India Inc wants to stay nimble and close to startups by setting up inhouse incubators and accelerators

While edtech unicorn PhysicsWallah launched its PW School of Startups in September, gaming unicorn Games24x7’s TechXpedite was renewed for a second edition this month. The PW School of Startups and TechXpedite are accelerators, which are structured programmes that support early-stage companies through education, mentorship and financing.

“PW will in turn benefit from access to early trends in the marketplace. When companies grow large, they often lose some nimbleness as you can’t be both large and small at the same time,” Vijay Shukla, director of PW Foundation, told Mint.

Apart from accelerators, companies are attempting to build more flexible in-house incubator models. Kolkata-based FMCG company Emami has been developing an incubator in its M&A team, where, unlike in traditional deals, the founding team of the incubated company continues to manage it while receiving support from Emami.

“In the startup acceleration ecosystem, as strategic investors, we focus on categories or sectors with high growth potential, especially those that offer entry into evolving segments where we currently have no presence,” said Harsha Vardhan Agarwal, vice chairman and managing director of Emami Ltd.

In return, the company provides support in areas like cost optimisation, financial control and offline distribution, while also infusing funds periodically.

India currently hosts over 1,100 startup incubators, according to a report by the Indian Institute of Management Bangalore, in September. The report did not include the rapidly increasing number of accelerators, which, according to Tracxn data, has grown to about 900.

As Indian companies and late-stage VC-funded firms scale up, they lose the ability to maintain their “move fast and break things” approach. They have now spotted perks in staying close to young blood and are eager to cash in, triggering the launch of many such programmes, experts told Mint.

Growing startup engagement programmes

India Inc. has also tied up with government agencies, venture capital firms and existing startup accelerators to launch about half a dozen sector-specific programmes in areas such as climate change, space tech, and AI, within the last quarter.

Yotta Data Services and the National Association of Software and Service Companies’ accelerator for AI startups, Amazon Web Services India’s space accelerator, Transition VC and T-Hub’s energy transition accelerator, and Australia RISE Accelerator for agritech startups have been launched in the past four months.

“We’ve been working with corporates since 2015 on their startup engagement, and over the last three years, we’ve seen a spike in active involvement from them,” said Vikram Gupta, founder and managing partner of early-stage VC firm IvyCap Ventures.

Insurance companies, banks, material science companies as well as tech companies are in front of the queue to launch in-house startup engagement programmes, he added. The quest for entrepreneurial talent and the desire to build an internal pipeline of future leaders are also triggering companies to launch accelerators.

“As more senior leaders with an entrepreneurial mindset leave to start their own ventures, these accelerators offer a way to nurture and retain such talent within the company,” Gupta said.

For VCs, accelerators help them build a pipeline of early-stage companies for future investments. Venture capital firm IPV launched IdeaSchool in January this year.

“We noticed our focus moving away from very early-stage to fairly growth-stage deals, so with IdeaSchool, we are deliberately seeking out early-stage startups,” said Ankur Mittal, COO and co-founder of IPV.

Mittal said accelerators nurture early-stage startups to reach Series A and B funding, after which growth funds and private equity can step in. The IIM-B report also showed that incubated startups are 250% more likely to attract external funding.

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