Article

Incubation Centres and Start-ups: SEDME (Small Enterprises Development,

Management & Extension Journal)
A Study on Kerala’s Start-up 47(1) 43–52, 2020
© The Authors 2020
Ecosystem Reprints and permissions:
in.sagepub.com/journals-permissions-india
DOI: 10.1177/0970846420930472
journals.sagepub.com/home/sde

Jyotsna Thomas1 and Georgee K.I.2

Abstract
Start-ups have got a vital role to play in the future of India by creating innovative solutions to country’s
challenging issues and also by generating large-scale job opportunities for upcoming workforce. The
government has recognised the importance of start-ups in the economic development of the country,
and therefore they have come with various revolutionary measures to create a conducive ecosystem
for start-ups. Along with union government, various state governments also have made their state-level
policies to support the start-ups in their respective states. Apart from the government, there are many
other institutions and ecosystem enablers in a start-up ecosystem who support start-up units, namely
incubators, accelerators, educational institutions, research institutions, investors, mentors, NGOs etc.
The purpose of this study is to explore how technology business incubation centres in Kerala are
performing their role as a facilitator among start-ups in the state and also to evaluate their impact on
functioning of start-ups units.

Keywords
Startups, incubators, accelerators, technology business incubation centers, startup India, Kerala startup
mission, mentors

Introduction
Unemployment is one of major economic as well as social issues in India, especially the unemployment
among educated youth. To spur economic growth and job creation in the country, there is a need for more
entrepreneurs and for that the government needs to promote innovation and invest in the education of the
next generation of workers. Entrepreneurship development can be a key element to fight against
unemployment, and to achieve economic progress, by transforming innovative ideas into new business
ventures or start-ups and thereby generating jobs. Therefore, the government should create a favourable

1
Research Scholar, Post Graduate and Research Department of Commerce, Mar Ivanios College (Autonomous), University of
Kerala, Thiruvananthapuram, Kerala, India.
2
Principal, Mar Ivanios College, University of Kerala, Thiruvananthapuram, Kerala, India.

Corresponding author:
Jyotsna Thomas, Thamburu, T.C. 75/818, Madhumukku, Kallumoodu Gardens, Anayara P.O., Thiruvananthapuram, Kerela
695029. India.
E-mail: jotom1006@gmail.com
44 SEDME (Small Enterprises Development, Management & Extension Journal) 47(1)

environment for the promotion of start-ups and change the mindset of educated youth to become self-
employed, rather than searching jobs.
A start-up is an entrepreneurial venture that is in the initial stage of its operation, where founders
develop an innovative product or service with a scalable business model. According to the Small Business
Administration, start-ups are ‘business that is typically technology oriented and has high growth potential’.

Start-ups in India
India has become one of the top most start-up ecosystems in the world with more 20,000 registered start-
ups across the country. The union government is giving a hand holding approach for start-up community
and as part of it, a number of schemes were initiated to boost this sector. The ‘Startup India’ was the most
ambitious initiative introduced by the union government to spur the start-up ecosystem. The scheme was
announced by the Prime Minister Shri Narendra Modi in his Independence Day address on 15 August
2015 and the blue print of the mission was released on 16 January 2016, at an event in Delhi.
The ‘Startup India’ mission which is launched with the aim of supporting and inspiring the start-up
community in the country. The various features of Startup India action plan includes introduction of a
mobile app through which new start-up registration can be done within a day, subsidised patent
registration, government funding (fund of funds), exemption of tax, reduction and removal of corporate
tax on new manufacturing units and small business units etc.

Start-up Ecosystem in Kerala

The state of Kerala with high literacy rate makes it ideal for start-up community and the state has taken
many policy measures to this regard that included the setting up of Kerala Startup Mission (KSUM).
KSUM formerly known as Technopark-Technology Business Incubator (T-TBI) which started its
operation during 2007 is designated as the nodal agency for start-ups across the state. As per the
ecosystem report published by Inc42 in October 2019, Kerala has got more than 2,200 registered start-
ups in the state.
The state of Kerala, as well as union government, has taken revolutionary efforts to create a start-up-
friendly ecosystem in Kerala and as part of it, Government of Kerala had launched various measures to
boost start-ups. The Government of Kerala has announced the ‘Student Entrepreneurship Policy’ in 2012
to create a culture of entrepreneurship among students and ‘Kerala Technology Startup Policy 2014’,
was introduced to empower youth entrepreneurship.

Incubators in Kerala
Incubators are organisations that offer various services and facilities required for the start-ups to survive
and grow. They provide office space, IT infrastructure, mentoring, legal services and so on. Apart from
this, they often assist start-ups in raising fund under various government schemes and at a later stage,
incubators support the innovator by providing him with networking facility and also mould them to pitch
before an investor in future. The report entitled ‘The State of Kerala Startup Ecosystem 2019’ published
by Inc42 reveals that as of October 2019, Kerala has got more than 40 incubators functioning in the state.
Thomas and K.I. 45

Usually, incubation process can be classified into three stages, namely pre-incubation stage, incubation
stage and accelerator stage. During the pre-incubation stage, the incubation centre will assist the
entrepreneur to develop his idea into a prototype and helps to understand the technical feasibility of the
proposed project. Once a feasible project as evolved, one can proceed to incubation stage which usually
ranges from 6 to 12 months or even more than a year. At the incubation stage, the start-up companies are
provided with workspace along with required infrastructure and necessary assistance to set up their
business venture. Incubator shall also assist the start-ups to avail financial aid through grants under
various schemes. Accelerator stage will reform a start-up through a highly systematic approach and
make them competent enough to approach an investor for pitching.

Statement of the Problem

Recognising the importance of innovation and technology upgradation through start-ups in the economic
development of the country, recently the government has come up with various revolutionary measures
to create a conducive ecosystem for start-ups in India. Along with union government, various state
governments also have made their state-level policies to support the start-ups in their respective states.
The state of Kerala was one among the four states who had its start-up policy before the launch of Startup
India. Apart from the government, there are many other institutions and ecosystem enablers in a start-up
ecosystem who support start-up units, namely incubators, accelerators, educational institutions, research
institutions, investors, mentors, NGOs and so on. This article aims to review the role of incubators as a
facilitator among start-ups and also to evaluate their impact on survival and growth of start-ups by
analysing the satisfaction among start-up founders about the facilities provided by the incubators and
also by evaluating the benefits acquired by founders through incubation support.

Significance of the Study

Start-ups have got a vital role to play in the future of India by creating innovative solutions to country’s
challenging issues and also by generating large-scale job opportunities for upcoming workforce. The
government has recognised the importance of start-ups in the economic development of the country, and
therefore they have come with various revolutionary measures to create a conducive ecosystem for start-ups.
The state of Kerala has also taken many policy measures to this regard that included the setting up of KSUM.
The purpose of this study is to explore how technology business incubation centres in Kerala are performing
their role as a facilitator among start-ups in the state and also to evaluate their impact on functioning of start-
ups units. 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.

Objectives of the Study

●● To study the facilities provided by the incubators in Kerala.
●● To review the role of incubators as a facilitator among start-ups
●● To evaluate the impact of incubators on start-up units.
●● To examine the opinion of incubation managers on various aspects related to their incubation
centre and Kerala’s start-up ecosystem.
46 SEDME (Small Enterprises Development, Management & Extension Journal) 47(1)

Methodology of the Study

Primary data are collected from a sample of 80 start-up founders and 8 incubation managers. For the
collection of primary data, 8 incubators from the state of Kerala are randomly selected and 10 start-up
founders are chosen from each of these incubators. Besides, incubation managers from these eight
incubators are also consulted. Thus the total sample size being 80 start-up founders and 8 incubation
managers. The sample is selected using convenience sampling technique and questionnaire method is
used to collect data from them. The data collected are analysed using statistical tools such as mean score
and one sample t-test and data so analysed are presented using tables. The secondary data necessary for
the study was collected from study reports, journals, websites and magazines.

Profile of Incubators
The eight incubators selected for the study are (a) KSUM (Thiruvananthapuram), (b) Startup Dreams,
(c) Centre for Innovation Technology Transfer and Industrial Collaboration (CITTIC), (d) Startups
Valley, (e) IIMK Live and (f) TBI-National Institute Of Technology Calicut (TBI-NITC), (g) TBI by
Government Engineering College, Barton Hill (TBI-GECBH) and (h) BioNEST. All the selected
incubators are supported through government funds and some of them get funds by charging fees from
the incubatees also.

Table 1. Profile of Incubation Centres

Duration of
Name of the Incubation
Incubator Programme Facilities Offered
Kerala Startup More than 1 year • Workspace
Mission • Research labs
• IT infrastructure
• Legal, administrative, marketing and technical assistance
• Mentorship and training
• Seed fund assistance
• Workshops and start-up events
Startup Dreams 6 months–1 year • Workspace
• IT infrastructure
• Mentorship and training
• Seed fund assistance
• Workshops and start-up events
CITTIC More than 1 year • Workspace
• Research labs
• IT infrastructure
• Legal, administrative, marketing and technical assistance
• Mentorship and training
• Seed fund assistance
• Workshops and start-up events
(Table 1 Continued)
Thomas and K.I. 47

(Table 1 Continued)
Duration of
Name of the Incubation
Incubator Programme Facilities Offered
Startups Valley More than 1 year • Workspace
• Research labs
• IT infrastructure
• Legal, administrative, marketing and technical assistance
• Mentorship and training
• Workshops and start-up events
IIMK Live More than 1 year • Workspace
• IT infrastructure
• Legal, administrative, marketing and technical assistance
• Mentorship and training
• Workshops and start-up events
TBI-NITC More than 1 year • Workspace
• Research labs
• IT infrastructure
• Legal, administrative, marketing and technical assistance
• Mentorship and training
• Seed fund assistance
• Workshops and start-up events
TBI-GECBH 6 months–1 year • Workspace
• IT infrastructure
• Seed fund assistance
• Workshops and events
BioNEST More than 1 year • Workspace
• IT infrastructure
• Legal, administrative, marketing and technical assistance
• Mentorship and training
• Seed fund assistance
• Workshops and events
Source: Primary data.

Most of the incubators offer facilities such as ‘workspace’, ‘IT infrastructure’, ‘legal, administrative,
marketing and technical assistance’, ‘mentorship’ and ‘workshops’. However, only four incubators have
got research lab facility. Similarly, seed fund assistance is given by only six incubators. Besides, all the
incubators provide incubation support for a period of more than one year except for Startup Dreams and
TBI-GECBH.

Satisfaction Level of Start-up Founders Regarding the Facilities at the

Incubation Centre
The incubation centre plays an important role in the life cycle of a start-up venture, especially during
their initial phase. In order to review the role of incubators as a facilitator among start-ups, the start-up
founders are asked to express their satisfaction related to various facilities and other aspects of incubators
48 SEDME (Small Enterprises Development, Management & Extension Journal) 47(1)

based on eight variables, namely (a) office space, (b) IT infrastructure, (c) legal, administrative, marketing
and technical assistance, (d) research and development (R&D) facilities (e) grants and funding aids
given by the incubator, (f) quality of faculty/mentors at the incubation centre, (g) workshops, seminars,
investor pitches and events organised by incubation centres and (h) fee charged for incubation. The
start-up founders are requested to rate the variables on a five-point scale, namely ‘highly satisfied’,
‘satisfied’, ‘neutral’, ‘dissatisfied’ and ‘highly dissatisfied’. The mean scores calculated for rating is
presented in Table 2.
Incubation centre is a place where entrepreneur with a potential innovative idea will be provided with
necessary support to develop his idea into a commercially viable product or service. From the analysis,
it is evident that the start-up founders are highly satisfied with regard to workspace (mean value 4.18)
and IT infrastructure (mean value 4.10) provided at the incubation centre.
Although the incubators are supported by government funds, some of them might charge fees from
their incubatees, and in most of the cases, such fee for providing the incubation support is reasonable and
affordable. Hence, respondents are asked to rate their satisfaction regarding the incubation fee if they are
paying such fees and the founders are highly satisfied with regard to fees charged by the incubator as the
mean value is 4.04. They are also satisfied with the legal, administrative and technical assistance (mean
value 3.88) given to them.
Mentors and trainers play an important role in nurturing start-ups, by providing guidance and directing
them towards the right track. Therefore quality and competence of mentors is a crucial factor for the
survival and success of any start-up unit. Start-ups founders are of the opinion that they are happy with
the service of the mentors available to them (mean value 3.75).
Sometimes, incubators might often conduct workshops and events related to entrepreneurship for
giving exposure to the start-up founders and also for creating networking opportunities with other
start-up ecosystem enablers. Start-up founders are fairly satisfied on such events conducted by the
incubators as the mean value is 3.56.
Similarly, research lab is an inevitable requirement for technology start-ups to experiment and develop
their innovative solutions. Hence the start-up founders are asked to rate the facilities at the research labs
and they are of the view that they are satisfied with the facilities at the research labs (mean value 3.50).
Start-up founders also rated grants and funding aids (mean value 3.49) provided by the incubator as
reasonably satisfied.

Table 2. Satisfaction Level of Start-up Founders

Facilities and Services Mean SD t Sig.

Office space 4.18 0.80 13.132 0.000
IT infrastructure 4.10 0.99 9.839 0.000
Legal, administrative, marketing and technical assistance 3.88 1.15 5.756 0.000
Research and development (R&D) facilities 3.50 1.14 2.408 0.023
Grants and funding aids given by the incubator 3.49 1.17 2.607 0.013
Quality of faculty/mentors 3.75 1.08 6.148 0.000
Workshops, seminars, investor pitches and events 3.56 1.12 4.428 0.000
organised by incubation centres
Fees charged for incubation 4.04 0.89 10.314 0.000
Source: Primary data.
Thomas and K.I. 49

Table 2 shows that the start-up founders are satisfied towards the various services provided and
facilities available at the incubation centres as the mean value for all variables are above 3. One sample
t-test is used to assess whether the mean significantly deviates from the mean of the response scale,
namely 3. Since the significance level of one sample t-test is less than 0.05 and mean value greater than
3 for all the variables, it is assumed that start-up founders have significantly high satisfaction level
towards the services and facilities at their incubation centres.

Benefits of Incubation Support

As discussed above, the incubators assist the innovator by providing him with physical space, lab
facilities, technical assistance, mentoring and even by giving grants for setting up the venture. All these
services and support are really beneficial for start-ups, especially during their initial stage. Table 3 shows
the benefits received by start-ups by accessing incubation support. It is studied with the help of eight
variables, namely (a) managerial and technical assistance, (b) R&D activities/product development
assistance, (c) market capturing and sales growth, (d) customer reach, (e) investor connect, (f) tie-ups
with corporates/industry connect, (g) access to information and (h) availability of financial and physical
resources at liberal terms. These variables are studied on five-point scale, namely ‘very high’, ‘high’,
‘medium’, ‘low’ and ‘very low’.
From the analysis, it is evident that start-up founders felt incubation support as beneficial for all the
variables except for investor connect as the mean value is 2.70, which is below 3. Start-up founders opined
that the incubation centre’s role of assisting in R&D activities/product development (mean value 3.98)
and in providing information (mean value 3.95) as highly beneficial. The mean value shows that the
incubation centre has helped respondents in terms of customer reach (mean value 3.75), market capturing
and sales growth (mean value 3.72) and managerial and technical assistance (mean value 3.58).
Apart from this, they often assist start-ups in raising fund and perform various networking activities.
Availability of financial and physical resources at liberal terms are also rated by the respondents as fairly
beneficial as the mean value is 3.29. However, the sample respondents have only average level of opinion
on the tie-up opportunity with corporates/industry connect (mean value 3.09) provided by incubators as
the significance level of one sample t-test is above 0.05. Similarly, the incubation centres are not up to
the mark in providing investor connect (mean value 2.70). Therefore, it can be concluded that the
incubation support has found beneficial for start-up units in all the variables except for investor connect.

Table 3. Benefits of Incubation Support

Benefits of Incubation Support Mean SD t Sig.

Managerial and technical assistance 3.58 0.78 6.652 0.000
R&D activities/product development assistance 3.98 0.77 11.287 0.000
Market capturing and sales growth 3.72 0.90 7.087 0.000
Customer reach 3.75 0.94 7.061 0.000
Investor connect 2.70 0.97 –2.797 0.006
Tie-ups with corporates/industry connect 3.09 1.11 0.708 0.481
Access to information 3.95 0.89 9.48 0.000
Availability of financial and physical resources at liberal terms 3.29 0.77 3.359 0.001
Source: Primary data.
50 SEDME (Small Enterprises Development, Management & Extension Journal) 47(1)

Opinion of Incubation Managers on Various Aspects Related to

Incubation Centre and Kerala’s Start-up Ecosystem
The incubation managers are responsible for managing the day-to-day operations of the institution and
will also be in very close touch with each and every person and element connected to the institution.
Hence they play a crucial in the successful running of the incubation centre.
Table 4 deals with the opinion of incubation managers regarding the various aspects related to the
incubation centre and Kerala’s start-up ecosystem. The variables considered for the study are (a) skills
and attitude of trainees who come for incubation, (b) capability of mentors and trainers in your incubation
centres, (c) support from the government for incubation centres (d) facilities at your incubation centre,
(e) government policies, start-up policy and IT policy, (f) ease of doing business, (g) infrastructure
facilities available for start-ups in Kerala and (h) investment climate in Kerala. The incubation managers
are requested to rate the variables on a five-point scale, namely ‘highly satisfied’, ‘satisfied’, ‘neutral’,
‘dissatisfied’ and ‘highly dissatisfied’.
Results of Table 4 reveals that the incubation managers absolutely satisfied with the existing support,
systems in Kerala’s start-up ecosystem and various aspects related to their incubation centres as the mean
value for all variables are above 3. Government fund and support are inevitable for the successful running
of incubators. Incubation managers are of the opinion that they are highly satisfied with support that they
get from the government as the mean value is 4.50.
Similarly, incubation managers opined that they are quite happy about the government policies,
start-up policy and IT policy (mean value 4.36), Infrastructure facilities available for start-ups in Kerala
(mean value 4.00), Ease of doing business prevailing in Kerala (mean value 3.88) and also about the
investment climate in Kerala (mean value 3.63).
Success and prospects of any incubator largely depend upon the competence of people who approach
the institution for support, facilities at the incubation centre and the quality of trainers who guide them.
Incubation managers rated skills and attitude of trainees who come for incubation, facilities at the
incubation centre and capability of mentors and trainers in the incubation centres as fairly satisfactory as
the mean value in all these cases are 4.13.

Table 4. Opinion of Incubation Managers on Various Aspects Related to Incubation Centre And Kerala’s Start-
up Ecosystem

Aspects Related to Incubation Centre and Kerala’s Start-up Ecosystem Mean SD

Skills and attitude of trainees who come for incubation 4.13 0.64
Capability of mentors in your incubation centre 4.13 0.64
Support from the government to your incubation centre 4.50 0.53
Facilities at your incubation centre 4.13 0.83
Government policies, start-up policy and IT policy 4.36 0.92
Ease of doing business 3.88 0.83
Infrastructure facilities available for start-ups in Kerala 4.00 0.76
Investment climate in Kerala 3.63 0.74
Source: Primary data.
Thomas and K.I. 51

Conclusion
The findings of the study reveal that the start-up founders are quite satisfied with the existing facilities
at their incubation centre and they also opined that such incubation support has paved way to many
benefits for their start-up units in the form of mentoring, marketing, networking opportunity and so on.
Since incubators are playing a vital role in nurturing start-ups by assisting them in product development,
feasibility study, finding capital, necessary infrastructure and various other services, it is better to
improve the facilities at the existing incubators in par with the changing needs of start-up sector and
establish new incubation centres to accommodate more start-ups, for creating a conducive start-up
ecosystem. Besides, as the incubators largely depend on government funds for running the institutions,
the government needs to increase technical education funding and necessary assistance to promote
innovation through TBIs.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of
this article.

Funding
The authors received no financial support for the publication of this article.

References
Grant Thornton. (2016). The Indian startup saga. https://www.grantthornton.in/globalassets/1.-member-firms/india/
assets/pdfs/the_indian_startup_saga.pdf
Grant Thornton & ASSOCHAM. (2016). Startups India: An overview. https://www.grantthornton.in/globalassets/1.-
member-firms/india/assets/pdfs/grant_thornton-startups_report.pdf
IBM Institute for Business Valueand Oxford Economics. (2017). Entrepreneurial India. https://d1iydh3qrygeij.
cloudfront.net/Media/Default/New%20release%20images%20and%20reports/Entrepreneurial%20India%20
IBV%20mid%202016.pdf
Inc42 Report. (2019). The State of Kerala Startup ecosystem 2019. https://inc42.com/reports/the-state-of-kerala-
startup-ecosystem-2019/
Kerala Startup Mission (KSUM). (2017). Kerala’s vibrant startup ecosystem. https://startupmission.kerala.gov.in/
frontend-pdfs/STARTUP%20ECOSYSTEM%202017.pdf/ksum_frontend_pdfs
Kerala Startup Mission (KSUM) and Inc42. (2018). Kerala startup ecosystem report. https://mailchi.
mp/49d382ac829d/ksum
Kumar, A., & Bagaria, O. (2015, February). Creating ecosystem of innovation and entrepreneurship in new engi-
neering colleges [Paper presentation]. 11th Biennial Conference on Entrepreneurship (Vol. 1, pp. 214–225),
EDII. http://library.ediindia.ac.in:8181/xmlui/handle/123456789/34
National Association of Software and Services Companies (NASSCOM) and Zinnov Report. (2018, November).
Indian tech start-up ecosystem 2018: Approaching escape velocity, 2018 (4th ed.). https://www.nasscom.in/
knowledge-center/publications/indian-tech-start-ecosystem-2018-approaching-escape-velocity
Panigrahi, A. K., & Joshi, V. (2015, February). Entrepreneurship education and economic development: An Indian
perspective [Paper presentation]. 11th Biennial Conference on Entrepreneurship (Vol. 1, pp. 234–241), EDII.
Sahay, A., & Nirjar, A. (2006). Entrepreneurship: Education, research and practice. Excel Books.
52 SEDME (Small Enterprises Development, Management & Extension Journal) 47(1)

Seyedpedram, M. (2017). Business incubator, a solution for startup’s challenges. A qualitative look at business
incubator’s support for startups to overcome the liability of newness and smallness (Master’s thesis). Center for
Entrepreneurship, The Faculty of Mathematics and Natural Sciences, University of Oslo.
YourStory. (2018, June). The India startup report 2018 (Vol. 1). http://userfilescdn.yourstory.com/ag4zzlb1-Indian-
StartupEcosystem_June-2018_Vol_1.pdf

Websites
Department of Industrial Policy and Promotion. https://secure.mygov.in/group/department-industrial-policy-
and-promotion-dipp/
Kerala Startup Mission (KSUM). https://startupmission.kerala.gov.in/
Startup India. http://www.startupindia.gov.in/