Chennai leads in academic start-up incubators while Bengaluru has more industry incubators: Report

Incubated start-ups have been able to secure their first round of funding earlier than the non-incubated, a new report by NSRCEL, the start-up incubator at IIM Bangalore, and the Centre for Research on Start-ups and Risk Financing (CREST) IIT Madras, has found.

While 27.1 per cent of the incubated start-ups received their first-round funding within one year of incorporation, the corresponding percentage for the non-incubated was 15.4 per cent. Further, incubated start-ups have also been engaged more actively in creation of intellectual property, the report adds, as the percentage of incubated start-ups that have published patents is about 5 times more that of the non-incubated.

NSRCEL, IIM Bangalore, and IIT-Madras’ CREST launched a joint research report, ‘India Incubator Kaleidoscope 2024’ on Friday. The research finds that the number of incubators in the Indian ecosystem has grown steadily, with more than 1,100 active incubators in the Indian start-up ecosystem.

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The Southern region leads the pack, housing 45% of all incubators and having the highest density of incubators. Chennai has a high proportion of academic incubators (82 percent), whereas Bengaluru and Gurugram has a high proportion of industry incubators at 71 percent and 84 percent respectively.

The rate of incubation is high among deep tech sectors such as AI/ML, Data Analytics, Biotech and other sectors. All of them have an incubation rate upward of 12 per cent.

Incubation is typically sought after by students, young professionals, and others with modest financial resources who need a support system to launch and grow their ventures.

The report also quantifies the contribution of such incubated start-ups. The annual average revenues in the initial years for every 100 incubated start-ups has been about ₹1,590 crores. The average value of assets for every 100 incubated start-ups by the 9th year from incorporation has been estimated at ₹10,627 crore. The revenue performance of start-ups associated with industry incubators is 50 percent higher as compared to those supported by academic incubators.

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The joint research was led by Prof. Thillai Rajan A., Head, CREST and Professor of Finance, Department of Management Studies, IIT Madras and Prof. Srivardhini K Jha, Professor of Entrepreneurship, IIM Bangalore and Chairperson of NSRCEL.

The report was launched in the presence of Amitabh Kant, G20 Sherpa, Govt. of India, Rishikesha T Krishnan, Director, IIM Bangalore, Anand Sri Ganesh, CEO, NSRCEL and others in Bengaluru.