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Business incubation

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Business incubation is a business support process that accelerates the su...
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and software development. Incubator sponsors have also targeted programs to support
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Services Provided by Incubator
Incubation program ensures that an individual seeking to start or promote the grow...
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Business incubation

  1. 1. Page | 1 1. INTRODUCTION 1.1 BUSINESS INCUBATION Business incubation is a business support process that accelerates the successful development of start-up and fledgling companies by providing entrepreneurs with an array of targeted resources and services. These services are usually developed or orchestrated by incubator management and offered both in the business incubator and through its network of contacts. A business incubator’s main goal is to produce successful firms that will leave the program financially viable and freestanding. These incubator graduates have the potential to create jobs, revitalize neighborhoods, commercialize new technologies, and strengthen local and national economies. Critical to the definition of an incubator is the provision of management guidance, technical assistance and consulting tailored to young growing companies. Incubators usually also provide clients access to appropriate rental space and flexible leases, shared basic business services and equipment, technology support services and assistance in obtaining the financing necessary for company growth. Incubators vary in the way they deliver their services, in their organizational structure and in the types of clients they serve. Highly adaptable, incubators have differing goals, including diversifying rural economies, providing employment for and increasing wealth of depressed inner cities, and transferring technology from universities and major corporations. Incubator clients are at the forefront of developing new and innovative technologies – creating products and services that improve the quality of our lives in communities around the world. The earliest incubation programs focused on a variety of technology companies or on a combination of light industrial, technology and service firms – today referred to as mixed-use incubators. However, in more recent years, new incubators have emerged targeting industries such as food processing, medical technologies, space and ceramics technologies, arts and crafts,
  2. 2. Page | 2 and software development. Incubator sponsors have also targeted programs to support microenterprise creation, the needs of women and minorities, environmental endeavors and telecommunications. Business incubation programs are often sponsored by private companies or municipal entities and public institutions, such as colleges and universities. Their goal is to help create and grow young businesses by providing them with necessary support and financial and technical services. There are approximately 900 business incubators nationwide, according to the National Business Incubation Association. Incubators provide numerous benefits to owners of startup businesses. Their office and manufacturing space is offered at below-market rates, and their staff supplies advice and much- needed expertise in developing business and marketing plans as well as helping to fund fledgling businesses. Companies typically spend average of two years in a business incubator, during which time they often share telephone, secretarial office, and production equipment expenses with other startup companies, in an effort to reduce everyone's overhead and operational costs.If an incubation program seems interesting to you, be prepared to submit a fleshed-out business plan. The plan will be reviewed by a screening committee to determine whether or not you meet the criteria for admission. Incubators carefully screen potential businesses because their space, equipment, and finances are limited, and they want to be sure they're choosing to nurture businesses with the best possible chance for success. Business Incubation A Business Incubator is a facility designed to assist businesses to become established and profitable during their incubation period. Incubatee come from individuals interested in promoting an innovative idea that they have so that it becomes a business, yet they may have no skills in business. Consequently they need to learn more to change the concept into business. The second category of incubatees may be people who have clear documented business concepts based on an innovative idea they already have but which again may not be converted into business due to resource constraints. They could also be businesses that are already set up and running but need to be boosted to grow. Each one of them needs a different approach to convert them into vibrant business outfits. The figure above describes the approaches that can be used to implement incubation.
  3. 3. Page | 3 Services Provided by Incubator Incubation program ensures that an individual seeking to start or promote the growth of their enterprise has easy access to the knowledge, experience in management, and financial resources. Invariably business incubators will provide a variety of resources or resourcefulness which may include the following:  Shared Premises  Business Advice  Business Services  Networking  Mentoring  A Full Time Manager Incubatee Needs The incubation period for an individual business is normally one to three years. The management, and board of directors of incubator, invests time and money in a feasibility studies to lay the groundwork for a successful incubation program. To set up an incubator, company will need to conduct an effective feasibility study, which will help determine whether the proposed project has all the factors crucial to an incubator’s success which include:  A solid market  A sound financial base  Strong community support and  A policy support perspective to attract government linkage.
  4. 4. Page | 4 1.2 BUSINESS INCUBATORS Definition: An organization designed to accelerate the growth and success of entrepreneurial companies through an array of business support resources and services that could include physical space, capital, coaching, common services, and networking connections Business incubatorsare programs designed to support the successful development of entrepreneurial companies through an array of business support resources and services, developed and orchestrated by incubator management and offered both in the incubator and through its network of contacts. Incubators vary in the way they deliver their services, in their organizational structure, and in the types of clients they serve. Successful completion of a business incubation program increases the likelihood that a startup company will stay in business for the long term: older studies found 87% of incubator graduates stayed in business, in contrast to 44% of all firms.Incubators differ from research and technology parks in their dedication to startup and early-stage companies. Research and technology parks, on the other hand, tend to be large-scale projects that house everything from corporate, government or university labs to very small companies. Most research and technology parks do not offer business assistance services, which are the hallmark of a business incubation program. However, many research and technology parks house incubation programs. How Can Incubators Improve The Start-Up Ecosystem In India? They can play a very big role. However, we need incubators that attract the best talent and mentors, as well as interest from corporates. A compact program targeting commercially viable products with a goal to launch products will work very well. The Centre for Innovation Incubation and Entrepreneurship at the Indian Institute of Management, Ahmedabad, the incubator at Indian Institute of Technology, Bombay, and others have done well, but we need to multiply this 1,000 times.
  5. 5. Page | 5 Surprisingly, most incubators have research and development as their goal, not successful start- ups. The Morpheus is doing a virtual incubator on the lines of the Y Combinator (one of the most successful incubators in the US) in India, and has produced good companies. We need more such programs. Apart from the government, a lot needs to be done by India Inc. It will be a pleasure to see the likes of Infosys, Wipro, Reliance, L&T and Tata’s opening up, perhaps, just a tiny part of their real estate for incubators. To Whom Incubators Incubate? An incubator is an institution that has the advisory support services that can promote others to grow. They are therefore well versed with the governing corporate law, a talented and experienced board of directors which applies rigorous selection processes to incubatees. They ensure that only those with a viable business propositions are accepted for incubation. The incubatees may be:  Trainees in a business development programme whose innovative ideas attract the financing eye of the incubating institution  Individuals with innovative ideas and a supporting business concept and an accompanying business plan, or  Businesses that have gone through the startup phase but now need support to reach proliferation but lack the know-how or financial resources The level of entry and the effort required to make incubatees rise to sustainable institutions determines the equity premium that the incubator would levy for the incubation effort. Depending on an organization the incubator could take 5-15% stake in return for an incubation period tenancy which could be 1-3 years and the support services received from the incubation. This equity requirement acts as a filtering mechanism by determining that entrepreneurs wanting to enter the incubator growth programme understand that ultimately, they probably will have to give up equity in order to raise capital. The moral of this equity expectation is to enable the incubator attain financial sustainability and hence reduce dependence on external funding from either donors or government.
  6. 6. Page | 6 Indicators To Best Assess The Businesses To Be Incubated The best indicators should be derived from the business plan but should include the following:  The business plan itself with all the elements that comprise an effective plan  Availability of market  Growth of market out turn  Sales growth and associated profitability  A well-formed governance structure for self-perpetuation Possible Investors Who Would Encourage Support Of New Technology  University institutions  The Constituency Development Fund  Large corporate institutions  Government ministries  Government institutions Figure 1: BUSINESS INCUBATION
  7. 7. Page | 7 1.3 HISTORY OF BUSINESS INCUBATION The formal concept of business incubation began in the USA in 1959 when Joseph Mancuso opened the Batavia Industrial Center in a Batavia, New York, warehouse. Incubation expanded in the U.S. in the 1980s and spread to the UK and Europe through various related forms. The U.S.-based National Business Incubation Association estimates that there are about 7,000 incubators worldwide. As of October 2006, there were more than 1,400 incubators in North America, up from only 12 in 1980. Her Majesty's Treasury identified around 25 incubation environments in the UK in 1997; by 2005, UKBI identified around 270 incubation environments across the country. A study funded by the European Commission in 2002 identified around 900 incubation environments in Western Europe. Incubation activity has not been limited to developed countries; incubation environments are now being implemented in developing countries and raising interest for financial support from organizations such as UNIDO and the World Bank. On November 3, 2010, New York City broke ground on its sixth business incubator and the first in the Bronx called the Sunshine Bronx Business Incubator which is a joint venture between the New York City Economic Development Corporation and Sunshine Suites. Incubators are going through a renaissance as of 2011. New experiments like Virtual Business Incubators are bringing the resources of entrepreneurship hubs like Silicon Valley to remote locations all over the world. The Batavia Industrial Center, commonly known as the first U.S. business incubator, opened in Batavia, N.Y., in 1959. But the concept of providing business assistance services to early-stage companies in shared facilities did not catch on with many communities until at least the late 1970s. In 1980, approximately 12 business incubators were operating in the United States – all of them in the industrial Northeast, which had been hard-hit by plant closures in the previous decade. Throughout the 1980s, business incubation industry growth was swift, as a few farsighted individuals saw the limitations of common economic development strategies that focused solely on industry attraction and large corporate expansions. As others began to recognize the value of creating and expanding new businesses to sustain local economies, more communities developed business incubators to support these new ventures. Three major activities drove industry growth during the period:
  8. 8. Page | 8  In the mid-1980s, the U.S. Small Business Administration (SBA) strongly promoted incubator development, holding a series of regional conferences to disseminate information about incubation. The SBA also published a newsletter and several incubator handbooks during the period. As a result of these activities, incubator development grew from about 20 openings annually in 1984 to more than 70 in 1987.  In 1982, the Pennsylvania Legislature enacted Walter Plosila’s design for the state’s Ben Franklin Partnership Program, one of the country’s first comprehensive technology and manufacturing agendas. This program, which included incubators as a key component, became an early model for other states’ support of business incubation.  Control Data Corporation, under the direction of company founder William Norris, became one of the earliest supporters of the business incubation industry. With a belief that large companies should work with government and other sectors to address major societal needs, Norris formed City Venture Corporation (CVC), a Control Data division that developed business incubators in several large and small cities. Several successful incubators that were initially developed with assistance from CVC – including the Entrepreneurial Center in Birmingham, Ala., and the Pueblo Business & Technology Center in Pueblo, Colo. – still exist today. In more recent years, communities around the world have embraced the business incubation concept. In Columbus, Ohio; Birmingham, Ala.; Troy, N.Y.; Atlanta; San Jose, Calif.; Philadelphia; Canberra, Australia; Shanghai, China; Coventry, England; and in many other places, model incubation programs have become deeply respected institutions. Recognizing the need for information sharing within this new growth industry, business incubation leaders formed the National Business Incubation Association (NBIA) in 1985 to provide training and tools for assisting start-up and fledgling firms and to serve as a clearinghouse for information on incubator management and development issues. The association’s membership has grown from approximately 40 members in its first year to approximately 1600 in 2006. As far as the Indian scenario is concerned, the National Science and Technology Entrepreneurship Development Board (NSTEDB) launched the Science and Technology Entrepreneurs Parks (STEP) in the early 1980’s, and the Technology Business Incubators (TBI)
  9. 9. Page | 9 in the beginning of 2000.Our country has nearly 120 incubators and science parks which have nurtured over 1150 entrepreneurs up to 2008.NSTEDB has so far created 53 technology business incubators in collaboration with premier academic and research institutes with an investment of Rs.100 crores and the cumulative revenue generated by these incubated enterprises now stands at Rs.595 crores. Figure 2: HISTORY OF BUSINESS INCUBATION
  10. 10. Page | 10 1.4 OBJECTIVES OF BUSINESS INCUBATION In both developed and developing economies, small and medium enterprises (SMEs) are considered crucial to fostering economic and social development and their growth is supported with a wide range of policies as outlined above. The failure rate of small new businesses in their initial years is high in both developed and developing economies. In part this reflects the competitive environment within which the businesses are launched and also the effectiveness of the specific business idea. It is also a consequence of the lack of experience of the entrepreneur who is launching the business and deficiencies in the environment (i.e. shortage of capital, legal difficulties, lack of information, etc.). A wide range of initiatives are supported by governments to try and reduce business failure rates through addressing problems in the environment (i.e. special loan funds, removing legal obstacles, reducing government administrative procedures and speeding up their operation) and by assisting new entrepreneurs to tackle their lack of experience (training programs, advisory and support services, etc.). Figure 3: BUSINESS INCUBATION LIFE CYCLE.
  11. 11. Page | 11 1.5 BENEFITS OF BUSINESS INCUBATION ADVISORY SERVICES Incubator staff serve as advisors to all client companies holding regular as well as informal meetings with each client to address strategic and tactical needs. They work with the client company to identify areas of need and to identify expertise and resources to address them. Referrals will be made to relevant professional advisors and other sources of business and technical assistance. Shared basic operating costs Tenants in a business incubator share a wide range of overhead costs, including utilities, office equipment, computer services, conference rooms, laboratories, and receptionist services. In addition, basic rent costs are usually below normal for the region in which the fledgling business is operating, which allows entrepreneurs to realize additional savings. It is worth noting, however, that incubators do not allow tenants to remain in the program forever; most lease agreements at incubator facilities run for three years, with some programs offering one or two one-year renewal options. Finances & Accounting Areas of Assistance - Assistance with budgeting, tax and reporting issues can be provided by appropriate Incubator organizations. Capital needs, possible sources for obtaining capital, timeframe, structure of deals, and alternatives will be discussed by the company, Incubator management, the Advisory Board and other advisors as needed. Intellectual Property Strategy Assessment - Incubator management, the Mentoring Team and other business service providers will review intellectual property strategy. Advisors will provide direction to client companies in this area and help to identify resources and/or professional assistance.
  12. 12. Page | 12 Legal Assistance Legal Guidance - The Incubator maintains relationships with a number of law firms that provide some level of pro bono assistance and/or reduced rates for Incubator clients. One or more of the partner attorneys are on-site at the Incubator each month to meet with you and provide guidance and advice. Office Operations Individual Services -The Business Incubation Program provides all clients with a businessaddress, mail service, Internet connection, and conference/meeting rooms Shared Services The following services are offered:  Shared office equipment (fax, laser printer, copier)  Audio-visual equipment  Other miscellaneous equipment Public Relations & Marketing Strategy Assessment - Incubator management, the Mentoring Team and other business service providers will review strategies. Sales Assistance Sales Strategies and Referrals - Incubator management and advisors will assist clients in developing sales strategies and understanding the sales process. If necessary, referrals will be made to professional service providers who can further assist in developing and implementing effective sales strategies.
  13. 13. Page | 13 1.6 RESEARCH METHODOLOGY For this project Descriptive Research method has been used. Structured interview of the CEO - MR. VIKRAM VORA of MyDentist was conducted on 21st September 2013. DURATION JUNE to SEPTEMBER Data computation: 25 hours (editing, typing) Presentation and collecting primary data: 20 hours Total time: 45 hours DATA DESIGN PRIMARY DATA: The primary data for this particular project is STRUCTURED PERSONAL INTERVIEW WITH VIKRAM VORA ON 21/0/13 SECONDARY DATA: The secondary data is obtained by the websites, handbooks, etc.
  14. 14. Page | 14 2. AN OVERVIEW OF GLOBAL AND INDIAN BUSINESS INCUBATION Business incubators are designed to nurture the development of newly formedentrepreneurial companies by providing them with an array of targeted businesssupport services and resources, which include: management guidance, technicaladvice, consulting, appropriate rental space, shared basic business services andequipment, networking support, marketing assistance, and financing necessary forcompany growth. The most common goals of incubation programs are to improve thesurvival and growth of new startup firms substantially, create jobs and wealth,enhance entrepreneurial climate, create and retain businesses, commercialize newtechnologies, build or accelerate growth in a local industry, and diversify economies. The earliest incubation programs focused on a variety of technology companies or on a combination of light industrial, technology and service firms. However, in more recent years, they are targeting industries such as food processing, medical technologies, space and ceramics technologies, arts and crafts, telecommunicationsand software development. Incubator sponsors have also focused on microenterprisecreation, the needs of women and minorities, and environmental endeavors. Althoughthe business incubation centers have come of age, the unavailability of adequate andreliable information about them is a major concern which needs to be addressed.The definitions of business incubation vary markedly from country to country andinformation flows are sporadic. Therefore, the numbers of incubators worldwide areestimates and are provisional. As of October 2006, there were nearly 7000 incubatorsof various types in the world.1 Out of these, approximately 1400 were in North America (1115 in United States, 191 in Mexico and 120 in Canada), 1000 in Europe(including 370 in Germany), 400 in China, 355 in Korea, 265 in Japan, and 220 inUK. The remaining are in other parts of the world. India has around 120 incubatorsincluding 40 Science and Technology Entrepreneurs’ Parks (STEP). Business incubators originated in the United States of America and the first incubatorcame into being in an abandoned Massey Ferguson manufacturing plant in Batavia in1959. A number of initiatives were undertaken between 1985 and 1995 to strengthenthe incubation movement and as a result, it evolved into an ecosystem with a plethoraof models ranging from public to private incubators.
  15. 15. Page | 15 Business incubation took a growing role in Canada’s economic development. Duringthe year 2005, there were more than 83 operating business incubators generatingfunds in excess of $45 million. Within them, 900 client businesses raised revenuesover $93 million and created full and part-time employment for more than 13,000people.China also has a well-developed incubation market space, with the governmentplaying a predominant role to accord with its mandate of high technology ledeconomic growth. Although the creation of small businesses through the incubationmodel started only in late 1980s, it has been able to develop about 400 variants in ashort span. These incubators have helped bridge the gap between research and the marketplace, fostered entrepreneurial attitudes, and facilitated the re-entry of scholarsabroad. Between 2002 and 2006, the number of client firms increased from 20993 to7141434, and their real value added increased from 41 billion to 133 billion Yuan (at the2000 price). National Business Incubation Association (NBIA) estimated that in 2005 alone, NorthAmerican incubators assisted more than 27,000 start-up companies that provided fulltimeemployment to over 100,000 workers and generated annual revenue of $17billion. Another study in the mid- 1990s found that 87 per cent of all firms that hadgraduated from NBIA member incubation programs were still in business and about84 per cent of them remained in the incubator’s community.5 A 2008 study conductedby consulting firm Grant Thornton for the US Department of Commerce EconomicDevelopment Administration found that business incubators produced new jobs at lowcost to the government.
  16. 16. Page | 16 Over the last 12 years, United Kingdom Business Incubation (UKBI) 7has measured the impact of incubators on local economy and workforce. The research proved thatan incubator's client firms provided an average of 167 jobs (full time equivalents) perincubator and were home to roughly 30 entrepreneurial companies at any one time.About 60 per cent of them also operated "outreach" services and were able to support150 additional ventures. Most importantly, businesses had an average success rate of98 per cent when they were located in the incubator as compared to a national averageof less than 30 per cent and around 87 per cent of them survived beyond five years.Thus, business incubation centers have not only grown in numbers and geographicspread, but also in terms of its impact on promoting entrepreneurship, job creation andeconomic development across the world. Figure 4:NUMBER OF BUSINESS INCUBATORS WORLDWIDE.
  17. 17. Page | 17 LIST OF INCUBATION CENTERS IN INDIA  NS Raghavan Center for Entrepreneurship and Learning (NSRCEL), IIM Bangalore  Center for Innovation, Incubation and Entrepreneurship IIM Ahmedabad  Entrepreneurship Cell IIT Kharagpur  Center for Entrepreneurship SP Jain, Mumbai  C-TIDES IIT Chennai  TeNeT IIT Chennai  Society for Innovation & Entrepreneurship IIT Mumbai  Nirma LabsSIDBI Innovation & Entrepreneurship Center IIT Kanpur  Entrepreneurship Development Center IIT Guwahati  Foundation for Technology and Innovation Transfer (FITT) IIT Delhi  Abhiyan IIM Lucknow  E-Cell IIM Kozikode  Center for Innovation & Entrepreneurship IIM Kolkata  Entrepreneurship Development Institute Ahmedabad  ICFAI Center for Entrepreneurship Development Hyderabad  MICA Entrepreneurship Development Center Ahmedabad  Wadhwani Center for Entrepreneurship Development ISB Hyderabad  TIME-IS DST, Government of India
  18. 18. Page | 18  JSS Academy Science & Technology Entrepreneur Park Noida  National Institute of Industrial Engineering Mumbai  Entrepreneurship Center IIT Rorkee  Ekta Incubation Center West Bengal University of Technology  E-Cell NIT Trichy  VIT Technology Incubator Vellore  Technopark Technology Business Incubator (T-TBI) Trivandrum  Center for Bio-Technology Anna University Chennai  National Design Business Incubator Ahmedabad  NIT Calicut  International Crops Research Institute for Semi-Arid Tropics Hyderabad  Kongu Engineering College NEN e-Cell Erode  Advanced Materials Technology Incubator Hyderabad  Center for Entrepreneurship SPJMIR Mumbai  North Eastern Development Finance Corporation Guwahati  NSIC Technical Services CenterBirla Institute of Technology Mesra  NIT Suratkal  STEP, BEC Bagalkot  Maulana Azad NIT Bhopal
  19. 19. Page | 19  Science and Technology Park, University of Pune  Science and Technology Entrepreneurs Park Ludhiana  STEP – Thapar Institute of Engineering & Technology Patiala  STEP – PSG College of Engineering  IncuCapital TechnoPark Trivandrum  ICICI Knowledge Park Incubation Center Hyderabad  Gujarat GrassRoots Innocations Augmentation Network Ahmedabad  CIE IIIT Hyderabad
  20. 20. Page | 20 3. COMPANY PROFILE 3.1 INCUBATOR COMPANY-SEEDFUND GENERAL INFORMATION: Website: http://seedfund.in Founded: 2006 Email: info@seedfund.in Offices: Mumbai, Bangalore, Noida Figure 5: SEEDFUND
  21. 21. Page | 21 SEEDFUND is India’s leading early-stage venture capital fund, with operations in Bombay, Bangalore and New Delhi. Seedfund was founded in 2006 by Bharati Jacob, Mahesh Murthy and Pravin Gandhi and the team has grown to include Paula Mariwala, Sanjay Anandaram, Sarabjeet Singh, Shailesh Vickram Singh and Tarana Lalwani. All Seedfund team members have been entrepreneurs at some point or the other in their careers. Seedfund investees include AFAQS, CarWale, EduSports, Fetise, Frontier Markets, Healthizen, Heckyl, Ixsight, Jeevanti Healthcare, Level10 Comics, Lifeblob, MyDentist, Nevales Networks, Printo, RedBus, RupeeTalk, Sportskeeda, ThinkLabs, Uhuroo and Vaatsalya. Some Recent Investments: Company Date Round Size Participants MyDentist 2013 Venture Round $10M 2 Jeeves 6/12 Angel NA 1 LurnQ 6/12 Seed NA 1 Innoz 4/12 Series A NA 1 Heckyl 1/12 Angel $1M 1 Fetise.com 12/11 Series A $5M 1 Lifeblob 8/08 Seed $1M 1 TABLE 1: RECENT INVESTMENT
  22. 22. Page | 22 TEAM Bharati Jacob is the Founder- Partner of Seedfund based in Bangalore. She brings over 24 years of diverse and rich experience in venture investing, marketing and financial services. She has been in venture investing since 2000 across 3 funds. She began her investing career with Infinity Venture Fund in 2000 as part of the startup team. Prior to Infinity, she was head of the investment bank Lazard in South India and established Lazard offices in Chennai and Bangalore. Her responsibilities included operations and business development with P&L responsibility for both offices.Bharati holds graduate degrees from the Wharton School, University of Pennsylvania as well as XLRI and the University of Delhi. After graduating from Wharton, she worked at Northwest Airlines as part of a strategic FP&A group that supported the Executive Management Board of the airline on key strategic and operational initiatives. Mahesh Murthy is a founding partner at Seedfund, and has over 26 years of marketing and communications experience, of which 15 years are in online marketing. After dropping out of college, Mahesh sold vacuum cleaners from door to door, worked with Grey in India and Ogilvy in Hong Kong, where he won notoriety and awards as a creative director on HP, The Economist, Pepsi and MTV – for whom he wrote and directed a spot voted “Asia’s best commercial of the decade”.He then moved to a Silicon Valley firm, CKS Partners (later, USWeb/CKS) as Creative Director, GM and Partner – where he helped launch the first commercial version of Yahoo in 1995 and the Earth’s Biggest Bookstore campaign for Amazon.com in 1997. While running search marketing campaigns for his favourite charity in 2003, Mahesh believed there was a need for a pay-for-performance digital brand management firm – and set up Pinstorm in Bombay. With over 120 people across 6 offices in India, Singapore, Malaysia, Europe and the US, Pinstorm is today among the world’s leading digital marketing firms.
  23. 23. Page | 23 Part of the founding team of Seedfund, Paula Mariwala is the Executive Director at Seedfund. She has over 20 years of experience with technology companies in USA and India. In her role as the Executive Director since inception of Seedfund in 2006, Paula has worked extensively with the entrepreneurial ecosystem in India to source, evaluate and mentor start-up companies for Seedfund. She works closely with Portfolio companies to take them to their next stage of growth and has led investments in education, healthcare and mobile technology. Coming from a strong business background and a technocrat by profession, Paula has worked with companies like Photon Kinetics, Tektronix and Optivideo in USA and is Promoter and Director of The Hinditron Group of companies, one of India’s oldest technology company, where she has been responsible for managing the Telecommunication business of the Group and for driving new business initiatives. She is also an active angel investor, and has mentored and invested in several innovative companies across sectors. Pravin Gandhi has over 35 years of operational and entrepreneurial experience in the IT industry in India, and is a founding partner at Seedfund. With over 10 years of investing experience, he is extensively networked in the Indian investment and entrepreneurial scene and is an active private equity investor in the technology sector. In 1972 he co-founded Hinditron Computers, India’s first IT Company, which subsequently merged with Digital Equipment Corporation in 1988. He is on the board of Avendus, Kale & Microland as an independent. Pravin holds a BS in Industrial Engineering from Cornell University, and serves on the board of several public and private corporations in India. Pravin is a former President of the Manufacturers Association of Information Technology (an IT manufacturers association in India) and was formerly a member of the NASSCOM Executive Council.
  24. 24. Page | 24 Sanjay Anandaram is a Venture Partner with Seed Fund. He has spent over 2 decades as an IT industry executive, an entrepreneur, a VC, an advisor to early stage funds, startup mentor and teacher. He’s a founding partner of JumpStartUp, an early stage VC fund set up to invest in technology and technology enabled businesses that leveraged India. He brings significant international experience involving new business creation and business development in India, US, Asia, Middle-East and Africa.Prior to founding JumpStartUp, Sanjay founded Neta Inc., a venture capital backed Silicon Valley software startup that was acquired by Infoseek (Disney). He’s involved with TiE Bangalore (as Charter Member and co-chair of the TiE Entrepreneur Acceleration Programme), Nasscom (as part of the Product and Innovation group), with IIM Bangalore (as member of the NS Raghavan Centre for Entrepreneurial Learning), with INSEAD, Dept of Science and Technology, Govt of India. Sanjay is an Electrical Engineer from Jadavpur University, Kolkata with an MBA degree from Indian Institute of Management, Bangalore. Sarabjeet Singh works as an Investment Analyst with Seedfund and volunteers with the Startup Leadership Program in Bangalore. Before Seedfund, Sarabjeet ran a leading student news portal, Letmeknow.in, and worked with Samhita Social Ventures, a Nadathur Group supported social venture. At Letmeknow, Sarabjeet grew traffic and users and built revenue streams for the company. At Samhita, Sarabjeet co- conceptualized Samhita.org, a portal for connecting Indian non- profits with donors and supporters from around the world. He joined Samhita during its inception and helped build the founding team. Sarabjeet has a Bachelors and Master’s degree in Mathematics and Computing from IIT Kharagpur. During college, he founded the local chapter of AIESEC, an international youth organization, and worked on summer research projects at MIT and University of Stuttgart.
  25. 25. Page | 25 Shailesh Vickram Singh has over 15 years of experience in investing in private equity / venture capital investing, and in business operations and entrepreneurship.Shailesh brings a strong entrepreneurial and operations perspective to investments having co-founded one startup in community space in early 2000 from where the team made a successful exit in 2003 and helped create another startup in agricultural commodities spaces which was acquired by a media conglomerate in 2005.He has worked with 2i Capital ( A mid-market Private Equity Growth Fund), Unit Trust of India ( the largest investment manager in India) and Gujarat Venture Finance Limited ( investors include CDC and World Bank) and was involved with investments in logistics, technology, telecommunications, media, and internet companies. Prior to his MBA, Shailesh had worked for four years in manufacturing (Heavy Engineering and Machining) with Tata Motors and ATV. Tarana Lalwani has fourteen years of experience in finance, corporate advisory and business development. She started her career in New York with Morgan Stanley, followed by Radian, a financial services firm in their structured finance group. Tarana moved to India in 2006 to manage the fund raising efforts of Webaroo (SMS Gupshup), a mobile internet startup incubated at IIT Mumbai. Tarana worked as a senior adviser with Sky Advance, a boutique private equity firm in Mumbai. Prior to joining Seedfund as a Principal, Tarana was Vice President, Investment Banking at Anand Rathi, a boutique financial services firm in Mumbai.Tarana was, until recently active with Mumbai Angels, a forum of high net worth early-stage investors, where she was involved in screening and closing transactions giving her an understanding of early stage investments. She holds an undergraduate degree in accounting from LaSalle University, and an MBA from Columbia Business School.
  26. 26. Page | 26 PORTFOLIO
  27. 27. Page | 27 Seedfund started with the team- People that had hands-on experience with raw startups in India. Pravin Gandhi and Bharati Jacob came from Infinity Venture, the fund behind Indiabulls, Indiagames and the like. Mahesh Murthy came from Passionfund, where he backed Geodesic, Pinstorm and other successes. Then the fund size - From their experience, they figured the right amount of funding for an Indian startup was not in the millions or in tens of millions of dollars range. It was closer to about $500,000. They also figured that they could work closely with about 15 or 20 companies over the next 5 years and hence arrived at a fund size of about $15 million. They can therefore invest from Rs.1 to 5 crores in a startup company. Next, the target sectors - They decided to stick close to businesses they know and sectors that can make a big difference, not just in the global market but in the large Indian market too. So they are looking mostly at internet or media or mobile or telecom or retail or consumer-facing plays and also for things that are not yet any sectors. On to the investors - In this market, money is cheap but the right money makes the difference. They wanted limited partners that could add significant strategic value to their startups and they have been lucky enough to end up with a dream team here too: institutions like Motorola Ventures, Reliance ADA Group, SVB Financial Group, an affiliate of Silicon Valley Bank, Sierra Ventures, Mayfield Fund, Edelweiss Capital and individuals like Kanwal Rekhi, KB Chandrashekhar, B V Jagadeesh and Sridar Iyengar.
  28. 28. Page | 28 THE PRIMARY IDEA BEHIND INCUBATORS An incubator is about creating an atmosphere, which is conducive to innovation and sharing knowledge. This, in turn, helps in validating ideas and inspiring performance. To provide such an atmosphere, the three crucial prerequisites are infrastructure, top-quality mentors and high- calibre teams. The current incubators are lacking on the first two counts. Lastly, an incubator should provide money to cover running expenses.At the Seedfund incubator, they look for products that haven't been developed, or are yet to be launched, or need to be redesigned. Both the idea and business model can be changed under the guidance of a set of mentors, who know what consumers and investors want. An example of successful incubation is MyDentist, a chain of dental clinics. The revenue of the start-up has shot up four times since it was incubated and is the largest dental chain in Mumbai.It usually takes 12-24 months for a product to be developed, tested and polished, but sometimes, the time frame is extended. Taking into account the space, infrastructure and so on, a four-six member team can cost a few lakh of rupees per month. Seedfund Investor group invests in these industries-  Hospitality  Financial Services  Business Services  Internet and Online  Technology  Energy  Utilities  Healthcare and Life science  Transportation and Logistics  Media and Entertainment  Retailing and Distributions  Education  IT Services  Telecommunications  Food and Beverage
  29. 29. Page | 29 3.2 INCUBATEE COMPANY – MYDENTIST GENERAL INFORMATION: WEBSITE: http://mydentist.co.in CATEGOERY: Health care industry FOUNDED: 2009 BRANCHES: Mumbai, Pune… Figure 6: MyDentist co-founders: Parth & Vikram Vora
  30. 30. Page | 30 MyDentist is a chain of dental clinics incorporated by Vikram Vora in 2009 and incubated by Seedfund in 2010.Their first clinic was established in Vile Parle, but they now have 50 branches - Malad, Kandivali, Borivali, Andheri, Bandra, Fort, Ghatkopar, Goregaon, Juhu, Mahim, Mazagaon, Mulund, Prabhadevi, Powai, Santacruz, Sion, Vile Parle, Pune... Their services encompass all aspects of cosmetic and restorative dentistry with the overall aim of oral wellbeing. They utilize the latest in dental technology and expertise to ensure that patients receive the highest possible standards of dental care available today. MyDentist provides all forms of general dentistry, oral surgery, fixed and removable prosthetics, implants, orthodontic care, cosmetic procedures and emergency care.Incubated by Seedfund in 2010, MyDentist received its initial investment of $2,00,000 which was followed by Series A round of funding in 2011. The dental chain was founded in 2009 by Vikram Vora and has a website with all its services including prices per service. MyDentist is a operative brand of Total Dental Care Pvt. Ltd. The website works with a slogan ‘Smile more, pay less’.MyDentist, a dental hospital chain which has its operations in Mumbai and Pune closed with a $10 Million(INR50Cr. Approx.)in its Series B round of funding from Seedfund Advisors and Asian Healthcare Fund to expand its current network of hospitals. Till the end of 2012, it was having 29 branches in Mumbai and till date it covers the area of Mumbai with its 46 branches and 2 in pune and many more coming up. MyDentist offers a standard rate for its services which is generally not practiced in India. The company caters its range of services from bleeding gums to full mouth rehabilitation to the middle class sector. Currently, it has over 250 professional dentists on its rolls who are employed on monthly pay instead of the commonly practiced profit sharing model. These dentists work in shifts of four hours each day. In the coming months, the company looks forward to have over 150 clinics operating between Mumbai and Pune. This dental chain of hospitals have been funded enough for its expansion up to 50 clinics and with its Series B round of funding, the company looks forward to expand its chain and have over 150 operating clinics. In 2010 Asian Healthcare Fund was founded by Dabur Group chairman Anand Burman and former Dabur Pharma CEO Ajay Kumar Vij. It started with a mandate of making investments between $5 Mn and $20 Mn in healthcare ventures such as diagnostics, clinics, pathology labs, pharmaceutical and medical devices manufacturers.
  31. 31. Page | 31 Private equity investments in the Indian healthcare space crossed $520.36 Mn in 2012 compared to $137.4 Mn in 2011. This jump is at a time when PE investments across all sectors plunged by a substantial 17.5% to $3.26 Bn from $3.95 Bn.A report by Frost and Sullivan stated that dental service market was worth $739 Mn in 2010 and is expected to reach $1.3 Bn by 2015 at a compounded annual growth rate of 12%.A production engineer armed with a masters in management studies (MMS) in marketing from Mumbai University, Vikram Vora co-founded Total Dental Care Pvt Ltd (TDC) with his brother Parth vora. In 2009, when Vikram Vora visited dental clinics in the suburbs of Mumbai, to sell dental equipment, the time he spent in the waiting room made him realise that the patients who visited there were most bothered by the long waiting hours, the inaccuracy of information shared about the procedures and the lack of transparency in the cost of treatments. Eventually, these factors became the crux of starting Total Dental Care Pvt. Limited, the company that operates a chain of multi-speciality dental clinics under the brand MyDentist.Vora founded MyDentist in 2009, in a move to provide affordable, flexible and transparent dental care treatment to patients. Today, the company has 50 clinics in Mumbai and Pune and caters to nearly 10,000 customers per month, of which 70 per cent are through referrals. According to Mr. Vikram vora, “The initial investment took care of building the back-end such as the initial team, real estate, technology and training modules to support the hub and spoke model that MyDentist use. The second round of funding will help support scale and ensure continuity”. The healthcare retail chain is now growing at a pace of five clinics a month and aims to expand to 150 clinics by the end of 2014. The company invests Rs.30 to 45 lakh per clinic. The company offers membership cards, preventive plans and oral care merchandise to its patients, its primary revenue comes from the clinical treatments it provides. The cost of treatment varies from Rs.300 to Rs.90,000 and the X-ray and consultation, for any number of visits, is free of cost. Interestingly, for treatments that cost Rs.500 and above, the company offers EMI facilities, in partnership with leading banks such as HDFC, ICICI, Axis and HSBC, to name a few. Mr. Vora says, “Primarily, the EMI facility makes treatments like root canals and orthodontics available even to the lower-middle class, who otherwise cannot even think of paying for such expensive surgeries”.
  32. 32. Page | 32 Today, MyDentist’s network comprises 400 professionals, including more than 250 doctors. The departments in the company include logistics, marketing, human resources and skill training.A 300 square foot MyDentist clinic calls for an overall investment of Rs.35 lakh of which majority (Rs. 20 lakh) goes into buying imported equipment (from vendors in India). Two doctors work three shifts in the day. On an average the MyDentist chain gets close to 8,000 patients every month and the number is set to reach 10,000 patients per month by June end. It is presumed that each centre will take 18-20 months to breakeven. The nature of treatments sought by most patients are pretty much the same -- root canal, scaling, polishing, crowns and bridges and other common treatments -- as any other standalone dental clinic would provide. The clinic has started offering orthodontics services and has tied-up with financial institutions to offer and EMI scheme as orthodontics tend to be expensive. According to Mr. Vora, revenues have increased over three times when compared with the peak revenue figures of the pre-incubation stage. The ownership of TDC is now equally shared between the promoters and the two investors.Pravin Gandhi, Founding Partner, Seedfund Advisors, commented that, “Our second round of funding to MyDentist reiterates are belief in the idea and the also the potential of the team behind it. In the last two years, MyDentist has developed its systems and processes and have also managed to build an understanding of the customer behavior we see a high potential of growth in the company and are happy to be a part of their growth path.”With 50 clinics so far, MyDentist is the largest dental chain in India and the third largest in Asia. At the rate which they are growing, they are trying to reach 110 clinics by end of this year and 250 clinics by end of next financial year.
  33. 33. Page | 33 4. PROCESS DESIGNING OF BUSINESS INCUBATION PROGRAMS From the current literature, it is evident (see section 2 above) that the number of Business incubators are growing rapidly. Today the number of incubators worldwide is approximately 7,000, where in the beginning of 1980, the number was 200. The Business incubation program become more popular amongst entrepreneurs and the strategic benefits such as: First, the business incubation program must have clear Mission to provide business advisory to startup companies. Second, business Incubation program should have resources to deliver and coordinates with the client Companies. Finally, business incubation program establish to lead the startup Company to self-sustainability. The process of designing and implementing business incubation programs really consists of nine stages. In addition, for the benefits of maximum survival of the incubation program required the steps be in order. Step 1: The Analysis of the community context to identify economic development Opportunities and constraints. The Analyzing characteristics of community context can be defined in terms of its boundaries, size, and composition, internal Linkages, external linkages and level of control over local resources. With this information, planners can systematically explore the influence of these Characteristics on the potential for economic development. Step 2: Choose economic development goals and objectives for the community. For Example, job creation involves not just the number but the type of new jobs that a community hopes to generate. Step 3: Select a business development strategy to help meet those goals and objectives. There are four of these available to communities: 1) Business attraction, 2) Business retention, 3) Business expansion,
  34. 34. Page | 34 4) Incubating new enterprises. Furthermore, each approach has a different set of rules, resources and players. Step 4: Select the appropriate business incubation program design. Incubation Program managers must evaluate their clients' required resources and Obstacles in order to design a package of practices. If the goal is a more diversified economy, the incubation program can focus on start-up enterprises that will introduce new products and services to the community. Step 5: Evaluate the economic feasibility of the program design the availability of clear data about the economic conditions that are necessary to make the program viable and the probability that those conditions will be met. Step 6: Specify the set of incubation practices to be used. There are too many program planners make the mistake of selecting practices with little idea of the resources their targeted clients require, or the obstacles that stand in their way. Step 7: Implement the selected practices. Incubation practitioner can refer to these descriptions for the specific actions they should take to implement the practices they have selected. Step 8: Evaluate the program's performance. The Evaluation of incubation program’s performance focus on the three elements of the overall situation; 1) Input: the community context and program client needs that were Identified, 2) Process: the effectiveness of the practices that were Implemented, which should be jointly assessed by program manager and Client, and 3) Outcome: changes in individual firms' access to require resources and in their overall business viability, along with how much those changes contributed to the community's economic outlook. Step 9: Use the evaluation results to redesign the incubation program and practices. An incubation program cannot evolve unless those who run it learn both from their mistakes and their successes, and a program that does not evolve will ultimately fail.
  35. 35. Page | 35 The diagram below provides an overview of a typical business incubation process: Figure 7: BUSINESS INCUBATION PROCESS
  36. 36. Page | 36 4.1 The three stages of business incubation development: 1) Business incubation provided within physical facility 2) Business incubation as business support service 3) Business incubation viewed from networks’ perspective 4.2 Key characteristics are summarized in the table below: First generation Second generation Third generation Name of the period Infrastructure: economies of scale Business support: accelerating the learning curve Networks: facilitating access to external resources, knowledge and legitimacy Offering Office space and shared resources Coaching and training support Access to technological, professional, and financial networks Theoretical rationale Economies of scale Accelerating the learning curve Access to external resources, knowledge, and legitimacy Years 1950s – 1980s Mid 1980s – mid 1990s Mid 1990s – 2000s
  37. 37. Page | 37 5. FORMATION OF A BUSINESS INCUBATOR 5.1 PRELIMINARY WORK 1. The feasibility study Conducting a feasibility study for a proposed incubator can achieve a number of important objectives and, if properly done, can provide a solid basis for judging the economic and political viability of the proposed project. The feasibility study represents the first in a series of early development phases that, for planning purposes, can be described as follows:  Feasibility: 3 months  Development: 9 months  Renovation: 3-12 months  Early-stage operations (up to anticipated break-even point): 18 months Reasons why conducting a feasibility study is needed:  Helps to forge a consensus among key organizations and civic leaders  Catalyzes the involvement of organizations that can provide the incubator with a range of resources including facilities, funding, equipment, and human resources  Allows for the completion of plans for both the facilities and the services to be provided  Helps secure funding from government sources at all levels  Educates public and private sector constituencies about business incubation in order to avoid confusion and unwarranted expectations  Provides an occasion to contact successful incubator programs in similar communities to learn their best practice lessons A feasibility study should also reveal examples of critical errors made with respect to other incubator programs. Such errors might involve facility and site selection, structure of the governing board, funding arrangements, income assumptions, or the nature of the business assistance program.
  38. 38. Page | 38 A thorough feasibility study will help avoid the two classic errors of incubator formation: accepting the worst building in town and thinking that the management assistance program will somehow take care of itself. While recommending the use of a consultant, selecting a consultant without direct incubator experience can result in a study that provides general analysis, but lacks concrete recommendations. Specific recommendations can make the difference in an incubator’s long-term success. An adequate feasibility study will answer essential questions about how to proceed in a systematic fashion and how to secure funding during all the phases of incubator development. Indeed, a thorough study by a qualified consultant can and should provide the information necessary to determine whether the project should be pursued. 2. Building support A core group committed to starting a business incubator must recognize that its efforts cannot be pursued in a vacuum. The dream of a few must become the dream of many. An incubator represents an important community investment, both practically and symbolically, and requires broad-based community support to be feasible. In forging the Incubator, meetings with community leaders can achieve several objectives. Community meetings allow proponents of the incubator to:  Provide information on the business incubation industry  Invite reaction to the prospects for a local business incubator  Solicit referrals to people, companies, organizations, and facilities that can assist the process of feasibility and/or development  Offer the opportunity of direct participation, to seek specific leads to entrepreneur prospects, and/or gather information that had been overlooked Engaging in this process should clarify the prospects for starting an incubator. The process should help to identify potential sites, funding sources, project champions from key organizations, and sources of assistance and support, both individual and organizational. The process may, however, also uncover serious impediments to realizing the project. Project supporters make serious efforts to placate opponents; indeed, project supporters should not assume that the project will be successful in the face of persistent opposition. Real estate
  39. 39. Page | 39 developers, for example, may resist the project because they believe an incubator will cut into their market. A persuasive argument, in this case, is that the incubator will only incubate companies for a limited period of time and that the incubator should serve to increase both the quantity and quality of companies seeking to rent space. Community consensus building should help locate organizations that will identify with the successes and failures of the proposed incubator. These organizations are known as stakeholders. 3. Identifying and securing stakeholders A stakeholder is any group or individual who can affect or is affected by achievement of an organization’s objectives. While each incubator’s circumstances are unique, anticipated stakeholders would likely include local and state governments and a variety of public and private sector organizations (universities, major corporations) interested in fostering new-business development in the region. Stakeholders might also include economic development organizations that could fund the rehabilitation of a facility and/or the operation of the incubator program. The support of these stakeholders is critical to initiating an incubator program. At the same time, potential supporters of the incubator effort understandably have varied motivations and expectations. Their level of understanding of the purposes and methods of business incubation will vary greatly. Stakeholders need to be identified and then cultivated. The first step is to secure commitment from potential stakeholders who have the strongest interest and who are most likely to provide financial support for the endeavor. Once stake-holders have committed to the project, the organizational structure needs to be formalized. A governing body, typically a board of directors, provides the organizational vehicle for maintaining, building, and strengthening commitment to the incubator program. One of the board’s tasks is getting interested parties to agree to a clear articulation of the mission and goals of the incubator. This articulation of the incubator’s goals brings the stakeholders together with a common purpose. Experience has shown that incubators that fail to achieve consensus on mission and goals invite trouble from their board, since members will create their own tacit mission statement and begin to act accordingly.
  40. 40. Page | 40 Incubator managers should seek to expand the number of valid stakeholders. New stake-holders should be welcomed as long as they have something tangible to contribute. On the other hand, allowing tenants to serve on the board can create conflicts of interest, so tenant participation on the board should be evaluated on a cost-benefit basis. Additionally, incubator managers must remain sensitive to external conditions, which may strengthen or weaken the commitment of stakeholders to the incubation enterprise. Finally, by-laws are crucial. They provide an objective means of removing no participatory board members and, at the other extreme, board members who are exerting undue influence. 4. Identifying a market niche A business incubator will operate in a particular locale with its own rich history, so it must act with an eye to the regional economy and institutions. To become an accepted part of this complex social fabric, an incubator must establish its distinctiveness and unique purpose. From a business perspective, the incubator needs to identify its market niche. Successful businesses carefully attend to the work of defining the market position of their products and services relative to their competitors, as well as to modifying their market position in response to changing customer preferences. Developing a market niche for a business incubator requires similar attention to these tasks. An incubator’s competitors come from the spheres of real estate and economic development. Within the real estate market, the incubator must distinguish itself from other multiple-tenant properties. For a technology-related incubator, the distinction may be readily apparent, for example, in that incubator facilities may offer wet and dry lab space. Incubators also differ from conventional real estate agents in that they often offer short-term leases and flex-space for a company’s expansion. Certainly, rent subsidization can be attractive to cash-poor start-ups. The availability of shared support services is another appealing feature of incubator facilities, although provision of such services by for-profit organizations has become a growth industry. Economic development programs for small businesses proliferated in the 1980s. These programs have been referred to as “incubators without walls.” Well-managed incubators often distinguish themselves by serving as a focal point for access to the broad spectrum of available
  41. 41. Page | 41 business services. Incubator managers thus provide the point of contact for entry into various programs. Many efforts to assist small business are, by contrast, programmatic in nature and limited by the scope of their intent. A well-positioned incubator, on the other hand, will help its tenants access the range of existing programs and, in addition, provide access to informal networks for business and financial advice and assistance. For example, a retired executive may agree to help out a struggling firm or a business angel may appear, discretely looking for new investment opportunities. The incubator program may also delimit itself and define its market by the type of company or client served. While high-tech incubators may limit their scope of service to technology- focused companies, some incubators may be even more targeted (for example, restricting their services to biotech companies). The customer for the incubator should be determined during the feasibility phase, during which new-business registrations, by industry type, are classified and certain industry sectors identified for their spinout potential.Whatever the mix of services offered and the assessment of the market to be served, the incubator must somehow package its product to effectively position itself.
  42. 42. Page | 42 5.2 THE FORMATION PROCESS The basic structure of an incubator facility is determined by owner attributes and regional demographics. The following owner/sponsor classifications can generally be applied:  Private  Local government  University  State government  Private nonprofit  Federal government A typical organizational format includes executive and advisory boards, a CEO or operations manager, and support staff. Selections for board positions and other representative forums may come from the following: private enterprise, educational institutions, government, organized labor, development and investment community, and private citizens. The role of the manager or chief executive officer of the incubator is both internal and external. This person is chiefly responsible for:  Incubator policy and planning  Marketing and recruitment  Tenant selection and lease negotiation  Facility operations management  Tenant service and administration The manager has multiple constituent groups representing both the sponsoring (funding) segments and the user (spinout) population. Appropriately selecting advisory board members allows the manager to establish and maintain networks for the dissemination of information and policy to these disparate groups. Table 1 provides typical staffing levels for incubators.
  43. 43. Page | 43 TABLE: TYPICAL INCUBATOR STAFFING PARTICULARS PUBLIC INCUBATOR TYPE UNIVERSITY PRIVATE Median number of administrative staff 1.60 1.90 3.50 Median number of business consulting staff 1.40 2.10 2.10 Ratio of business consultants to firms 0.13 0.12 0.12 Managers with previous business experience 70% 67% 92% Managers with business consulting duties 73% 67% 93% Source: National Council for Urban Economic Development5 An important function is marketing the incubator, which will be driven, in part, by the results of the market analysis conducted during the feasibility study. The market analysis should consider the following major aspects of the local economy:  Characteristics of large corporations in the area  Level of entrepreneurial activity in the community  Demand for incubator-type space  Small-business support services by industry type, if feasible. Large corporations can supply an important market for new businesses and are also the chief sources of spinout companies in a region. The number, type, and rate of filing of new-business permits can provide important indicators of potential demand for incubator space. An inventory of available space broken down by type (office, manufacturing, and so on) is essential for determining potential demand.
  44. 44. Page | 44 Market information can also be secured by offering a workshop or seminar that highlights some of the proposed business-service components of the incubator (for example, a workshop on developing an effective business plan or one on the accounting needs of small businesses). This information can provide the basis for a market strategy that is integrated into the overall incubator budget. Proactively gathering market information is recommended over a reactive mode, which does not typically serve to effectively market the incubator. A reactive approach is tempting when an incubator manager is stretched thin with other responsibilities. However, a written marketing strategy allows other parties (board of directors, advisory board, related organizations) to assist. The most successful sales organizations have a standard sales script or routine with which everyone involved is familiar. The marketing effort should include typical means of communication, including brochures, newsletters, and press releases about new tenants, tenant successes, and graduations. One of the incubator’s sponsoring organizations may be able to help develop these promotional materials. In addition, the incubator story may be included in the communications of sponsoring organizations. Other organizations may also be interested in cosponsoring seminars of interest to entrepreneurs. Such marketing efforts are necessary but not sufficient. Studies have shown that most entrepreneurs learn about the incubator through word of mouth. To market the incubator effectively, it is incumbent on the incubator manager to continue to develop and maintain a network of contacts in real estate, banking, patent law, business and economic development, both formally, through boards of directors and advisors, and informally, through professional organizations and business contacts. Individuals in an incubator’s local community are often the first to alert a nascent entrepreneur of the benefits of locating in a small-business incubator.
  45. 45. Page | 45 5.3 SERVICES As the incubator concept has evolved, the range of services offered by incubators has greatly expanded. Early incubators provided access to a photocopier and a conference room, clerical support, and perhaps switchboard services. Today, incubators themselves provide, or provide access to, a broad spectrum of office, business consulting, and professional services. The most common in-house and outside services offered are given in Table 2. TABLE 2: TYPICAL INCUBATOR STAFFING SERVICES IN-HOUSE (PERCENT OF TOTAL) OUTSIDE (PERCENT OF TOTAL) Office services 81 2 Business/strategic planning 65 32 External debt financing 59 7 Government grant/loan assistance 58 28 Training/educational programs 52 29 Financial management 51 36 Sales/marketing 51 37 External equity financing 47 27 Employment assistance 31 41 Lab equipment access 29 24 Bookkeeping 23 30 Government procurement 19 52
  46. 46. Page | 46 SERVICES IN-HOUSE (PERCENT OF TOTAL) OUTSIDE (PERCENT OF TOTAL) R&D/product development 19 43 International trade 14 52 Accounting or tax assistance 8 59 Legal/patent services 6 67 Source: NBIA In recent years, incubators have greatly expanded the variety of office services they provide. For example, the menu of office services offered by an incubator based in Pennsylvania in operation for three years includes:  Clerical services  Switchboard services  Voice mailbox  Electronic mailbox  Telephone equipment  FAX service  Postal service  Overnight courier service  Notary services  Photocopier  VCR/TV equipment  Audio-visual equipment  Conference room  Printing services  Furniture rental  Laser printing/graphics
  47. 47. Page | 47  Auto service discounts  Sports ticket purchasing Business consulting services may include business plan preparation, financial planning, advertising and marketing, strategic planning, technical and commercial communications, relocation planning, capital development (equity and debt services), business taxes, employee relations, R&D, and government procurement. Professional services include legal/patent services, accounting, business development (including sales/marketing), and technical/scientific support, among others. Professional services may be provided at special discounts to incubator tenants. Some incubators arrange for new tenants to initially receive some professional services at no cost or at a deep discount. Given that entrepreneurs have no time to spare, professional service providers are often regularly available at an incubator and make themselves available for support and consultation. In developing the spectrum of services for a new incubator, several options need to be explored. First, there is the essential question of which services will be offered. Next, incubator managers must consider which of these services will be offered in-house. This will depend on internal resources and the external availability of business services. The availability of qualified outside sources will depend on the success of forging informal alliances with a range of service providers in the public and private sectors. For those services offered in-house, the question of cost recovery will need to be addressed. Several services are typically included as a standard feature in a tenant’s rental agreement. These most commonly include janitorial service, management assistance, utilities, shared office services, and financing assistance. Other services, such as clerical assistance, are charged back to the company on an at-cost or cost-plus basis. The quality, range, dependability, and accessibility of these services are the value-added features that will provide the strongest lure for attracting entrepreneurs to an incubator. The incubator should solicit feedback from tenants to ascertain whether or not the services are effectively meeting their needs and to determine whether additional services should be added.
  48. 48. Page | 48 5.4 Strategic Planning While the previous sections have addressed discrete issues related to incubator formation, the need for strategic planning—and the integration of these various elements into a coherent, multi-phased plan—should be apparent. Determinations about one aspect of the plan will affect other aspects. A rather obvious example is the effect that the facility’s net available square footage will have on rental income. More subtle considerations might include expectations for the facility’s long-term self-sufficiency. Managers should consider whether self-sufficiency can be achieved solely from rental income, through subsidies from sponsoring organizations, or through grants.Strategic planning compels incubator management to confront tough issues. How will the incubator continue to operate if revenue projections from rental income are not achieved? How will major facility repairs (for example, a ruptured boiler) be paid for? Addressing these worst-case scenarios through strategic planning can provide both a clear course of action if things go as planned and, if they do not, the necessary contingency plans to navigate what may be a difficult beginning. Strategic planning usefully determines not only what should be done but when it should be done. The initiation of a new phase of the incubator may or may not be made contingent upon the successful completion of an earlier phase. Can the operation begin as an “incubator without walls,” providing business services before the facility is ready for occupancy? At what point in the development process is the manager hired? The notion that timing is everything is certainly true in strategic planning for an incubator spinout.
  50. 50. Page | 50 6. BARRIERS IN INDIAN COUNTRY Entrepreneurs and policy makers report significant barriers: Capital • Few banks and limited financial services • Money does not circulate in / leaves the reservation • Sovereign land cannot be used for loan collateral • Investors do not see reservation opportunities Political Environment • Inconsistent regulations and rules for business • Property rights and land use issues • Short-termism due to changing politics • Over-involvement by tribal council in business issues Education • General education levels are low • Few entrepreneurial examples: only 13% of Native American entrepreneurs had entrepreneurparents, versus 75% in the general population (CFED, 2004) • Workforce can be dominated by government or a single industry, limiting opportunities • In a recent survey of tribal members on reservations, 80% called business training “highlyinsufficient” Culture • Tribal histories of exclusion, repression, economic exploitation, and government subsidies • Limited experience with formal economy • “Crab pot” syndrome, pulling “climbers” down
  51. 51. Page | 51 7.PERSONAL INTERVIEW Figure 9: Mr. Vikram Vora- CEO of MyDentist [Incuabtee Of Seedfund] 1. What inspired you to begin with MyDentist?  In 2009, Vikram Vora visited dental clinics in the suburbs of Mumbai to sell dental equipment, the time he spent in the waiting room made him realize that the patients who visited there were most bothered by the long waiting hours, the inaccuracy of information shared about the procedures and the lack of transparency in the cost of treatments. These became the crux of starting Total Dental Care Pvt. Limited, the company that operates a chain of multi-specialty dental clinics under the brand MyDentist. 2. What inspired you to incubate MyDentist?  In order to accomplish right business model and generate funds to implement the business idea, he had taken loans for the startup purpose and it was doing well but it was clear that it could not scale up,as taking debt was not an option. In a meeting with his ex-boss, Anand Lunia, who gave Mr. Vora the idea that if he could share equity capital, then he could raise funds to expand nearly 100 clinics. Hence, Seedfund Advisors incubated MyDentist in 2010 and increased their investment by 2011.
  52. 52. Page | 52 3. Was incubation helpful?  According to Mr. Vikram Vora incubation was helpful as it helped MyDentist to reach 5 clinics at the initial stage to 50 clinics currently. 4. Why did you selected Seedfund for incubation?  According to Mr. Vikram Vora, “It’s very good to get incubated rather than going in directly for venture capital”. Seedfund helped much MyDentist to build business model and creating a brand in the corporate world. 5. What are the aims ofMyDentist?  To provide affordable, flexible and transparent dental care treatment to patients and make sure a patient has 100% clarity on the cost of treatment he/she chooses to undergo. 6. What is the turnover of MyDentist?  The turnover was Rs.2.5 Cr by the end of FY2012. 7. How much capital is required to start one branch?  Approximately it requires Rs.30 Lakhs to per clinic. 8. How many number of patients does MyDentist treat on an average in a month?  The overall number is 10,000 patients per month. MyDentist treat on an average 20 patients per clinic per day. 9. What is the uniqueness about MyDentist?  MyDentist enhances quality and speed delivery of service, extending reach and coverage, improving efficient operations, adopting largest technologies and economies of scale. The uniqueness of MyDentist is their quality service at reasonable rates and even one can pay that in EMIs also.
  53. 53. Page | 53 10. How much staff does MyDentist comprises of?  MyDentist network comprises of around 400 professionals, including more than 200 doctors including the staff of other departments in the company like logistics, marketing, HR. 11. Whom do you consider as MyDentist’s competitors?  V Dentristree, Narayana Hrudayalaya Dental Clinic, Alliance Dental Core, other Dental Chains and private dental clinic. 12. What image of MyDentist do you want to portrait in the corporate world?  Vikram Vora aims to make MyDentist the largest dental clinic chain in Asia, excluding china. He wants MyDentist to be known for its world-class treatment and affordable prices.
  54. 54. Page | 54 CONCLUSION  Business incubation proves to be a boon to every small enterprises as it helps to manage the finance, management, polices, working of the incubated organization.  Business Incubator is a program designed to assist businesses to become established and profitable during their incubation period.  The two most important goals for incubation programs are job creation and fostering an entrepreneurial climate in the community. Other key incubator goals are diversifying the local economy, building or accelerating new industries/businesses.  Business incubation has changed the scenario of business world as well as the economy.  Incubators provides a useful range of services for a start-up company. Many incubators have staff members who can help with business plan or access to experts and mentors who volunteer their time to help.  Business incubators support the development of start-ups by providing them with advisory and administrative support services
  55. 55. Page | 55 WEBLOGRAPHY www.seedfund.co.in www.mydentist.co.in www.enterprises.com www.businessworld.com BIBLOGRAPHY Business world- India’s young entrepreneur