Session Blog. See overview at IoTMATRIX 2020 Conference Summary
Are you an entrepreneur? Are you seeking domain expertise to accelerate your product? Are you looking for business expertise to refine your business model? Are you searching for investor networks that can accelerate growth? Are you keen to get iconic brands as your customers?... And many of them??
If you say, ‘Yes’, then the recommendation by the majority in the start-up world would be to look for a ‘good’ incubator or accelerator.
India continues to be the world's third-largest start-up ecosystem, behind the US and China. Moreover, India has over nine thousand start-ups and more than three hundred incubator and accelerators programs to support these entrepreneurs.
So, the question really is about how to find ‘good’ incubators and accelerators among them. And what defines as ‘good’?
The recently concluded IOTMatrix - a flagship event hosted by TIE Bangalore - had a panel discussion on “Accelerators: Putting Start-ups on the Fast-Track”, covering Innovation Continuum from incubator and accelerator programs, the value propositions, how to evaluate and hopefully how to get the best out of these programs.
The panellists included Mr Venkat Raju, Venture Partner and Advisor, Mr Abhay Tandon, Director and Head, Lowes Innovation, Ms Sangeeta Bavi, Director, Microsoft Start-up Ecosystem,
Mr Garrett Winther, Partner & Program Director, HAX and Mr Pramod Ghadge, CEO and Co-Founder, Unbox Robotics. The discussion was moderated by Ms Priyanka Chopra, Chief Operating Officer and Managing partner in Canter for Innovation, Incubation, Entrepreneurship, CIIE, IIM Ahmedabad and venture partner with Bharat Innovation Fund.
Incubators and accelerators are part of the same continuum. On one extreme we have incubators, who encourage students and entrepreneurs to go and try to test the waters - with an idea or a concept - to determine if they really want to become entrepreneurs and to take that idea and concept to potentially a product prototype or help launch a small business if the entrepreneur wishes.
And on another extreme, we have accelerators, who help start-ups probably from the prototype stage all the way to the product-market fit, or in terms of free revenue, going to, let's say, a million dollars IRR, helping them with expansion across geographies and markets and so on. So, they come in different sizes and shapes - industry-agnostic accelerators, theme-specific accelerators like, hardware accelerators and so on.
As an entrepreneur, you should be clear as to whether you will fit into an incubator or an accelerator program.
Typically, 95 % of applications received from entrepreneurs are not meaningful or associated with the intent of an incubator or accelerator program. It seems to be the case that start-ups are applying to a lot of different programs without seeing the actual thesis, without seeing whether it's making sense or not. And that is a problem. So, start-ups must look at what stage, what size, and what kind of value proposition is provided while choosing the right program.
Start-ups must invest time to choose the right partner because that will really help them on the growth path.
Corporate-hosted accelerator programs offer deep domain experience, talent, technology and market access to entrepreneurs. Corporates like Target work on solutions that could create unique value propositions that can solve their internal problems.
Many incubators and accelerators have very strong teams of mentors who can provide individual mentoring access. They can bring that person with specific expertise as a mentor to help you grow, validate the product, network with investors, and help in media connect (of course, if your story is compelling enough)
What if your start-up is not software-based, but in the hardware space? Hardware start-ups differ in the range of diverse skill sets that are required, in talent and experienced people who are necessary and in the size of funding that is required. Besides software skills, you need electrical, mechanical, manufacturing, and supply chain skills, industrial design, followed by all the business aspects. You also need access to millions of dollars worth of testing equipment, testing chambers, robot testing labs and the infrastructure for product development.
An interesting case is Mr Pramod Ghadge, CEO and Co-Founder, Unbox Robotics, who interacted with 3 incubators and accelerators, starting from choosing an idea, evaluation, building business models, raising funds, building a prototype/product, to product-market fit, and accelerating the speed by leveraging the experience of an accelerator that worked with hundreds of start-ups across the globe. Getting all the guidance at various stages of the idea journey allowed them to avoid some mistakes which they otherwise would have made.
To summarize, you as an entrepreneur need to figure out what's going to work best for you, because the people on the other side are doing more. You need to bring clarity to what you really want, on how you want to drive your business and what your vision is for the next 6, 12 and 18 months by defining milestones.
Do study before applying for any program and make sure why you're not applying to a certain program.
Make sure that the prime program drivers and their expectations are in alignment with your own goals.
Talk to their alumni, and learn about their last demo day activities and post-program support.
The major driver from a business model perspective is the equity ownership of the portfolio, and that is the prime business model. And so, look at what you can offer or dilute. If you are giving up equity, you'd better be like the value that you're getting is coming straight to multiple times the equity that you are giving up.
And always, always remember that the start-up is your baby and YOU are in the driver's seat.
Choose the best!
The session was chaired by Mr Somshubhro (Som) Pal Choudhury, Partner, Bharat Fund and Mr Kiran Rudrappa, CEO, I2G Global.