INCUBATION ZONE. A park for entrepreneurship

The incubator at the Indian Institute of Management Calcutta – IIM Calcutta Innovation Park – focuses on healthcare, education, cleantech, lifestyle, analytics, Internet of Things. But, says Subhranghsu Sanyal, Chief Executive Officer, IIMCIP, there is a special focus on social enterprises. There is a big need, says Sanyal, to promote social enterprises in India, as it impacts those at the bottom of the pyramid, and there are not many business incubators that focus on this area.

The IIMCIP conducts seminars, roundtables and a business plan contest to promote social entrepreneurship. This is done in partnership with the Tata group under the Tata Social Enterprise Challenge.

IIMCIP is spread over 10,000 sq ft and it is a not-for-profit company established in 2014, run by an independent board and has on its governing body a good mix of faculty and alumni, who are also either serial entrepreneurs or involved with the venture capital ecosystem.

According to Sanyal, IIMCIP can now incubate around 40 companies, including physical and virtual incubation. It targets to incubate 10 start-ups in a year. The ventures are allowed to be in the incubator for a maximum of 24 months. In the case of commercial enterprises, selection for admission depends on the fundability of the business model and for social enterprises, it is based on the potential to be self-sustainable.

The other criteria for admission to the incubation include scalability of the business and the quality and commitment of the founding team. “We have an independent investment committee comprising three members that takes decision regarding incubation,” says Sanyal.

IIMCIP offers both physical and virtual incubation. “We have a pool of mentors comprising IIMC alumni and faculty members. Through the mentorship programme, our incubatees work closely with the mentors,” says Sanyal, himself an alumnus of IIMC. He adds that if a venture at the incubator needs seed funding support, the IIMCIP facilitates this through its investor/funding partner network.

The incubator offers dedicated mentorship through a mentor pool that is made up of alumni, faculty, entrepreneurs and investors with expertise in different domains; funding connect – put the ventures in touch with funding sources including venture capital firms and angel investors, government seed/venture fund, collateral-free bank loan. “IIMCIP aims at organising seed funding to all incubatees and ensuring successful exit in 18-24 months,” says Sanyal.

Seed funding comes from the funding partners of IIMCIP. On successful raising of funds or on becoming self-sustainable the ventures will exit the incubator.

According to Sanyal, IIMCIP takes a small percentage of equity, typically up to 5 per cent, as a consideration for the incubation support. IIMCIP sells its stake when the venture raises the next level of funding.

Formal incubation through IIMCIP as a separate entity started in September 2014. Prior to this, IIMC offer incubation support through its Centre for Entrepreneurship and Innovation. One of the success stories, says Sanyal, was of four students from IIMC who started Zostel in 2014. Zostel is a backpacker hostel and affordable hotel chain that is present in 35 cities. It has just announced opening a hostel in Vietnam. Zostel recently raised another round of funding and had previously raised $1 million.

On the start-up scene, Sanyal says the success stories of internet businesses have created a buzz. Now more and more students and young professionals are opting out of jobs and starting their own ventures. “We need to create an enabling ecosystem that will inspire and support these start-ups till they become fundable or self-sustainable,” says Sanyal. Mentorship with early-stage funding is the most essential need for any start-up. Incubators need to develop strong linkages with key stakeholders in the entrepreneurship ecosystem so that they may effectively support the needs of start-ups, he says.

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