Incubators often invest in research and development (R&D) to help startups develop ideas and come up with innovative products. What factors drive such investment and innovation?
A new study finds that incubators tend to invest more in R&D if they have larger networks of business mentors and venture capitalists. Incubators are likely to put out more new products if they are better networked, work with more startups, or have more operational experience.
B.S. Mungila Hillemane of Bengaluru’s Indian Institute of Science makes use of a survey from 2016-17, involving 65 incubators—nine of which could be classified as accelerators and 25 as co-working spaces—in Bengaluru, Chennai and Hyderabad.
Accelerators are those that work with startups beyond just their early stages. They are based in existing companies, and don’t invest much in R&D as they can use the host company’s in-house team. Co-working spaces have no unique focus and around 75% have no R&D staff. The rest of the incubating entities in the study are usually based in universities and may have staff exclusively for R&D.
The 65 entities claimed a total spend of ₹2 billion on R&D, an average of ₹31 million each. But around one-third didn’t have exclusive R&D staff, and the rest had only three R&D employees on average.
Over 8,000 new products were created with the support of these incubators, but only 6% of the products got patent applications. This means many products weren’t novel enough to even bother applying for a patent. But they were certainly new enough for the Indian market, with around ₹19 billion generated in sales up to 2016-17.
The author suggests encouraging partnerships between industry and institutes will help incubators and their startups, and strengthen the innovation ecosystem of India.
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