INTERNSHIP REPORT

A QUALITATIVE STUDY ON INCUBATORS EXIT: AN

INDIAN PERSPECTIVE
A report submitted in partial fulfilment of the requirements for the Award of Diploma of

Post Graduate Diploma in Management

by

Aayush Garg
Roll No. 20DM004

Under Supervision of
Prof. Arindam Banerjee
(Duration: 1nd May, 2021 to 10th July, 2021)

BIMTECH (An Autonomous Institute)

Approved by AICTE, Accredited by NBA (AICTE) & NAAC (UGC),
Plot Number 5, Knowledge Park 2, NCR, Greater Noida, Uttar Pradesh- 201306

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 Summer Project Certificate

This is to certify that Mr. / Ms. Aayush Garg, Roll No. 20DM004, a student of PGDM (Finance), has
worked on a summer project titled “A Qualitative Study on Incubators Exit: An Indian Perspective”
at “Atal Incubation Centre, BIMTECH” after Trimester-III in partial fulfilment of the requirement
for the Post Graduate Diploma in Management programme. This is his/her original work to the best
of my knowledge.

Date: ___________ Signature___________

BIMTECH SEAL Prof. Arindam Banerjee

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 Letter of Transmittal

Dr. Abha Rishi,

Second Floor, BIMTECH, Plot No. 5, Knowledge Park 2 Greater Noida, NCR, Uttar Pradesh 201306
Dear Sir/Madam,

Re: Summer Project Report

Attached herewith is a copy of my summer-project report “A Qualitative Study on Incubators Exit:

An Indian Perspective” which I am submitting in order to mark the completion of my 08/10-week
summer project at your organization. This report was prepared by me using the best of practices and
summarizes the work performed on the project and is being submitted in partial fulfilment of the
requirements for award of diploma.

I would like to mention that the overall experience with the organization was very good, and helped
me to know how work is carried out in real practice with the help of your esteemed organization. I
feel honoured that I got an opportunity to work with Atal Incubation Centre, BIMTECH, an
organisation of great repute.

I hope I did justice to the project and added some value to the organization.

Your suggestions/comments would be appreciated.

Yours truly,
Aayush Garg

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v|Page
 ACKNOWLEDGEMENT

I would like to gratefully acknowledge the contribution of all the people who took active part and
provided valuable support to me during the course of this project. To begin with, I would like to offer
my sincere thanks to “Dr. Abha Rishi, CEO”, for giving me the opportunity to do my summer
training at “Atal Incubation Centre, BIMTECH”. ‘Without her guidance, support and valuable
suggestions during the research, the project would not have been accomplished.

My heartfelt gratitude also goes to the entire team at the organization for their co-operation and
willingness to answer all my queries, and provide valuable assistance.

I also sincerely thank “Prof. Arindam Banerjee”, my faculty mentor at BIMTECH, who provided
valuable suggestions, shared his/her rich corporate experience, and helped me script the exact
requisites.

Last, but not least, I would like to thank all other Incubators for sharing their experience and giving
their valuable time to me during the course of my project.

Name: Aayush Garg

Roll No. 20DM004

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 Table of Contents

Executive Summary ............................................................................................ 2

Chapter- I Introduction ...................................................................................... 3

Chapter- II Literature Review ........................................................................... 12

Chapter- III Details About the Study ................................................................. 15

Chapter- IV Methodology Adopted for the Study ............................................ 18

Chapter- V Analysis & Conclusion .................................................................... 20

Chapter- VI Contribution and Learning from the Project ................................. 32

Chapter- VII Acknowledgements ...................................................................... 34

Bibliography ..................................................................................................... 36

Questionnaire .................................................................................................. 38

Snapshots of Interview .................................................................................... 39

Plagiarism Report ............................................................................................. 41

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 Executive Summary
India has the third highest number of incubators with a strength of 250 in number. Incubators plan an
important role in growth of start-ups. In India, the BI’s are high tech in a shifted style as Technology
Business Incubators (TBI) and as Start-up Incubators—that manages innovative business and the later
arrangements with equipping new companies. The mission of creating explicit advancements among
the scientists through. The Start-up India Seed Fund, which has an objective corpus of Rs 945 crore
to be dispensed more than five years in beginning phase new businesses, is hoping to help around
3,600 business people through 300 incubators, as indicated by it carrying out body Department for
Promotion of Industry and Internal Trade (DPIIT).

The study has been conducted to research about the exit made by incubators from the start-ups. Exit
routes such as Initial Public Offerings, Mergers and Acquisitions, Private Sale, Sell the Business in
the Open Market, Liquidation is followed. The following are the research questions:

• How do resources and investment influence the success of a start-up provided by the
incubators?
• Does exit strategies have an impact on the functioning and viability of a business and does
planning has a bearing on smooth exits?
• What challenges are faced by the incubators during the incubation period and after the exit by
the start-up?

The questionnaire has been designed to know about the ecosystem of incubators to know about the
resources provided by the incubators and the different exit strategies adopted by the incubators. For
research purpose 4 incubators have been interviewed. The conclusions found from the interview are
that resources that have been provided to start-ups had result in a tremendous growth especially in
high technology firms. Acquisition is the new upcoming trend in the market by the rival company for
a high valuation of start-up but IPO is considered best exit strategy and no incubator has much focus
on exit strategies where they need to plan beforehand about these exit policies as they are integral
part of their growth because due to pandemic and natural circumstance the exits have been rough
which can be better if they were planned ones. No strategy and no time are best for an incubator to
take exit and not suitable for a company it depends on situation and expertise and incubators faced
some challenge after incubators take exit from them.

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 CHAPTER- I
INTRODUCTION

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Business incubator is an association that helps new businesses and individual business visionaries to
foster their businesses by giving a full-scale scope of administrations beginning with the executives
preparing and office space and finishing with funding financing. Business incubators contrast from
exploration and innovation parks in their devotion to fire up and beginning phase organizations.
Research and Technology Park, then again, will in general be enormous scope projects that house
everything from corporate, government, or college labs to little organizations. Most Research and
Technology Park don't offer business help administrations, which are the sign of a business hatching
program. In India, the business incubators are advanced in a shifted style: as Technology Business
Incubators (TBI) and as Start-up Incubators—the principal manages innovation business and the later
arrangements with advancing new companies (with more accentuation on setting up new
organizations, scaling the businesses, prototyping, protecting, etc). The mission on making explicit
advancements among the youthful personalities of scientists through. 101 particular incubators have
been supported in different pieces of India through AIM-India.

The Start-up India Seed Fund, which has an objective corpus of Rs 945 crore to be dispensed more
than five years in beginning phase new businesses, is hoping to help around 3,600 business people
through 300 incubators, as indicated by it carrying out body Department for Promotion of Industry
and Internal Trade (DPIIT). The speculation will be made in qualified new businesses to help their
verification of idea, model turn of events, item preliminaries, market-passage, and commercialization.
The 3,600-business people will address DPIIT-enlisted new companies across areas and joined not
over two years prior at the hour of applying for the plan. The chose new businesses will be presented
Rs 20 lakhs as an award for proof of idea and up to Rs 50 lakhs through convertible debentures or
obligation or obligation connected instruments for commercialization of the item. New companies
chose under the plan would ideally be from areas including social effect, squander the executives,
water the board, monetary incorporation, training, farming, food handling, biotechnology, medical
services, energy, versatility, guard, space, rail routes, oil and gas, materials.

Since new businesses need various assets, experience and organizations, incubators offer types of
assistance which assists them with getting past beginning obstacles in starting up a business. These
hurdles include space, funding, legal, accounting, IT services, administrations and different essentials
to maintaining the business.

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Advantages of Business Incubators:

Business incubators can be beneficial to start-ups:

• Mentorship and Advisory services

The mentorship and administrations that are offered by the incubators permit the start-ups to decrease
the gap in their insight or experience expected to settle on better choices.

• Time and money saver

Start-ups set aside time and cash went through on everyday working activities (e.g., bookkeeping,
marketing, HR), as incubators cover either a few or the entirety of the administrations.

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 • Access to industry mentors and experts

Finally, incubators guarantee access to industry experts and guides that by and large which not
accessible. Overall, the incubators address expert in a particular industry. For example, one incubator
bases on the food business while other spotlights on the fintech business. Before long, a couple of
incubators with no industry limitations.

The incubators pass on their organizations to a start up as a trade-off for a stake in the start-up. The
shareholding can be from 2% to 10%. In addition, a couple of incubators demand fixed rate.

TOTAL NO. OF INCUBATORS

MOD
MEITY
2% AIM
5%
11%

NSTEDB
24%

MSME
39%

TDB
7%
DARE
DOS 2%
DBT
1% 9%

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Business Incubator Affiliated to Government are:

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Mission Start-up India:

The Start-up India initiative was declared on 15th August, 2015. The lead drive intends to fabricate a
solid eco-framework for supporting development and Start-ups in the country that will drive
manageable financial development and produce huge scope business openings. Further to this, an
Action Plan for Start-up India was revealed by Prime Minister of India on 16th January, 2016. The
Action Plan involves 19 things to do spreading over across regions, for example, “Simplification and
handholding”, “Funding support and incentives” & “Industry-academia partnership and incubation”.

Government has put high speed attempts towards the vision of Start-up India drive a dream come
true. Generous advancement are being made under the Start-up India drive, having blended
pioneering soul across the country. The Department for Promotion of Industry and Internal Trade
(DPIIT) is ordered to facilitate execution of Start-up India drive with other Government Agencies.
Aside from DPIIT, the drives under Start-up India are driven basically by five Government Agencies
viz. Department of Science and Technology (DST), Department of Bio-innovation (DBT), Ministry
of Human Resource Development (MHRD), Ministry of Labour and Employment and Ministry of
Corporate Affairs (MCA) and NITI Aayog.

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Launch of Start-up India Action Plan:

The Start-up India Action Plan was uncovered on 16th January, 2016 to feature a few drives and plans
proposed by the Government of India to fabricate a solid eco-framework to sustain development and
enable Start-ups across India.

The 19-point Action Plan visualizes a few hatching places, simpler patent recording, charge
exceptions, simplicity of setting-up of business, an INR 10,000 crore amount, a quicker leave
component, among others.

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Support for Start-up India:

Start-up India campaign got overall help for its endeavour to carry Start-ups to the front line of India's
development story. It permits business people to zero in on their centre business (rather than time-
postponing administrative compliances) – while enabling them with a solid eco-framework to help
their innovativeness and development.

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The following are the exit routes:

• Initial Public Offering (IPO)- IPO stands for ‘initial public offering’ means that a company
begins floating on a exchange, selling a critical number of their shares to institutional and non-
institutional investors. The company have that Venture Capitalists think of, as they give huge
amounts of cash-flow to all stakeholders (founders, employees and its investors).
• Mergers and Acquisitions- Also commonly known as M&As, these exchanges generally
infer a, emerging to a comparative and bigger company. This kind of exit is made by huge
companies that are looking for complimentary skills in the company, and picking a more
modest start-up is a better way to develop as new than making it again in-house. M&As are
less common than IPOs and straight acquisitions.
• Private Sale- This isn't a M&A, since it's anything other than consolidating two entities into
one. However, it's an extraordinary method to "cash out" so you can pay investors, pay
yourself, get some much-needed rest, and prepare to have a good time once more. The best
purchaser is somebody who has more abilities and interest on the functional side of the
business, and can scale it.
• Sell the Business in the Open Market- Buying an already established business can be an
attractive option for entrepreneurs. This is because it’s less risky than starting a new
enterprise, and seller financing makes the purchase easier to fund than it would be if you were
financing a start-up.
Buyers additionally advantage from expecting a business' current frameworks, its business
stream and income, set up customer base, and brand reputation. Consequently, it's ideal to
invest the work to set up your business ahead of time and make it as engaging as possible to
attract potential buyers.
• Liquidation- One alternative is to liquidate straightaway. This is frequently a last resort
technique for a business, as you just bring in cash by selling the assets and significant things
like customer records or connections are lost.
Prior to exchanging a start-up, one has to work which specialize in liquidation to ensure one
is having the right strategy for assets to be sold, taking care of obligations, and finishing all
legal requirements and financial promises.

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 CHAPTER- II

LITERATURE REVIEW

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Youthful or recently established ventures are portrayed by a significant error between distinct
advantages that are vital for long term viability and the actuals firms' resource base. Stinchcombe
(1965) calls attention to that new organisation need stable business connections, should get familiar
with their particular jobs as friendly entertainers and need to develop schedules—a process which
takes time. Besides, new companies and young firms specifically don't have any standing and need
some an ideal opportunity to acquire authentic firms. Even from a pessimistic standpoint, they are
related with a fairly regrettable picture because of their oddity or on the grounds that they have new
items/administrations. As indicated by Hannan and Freeman (1984), firms with low dependability
and responsibility will be wiped out from the populace. Consequently, youthful firms need to exhibit
that they are dependable and reliable colleagues towards their current circumstance (counting e.g.,
clients, providers, or financial backers). For instance, getting image benefits related with an incubator
area and procuring validity is a significant system of BI help, whereby the support functions as a
symbol of the organizations quality (e.g., Ferguson and Olofsson 2004; McAdam and Marlow 2007).
Moreover, physical infrastructure (e.g., economical rental space, meeting rooms, conference rooms)
help to decrease beginning phase fixed expenses through co-area and shared use, and an assortment
of business help administrations help the incubated firms in regions where they don't have the
important information and aptitude (e.g., marketing, accounting, human resource). Through the
interaction of these support mechanisms, it is expected that the BI support may reduce the ‘liability
of newness’, meaning that the rate of firm survival during the incubation period as well as beyond
graduation should be considerably high.

Nonetheless, it must be remembered that the explanatory power of tenant survival rates may be
somewhat restricted, due to the systematic selection process by the BIs before every incubation. This
implies that potential tenant are screened by various standards (e.g., strategy, financing, capabilities
of the entrepreneur, properties of the product) to evaluate their market potential and the achievement
odds of the basic plan of action. This outcomes in a substantial selection bias (see e.g., Bearse 1998;
Sherman and Chappell 1998; Phan et al. 2005). Start-ups with considerable risk of not surviving don't
typically pass the admission criteria. This proposes that it is this incubator-specific selection process
that initiates generally low failure rates during incubation. Accordingly, Sherman and Chappell
(1998) argue that the direct between tenant survival rates and survival rate of control-group of non-
incubator firms may not be significant. Regarding this issue of endogeneity, Phan et al. (2005, p. 170)
express: ''A significant issue with research in this area is that typical dependent variable, the rate of
firm survival (or failure), has little validity, since incubators are explicitly intended to keep up with
and increase life span.

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As a last point, in spite of the fact that, survival might be perhaps the main markers of incubator
achievement, it must be referenced that the work of incubator rates as sole indicator is insufficient to
capture the success or performance of a specific BI, since this may cover just one element of the
complex help measure (see e.g., Hackett and Dilts 2004; Bigliardi et al. 2006; Voisey et al. 2006;
Bergek and Norrman 2008 for related conversation). Nonetheless, the decision of the suitable
measures is dependent upon conversations and a long way from being obvious. For example, there is
no reasonable agreement whether the number of company survival matter more for incubator
evaluation than the development directions of the greatest triumphs. As for survival rates as pointers
for incubator achievement, it has additionally to be remembered that market exit is a central
component inside an efficient (regional) economy also (Brixy and Grotz 2004; Strotmann 2007),
since new firms may prompt upgrades (e.g., regional employment, competition, speed increase of
structural change), regardless of whether they fail (Fritsch and Mueller 2004). In this manner, survival
rates alone, as some other indicator, can't give a complete image of BI execution.

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 CHAPTER- III

DETAILS ABOUT THE STUDY

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Purpose of the Study:

The Purpose of the study is to research about exit done by the incubators. Through this study we tried
to find out reasons behind the exits and the resources provided by Business incubators to start-ups
and the exit strategies adopted by the incubators and the impact of these strategies on a start-up. The
challenges faced by the start-up after the exits of the incubators.

The study is based on the following research problem:

Q.1 How do resources and investment influence the success of a start-up provided by the incubators?

Q.2 Does exit strategies have an impact on the functioning and viability of a business and does
planning has a bearing on smooth exits?

Q.3 What challenges are faced by the incubators during the incubation period and after the exit by
the start-up?

Approach to the Problem:

The proposed study aims at throwing light on the effectiveness of business incubators in nurturing
start-ups. The study also aims at understanding the prospects of such incubators in making great
contributions commercializing innovations. In order to find out about the exit made by incubators a
qualitative research has been done by interviewing different business incubators across the country
in order to understand the ecosystem of incubators and the problem these incubators are trying to
solve and the challenges faced by them.

The questionnaire has been designed to know about the ecosystem of incubators to know about the
resources provided by the incubators and the different exit strategies adopted by the incubators.
Business Incubators across India affiliated under different schemes of Government of India have been
considered for the purpose of research.

Through this research different success criteria have been tried to find how many Intellectual Property
Rights (IPR); awards have been given to business under the guidance of these business Incubators.
For the purpose of research 4 incubators has been interviewed across the country. New companies
have a crucial task to carry out in the future of India by making creative solutions for nation's
challenging issues and furthermore by creating huge large-scale job opportunities for upcoming
workforce. The government has perceived the significance of new businesses in the financial
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improvement of the nation, and hence they have accompanied different progressive measures to make
a favourable environment for new companies.

The significance of the study lies in its novelty and scope. The study would provide a better
understanding of incubators and concerned authorities for the improvement of its performance. As
concluding remarks of the purpose of this research, the objective is further to gain knowledge on
incubators and start-ups. In the extension, the research hopes to provide practical implications for
incubators, entrepreneurs. The three research questions will be addressed through case analysis and
qualitative data collection. The data will thereafter be analysed, discussed, and compared with the
literature review and the theoretical framework.

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 CHAPTER- IV

METHODOLOGY ADOPTED FOR THE

STUDY

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Research objectives of the study:

• To examine the opinion of incubation managers on various aspects related to their incubation
centre and start-up ecosystem.
• To know about the various exit strategies adopted by the business incubators to exit from
start-ups.
• To know about the challenges faced by the Incubators during the exit from the start-ups.

Research methodology adopted:

The study is based on Qualitative method in which Interviews were conducted. The incubators were
selected across the country.

The primary data is collected by interviewing the incubators. The secondary data is collected from
the research paper and websites.

Research design:

The research design is of Exploratory type since it involved the in-depth analysis of the qualitative
data collected from the incubators.

Data source:

The Primary data was collected by interviewing the incubators and the secondary data was collected
from research papers and websites.

Sampling plan:

The sample that was taken were the different sectors incubators affiliated to government scheme were
interviewed for the research purpose.

Sample size:

The sample size was 4 incubators were interviewed across the different sectors. These incubators
were interviewed to understand their experiences and expectations from a start-up.

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 CHAPTER- V

ANALYSIS AND CONCLUSIONS

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Q.1 For how long you have been associated with the incubator? What were the
resources that were provided in these years by you and have you seen any
difference in resources been given to company to have a contribution in the
growth of the start-up?

Mr. Saurav Kumar from KIET has been associated with the incubators with the past last 6 years and
he believes that he has seen difference in the growth of the company due to the resources provided
by the incubators and the resources that has been provided by them to the start-ups are the awareness
about the entrepreneurship provided by them and the offices spaces to work with a good environment
and all the infrastructural facilities has been provided by them.

The resources beside these provided were the common facility centre and various types of innovation
centre. All these resources were the reason behind the companies were able to run their business and
achieve growth in their business.

Mr. Saurabh Singh from IIM Kashipur had an experience of last 4 years with the incubators. The
resources that were provided by the incubator were guidance to the young entrepreneur who are new
in this and promote entrepreneurship and the various kinds of funding to the start-ups.

The other resources that are provided are the strategy to the business to plan for their future and the
start-up funding to new start-ups. In order to promote and provide mentoring the incubator has also
added 52 mentors on board to guide start-ups in mentoring. These were the resources that provided
success to the start-ups and the difference can be seen in the growth of the companies.

Dr. Shashwat Pathak from MIET has an experience of 3 years with the incubators. The resources
provided were the support to the Innovators and creating awareness to the young entrepreneurs to
encourage them to come forward as entrepreneurs and they also provided 20+ centres of excellence
labs and fabrication lab which help the start-ups to make prototype to the final products in their lab
as innovative products. These were the resources that these start-ups can achieve success in their
particular areas.

Mr. S K Verma from Galgotias College of Engineering & Technology has an experience of 6 years
with the incubators. He has seen a tremendous growth due to start-ups has been incubated by the
incubators and these resources can help to achieve the goals of the business and the resources that
have been provided by the incubators are the office space with infrastructural equipment and the
funding were the main resources has been provided which help in the growth of the start-ups which
has been incubated by these incubators.

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Q.2 Why do you think every start-up has a different successful factor of exit, like
technology start-up may be looking for raising finance through IPO or Angel
Investor as a factor for exit whereas a medium growth start-up may consider
positive cash flow and profits as a successful factor for exit?

Mr. Saurav Kumar from KIET feels that difference is there in technology start-up and medium growth
start-up due to the different mindsets as in technology due to innovation investors are keener to invest
in the start-up whereas as in medium growth start-up there is lack of innovation.

Although after having innovation in technology start-ups they rush for the IPO to generate more funds
and they fails due to rush without properly understanding their product and their technology fails
whereas the medium growth start-up follow the story of rabbit and tortoise and they have the zeal to
come forward and the slow and steady wins the race.

Mr. Saurabh Singh from IIM Kashipur mentioned that exit policy of incubators in India is whether it
is in form of equity or free of cost funds to start-ups or nominal fee to incubators per year. Technology
start-ups are based on the ideation and tech start-ups achieve high growth due to the automation in
their business and the industry 4.0 includes artificial intelligence and internet of things, so they are
able to achieve automation and can generate more funds whereas medium growth start-ups have less
automation and profits can be seen as a successful factor for exit from the incubators.

Dr. Shashwat Pathak from MIET feels that every entrepreneur has its own journey and the exit depend
on the type of business. If the technology start-ups are not able to evolve new technology, then it will
be very difficult for them to survive and these start-ups should look at different kind of exits. Taking
correct decision when to exit can led to save the future of entrepreneurs so they can have a suitable
job.

Mr. S K Verma from Galgotias College of Engineering & Technology talks that the cashflows and
financial support is very important for any kind of start-ups. Finance doesn’t come early but it takes
time and money is required by all and for tech start-ups fund flow after some period of time. So, the
cashflows can’t happen in early stage then profit count as a successful factor for the medium growth
start-ups.

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Q.3 What do you think whether the success of a start-up only depend on the
launch of a successful IPO or acquire by other company or it depend on the
whether start-up was able to register for a trademark or IPR or won an award?

Mr. Saurav Kumar from KIET says that not only the Intellectual Property Rights, Award or a
trademark are the only criteria to define the success of a start-up. These are factors are important but
not only factor to measure a success of start-up but IPO and acquire by other company are also criteria
to measure success. But the best criteria among them is the successful launch of an IPO where public
can invest in the company.

Mr. Saurabh Singh from IIM Kashipur feels that if a start-up can grow exponentially the start-up
should never go for an IPO rather it should make its competitor feel its presence in the market and
that start-up can be acquired by the rival bigger company with a high valuation.

Although he feels that IPO is the biggest and the successful factor for exit. Other factors like
trademark, IPR and award are not so big contributors rather they help in defining the rank of a country
in innovation and can be a small factor to measure its success.

Dr. Shashwat Pathak from MIET says that all the factors are important can combined together can
help to measure success of a start-up but not only alone factor can be a criteria to measure the success.
He focuses that innovation is the soul of any start-up and without innovation these factors can’t help
a start-up to grow and every start-up has to go with all these factors at a stage to achieve success
whether to commercialize its product or raise funds for further growth and expansion of the business.

Mr. S K Verma from Galgotias College of Engineering & Technology feels that the acquisition of
the start-up by other company or your rival company is the easiest way and successful exit while
waiting for IPO is a long time to raise finance from the public and other requirements have to be
fulfilled to launch an IPO.

If the start-up is successful for the last 5-10 years, then the start-up should wait for an IPO. The
concept of the business is important and if start-up has an innovative idea the they should file for IPR.
Not only IPO is a successful way to exit but Acquire by some other company is the best successful
exit.

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Q.4 Were the exit strategies adopted by the company were appropriate in your
view or some other exit strategies could be better which would be fair and return
could have been better?

Mr. Saurav Kumar from KIET provides mentorship for 100 days and take the exit for start-up after
the commercialization and the support needed by them is fulfilled. He feels that these strategies
couldn’t have been better as give them more relaxed time led to failure in their ideas and it doesn’t
work and within time period make them to achieve in their career and if start-up doesn’t work then
entrepreneur has chance to find a job for himself in a company. The equity taken by this incubator is
written off books and treated as a bad debt in case the start-up fails to grow.

Mr. Saurabh Singh from IIM Kashipur said that the incubation follows exit policy of 1 year and after
that they exit from the start-up. Here the incubator set quarterly goals for a year for start-ups where
they are evaluated every quarter in order to keep a check on their performance and if these goals are
achieved the incubator exit from the start-up.

The incubator focuses on preparing start-up for next round of funding so that the incubator can take
can exit from the start-up. Exit is done by the incubator only when the set goals are achieved by start-
up as no equity is taken by the incubator.

Dr. Shashwat Pathak from MIET told that no such exits have been taken by the incubator. Currently
no exits plans are made by the incubator for the start-ups and focus is given on exit policies. All the
start-ups are new to the incubator and initial stage of growth so no such policies are considered maybe
along with the way exit policies will be considered by the incubator.

Mr. S K Verma from Galgotias College of Engineering & Technology says the exit strategies
followed by the incubator were appropriate in his view. Promoters should focus on generating new
ideas and evaluate their growth from time to time which can help to get good return to the incubator
while they exit due to better funding of start-up.

Patience, Perseverance and Fore-sightedness are the key factor to keep in mind while making the exit
and business dynamics are changing rapidly so according to the situation the decisions taken by the
incubator during that time were appropriate and their decision was correct to take exit from start-up.

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Q.5 Sometimes thing never go as planned. What were the surprises faced by you
in the exit? Were the some exit better than planned or worse that planned? What
was the course of action in case exit were worse than planned and how did you
tackle them?

Mr. Saurav Kumar from KIET said that last one and a half year has changed everything due to
pandemic and the exits happened were the worse in that period and he believes that the situation is
not in our hands due to some natural factors and beyond control of humans. That was a very
unexpected time and start-ups are small in size and need guidance to grow and the pandemic hit them
hard so the incubators have to revise their plan and plan their projections for future and they
encouraged them and made aware about the current situation and how to go about it and help them to
revise their technology and reschedule their work before taking the exit from start-ups.

Mr. Saurabh Singh from IIM Kashipur in their case no equity is taken by the incubator so they can
exit anytime they want if they feel start-up is not going to work, incubator make an exit. Start-up are
very unpredictable so if there are 40 start-ups with them only 3-4 start-up are good and 50%-60% are
just surviving to exist and the rest of them are failures. So, some of the start-up try to approach angel
investor or Venture capitalist before exit by incubator then the incubator make exit. The incubator is
not so focused on exit policies due to lack of taking equity at a very early stage and the tackle these
situations by revising their plans for the future before they take the exit.

Dr. Shashwat Pathak from MIET says that incubators should be adaptive to tackle the failure as things
never go as planned. The exits were worse than the planned due to the pandemic because of natural
circumstances. In order to tackle these situations, he believed incubators should have a projection for
the long terms and the short terms. This will help them to achieve the desired target and planning
beforehand comes handy and make the exit smooth for the incubators to take from these start-ups.

Mr. S K Verma from Galgotias College of Engineering & Technology says that sometime the exits
made are worst also than the planned ones. Start-up is a concept, it’s an idea sometime it works and
sometime it doesn’t work. The incubator prefers to take exit before company start incurring losses
and they handle the situation by providing motivation to the start-ups and help them to do market
research on the exit that didn’t go well as planned.

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Q.6 Which exits strategy according to you is best strategy? What is the main
factor considered while considering the exit strategy from the company?

Mr. Saurav Kumar from KIET said that best exit strategy according to him is that the start-up is able
to generate funds from the venture capitalist or angel investors. These investors invest in the company
only when they see potential in the start-up so according to him it is the best exit strategy. The seed
funding for the start-up will make the valuation of the company high and the incubator can take an
exit after that by selling the equity.

The factors that are considered for exit strategy are when the start-up is able to generate a revenue
which is sufficient to meet it expenses and the liabilities of the business and when the entrepreneur is
able to generate salary for himself/herself and for the team which he is working with.

Mr. Saurabh Singh from IIM Kashipur feels that best exit strategy depends on the valuation of the
company at the time of exit from the incubator. It also depends on the entrepreneur how much equity
and control he/she wants to dilute.

The factors that are considered for exit strategy is to wait for a long time and dell off the equity when
valuation of the company is high and start-up has received its new round of funding from the investors
as at that time the value of the share will be high and take exit by selling the equity of the company.

Dr. Shashwat Pathak from MIET believes that the exit policy should be designed in a way that all the
stakeholders of the entity are considered and what’s best for the stakeholder that will led to an exit
policy such as investors, employees, board of directors and other shareholders.

Exits are the important decision to take and it start a catastrophe in the organisation and decision
should be taken after kept in mind of all the stakeholders. In case the start-up doesn’t work then exit
is made by the incubator.

Mr. S K Verma from Galgotias College of Engineering & Technology feels that the best exit strategy
depend upon the nature of the products and services start-up is providing and the position of the
incubator is in.

He feels start-up is in competitive market then they take the exit as soon as they earn some return in
lieu of the equity. If the start-up is in monopolistic market and if it has a product advantage or
technology advantage the incubator takes the exit by earning a good return before someone else
develop such technology or product.

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Q.7 When do you think is the best time to take exit from the company? Why do
you think so?

Mr. Saurav Kumar from KIET feels that the right time to take exit from start-up by the incubator is
when the incubators start feeling that the technology developed by start-up is failing or the technology
available with them becomes out-dated and they are not able to launch new technology in the market
and can’t compete with their competitors incubators take the exit.

If the same technology is developed by some other company and launch it in the market before the
start-up it is the best time for an incubator to take an exit from the start-up. The main reason is that
they tend to lose market share and cannot compete with the upcoming technology and the customer
base also start reducing so it best for the incubator to take the exit.

Mr. Saurabh Singh from IIM Kashipur says when the incubator feels next round of funding is
upcoming and the valuation of the start-up will be high and the share price will be high and that is the
best time for an incubator to take the exit from the start-up. The other possible way of looking at it is
that the start-up is not growing as planned or is not able to good performance.

These failed start-ups will not look good on incubator portfolio and the incubator will not like to
promote it as a failed start-up, so the incubator take an exit before the things tend to move in different
directions. The main reason to take exit from the start-up is to make these start-ups to a level where
they can survive on their own and make them ready to be picked up by a big Venture Capitalist or
Angel investor and can start their operations on their own.

Dr. Shashwat Pathak from MIET said that exit depend on the number of new start-up will be joining
the incubator based on the application received by the incubator. Based on the planning how many
new start-ups will be joining funds requirement has to be assessed by the incubator, so the exit made
by the incubator depend on this situation.

The other situation could be when the start-up is not performing up to the mark and the company is
not able to generate enough revenue to meet its expenses so the incubator decides to take exit from
the start-up.

Mr. S K Verma from Galgotias College of Engineering & Technology says that no time can be
described as a best time to take exit from the start-up. The exit based on the reality, it is based on the
situation what is the position of the company whether it is able to survive and can show a growth in
the company. It is purely a gut feeling of the incubator when it decides to take the exit based on
looking at various factors prevalent at that time.

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Whenever incubators feel it is right for them to take the exit whether it has been able to achieve its
target or incurring losses or is not able to grow its customer base or facing any other difficulty.

Q.8 What do you think are the challenges faced by the company after incubators
exit from the company? Does additional guidance after intervals would be any
beneficial to the company?

Mr. Saurav Kumar from KIET feels that challenges that are faced by the start-ups after incubators
exit are networking where looking for new clients can be a difficult task and fund generation to
procure fund from different sources where incubators used to provide funds to them and financial
management are the main challenges faced by them.

Incubators used to hand-hold them and provide moral support and guidance but in case after exit these
become difficult as finding a right mentor is a huge task. He believes that additional guidance from
incubator can help in future where they can get advisory about the market research and change their
plan and strategy according to the market and it make the pace smooth in the functioning of the
company.

Mr. Saurabh Singh from IIM Kashipur feels that no such challenges are faced by the start-up after
incubator exit as he feels after next round of funding the start-up has a new mentor to guide the start-
up in the best possible way as they have invested their money and they are the best person to guide
the start-up and provide networking and all the resources to help them grow. So that’s why he feels
less challenges are faced by them and they also have been incubated by the incubator and are self-
reliant to function on their own.

He believes that additional guidance from incubators would be very beneficial for the start-ups as
mentorship from the mentor who has knowledge about your business since its existence can help to
get more insight about future strategy.

Dr. Shashwat Pathak from MIET feels that angel investors and venture capitalists need more
information about the business as they will be investing their money and will look at different factors
before considering to invest in the company whereas incubators don’t ask so much information. The
other challenges faced by start-up are mentoring and start-up need to sell themselves in front of angel
investors and venture capitalists to get funding for the next round.

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Mr. S K Verma from Galgotias College of Engineering & Technology feels that incubators someday
have to take exit from the start-up. The challenges faced by start-up are networking challenges as
incubators are able to provide better networking to the start-ups and Incubators are hand-holders of
the start-up during the incubation period and when incubator exit from them, they are own their own
and that is the main challenge faced by them. The next challenge is that start-ups are small entity and
while pitching investors for next round of funding they don’t have much to say as they are small
entity and big investors value their start-ups less and ask for more equity and same in case of acquire
by other company the terms are dictated by big companies.

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 CONCLUSION

• The person interviewed have an experience between 3-6 years with the incubators. The main
resources given by the incubators to the start-up are funding, office spaces, mentorship to the
entrepreneurs, innovation labs. The incubators have seen a tremendous growth in the start-up
from the resources that has been provided and it could not have been possible if these
resources were not provided to the start-ups.
• High tech start-ups have an advantage over other start-ups and they are able to achieve success
quickly by launching technology in the market and they are also able to generate funds from
the markets whereas the medium growth start-ups count cashflow and profits as a success
factor in their growth and the exit made by incubators from the start-ups depend on the start-
up and how successful it is.
• Acquire by other company or rival company is the new upcoming trend as a successful factor
of exit. But Initial Public Offering is considered the best successful strategy to exit if business
has a high growth in last few years. Only IPR, trademark or an award are not the factors that
are to be considered to see a start-up as successful. These factors are considered along with
IPO and acquisition to see how successful a business is but organic growth is considered as
best.
• Mentorship period is different for different incubators which range from 100 days to a year to
whenever the incubators feel to take exit from the start-ups. The decision of the exit is taken
by incubators based on the amount invested in the start-up or the growth of a start-up or the
future plans or ideas the exit is taken.
• The experience with the exits of incubators was worse than the planned and the reason behind
was the pandemic due to slowdown of economic activities and lockdowns the exits were
rough. Course of actions of the incubators was to give a path before they exit from the start-
up and provide mentorship and revise the plan according to the market conditions and the
incubators were adaptive to these failures. Incubators right now in India doesn’t have much
focus on exit policy and they are not planned beforehand.
• No such strategy is best for exit as different incubators have different strategy for exit based
on the equity taken and the resources provided to them by the incubators. Some of the
incubators focuses on the generate funds or pitch venture capitalist for next round of funding
whole others focus on keeping interest of employees and other stakeholders during the exit or
it depends on the nature of the start-up or the product or service a start-up provides. Factors
that were considered for exit are if the product advantage has with a start-up or technology
advantage or it depend on valuation of start-up or ability to generate profits.
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• No time can be considered as the best time to take the exit from the start-up but it depends
on the situation, future projections and the new number of start-up wants to join incubators
and on if the new round of funding is coming up or when the technology starts to fail or
become obsolete or start will not look good on incubator portfolio because start-up is not able
to grow as expected.
• The main challenges faced by start-up are financing, support and mentorship, networking as
start-ups is small entity and they need hand holding to be able to run smoothly. While IIM
Kashipur doesn’t feel that there are any such kind of challenges, this may be due to better
brand value of incubator and the kind of resources that are provided to start-ups and mentoring
and networking provided by them. Additional guidance can be beneficial for the start-ups after
an interval of time to see their plans and achievement and revise their strategy after advice
from incubators mentors.

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 CHAPTER- VI

CONTRIBUTION AND LEARNING

FROM THE PROJECT

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The following are the contributions and key learnings from the project:

• About the eco-system of business incubators and the start-ups and their functioning in the real
world.
• About the business incubators and the services provided by them such as infrastructure
support, networking, mentoring, office spaces, marketing assistance, financial assistance, help
in access to bank loans etc.
• About the role of business incubators in creating jobs, commercializing technology, business
creation, encouraging entrepreneurship.
• About the start-up incubation centre in India which are registered under mission Start-up India
by government such as AIM, DBT, DST, MEITY, MSME etc.
• Start-up need to register themselves with Department for Promotion of Industry and Internal
Trade (DPIIT) to avail different government funding and schemes and about the DPIIT
implementation body.
• Different exit strategies adopted by the business such as Initial Public offerings, Merger &
Acquisitions, Private Sale, Liquidation or maybe family succession.
• It contributed to learn about the eco system of business incubators and the way resources are
provided to start-ups and can help while having a start-up in near future.
• About the resources provided by the incubators to the start-ups and their impact on their
growth and smooth functioning of business.
• Difference between the start-up that is mentored by the incubator and the other business which
is not incubated by the incubators.
• About the exit routes chosen by the incubators and the way failures were handled when these
exits didn’t go smooth as planned and their future course of action.
• About the various aspects related to the exits made by incubators such as about the best exit
strategy and when should the exit would have been made would be beneficial for the
incubators and the main factors that were considered while taking the exits from the start-ups.
• About the challenges faced by the start-ups after taking exit by the incubators and the ways
for additional guidance to make the start-up growing.
• About the functioning of a start-up and the viability of the business after the exit made whether
the smooth exits have a bearing on business or business is able to manage or not without the
smooth exits.
• The contribution of various stakeholders such as investors, government, shareholders of
company, incubators to help in successful implementation of ideas and mentoring to help them
grow and expand their business.
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 CHAPTER- VII

ACKNOWLEDGEMENTS

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BIBLIOGRAPHY

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• Schwartz, Michael. (2008). Beyond incubation: An analysis of firm survival and exit
dynamics in the post-graduation period. The Journal of Technology Transfer. 34. 403-421.
10.1007/s10961-008-9095-x.
• Virtanen, Markku & Kiuru, Pertti. (2012). Do the incubators foster excellent performance?
The analysis of post-incubation gazelles of Aalto Start-up Centre...
• Schwartz, Michael. (2010). A Control Group Study of Incubators’ Impact to Promote Firm
Survival. The Journal of Technology Transfer. 38. 10.1007/s10961-012-9254-y.
• Schwartz, Michael. (2008). Incubator Age and Incubation Time: Determinants of Firm
Survival after Graduation?
• Gest. Prod., São Carlos, v. 24, n. 3, p. 570-581, 2017
• Edlund, P., & Kemper, L. (2019). Leaving a start-up you helped to create: A qualitative study
of managerial exits (Dissertation).
• Hausberg, J. & Korreck, S.. (2018). Business incubators and accelerators: a co-citation
analysis-based, systematic literature review. Journal of Technology Transfer. 1-26.
• Sharma, Supriya & Vohra, Neharika, 2020. "Incubation in India – A Multilevel
Analysis," IIMA Working Papers WP 2020-03-01, Indian Institute of Management
Ahmedabad, Research and Publication Department.
• Thomas, J. and K.I., G. (2020) ‘Incubation Centres and Start-ups: A Study on Kerala’s Start-
up Ecosystem’, SEDME (Small Enterprises Development, Management & Extension
Journal), 47(1), pp. 43–52. doi: 10.1177/0970846420930472.

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 QUESTIONNAIRE

Q.1 For how long you have been associated with the incubator? What were the resources that were
provided in these years by you and have you seen any difference in resources been given to company
to have a contribution in the growth of the start-up?

Q.2 Why do you think every start-up has a different successful factor of exit, like technology start-up
may be looking for raising finance through IPO or Angel Investor as a factor for exit whereas a
medium growth start-up may consider positive cash flow and profits as a successful factor for exit?

Q.3 What do you think whether the success of a start-up only depend on the launch of a successful
IPO or acquire by other company or it depend on the whether start-up was able to register for a
trademark or IPR or won an award?

Q.4 Were the exit strategies adopted by the incubator were appropriate in your view or some other
exit strategies could be better which would be fair and return could have been better?

Q.5 Sometimes thing never go as planned. What were the surprises faced by you in the exit? Were
the some exit better than planned or worse that planned? What was the course of action in case exit
were worse than planned and how did you tackle them?

Q.6 Which exits strategy according to you is best strategy for an incubator? What is the main factor
considered while considering the exit strategy from the company?

Q.7 When do you think is the best time to take exit from the start up by incubator? Why do you think
so?

Q.8 What do you think are the challenges faced by the start up after incubators exit from the company?
Does additional guidance after intervals would be any beneficial to the company?

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SNAPSHOTS OF INTERVIEW

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