelerator or incubator program specific to the sector or technology. This is the ideal way to seek for proper support through incubators. If entrepreneurs are well-versed with these factors, then they may get into the funding market with their to-the-point presentations of the business idea they are working on.
How to create a market implementing start-up ideas in government, especially AI health tech solutions, to accelerate business opportunities?
This is a space-specific question, and the approach of T-Hub in Telangana is relevant here. ‘Emerging Technology’ is one of Telangana Innovation Partners. This is an office, which figures out the areas where it is possible to implement AI. This year has been announced as the year of AI by The Telangana Government. So, the focus is on this technology.
For instance, during the pandemic, they detected people that are putting on their masks through the traffic signals. Through the Start-up India initiative, the government is picking up the right companies to introduce innovative solutions. There are bright prospects as people are looking for start-ups and technology-driven ways to solve their problems.
While doing business with the government, many people get frustrated. They may have good ideas, yet cracking the government orders may be tricky. So, they should not get overwhelmed with the AI and Robotics sort of concepts. If they wish to do business in the healthcare sector in India, they should come up with solutions that are affordable, accessible, and with acceptable quality. If you maintain these things and leverage technology to enable it, you can do a big business. Otherwise, the technology would be meaningless from an Indian context.
The organizations like Start-up India are giving opportunities to reach out to the government and pitch the product ideas. It is essential to prove your product to attain higher acceptability in the market. So, if you can crack the government orders, you may be able to sell the product in the private sector as well. Some companies are connecting to the government, and the government is also open to adopting technology-driven solutions through a pilot project and other modes at a very early stage.
How should start-up founders and entrepreneurs look at COVID-19, and how can the landscape be post-COVID-19?
They have surveyed to understand how COVID-19 is affecting various start-ups, and a lot of start-ups think that the pandemic would bear adverse effects on their growth and even existence. T-Hub is working with them to understand their key skills and strengths and help them head in the right direction. In every crisis, there would be an opportunity. It is crucial to understand the opportunity. Again, in every solution, there would be a significant part that would work in the post-COVID-era. Presently, the intelligence is in finding that part of the solution or to work with a strong team that would build something for the future. So, start-ups need to work out their other plans to overcome this crisis.
COVID has brought a lot of learning for all of us. The key factor would be to focus on the pain points and design a solution that works by solving people’s problems. So, to survive and succeed, working on the pain points is more significant than the gain points.
The founders and entrepreneurs need to analyze which part of their business model can become an acceptable solution in the current scenario. They need to re-assess their business model and products to understand which part of the model would be relevant during and post COVID eras.
They should also try to immune their business model in the current crisis. Start-ups need to quickly and correctly decide on their strategies as they don’t have much time. Most of the recently funded start-ups are still busy in validating their business ideas, and they possess very limited resources to survive. So, start-ups that fail to decide quickly on their strategies would neither have the runway nor would the fund-raising be easy for them in this situation.
They can tackle this in three ways:
The incubators and accelerators are also trying hard to help the start-ups pivot their business ideas faster and avail some resources to let them survive and grow.
Finally, Shashank thanks all the panel members for the insightful session and taking their time to express their valuable views.
Published on: June 11, 2020