Where are Indian incubators and accelerators lacking? VCs share their thoughts at Incubator Connect

Names like Airbnb, Dropbox, Zenefits, Instacart, and Reddit are among the billion-dollar companies that were incubated by Y Combinator at an early stage. Since 2005, Y Combinator, a California-based seed accelerator, has funded over 1,400 startups, which today have a combined valuation of over $80 billion.

On Thursday, Incubator Connect, an event organised for incubators in New Delhi, saw various stakeholders in the ecosystem such as venture capitalists (VC), startups, and the government come together to listen to the incubators and share their insights with them. The event was organised by Atal Innovation Mission (AIM), housed at NITI Aayog, and Invest India, the official investment promotion and facilitation agency of the Government of India.

The government was represented by Niti Aayog CEO Amitabh Kant and Shailendra Singh, Joint Secretary in the Department of Industrial Policy and Promotion, or DIPP.

Moderating a panel of venture capitalists (VC) at the event, YourStory Founder Shradha Sharma posed a very basic question: Why haven't Indian incubators and accelerators been able to produce billion-dollar businesses like their kin abroad?

The eight VCs on the panel had different takes on the subject. While some invoked the immaturity of the Indian startup ecosystem and a few refused to accept that argument, others called the comparison between the US and Indian startup ecosystems flawed.

Miten Mehta, Co-founder, Spinta Global Accelerator, said the Indian startup ecosystem was still in its growing stage, where accelerators are maturing with the ecosystem. According to him, in India, growth on the entrepreneurs’ side is much faster than that on the incubators and accelerators’ side.

Bharti Jacob, Managing Partner, Seedfund, however, disagreed with the very premise itself. “It’s wrong to say accelerators haven’t produced any company whatsoever. RedBus and Housing are some of the companies that came out of the IIT-Bombay incubator. Yes, we may say incubators haven’t had enough of them (such companies),” she said.

Taking the conversation further to the subject of collaboration between investors and incubators, Shradha sought to know how the investors establish a synergy with incubators.

“We reach out to incubators and are always in contact with them. There is always a scope for good deals coming from incubators,” said Bharti.

Angela De Giacomo, Co-founder, WunderNova, joined the conversation saying that it’s always good to have companies coming from incubators, as the latter have expertise in the category and would have worked to shape up the startup before it moves ahead.

Manoj Kumar, Senior Advisor and Head of Innovations at Tata Trusts, chipped in with the suggestion that investors need to get involved with incubators.

Vineet Rai of Aavishkaar, however, questioned the quality of incubators in the country. How many incubators have actually reached out to get the best startups and incubate them, he asked. He insisted that incubators need to find and develop their own models, without which entrepreneurs would have no reason to admire them or seek their guidance.

Supporting Vineet’s view, Bharti went on to say that since VCs are now playing across the field and are directly involved with entrepreneurs, incubators need to define why they exist. There has to be value addition for startups, she said.

Referring to the debate on the need for accelerators or incubators, Girish Shivani, Executive Director and Fund Manager, YourNest Angel Fund, said that less than 5 percent of the startups coming out of incubators are chosen for VC funding, adding that accelerators and incubators need to make themselves relevant to the current ecosystem.

Kartik Desai, Executive Director, Asha Impact, concluded the discussion by saying that organisations such as theirs approach incubators or accelerators with the aim of picking only a few kinds of technology-based or hardware-based startups. Incubators should actually be looking at the innovation side and business model of these startups, he added.