Why Business Incubation?

By Aditya Jadhav, CFA

The end of the last century and the beginning of this have been marked by great changes in society as a whole, and especially in business after witnessing a recession of 1999 & 2008. Among these changes, one can point to the increase in global competition and growth in unemployment. This new situation requires that the different players in a given region act in an innovative way. One of the options, which have been widely used by premier education institutes such as IIT and IIM, is the establishment of business incubators, which offer support for the creation and development of start-ups founded by students.

Start-up Incubation plays an indispensable role in a country like India where entrepreneurs are launching new business ideas and changing the competitive landscape by minutes. In a report quoted by the US Small Business Administration, the data shows that, across sectors, 66 percent of new establishments in the US were still in existence 2 years after their birth, and 44 percent were still in existence 4 years after. Other analysts claim failure rates as high as 60 percent in the first five years and some anecdotal evidence would even suggest that it may be as high as up to 80% in emerging markets such as India.

Incubation Cell can add value to the incubated companies founded by CFA candidates, thereby increasing their chances of success by:

  • A reduction in the company mortality rate
  • The development of an entrepreneurial spirit
  • The development of a determined market niche

Apart from this value addition, Incubation process also helps entrepreneurs in management coaching by mentors, help in preparing effective business plans, administrative services, technical support, business networking, advice on intellectual property, and help in finding sources of financing.

-ASJ

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