Prosenjit Sen has everything it takes to be a successful entrepreneur in Silicon Valley. He has a great idea - his startup Vizl lets you to try out and mix and match garments virtually on your iPhone before you buy them online. He is a serial entreprenur having founded or been part of founding teams in start-ups like Informatica, SaleMinder etc. He is also a Valley veteran with over two decades of experience in the high-tech and Internet industries.
Also see: The Economic Times presents The Power of IdeasStill, Sen didn't want to fly solo with his latest venture. He approached Plug and Play (PnP), arguably Silicon Valley's largest incubator and home to well over 300 start-ups, about six months ago. PnP would take a small equity stake in the company and present a prescreened pitch to its own extensive network of investors and venture capitalists.
"Sure, I have a rolodex of my own, but this process saves me a lot of time and helps me find the right investor," says Sen. He is now seeking $ 4 million in Series A funding for his digital dressing room that's custom-built for fashion retailers.
Not every company can do what Google, HP or Apple did - start up in a garage and strike it big. They need incubators to help see them through the difficult early stages of a new venture until they raise meaningful funding.
Plug and Play, now home to Sen, even housed Google briefly in 1999. It also housed Paypal, which was later acquired by eBay. This is why even serial entrepreneurs like Prosenjit Sen, who know the who's who in the Valley, still feel the need for incubators.
That's also why new incubators are sprouting up across the Valley all the time. Some like Plug and Play provide office rentals to pretty much any start-up and hold seasonal 'expositions' for start-ups to make timed elevator pitches to investors. Others like Y Combinator (YC) select a bunch of start-ups that they then mentor, seed fund and help pitch to investors.
Some of today's most celebrated Internet darlings like Reddit, Dropbox, Airbnb, Scribd, Bump and Heroku have come out of here. Down the road from Y Combinator is 500 Startups -- a messy, noisy floor full of tables rented out to early-stage companies that have received between $10,000 and $250,000 in funding.
Incubators are a vital cog in the Valley's vibrant entrepreneurial ecosystem, but they are only now gaining early traction in India as well.
Hardly any start-up graduating from the Indian incubator and accelerator ecosystem has made it big. Money is still hard to come by for raw start-ups that need to build a business from an idea. So far, the gap has been filled only by incubators in state-run educational institutions such as the IITs and IIMs.
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IIM Ahmedabad's Centre for Innovation Incubation and Entrepreneurship (CIIE) has over 50 incubatees; IIT Bombay's Society for Innovation and ntrepreneurship (SINE) has about 20; IIM Bangalore's Nadathur S Raghavan Centre for Entrepreneurial Learning is nurturing a few including Milaap.org, the online social lending portal focused at the base of the pyramid population, and community library chain JustBooks. Their success has been patchy.
"An academic setting has a lot of constraints. They are mandated by government-set rules. Private acclerators, on the other hand, attract more entrepreneurial talent, and hence, can identify true agents of disruption," says Vijay Anand, founder of Chennai-based Startup Centre.
But private incubators and accelerators in India have emerged only over the last three to five years, and are yet to put in place metrics to determine long-term survival of the business or put in place successful fund ing efforts.
Apart from Startup Centre, Angel Prime, set up by serial entrepreneurs Bala Parthasarathy, Shripati Acharya and Sanjay Swamy, plans to invest between $200,000 and $800,000 in every start-up in its portfolio.
Multinational tech firms are also setting up their accelerators here. In May, Microsoft launched Microsoft Accelerator for Windows Azure, which will incubate 10 technology start-ups for four months. In 2011, Citrix Systems launched its start-up accelerator programme, which aims to invest $400,000 each in six early-stage start-ups. The IndianAngel Network and the Mumbai Angels have lent their support to VentureNursery, India's first angel-backed start-up accelerator. But all this is still a long way behind incubators in the US.
Hum of hundreds starting up
Incubators aid and nurture fledgling entrepreneurs in myriad ways. For Labhesh Patel, Co-Founder of CellKnight -- which helps enterprises cut wireless expenses - it included random introductions and endless informal chats which resulted in a big client contract with a bank, sales lessons and even a job for his wife in the same building!
"Our main reason to move into this incubator was the ecosystem...it is full of like-minded entrepreneurs...during pitches to VCs, you really are in the nerve of the Valley," says Patel who is based at PnP. "We even pivoted our business model (from creating a software for telecomm consultants to selling directly to enterprises) based on conversations with PnP's technology investments head Alireza Masrour. It was the best move for our startup!"
No wonder incubators like TechStars are opening up in other technology hubs, like Seattle, Boston and New York City as well. Last June, RockHealth, an incubator focused on health startups, opened in San Francisco. Through its partners -- like Harvard Medical School, Mayo Clinic, University of California, San Francisco and Genentech -- RockHealth helps entrepreneurs understand the complexities of healthcare, including USFDA regulations, legal and finance issues.
"The hurdles and barriers to enter healthcare are otherwise so very difficult because of the nature of the industry. Being here also accelerates, validates and builds our idea," says Ryan Panchadsaram. His RockHealth incubated startup Pipette -- a remote app for monitoring medications, symptoms, progress of patients who have been discharged after surgeries -- was acquired by an MIT spin-off called Gingerio.
Over half the startups at Plug and Play are led by Indians. "And I personally know of at least five Bangalore-based start-ups that are applying at YC," says Vivek Ravisankar, co-founder of Interviewstreet. When he made it to YC's three-month summer programme last June, he was the first Indian entrepreneur to do so.
Ravisankar wanted to move to the US to hire engineers and get users for his start-up that creates puzzles for engineers, which doubles up as tools for firms to recruit engineers.
Not only did he get seed funding from YC and other investors, but also availed of YC's celebrity head Paul Graham's mentoring, clout and connections. Plus, the incubator's culture meant that the 200 start-ups at YC became beta users and Ravisankar got feedback and critique.
Today, an estimated 1,500 programmers spend about an hour-and-half to two hours a day on Interviewstreet. The start-up also powers the career pages of Facebook and Amazon with special timed custom-built puzzles. "I don't know of a simpler way of getting a non-US person's start-up set up in the Valley," says Ravisankar.
(With inputs from Biswarup Gooptu in Bangalore)
( Originally published on Jun 07, 2012 )
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