Do Incubators/Accelerators Force Mentoring On Start-ups Who Only Need Funding Support?

Several Founders, Co-Founders, CXO Bankers, CXO Fintech professional & people who participated in the e-panel discussions:

• Ms. Priti Shah, Co-founder & CEO, Payswiff Solutions
• Mr. Shashank Kumar, Co-Founder at Razorpay
• Mr. Pramod Saxena, Founder & Chairman, Oxigen Services India Pvt. Ltd.
• Mr. Probir Roy, Co-founder, Paymate
• Mr. Mukesh Bubna, Founder, Monexo FinTech Pvt. Limited
• Mr. Summann Gandham, Tech & Innovations Director, Nekko Capital
• Mr. Rajiv Rai, Chief Digital Officer, Edelweiss Financial Services
• Mr. Alok Jha, Managing Director Cyberplat India
• Mr. Vikram Sareen, Chief Architect, Founder, CEO, Blue Bricks Pty Ltd
• Mr. Shashank Chowdhury, Managing Director – India, Infinite Zero
• Mr. Raghu Veer Dendukuri, Product Owner, Intandemly
• Mr. Taron Mohan, CEO & Promoter, NextGen Telesolutions Pvt. Ltd.
• Mr. Kamonasish Aayush Mazumdar, Chief Marketing Officer, MeraEvents
• Mr. Hemal Shah, Technical Product Manager, Mastercard
• Mr. Sunil Dalal, Managing Director, Softcell Technologies Ltd.
• Mr. Dewang Neralla CEO, Atom Technologies Ltd.
• Mr. Ketan Doshi, Managing Director, Pay Point India Network Pvt. Ltd.
• Mr. Parag Mehta Founder & CEO, Evolute Group
• Mr. Vikas R Panditrao, Advisor, Forum of Industry & Academic Knowledge Sharing (FIAKS)
• Many other CEO/CXO Bankers & Fintech professionals on FIAKS Forum

The FIAKS community has a lot of entrepreneurs and founders. Some of them were curious about start-ups needing accelerators and incubators. So two questions arose that ensued the following discussion – Do start-up founders need an accelerator or an incubator who don’t offer any funding support? And if so, what is it that startups’ founders are looking from accelerator/incubator other than funding? These questions started off an invigorating discussion where each community member learned something new and interesting about start-ups, incubators, accelerators, and for some reason, we also stumbled upon a very interesting TED talk.

But first, let us first understand what the words “accelerator” and “incubator” means to better follow along with the FIAKS discussion. An article in Funders Club was helpful in explaining both concepts and pointing out a difference between them too –

At a high level, startup accelerators and incubators are organizations that seek to help startups attain success. Startup accelerators tend to focus on providing startups with mentorship, advice, and resources to help the startups succeed, including a Demo Day, a day to focus the attention of the startup investor community on the startups through hosting a series of investments pitches from the startups to startup investors.

Accelerators tend to not offer dedicated office space to startups (and may encourage startups to find their own dedicated space), but may have a physical location for shared resources and accelerator events such as invited guest speaker talks and advising office hours. Incubators tend to offer dedicated office and development space to the startups for a set period of time.

Startup accelerators and incubators can get involved at all stages of a startup’s development, from the idea stage to revenue-generating, late stage. However, most tend to focus on relatively early stage startups, as this is when companies can typically most benefit from outside help.

The discussion started with one of the experts of the community sharing all the things that he believes each start-up would need –

1. A Bank Account – specifically for the company has to be opened to receive all the payments and record all their transactions.
2. Infrastructure And Utilities – so that the startup team can have a place to sit and operate that has all the basic necessities that are required to work, i.e. a laptop, desks, etc.
3. A CA Firm – for accounting, tax consultation, and also for guidance as to whether the startup needs a partnership, or an agency or should they be a sole proprietor.
4. Technology – that is required to enable their business ideas. They can hire an agency to do it for them or partner up with someone (make co-founder) who will handle this part of the startup.
5. Payment Gateway Connect – An easy way for customers to make their payments to the startup.
6. NPCI Connect Or Visa/Mastercard Connect – for startups operating out of India needs to an NPCI connect if they are selling certain products or they may need a card association like Visa or Mastercard.
7. Sponsor Bank Connect – is required if they launch a product in the fintech industry. They will have to partner up with a bank to get sponsorship for the whole product program.
8. Some Customers For POC (Proof Of Concept) – is required for launching a new product. This will endorse their business idea. These customers will also provide feedback and can refer the startups to other people.
9. Employees And/Or H.R. – that a right fit for the organization so that the initiative can move forward efficiently in the right direction.
10. A Digital Marketing Company – as every company needs to be available on the digital space as well promoted properly to get the exposure to the relevant people.

This is when a community member realizes how useful FIAKS can be to a startup as an incubator if it is not running after funding. Not only FIAKS can properly mentor startups every step of the way with the help of experts in the panel but they can also give great exposure to the relevant industry due to its extensive network in 24 countries. A startup, when it is taken on by FIAKS, can get the right team, an efficient business model, the startup idea can be made more clear and elaborate, and it will also get all the help and support from the high ranking individuals from the industry.

A member of the community shared a TED talk related to startups that provided valuable insights – The single biggest reason why start-ups succeed. Bill Gross shares in the video 5 things that are the most important for a startup to succeed – Timing, Team, Ideas, Business Model, and Funding (in the order of their importance, with timing being the most important reason for a startup’s success).

He shares a few examples of startups that could have succeeded but did not because the timing was wrong but also how Airbnb succeeded because they started out during recession time when people needed extra money and any reservations people had about renting their homes to the strangers were gone because of the timing i.e. recession.

The member who shared the video continues on to suggest that all the founders should stop chasing VCs. They should start with building a business, getting customers first and then the VCs will follow eventually if the timing, the team of the startup and the idea is good.

Another expert agrees to the previous statement that accelerator and incubators are of limited use unless some seed (cash) is also thrown in. Giving a place and supporting infrastructure for the stock is asymmetrical. A start-up can get mentored or advised by a person (or two). That person has to then also perforce facilitate deal-making and funding, besides actively advising, and be accountable for that.

Another member argues that in certain cases accelerator programs are necessary. There are a lot of start-ups who should have included an incubator in the beginning but these start-ups failed because they tried to do everything on their own. It is very important to realize that you are out of your depth and find an expert in the field immediately before it is too late. These partnerships with incubators can be very critical, as they can make or break your start-up.

A leader in the community says that start-ups (by youngsters in particular) need a lot of support in the initial phase to put them on the right track. They need mentoring and guidance from experienced professionals, processes and infrastructural support besides opening the right doors for them and introducing them to the right kind of investors at the right stages. Of course, some initial funding is also desirable. People running incubator/accelerator programs have to be highly experienced in the business and also in setting up new businesses. Funding alone is not the only help young entrepreneurs need.

Incubators have to have a strong panel of experienced professionals from tech, finance, operations & legal/commercial background who are willing to allocate a lot of time for the start-up. If the incubators don’t provide all-around support then they are not doing their job well and would surely not find any takers. Generally, there is no short cut to a start-up unless it is a copy of another business idea or someone who just got very lucky.

One of the members believes that accelerators actually take up most of the equities by just investing little money. The idea of most of these incubators is to take the stakes by investing a minimum or none in the name of mentoring. Since the objective is equity and sale of services to incubating companies, the real purpose is lost. Hence, most of these projects do not succeed.

Register and Read the entire discussions