Startups that are incubated are better at clocking higher top-line growth than those launched without such backing, says a study.
According to the study, in over 40 per cent of the sampled incubators, growth rate of graduated companies in terms of turnover has been more than 20 per cent, while 38 per cent saw growth in the range of 10-20 per cent.
The study, commissioned by the Ahmedabad-based Entrepreneurship Development Institute of India (EDII), a part of the Department of Science & Technology, has also compiled the best practices followed across the world for incubators.
The best practices include parameters like entry criteria, selection process, pre- and post-incubation services, infrastructure, human resources, performance, financials and exit strategy among others.
"The overall objective of the study is to assess the effectiveness and sustainability of incubators, major issues faced by them and to evolve a comprehensive strategy for sustenance and growth of the incubation movement, keeping in view the global best practices in incubation space," said S.B. Sareen, director at the Centre for Advancing and Launching Enterprises at EDII.
The study is based on analysis of data received from 29 incubators, their tenants and personal interactions with 10 incubators chosen from across the country, he added. With a view to enhance effectiveness of incubation, some actions suggested by the study include promoting privately-owned seed funds, promoting incubation clusters, localising networking platforms, and help graduate entrepreneurs as investors for new incubators.
It also suggests promoting incubators focused on emerging domains, and facilitating CSR fund routing to business incubators and startups.
The study observes that in about 40 per cent of the sampled incubators, clients graduated in less than 16 months after entering the incubator, while in about half the sampled incubators, it took over 24 months.
Further, in about half the sampled incubators, the average annual job creation by graduated companies has been less than 20 and in about just 7 per cent of them, the average annual job creation by graduated companies has been over 120.
