The Need for a New Kind of Incubation Model

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

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

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

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

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

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

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

It worries me when well known Venture capital firms, with a bottomless fund size, are planning to start another incubation centre in an attempt to nurture innovation. If at all, an incubation center is the way to go, I think a really new kind of thinking is required.

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

In the meantime, what are your thoughts? Comments