The report was brought out by NSRCEL, the startup incubator of IIM Bangalore and Centre for Research on Start-ups and Risk Financing (CREST) at IIT Madras.

It offers valuable insights and recommendations to policymakers and business leaders on how to create and nurture thriving startup incubators, which are essential for job creation and economic growth.

This report addresses that gap and highlights the need to both raise the level of incubation activity and enhance the quality of incubation efforts nationwide, she said.

Highlights

The highlights of the research taken up by IIT Madras and IIM Bangalore are:

Incubator landscape

Ø The number of incubators in the Indian ecosystem has grown steadily, with more than 1,100 active incubators dotting the Indian startup ecosystem.

The Southern region leads the pack, housing 45% of all incubators and having the highest density of incubators.

Ø Tier I cities house almost half of all incubators (48 percent). However, the mix of incubators, viz., those hosted by academic institutions, industry and public sector, shows significant variation across cities.

Chennai has a high proportion of academic incubators (82 percent), whereas Bengaluru and Gurugram have a high proportion of industry incubators at 71 percent and 84 percent respectively, say sources from IIT Madras.

Ø The incubator density is 0.8 incubators per million population, whereas countries like US, UK and China range between 8 and 10 incubators per million population.

This indicates the need for setting up more incubators in the country

Incubator coverage

Ø Only 8.2 percent of all startups undergo incubation. Further, 20 percent of the incubators support 98 percent of these startups that are incubated.

Taken together, this highlights an urgent need to improve the performance of incubators that are underutilized and to actively engage in outreach efforts to raise awareness about the benefits of incubation.

Ø The correlation coefficient between the presence of incubators and startups was found be 0.84, which indicates a strong positive correlation.

A higher presence of startups is associated with a higher presence of incubators.

Ø Incubation is sought after by students, young professionals, women founders and those with modest financial resources.

This is a positive trend that indicates that the support system is working for those who need it.

Ø The rate of incubation is high among deep tech sectors such as AI/ML, Data Analytics, Biotech and other sectors.

All of them have an incubation rate upward of 12 percent.

Incubator outcomes

· Incubated startups have been able to secure their first round of funding earlier than the non-incubated. While 27.1 percent of the incubated startups that received their first-round funding within one year of incorporation, the corresponding percentage for the non-incubated was 15.4 percent

· Despite being smaller in number, incubated startups have won more awards in all the leading startup awards.

Incubated startups have also been engaged more actively in creation of intellectual property – the percentage of incubated startups that have published patents is about 5 times more that of the non-incubated

· For the startups that ceased to operate, the average age at which operations ceased was about 15 percent higher for incubated startups, indicating that incubators could provide a nurturing ecosystem that provides more time for the ideas to flourish

· The contribution of the incubated startups to the economy has also been significant. The annual average revenues in the initial years for every 100 incubated startups has been about ₹1590 crores.

The average value of assets for every 100 incubated startups by the 9th year from incorporation has been estimated at ₹10627 crore.

However, the revenue performance of startups associated with industry incubators is 50 percent higher as compared to those supported by academic incubators, say sources from IIT Madras.

This report turns the spotlight on incubators, a significant link in the startup value creation chain, he said.

‘Tell me who your friends are, and I will tell you who you are’ is a well-known proverb. In much the same way, our research finds that incubators enhance the credibility of the startups that they support.

This manifests more compellingly in startup funding. Incubated startups are two and a half times more likely to get funded as compared to the non-incubated, said Prof Thillai Rajan of IIT Madras.

Launch

Amitabh Kant, G20 Sherpa, Government of India and ex-CEO, NITI Aayog launched the report. He said in the growth of Indian startup ecosystem, incubators play a very crucial role, and their contribution has been expanding in recent years.

Conceptualized initially to facilitate the formation of start-ups, today incubators perform multiple roles such as bringing together scientific and business expertise, channelizing capital to promising start-ups, and increase awareness on startups in the society, he said.

For the government, incubators are becoming the last link in identifying startup beneficiaries for various schemes and monitoring their progress, he said.

‘I am happy to note that two of the best institutions in the country have joined hands in bringing this timely as well as relevant publication on incubators.’

Their findings vindicate the policy emphasis on incubators, while giving suggestions on how the incubation landscape can be further enriched through various interventions, he said.

Director of IIM Bangalore

Prof. Rishikesha T. Krishnan, Director, IIM Bangalore, said, the value of innovation cannot be overstated.

Incubators play an important role in supporting the unique needs of diverse creators not only by accelerating grassroots development but also by leveling the playing field, he said.

Significant findings

Among the various significant findings of this collaborative research undertaking is one—that cities of Chennai and Bangalore lead the startup ecosystem with their high concentration of industry and academic incubators.

As IIMB stands at the heart of India’s knowledge capital, we look forward to continuing our sustained contribution to the city’s deep roots—its history and investment in the future of growth and innovation”.

This report addresses this crucial point and the challenges. I am sure the recommendation of this report will be immensely beneficial for all the stakeholders, said director of IIT Madras.

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This collaboration agreement seeks to capitalize on the strengths of both institutions, broadening the learning experience for students enrolled in the Bachelor of Science (BS) programs at IIT Madras and undergraduate programs at IIT Palakkad.

To date, over 30,000 students are actively participating in this program, fostering a vibrant and interactive learning community, say sources from IIT Palakkad.

Director of IIT Madras

Welcoming this collaboration, Prof. V. Kamakoti, Director, IIT Madras, said IIT Madras is committed to reach quality education to every deserving student in our country. This initiative with IIT Palakkad is a very significant step towards reaching the goals.

We are enthusiastic about mentoring these bright minds. Our courses and internships have a strong emphasis on hands-on learning and innovation, said director of IIT Palakkad.

This collaboration with IIT Madras will build a robust foundation that equips students with the skills, insights, and networks they need to excel, he said.

Key features

The key features of this collaboration include:

Ø Credit Transfer from IITPkd Courses: IIT Madras BS (Data Science and Applications) students who meet the eligibility criteria can fulfil their credit requirements by taking courses at IIT Palakkad, promoting an exchange of academic resources and expertise.

Ø Access to IIT Madras Courses for IIT Palakkad Students: The MoU allows undergraduate students at IIT Palakkad to enrol in courses on Data Science and Programming from the IIT Madras BS program, ensuring equitable access to these cutting-edge skills.

Ø Support for Additional Initiatives: The collaboration will also facilitate student exchange programs, internship opportunities, and other joint initiatives.

Commitment

This collaboration between IIT Madras and IITPkd highlights the commitment of both institutions to enrich student experiences through cross-disciplinary exposure, practical learning, and research opportunities.

It aims to create a robust academic ecosystem that utilizes the expertise and infrastructure of both IITs.

Collaboration

IIT Madras has been collaborating with other leading institutions in the country to provide in-person learning opportunities for final-year students in the BS program.

IIT Gandhinagar, IIIT Hyderabad, and Chennai Mathematical Institute (CMI) have already made their campus courses available to eligible students from the IIT Madras BS (Data Science) degree program.

About IIT Palakkad

Established in 2015, the Indian Institute of Technology, Palakkad is dedicated to creating an environment that enables students and faculty to engage in the pursuit of knowledge, to dream, think, and innovate thereby becoming change agents for a better world.

Having begun with just 120 students in July 2015, IIT Palakkad has since grown into an establishment that is about a thousand students strong and with the best manpower in key positions.

IITPkd aims to become a multi-disciplinary institution with 5000 students by its 10th year. The Institute recognizes collective growth, in collaboration with industry and other academic institutions, as the need of the time and emphasizes blue-sky research and directed research as two essential pillars of technology development.

The Institute embraces a vision to be a leader in cross-disciplinary inquiries, and to contribute to the potential that India’s demographic dividend represents for the country and the world, which is embodied in the motto of the institute “Nurturing minds for a better world”.

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