National Entrepreneurship Network (NEN), the flagship initiative by Wadhwani Foundation, has released a whitepaper for the Department of Science & Technology (DST) to institute standards for the establishment and working of incubators in India, titled “Guidelines – Metrics & Milestones for Successful Incubator Development.”
The whitepaper aims at setting some of the much needed guidelines for incubation of startups in India and includes recommendations to set the motion for analysis, discussion & debate for policy review and modifications, for the benefit of both funding and host organizations that set up incubators.
On the basis of this whitepaper, the two key pointers that will help setting up national guidelines, metrics and milestones for incubators are Categorization of incubators to identify unique characteristics and success factors for each incubator model thereby enabling replication of successful models and Critical indicators of success for companies that different categories of incubators support.
As per the report, there is a need to devise a measurement strategy for incubators as they are considered to be drivers of economic development. These incubators need to be backed up by raising the necessary resources whenever required and also to showcase and reward the real winners. As far as the funding organizations are concerned, having a detailed measurement on incubators will provide them with visibility to the partnership and can also help them to take timely decisions regarding further funding.
Without the right framework for measurement on the performance of incubators, like in the present scenario, there is always an over-generalization of the complete sector which leads to comparisons between the wrong metrics. This clearly means that there is a need to develop success metrics for a broad set of acceptable incubators. Separate metrics need to be devised to understand the outcome and long term impact from incubators.
The solutions & recommendations in the white paper are based on a detailed understanding of key factors that govern incubator categorization like motive, size of opportunity, location, in-house expertise and sphere of influence.
Every incubator has a motive to back a startup. This could be commercial or not-for-profit. To understand the commercial aspects of backing up a startup, the incubator needs to know the size of opportunity that they have with the startup. This depends upon the core expertise of the host organization, the local eco system and the geographical influence of the incubator.
A not for profit incubator is usually the kinds found in educational institutions and their success factors are majorly measured through social impacts and financial returns.
Incubators also need to be categorized on the basis of the size of opportunity that they find in backing up a startup. It is essential to maintain uniformity in the type of start ups that the incubator can back up so as to maintain a continuous support mechanism.
The whitepaper also provides insight into the key challenges that incubators face in terms of the right amount of funding required for financial sustainability, training and mentoring services for community entrepreneurs and returnable seed money to incubated companies.
The whitepaper (download) gains significance, in light of the proposed nationwide “District Level Incubation and Accelerator Programme”, for incubation of new ideas and support for accelerating entrepreneurship as mentioned in Union Budget 2014.