As of January 2024, India had become home to more than 1.3 lakh recognised start-ups. Yet, only around 110 of these have achieved unicorn status, with valuations exceeding a billion dollars — meaning just one in every 1,200 start-ups reach this coveted milestone. This leads us to a crucial question: why do so few start-ups end up being super successful?
The answer lies in understanding that starting a business is relatively easy. The real challenge, as seasoned entrepreneurs know, is building a company that delivers value to its customers and scales effectively to benefit investors and stakeholders. At the Society of Innovation and Entrepreneurship (SINE), the technology business incubator at the Indian Institute of Technology - Bombay, we have witnessed this process up close. SINE has supported over 240 start-ups and 1,000 founders, with an impressive 75 per cent success rate among our incubated firms, compared to the industry average of 10 per cent.
Drawing from 20 years of hands-on experience, we’ve identified five key success factors that separate thriving start-ups from the rest.
Beyond Intellectual Property
For a start-up, having strong intellectual property (IP) is essential, but not sufficient. Success comes from mapping IP to user requirements, exploring market demand, and assessing the total addressable market (TAM). One of our start-ups, SustLabs, developed an AI-powered smart electricity meter that delivers actionable insights on energy consumption. We helped them connect with a Japanese corporation, which became a key licensing partner, demonstrating the importance of market input and strategic partnerships in scaling innovative solutions.
Understanding market dynamics
Founders need a deep understanding of market dynamics and scalability potential. At SINE, we incubated Haystack Analytics, a genomics company that partnered with Brihanmumbai Mahanagar Palika’s SMILE incubator. This collaboration allowed Haystack to test their solution through large-scale civic projects, helping them refine their product while understanding the market dynamics and addressing a tangible public health need.
Execution, Execution, Execution
Executing a business plan is arguably the most challenging aspect for any start-up. Founders must assemble a well-rounded team with both technical and business acumen. For instance, ImmunoAct, a company spun out of research by IIT Bombay’s Prof Rahul Purwar, successfully commercialised an immunotherapy treatment for blood cancer. With Prof Purwar focused on research, the start-up brought in a co-founder skilled in business operations, creating a complementary team that has since raised substantial funds and brought affordable gene-based cancer treatments to the market.
Securing initial funding for deep-tech start-ups
Funding is particularly crucial for deep-tech start-ups in science and technology fields, as they require substantial capital for long-term R&D. KaviRISE Technologies, currently incubated at SINE, is developing an AI-enabled wireless fast-charging solution for diverse applications, including industrial robotics and electric vehicles. We provided them with initial grants for prototype development and connected them with another SINE-supported start-up, Aubotz Labs, for market testing and validation.
Forming strategic partnerships
Finding the right strategic partners can significantly accelerate growth. For example, Choira Music, a platform for real-time music collaboration, benefited from a partnership facilitated by SINE with a Japanese university. This collaboration led to invitations to Tokyo’s premier tech events and secured funding from Japanese tech investors. Partnerships like these are often pivotal in scaling globally.
The critical role of incubators
Incubators are vital for early-stage start-ups, providing support when no other investors are willing to take the risk. Research and our experience shows that incubator-supported start-ups have better survival rates 80-90 per cent higher) than those without support. By offering resources and connections that enable founders to refine their ideas, build, validate and attract venture capital, incubators are helping India move closer to the Start-up India vision: May a million start-ups bloom.
The writer is CEO, Society of Innovation and Entrepreneurship, IIT Bombay