M-III

3.1=StartupMeaning

StartupIndia isaninitiativeofthe GovernmentofIndia.Thecampaignwasfirstannouncedby IndianPrimeMinister, NarendraModi duringhis15August2015addressfrom the RedFort,in NewDelhi.[1]

Theactionplanofthisinitiativeisfocusingonthreeareas:

1.SimplificationandHandholding.

2.FundingSupportandIncentives.

3.Industry-AcademiaPartnershipandIncubation.

AnadditionalarearelatingtothisinitiativeistodiscardrestrictiveStatesGovernmentpolicieswithinthisdomain,suchas LicenseRaj, LandPermissions,ForeignInvestmentProposals,andEnvironmentalClearances.ItwasorganizedbyTheDepartmentforpromotionofindustryandinternaltrade(DPI&IT).

Astartupdefinedasanentitythatisheadquarteredin India,

whichwasopenedlessthan10yearsago,andhasanannualturnoverlessthan

 ₹100crore (US$14 million).] 

Underthisinitiative,thegovernmenthasalreadylaunchedtheI-MADEprogram,tohelpIndianentrepreneursbuild10 lakh (1million)mobileappstart-ups,andthe MUDRABank'sscheme(PradhanMantriMudraYojana),

aninitiativewhichaimstoprovidemicro-finance,low-interestrateloanstoentrepreneursfromlowsocioeconomicbackgrounds.[4] Initialcapitalof 20,000crore (equivalentto ₹230 billionorUS$3.2 billionin2019)hasbeenallocatedforthisscheme.

Definition

TheHonorableUnionMinister,SureshPrabhu,recentlyamendedthedefinitionofstartuptosimplifyitsexemptionsunderSection56(2)(viib)oftheIncomeTaxActandproviderelieffromangeltax.Themoveisexpectedtorelaxthenormsandfacilitatethegrowthofstartupsinthecountry.Thisarticleseekstocreateawarenessofthesenewlyannouncedprovisions.

3.2=Startupecosystem

A startupecosystem isformedbypeople, startups intheirvariousstagesandvarioustypes

of organizations inalocation(physicalorvirtual),interactingasasystem tocreateandscale

new startupcompanies.Theseorganizationscanbefurtherdividedintocategoriessuchas

universities,fundingorganizations,supportorganizations(likeincubators,accelerators,co-

workingspacesetc.),researchorganizations,serviceproviderorganizations(likelegal,financial

servicesetc.)andlargecorporations.LocalGovernmentsandGovernmentorganizationssuchas

Commerce/Industry/Tradedepartmentsalsoplayanimportantroleinstartupecosystem.

Differentorganizationstypicallyfocusonspecificpartsoftheecosystem functionandstartupsat

theirspecificdevelopmentstage(s).

StartupEcosystem Dynamics

Ideas, inventions and research i.e. Intellectualpropertyrights (IPR)

EntrepreneurshipEducation[1]

Startups atvariousstages[1]

Entrepreneurs[1]

Startupteam members[1]

Angelinvestors[2]

Startup mentors[1]

Startupadvisors[1]

Otherbusiness-orientedpeople

Peoplefrom otherorganizationswithstart-upactivities

Startupevents

Listoforganizationsand/ororganizedactivitieswithstartupactivities

Universities[3]

Advisoryandmentoringorganizations

Startupincubators[3]

Startupaccelerators

Corporateaccelerator

Coworking spaces

Serviceproviders (Consulting,Accounting,Legal,etc.)

Eventorganizers[3]

Start-upcompetitions[3]

StartupBusinessModelEvaluators

BusinessAngelNetworks[3]

Venturecapital companies[3]

EquityCrowdfunding portals

Corporates(telcos,banking,health,food,etc.)

Other funding providers(loans,grantsetc.)

Start-up blogs andsocialnetworks[4]

Other facilitators

Investorsfrom theserolesarelinkedtogetherthroughsharedevents,activities,locationsandinteractions.Startupecosystemsgenerallyencompassthenetworkofinteractionsbetweenpeople,organizations,andtheirenvironment.Anyparticularstart-upecosystem isdefinedbyitscollectionofspecificcitiesoronlinecommunities.

Inaddition,resourceslikeskills,timeandmoneyarealsoessentialcomponentsofastart-upecosystem.Theresourcesthatflowthroughecosystemsareobtainedprimarilyfrom themeetingsbetweenpeopleandorganizationsthatareanactivepartofthosestartupecosystems.Theseinteractionshelptocreatenewpotentialstartupsand/ortostrengthenthealreadyexistingones.

Externalandinternalfactors

Startupecosystemsarecontrolledbybothexternalandinternalfactors.Externalfactors,suchasfinancialclimate,bigmarketdisruptionsandsignificanttransitions,controltheoverallstructureofanecosystem andthewaythingsworkwithinit.Start-upecosystemsaredynamicentitieswhichprogressfrom formationstagestoperiodicdisturbances(likethe financialbubbles)andthentorecoveringprocesses.

Severalresearchershavecreatedlistsofessentialinternalattributesforstartupecosystems.Spigel[5] suggeststhatecosystemsrequireculturalattributes(acultureofentrepreneurshipandhistoriesofsuccessfulentrepreneurship),socialattributesthatareaccessedthroughsocialties(workertalent,investmentcapital,socialnetworks,andentrepreneurialmentors)andmaterialattributesgroundedinaspecificplaces(governmentpolicies,universities,supportservices,physicalinfrastructure,andopenlocalmarkets).Stam[6] distinguishesbetweenframeworkconditionsofecosystems(formalinstitutions,culture,physicalinfrastructure,andmarketdemand)withsystematicconditionsofnetworks,leadership,finance,talent,knowledge,andsupportservices.

Startupecosystemsinsimilarenvironmentsbutlocatedindifferentpartsoftheworldcanendupdoingthingsdifferentlysimplybecausetheyhaveadifferententrepreneurialcultureandresourcepool.Theintroductionofnon-nativepeoples'knowledgeandskillscanalsocausesubstantialshiftsintheecosystem'sfunctions.

Internalfactorsactasfeedbackloopsinsideanyparticularstartupecosystem.Theynotonly

controlecosystem processes,butarealsocontrolledbythem.Whilesomeoftheresourceinputsaregenerallycontrolledbyexternalprocesseslikefinancialclimateandmarketdisruptions,theavailabilityofresourceswithintheecosystem arecontrolledbyeveryorganization'sabilitytocontributetowardstheecosystem.Althoughpeopleexistandoperatewithinecosystems,theircumulativeeffectsarelargeenoughtoinfluenceexternalfactorslikefinancialclimate.

RoleofemployeediversityEmployeediversityalsoaffectsstartupecosystem functions,asdotheprocessesofdisturbanceandsuccession.StartupEcosystemsprovideavarietyofgoodsandservicesuponwhichotherpeopleandcompaniesdependon.Thus,theprinciplesofstart-up ecosystemmanagement suggestthatratherthanmanagingindividualpeopleororganizations,resourcesshouldbemanagedatthelevelofthestartupecosystem itself.Classifyingstart-upecosystemsintostructurallysimilarunitsisanimportantsteptowardseffectiveecosystem managing.

Startupecosystem studiesThereareseveralindependentstudiesmadetoevaluatestart-upecosystemstobetterunderstandandcomparevariousstart-upecosystemsandtooffervaluableinsightsofthestrengthsandweaknessesofdifferentstart-upecosystems.Startupecosystemscanbestudiedthroughavarietyofapproaches-theoreticalstudies,studiesmonitoringspecificstart-upecosystemsoverlongperiodsoftimeandthosethatlookatdifferencesbetweenstart-upecosystemstoelucidatehowtheywork.

Since2012,SanFrancisco-basedStartupGenomehasbeenthefirstorganizationtoreleasecomprehensiveresearchreportsthatbenchmarkstartupecosystemsglobally.CurrentlyledbyJFGauthierandMarcPenzel,theSanFrancisco-basedstartuphasbeenthefirstorganizationtocapturetherequirementsofastartupecosystem inadata-drivenframework.[7] StartupGenome'sworkinfluencedstartuppoliciesgloballyandissupportedbythoughtleaderssuchas SteveBlank[8] andhasappearedinleadingbusinessmediasuchas TheEconomist, Bloomberg and HarvardBusinessReview.[9]

Since2017,Zurich-basedStartupBlinkhasbeenpublishingreportsrankingthestartupecosystemsof1,000citiesand100countries.CurrentlyledbyEliDavid,thelatestreportof2019hasrevealedthattheUSA,ranked1stinthecountryrankings,has441citiesranked,comparedto48rankedcitiesintheUnitedKingdom,the2ndrankedcountry.

Startupdevelopmentphases:Ideating,concepting,committing,validating,scalingandestablishing.

Startupbusinesspartnering

Itisthedevelopmentofsuccessful,longterm,strategicrelationshipsbetweencustomersandsuppliers,basedonachievingbestpracticeandsustainablecompetitiveadvantage.

 Inthebusinesspartnermodel,HRprofessionalsworkcloselywithbusinessleadersandlinemanagerstoachievesharedorganisationalobjectives. 

Inpractice,thebusinesspartnermodelcanbebroadenedtoincludemembersofanybusinessfunction,forexample,Finance,IT,HR,Legal,ExternalRelations,whoactasaconnector,linkingtheirfunctionwithbusinessunitstoensurethatthetechnical,orfunctional,expertisetheyhavetoofferisplacedwithintherealandcurrentconcernsofthebusinesstocreatevalue.

Startupculture

A startup cultureisaworkplaceenvironmentthatvaluescreativeproblem solving,open

communicationandaflathierarchy. Instartupcultures,thesecorevaluestendtoreflectthe

personalitiesandethosofthepeoplewhoworkedforthebusinessintheearlydays.Because

newbusinessesmustadaptquicklytointernalandexternalmarketpressuresinorderto

survive,astartupculturealsopromotes businessagility andadaptabilityasbeingkeyvirtues.

Theworkplacevaluessupportedbystartupculturesareincreasinglyresonatingwithbusiness

leadersatlargeorganizations.Asthepaceofbusinessspeedsup,quickenedinpartby

advancesintechnology,largecompaniesarerealizingthattheycouldbenefitgreatlyby

puttingmoreemphasisonstartupculturevalues,includingthevalueoftheindividual.

Preparingtolaunchstartup

1-Clarifyyourreasonsandyourgoals.

2-Understandyourentrepreneurialpersonality.

3-Mapyourskillsandexperience

4- Leverageyourrelationshipsandresources.

5-Positionyourselfforhighperformance.

6- Choose the right business structure. (business, which willhave legal and tax implications, Liability limitations, Startup losses,Capital-raisingplansetc.)

Businessincubationdefinition

A businessincubator isacompanythathelpsnewand startupcompanies todevelopbyprovidingservicessuchas managementtraining or officespace.

TheNationalBusinessIncubationAssociation(NBIA)definesbusinessincubatorsasacatalysttoolforeitherregionalornationaleconomicdevelopment.NBIAcategorizestheirmembers’incubatorsbythefollowingfiveincubatortypes:academicinstitutions;non-profitdevelopmentcorporations;for-profitpropertydevelopmentventures;venturecapitalfirms,andcombinationoftheabove

Incubatormodelsandsuccessfactors

BusinessIncubationModels

ThispagecontainsBusinessIncubationModels.Thisisasummaryofpostseriesabout BusinessIncubationModels. Themainpurposeofthissectionistoreview existingBusinessIncubator’sModels,andassesstheirhistoricalapplicability,performanceand efficiencyfor

businessinnovationpurposes.BusinessIncubationisaconceptwhichinvolvesmultiplestakeholders,dozens“buildingblocks”,varioustypesofresources and severalservice categories (around 100 specificservicesintotal).BusinessIncubationModelswillbedescribedbelowinordertobetterdefine,analyze,design,calibrate,evaluateandthinkaboutbusinessincubation.Thesemodelshavebeendevelopedbyresearchers,consultantsandpractitionerssince1985.Moreover,theycreatedaround20differentmodels.

20BusinessIncubationModels

20BusinessIncubationModels–ComparisonMatrix

Herearelinkstoeachpartoftheseries:

Part1. Introductionofaseries.Methodology.Campbell,Kendrick&SamuelsonModel(1985)

Part2. Smilormodel(1987) Part3. Nijkamp&SmilorGenericIncubatormodel(1988) Part4. Carter&Jones-Evansprocessmodel(2000) Part5. NowakandGrantham VirtualIncubationModel(2000) Part6. Booz,Allen&HamiltonCorporateIncubatorModel(2000) Part7. Lazarowich&Wojciechowski‘NewEconomy’Incubator

Model(2002) Part8. LalkakaIncubatorDevelopmentModel(TechnologyBusiness

IncubatorManual)(2000) Part9. Costa-David,Malan,Lalkaka,NBIAModel(2002) Parts10-11. Gibson&WigginsModel(2003);SahayModel(2004) Parts12-13. Hackett&DiltsGenericBusinessIncubatorModel

(2004) Part14. Bergek&NorrmanModel(2008) Part15. InfoDevProcessModel (2009) Part16. Jones’sIncubationValueChainModel (2010) Parts17-18. ChandraandC.-A.ChaoModel(2009);Metibtikarmodel

(2012) Part19.Becker&Gassmann(2006) Analysisof20BusinessIncubationModels Summaryoftheseries.Problemsofbusinessincubation Part20.RyzhonkovGenericBusinessIncubationModel(2013)

 

1985, Campbell, Kendrick & Samuelson, white-box,process,operations

Campbell,Kendrick&Samuelson’sincubationmodel(1985)

The modelstresses on process functions ofincubatoras mainbusiness developmenttoolthatcan transform idea into a realbusiness. Themainoutcomeofthemodel: Incubationprocessisofkeyimportance…

Moreinformationaboutthemodelisinthepost here.

1987,Smilor,mixed,structure,operations

Smilor’sIncubationModel(1987)

ThismodelwasdevelopedbySmilorin1987byrefiningCampbell’smodel(1985).Smilorcreated structuremodelviadescribing mainincubatoraffiliates,supportsystemsanddescriptionofmainoutcomesof the incubation process. He considers an incubator as atransformation mechanism thatassistentrepreneurin building aventure.Eventhoughtherepresentationofthemodeldoesn’tprovideextensiveinformationaboutparticularservicesthatbusinessincubator suppliesto tenants,Smilorcategorizesthebenefitsthatbusinessincubatorsprovidetotheirtenantsthroughfourdimensions:

1.Credibilitydevelopment.2.Theshorteningofthelearningcurve.3.Fastertroubleshooting.4.Accesstothenetworkofentrepreneurs…

Moreinformationaboutthemodelisinthepost here.

1988,Nijkamp & Smilor,black-box,structure model,operations

Nijkamp&Smilor’sGenericIncubatorModel(1988)

Thismodelisthecombinationoftwo.Firstly,SmilorintroducedhismodelandthenitwasextendedbyNijkamp.Nijkamp’s(1988)modelistheinterpretationofagenericbusinessincubator.Hearguesthatany businessincubatoractsasamediatorbetweenentrepreneursandcommunity.Thus,successfulimplementationoftheincubatorrequirescombintationofatleasttheseelements:

Sourcesofentrepreneurs Recognitionofopportunitiesbyentrepreneurs Demandforbusinessincubationservices…

Moreinformationaboutthemodelisinthepost here.

2000,Carter& Jones-Evans,white-box,processmodel,operations

Carter&Jones-EvansProcessIncubationModel(2000)

Thisisafirsttrueprocessmodelinarow.Carter&Jones-Evans(2000)proposedatypicalfive-stepincubationprocess,asshowninthefigureabove.Asitcanbeseenfrom Carter&Jones-Evans’(2000)modeltheprocessisorganizedandfocusedontheneedsoftheincubatee,whichwillbesupportedbytheservicesprovidedbytheincubatorsduringtheincubationprocess.TheincubationprocessaccordingtotheCarter&Jones-Evansconsistsofthefollowingstages: ideaformulation, postentrydevelopment, opportunityrecognition, entryandlaunch, pre-start

planningandpreparation…

Moreinformationaboutthemodelisinthepost here.

2000, Nowak and Grantham, white-box, structure,operations

NowakandGrantham VirtualIncubationModel(2000)

NowakandGrantham (2000)haveestablishedtheirmodelonthefollowingpremise: “Traditionalbusinessdevelopmententrepreneursfaceacommonchallenge:theabsenceofcapital,humanresources,andmanagementcapabilities.” So,thenewmodelneedstoprovidethesmallbusinesscommunitywithastructureandmechanism toeasilyaccess:

informationon‘‘bestpractices’’forbusinessdevelopment industryandmanagementexperience resourcesforinternationalmarketing,salesanddistribution

Theyproposedthecreationofa virtualincubationmodel,basedonnetworkedinnovation,whichbringstogether,ifonlyinavirtualsense,centersoftechnicalandbusinessormanagementexcellence…

Moreinformationaboutthemodelisinthepost here.

2000,Booz,Allen&Hamiltonmodel,white-box,process,operations

Booz,Allen&HamiltonCorporateIncubatorModel(2000)

Maincontributionofthemodelproposed byGregorHarter,KlausHölbling & Steffen Leistner from Booz, Allen andHamilton[1] is conceptualizationofbusinessincubationandapplyingittoacorporation’sneedsincontinuousinnovation.Themodeldescribeshow corporate incubatorcould reinforce and supportinnovationpractices…

Moreinformationaboutthemodelisinthepost here.

2002,Lazarowich & Wojciechowski ‘New Economy’IncubatorModel,white-box,structure,operations

Lazarowich&Wojciechowski‘NewEconomy’IncubatorModel(2002)

ThemodeldescribedbyLazarowichandWojciechowski[1] explains

‘neweconomy’incubators.Theyarecharacterizedbythefollowing:

“Businessincubatorsareprivate-sector,profit-drivenwiththepay-backcomingfrom investmentincompaniesratherthanfrom rentalincome.

Theytendtofocusmainlyonhigh-techandinternet-relatedactivitiesandunlike‘traditional’incubators,donothavejobcreationastheirprincipal.

‘Neweconomy’incubatorsoftenhaveanessentiallyvirtualpresencewithfinancialandbusinessservicesatthecoreoftheofferingunliketheir‘traditional’counterpartsthatusually centerontheprovisionofphysicalworkspace.”

Moreinformationaboutthemodelisinthepost here.

2000,LalkakaIncubatorDevelopmentModel,white-box,process,development

LalkakaIncubatorDevelopmentModel–Planning(2000)

Thismodelis aboutthedevelopmentoftechnologybusinessincubator.ThemodelwaspresentedbyMr.Lalkakain2000andwasintendedtoguide planners,educators,sponsors and managementteams inexploringandestablishinga successfulTBIprogram.

Moreinformationaboutthemodelisinthepost here.

2002,Costa-David,Malan,Lalkaka,NBIA,mixed,mixed,operations

Costa-David,Malan,LalkakaGenericIncubatorModel(2002)

Thismodelwaspresented in a2002 EU incubatorbenchmarkingstudy[1] asageneral‘modelofincubation’basedonEU-widesurveydata.However,itwasdevelopedbyveryknowledgeableauthorsCosta-David,Malan,Lalkaka forNBIA.Laterthe CenterforStrategy&Evaluation Services (EU)copied this modeland used proposedbenchmarksthatdepictincubatorefficiencyandperformanceintermsofusinginputs,developingandorchestratingprocessesandensuringasteadysupplyofqualityoutputs.

Moreinformationaboutthemodelisinthepost here.

2003,Gibson,Wiggins,black-box,structure,operations

Gibson&WigginsTechnologyBusinessIncubatorModel(2003)

Thisisbasicallyacopy-pasteofa Smilormodel (1987).

Moreinformationaboutthemodelisinthepost here.

2004,Sahay,black-box,structuremodel,operations

SahayTechologyBusinessIncubatorModel(2004)

Moreinformationabouthemodelisinthepost here.

2004,Hackett&DiltsGenericIncubatormodel,black-box,structure,operations

Hackett&DiltsBusinessIncubatorModel–Structure

(2004)

Themodelisa universalbusinessincubationmodelwhichcanbeusedbothinpublicandcorporatepurposes. Inshort,itisstructuredasblack-box:inputsoftheprocess,processactivities,andoutputsoftheprocess.AuthorsalsopresentaformulaofBusinessIncubationProcess.Wethinkthatthisisthemostsuccessfulrepresentationofbusinessincubatoramongallin theseries.

Moreinformationaboutthemodelisinthepost here.

2008,Bergek&Norrmanmodel,white-box,process,operations

Bergek&NorrmanBusinessIncubationModel(2008)

ThemodelofBergek&Norrmanfrom 2008continuestheideasthathave been developed by Hackett & Dilts (2004),Smilor in1987 and Gibson&Wiggins(2003).Ontheonehandthemodel iscenteredontheresultsofthebusinessincubation.Ontheotherhandit’sstillprocessmodelwhichdescribesdifferentstagesoftheprocess.So,it’seasytoadaptitinthereallifeandbuildyourincubatorbyapplyingthismodel.

Moreinformationaboutthemodelisinthepost here.

2009,InfoDev,process,internal,operations

InfoDevProcessModel(2009)

infoDev modelisthemodeldevelopedforbuildingbusinessincubatorsaroundtheWorldwithininfoDevnetwork.infoDevisapowerfuland

well-knownWorldBankprogram that“growsinnovationaroundtheworld”.They work in five different areas:Access to Finance,AgribusinessEntrepreneurship,ClimateTechnology,MobileInnovation,Women Entrepreneurs.One of the works they do is helpingentrepreneursbybringingthem businesscoaching,accesstoearly-stagefinancing,andbetterentrepreneurshipenvironments(whichareoften include business incubators).They have published severalmaterialsthatcouldbevaluableforthosewhoarecreatingbusinessincubators.Oneofthemodelswillbedescribedtoday.Aninterestingpointaboutthismodelof BusinessIncubationSeries isthelinkagebetweenbusinessincubationphasesandentrepreneuriallifecycle.

WhatisaBusinessIncubator?

Businessincubatorsareorganizationsthatofferstartupssharedoperationspace.Indoingso,entrepreneursenjoyacollaborativeworkenvironmentwithinvaluablementoringandnetworkingopportunities,fundingsupportandsharedequipment.Inshort,theyofferfledglingyoungcompaniesawarm,safeplacetogrowandprosper.

WhatistheGoalofaBusinessIncubator?

Simplyput,thegoalofabusinessincubatorishelpyourstartupsucceed.Mostincubatorsarenon-profitorganizationsthatselecttenantsonanon-competitivebasis.Theyreceivetheirfundingfrom governmentorlotterygrants,donationsandrentyoupayasatenant.Theyprovidebothvirtualandon-sitetacticalsupportifandwhenyouneedit,andtheygaugesuccessbaseduponthesuccessoftheirtenants.

WhataretheBenefitsofaBusinessIncubator?

Basedonthetypicalofferings,theimplicationsforastartuptakingupresidenceatabusinessincubatorareclear.Unrivalledaccesstofunding,mentors,skillsdevelopmentprogramsandacollaborativeworkenvironmentcanmakeaworldofdifferencetoyoursuccess.Therearelessobviousbenefits,though.Unlikeaccelerators,incubatorsdon’tputatimestampontheirsupportprograms.Thatmeansyouaren’tbulliedintogrowingtooquickly,andarefreetoscaleandexpandatyourownpace.Likewise,businessincubatorsdon’taskforequityinyourcompanyinreturntoaccessforresources.Thatmeansyoureapallthebenefitswithouthavingtohandoverapieceofyourcompanyintheprocess.

WhataretheDrawbacksofaBusinessIncubator?

Incubatorsdohaveacoupleofdrawbacks,too.Becausemostincubatorsarenon-profitorganizations,theygenerallycan’tofferyouthesortofaccesstocapitalyoumightenjoyfrom anacceleratororwooinganangelinvestor.