Role of Business Incubators in Entrepreneurship Development Reflection
The need for entrepreneurs is greater today than ever before
While businesses and startups around the world are gearing up for the post COVID world, The British College- Business Incubation Centre in Kathmandu has recently conducted a panel discussion on the role of business incubators/ accelerators in entrepreneurship development. An excellent line- up of experts working to enlarge the Nepali entrepreneurial ecosystem discussed why the need for entrepreneurs as well as incubators is greater today than ever before. The following are some highlights of the panel discussion held on September 10, 2020.
Even though giant Asian economies such as India and China, as well as US and Canada of North America, are abuzz with entrepreneurial activities, Nepal is just starting to step its foot on the startup scene. Nepal is still very far from its way to building a champion entrepreneurial ecosystem, due to its nascent entrepreneurial culture and a near-complete lack of government support thereof. Hence, it is necessary for a country like Nepal to learn a thing or two about the what, why and how of the startup game from regional emerging economies like India, Bangladesh, Bhutan, etc., where the rapid emergence of entrepreneurs and their contribution to the national economy has been quite evident for years. The last two decades of swift economic growth in Bhutan has been, solely, due to the rise of various entrepreneurial start-ups in this country. Over the past decades, India too has been effectively working to meet its goal of creating 100 million jobs by 2022 through the launch of various initiatives and schemes. Because entrepreneurship is more of a participatory game rather than a spectator game, Nepal to needs to dive deep into the entrepreneurial scene to be able to successfully foster entrepreneurship, create more jobs and subsequently, lead the nation towards economic prosperity.
First and foremost, it is imperative that we all understand the significance of Incubators and Accelerators as they play a key role in creating the platforms for supporting the growth of entrepreneurs. Moreover, the enterprises that go through incubation stand a higher chance of surviving as compared to those who do not. While both Incubators and Accelerators provide the basic mentoring, business networking, access to financial resources and other support services, Incubation programs are primarily for entrepreneurs who are still in the idea stage and are trying to gather necessary resources while also looking to develop a viable business model. Accelerator programs, on the other hand, are for slightly mature startups that are looking to scale up their businesses and grow into full-fledged companies. In Nepal, community- based innovation hubs like Nepal Communitere and private sector-led Next Venture Corp are among the few players that have been working to build and develop platforms where people with innovative ideas are extended support systems to help transform their ideas into businesses, initiatives and art projects. Even during this pandemic- hit difficult times, they are continuing to provide support/ seed investment to businesses to help rethink their businesses, cut costs, become sustainable, make a social impact and increase linkages to new markets. Furthermore, businesses looking to launch/ add new verticals or to pivot their business models are also being encouraged to apply for some of their newly announced Incubation and Accelerator programs.
While such calls for Incubation cohorts may give a ray of hope to the budding entrepreneurs during these unprecedented times, a supply of a mere number of programs with a few entities graduating from them is just too little than what the country requires to move towards a champion entrepreneurial ecosystem. On the other hand, there isn’t enough supply of young startups that are seeking support from incubation services. Therefore, the city councils and other government-led institutional mechanisms working as policy advisory boards and policy think tanks regarding entrepreneurship must act now and prove to be instrumental in supporting the entrepreneurial ecosystem by firstly, launching various education and awareness programs regarding the benefits of incubation programs and consequently by backing entrepreneurship development programs and initiatives. Moreover, various corporates as well as public enterprises should also be roped in by the government to support, nurture, and incubate innovative ideas. In a nutshell, it is important to note that just a few independent bodies working in the field is not going to cut it. In order to harness the true potential of startups in building the nation, several government organizations, corporate, academia and the entrepreneurs have to join hands and form partnerships in order to lead the country towards sustainable development. Hence, it is essential to devise opposite strategies so that the government bodies are working to form partnerships, particularly with Industry and Academia. In addition, the central government should empower states and local level government institutions to help their cities become important destinations for economic activities. Local governments, in turn, have to start seeing the startup community as long- term future investments. It is unfortunate to note that currently, the Nepali laws and policies are largely not friendly to angel and business investment and every startup is treated as a fully grown company.
Similarly, Alternative Investment Funds must be mobilised properly via non- banking institutions to provide funding on Seed, Angel, Venture Capital and Private Equity levels. These institutions should focus more on operational risk to help startups survive and thrive by providing advisory services. In Nepal, however, the financial institutions are still following the 1980s model of banking and the regulator has set the rules in such a way that there are hardly any distinguishing factors among the banks that there are. For instance, Bhutan has all kinds of banks as per the needs of the people- SME banks, Micro banks, banks that focus on renewable energy, community development, etc. In Nepal, all banks look alike.
Although there is a lot to be done from the government’s side, another key player that needs to step in the entrepreneurial ecosystem is the Corporates. It is high time now that the corporates start thinking about the future of their enterprises. In today’s ambiguous environment, partnering with innovators is the only way to go forward if the goal is to survive for long. In order to achieve that, corporations can lead by introducing various sector-specific incubation programs. In addition, they can partner with future-oriented enterprises that are looking to disrupt their own models and processes. Furthermore, corporate accelerator programs or corporate venture arms must be mobilised to call aspiring entrepreneurs to work jointly to foster business innovation and hence, growth.
Finally, it is not always that the enablers have to improvise. Even startups have a long way to go. It seems that the majority of startups that seek incubation and acceleration support do not understand the basic etiquettes of the incubation and acceleration programs. Oftentimes, startups are blindly looking to enter incubation programs without considering vital factors such as, quality of investors, mentors, business coaches, etc. They seem to care less about what the last graduating cohort was like and how much success they were able to achieve through the support extended by these programs. On the contrary, there are others who do not understand the essence of having a BOD that is composed of investors and mentors. They simply do not want to entertain the idea of giving away ownership. Moreover, they question their judgment and decisions, which is mostly all in the interest of growing the business. Therefore, it is essential that startup owners thoroughly understand what they want from the incubation program and why they should get in. This will, in turn, give a better experience to the startup owners. It also helps the startup founders and owners to first get a job, learn about office culture, and gain some work experience before venturing into a new business.
In conclusion, the development of infrastructure for all entrepreneurial activity should be built using a bottom-up approach rather than a top-down approach. Recently, cross-party lawmakers demanded that the government prioritise four sectors—employment generation, agriculture, health and the education—in the national budget for the upcoming fiscal year. If the lawmakers are at all serious about supporting the startups to generate more employment, then they should be willing to transparently work hand- in- hand with the private sector Business Incubators and Accelerators, Corporates, Public enterprises, Academia, and startups to act as a game-changer and to successfully foster entrepreneurship in the nation.