Vijay Anand | The Startup Guy.

A New Kind of Incubation Model. Part I

Posted on: September 16, 2007

It seems that at the rise of every economic cycle, old structures of the past do pop-up again. Incubators are a good example of that. They were around during the dotcom bubble and they are back now. I am not talking about India, where incubators are meant to be the last refuge for most entrepreneurs who are starting up, but am referring to the situation in the valley here.

That takes me to a topic, I want to talk about.

For those who aren’t aware, I am involved with an Incubation centre, and a very well known one at that – some would even say that it is one of the most successful ones.

‘Success’ is a very relative term I would say. I would categorize success as the creation of the company that can exponentially grow and can disrupt markets. It doesn’t make sense otherwise to put all the hardwork into an entrepreneur, team and company (for days at a time) for a single digit equity percentage otherwise. The numbers simply don’t add up if its going to be just another surviving company, in a world filled with such companies with mediocre revenues. I am simply not interested. It’s also because there are plenty and more of resources to help out such companies. It’s a well-trodden and beaten down path and doesnt require one to walk someone along that path. I am more interested in the path breakers.

There are some folks who do think that the silicon valley was always breeding and breathing innovation. Actually, it started that way, died off and was revived again in ’95 when Yahoo was the story in town. Yahoo, in ways more than one, brought back the spirit of the valley. It goes to say that most of the hardwork in building a ecosystem becomes a bit simpler if there is a success story in the middle of it. It is just easier to rally for changes and to persuade.

The concept of an incubator has been around for quite sometime. There have been such facilities setup in the valley sometime earlier in the mid 90s and there are enough and more documentation available for all these initiatives.

I am starting to see more and more correlation between the events that occurred then with the incubation centres in the valley, and what is going on here in India now. They are all churning out a lot of interesting, and good companies, but the “great” companies are still missing.

It worries me when well known Venture capital firms, are planning to start another incubation centre or similar initiatives. If at all, an incubation center is the way to go, I think a really new kind of thinking is required.

This post has gone longer than expected, let me summarize the rest in part two of this discussion.

In the meantime, what are your thoughts?

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8 Responses to "A New Kind of Incubation Model. Part I"

I am unaware of the existing incubation model. If you can throw some light on that it would help people like me understand the further discussions.

Vijay,

My thoughts would be an incubation center should be aligned/to think towards the following models.

1. Do you want to build “asset sale” company ?
2. Do you want to build a “Cash flow sale” company ?
3. Do you want to build a “IPO sale” company ?

As you can see, each requires unique attitude and scale. Each should have independent strategies and eco systems. This will help create a pool of entrepreneurs.

My 2 cents.

Regards

Bala

I am thinking of incubation online.A virtual place where people pull the resources online.Anybody thinking or working on such a theme can contact me at 9327919212.I might prove to be a necessary evil to their project.

Hey Vijay,

I have read about the incubation model but not am very familiar with it.

If you ask my perspective, I would really be very keen to start up something on web2.0, most likely a utility website, for a person who does not have any experience how to manage or run a startup an incubator model will be very useful.

I am infact hunting for people who can help me with their ideas and suggestions as to how I should proceed further.

If you can help me , I would be elated.

Looking forward to a prolonged association.

Cheers
N.Vipin

Vijay,
I am pasting my post on my blog ” Killing the future ” as i think it make some sense to what you were trying to express.

My definition of an entrepreneur is a person who believes in his dreams and the one who is ready to take big risks and the one who is motivated by his passion and vision to move ahead during failures.

If you have noticed those startups and entrepreneurs who made it big, the one thing that accelerated their growth is the adversities and challenges they had faced. Failures and unfavorable conditions were a motivating force for them. There is a common notion that 95% of all the startups fail within the first 3 years and rest 5% will definitely make it big, becuase they now have survived the maximum challenges they can face in the last three years.

For the same reason, very people got into entrepreneurship and all of them got into the same for the sheer passion involved in it. Success or failure these people really enjoyed what they did and they are the true entrepreneurs.

Now circa 2006, the situation is changing ..thanks to the media hype..thanks to incubators..thanks to seed funds and VC’s and angels..a lot of people are getting into entrepreneurship. So for those who is never ready to take risks or never wanted to take up challenges in life a new ecosystem has evolved…rather than bootstrapping you have an incubator where you shell out 1500 Rs and you get a fully furnished workspace, then you have seed funds to fund, you have mentors who will guide you through the proper channel and some incubators even pay you a monthly incentive apart from the seed fund. But will these startups ever make it big….my answer is no, or these startups will ever continue to be mama’s boy or milk babies, they will never take risks becuase they never got a chance to know the challenges and they will always go by conventional wisdom…the reason these entrepreneurs will never get into entrepreneurship, if there were no incubators, if there were no seed funds, if there were no mentors. They decided to try their luck becuase of the minimum risks rather than believing in their dreams or taking up their passion.

So for the same reason even though they may be successful , they may not make it that big..say a google or a yahoo or a microsoft. So by breast feeding our babies…are we killing the future !

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