The Bihar Startup Policy 2022 has energised the startup sector in Bihar significantly. The success of B-HUB, Startup grant and matching grant has accelerated creation of young startups across the state and green shoots for both successful scaling and employment generation can be seen. Some startups have already raised significant funds from AIFs and/or Angel Investor Networks.
One are where the policy can be improved is radically scaling up startup activity in the state via an active policy to support creation of startup incubators at each and every technical institute.
This note proposes that the Bihar Startup Policy be extended by adding support for creation of startup incubators across all technical universities / colleges in the state.
This policy change will unleash the creation of hundreds of incubators and a state-wide movement to build startups and become employment generators will start. The wide base will make it possible for good ideas to bubble up and within 2–3 years, the state will begin to see strong, scalable startups make an impact at the national level.
UP has seen strong outcomes from a similar policy. Over 200 startup incubators have been spawned in its universities/colleges. AP, Telengana, Karnakata, TN all have successful incubator policies for universities and colleges. Central schemes also support this initiative.
Some Relevant Extracts from the UP Startup Policy for consideration (Dealing with Incubators)
“8.9 Incubators as anchors of Startup Ecosystem
Incubators are the most critical component of startup ecosystem. They are established by private/government host institutes to support startup companies during their early stages of life to develop a scalable business model. They provide startups with various resources such as physical office space, coaching, mentoring, legal & corporate services and providing network connections to grow their business. An incubator shall also mean a Technology Business Incubator recognized by Government of India. In the context of this policy, incubators will serve as first point of contact for startups to get their business plans evaluated for availing any incentives as per the Startup Policy. Startups shall be able to apply for financial incentives to Nodal Agency only after approval by the incubators.
i. State Government shall promote establishment of incubators in each district of the state.
ii. Largest Incubator: The state aims to develop country’s largest Incubator in Lucknow under hub and spoke model.
iii. Host institutes willing to get recognized under UP Startup Policy shall be required to fulfill the following parameters:
Floor Area:10,000 sq. ft. for educational institutes and 5,000 sq. ft. for incubators occupying commercial space
Dedicated Incubation Team: Incubator must employ a dedicated incubation manager to manage the regular operations along with 2 other team members to support.
Co-working Space: Incubator shall create coworking space of at least 100 sq. ft. per seat.
Meeting Rooms: There should be availability of dedicated meetings rooms available to be used for client meetings by startups.
Conference Room: A conference room should also be there to hold small events or mentoring classes for startups founders.
Cafeteria/Refreshment Zone: Refreshments zone shall be established for startups and visitors working from/visiting the incubation center.
iv. Apart from physical infrastructure, Incubators shall also be required to set up digital infrastructure to offer incubation services and engage with startups/other stakeholders digitally. They will be required to provide input in digital format (through API integration with Start-In-UP Portal, wherever possible) against Key Performance Indicators assigned by the Startup Nodal Agency/PIU to all GoUP recognised incubators.
v. Sector specific incubators shall be established in consultation with respective departments through collaboration/partnership with academic institutions/private sector.
vi. Host institutes like Government and Private Technical Colleges, Management Institutes, R&D Institutes, organizations /non-profit organization/corporates/industry association shall be encouraged to establish Incubators in Uttar Pradesh. The selection of host institutes shall be done after due diligence and fulfillment of the laid down guidelines. However, the financial incentives assigned for incubators can be claimed by private institutions only and Government host institutes shall not be covered under this policy as they already get grants and endowments under various schemes of State/Central Governments. State Government Departments pertaining to Technical Education, Higher Education, Agriculture Education, Medical Education and MSME shall be required to set up incubators across the state, put together at least 50 percent of the overall policy target.
vii. Incubators having rich experience and strong capabilities in the incubation field shall be nominated as Navratna Incubators. The State Government shall enter into an MoU with these “Navratna” incubators to guide, mentor and handhold other Host Institutes willing to establish Incubation facilities in the state. These Navratna incubators will be nominated based on Annual incubator performance and shall be selected/renewed by PMIC every year.
viii. Women led startups: 25% incubation seats at GoUP recognized incubators shall be given on priority basis to startups with women founders/co-founders on preferential basis.
ix. Hub & Spoke Model: Incubators recognised under the startup policy will work under a Hub & Spoke model; where Largest Incubator being developed by Department of IT & Electronics, AKTU Innovation Hub, and 3 Center of Excellences will act as Hub for other satellite incubators in the state. The Navratna incubators will work closely with Hub to assist in capacity building of these satellite incubators set up at District level.
9. Fiscal Incentives
9.1 Incentives for Incubators
i. Capital grant
Capital grant on setting up/scaling up technology infrastructure for the private host institutes shall be reimbursed upto 50 percent of the eligible amount subject to maximum limit of INR One (1) Crore, first installment to be capped at 25 percent of the maximum limit. The demand for the same shall be raised on quarterly basis by incubators. The limit of INR 1 crore shall be increased to INR 1.25 crore for incubators established in Purvanchal/Bundelkhand regions.
Capital grant to government host institutes shall be given in exceptional cases only post approval by PMIC. However, despite not getting the capital support, government incubators will continue to act as first point of contact for startups on behalf of Startup Nodal Agency.
ii. Operational Expenditure
Financial support to incubators upto INR 30 Lakhs per year to cover operational expenditure for 5 years or until self-sustainable whichever is earlier. This incentive shall be granted to those incubators which have 10 or more startups incubated. The year-on-year continuation of operational expenditure support shall be solely dependent on incubator’s performance assessed through Incubator Performance Evaluation Framework released by Nodal Agency and approved by PMIC.
iii. Acceleration Programs
Acceleration programs are short to medium term mentoring programs to support startups with business expansion once they have scaled up from an idea to formal product launch in the market.
A matching grant of INR 5 Lakhs per year (Maximum INR 2 Lakhs per program) shall be given to competent institutions (upto 25 institutions per year) to run acceleration programs for supporting the startups. Acceleration programs with minimum 10 startups participating shall be eligible to get incentives under this program and maximum 100 programs could be organized in a year under the policy. The competent institutions in this case would be GoI/GoUP supported/sponsored incubators, angel investors registered with SEBI/Banks or reputed academic institutions. Capping on total number of institutions benefitted could be relaxed by PMIC on recommendation of PIU.
iv. Annual Incubator Rankings
State level annual incubator rankings shall be introduced as per the KPI framework approved by the PMIC. An external agency will be engaged to perform the evaluation and assign rankings. Top3 performers in the ranking will be awarded amount of INR 3 Lakhs, 2 Lakhs and 1 Lakh per year to the winner, first runner up and the second runner up respectively.
v. Navratna Incubators
All Navratna incubators shall get incentive of INR 10 Lakhs per annum for the expenses incurred to support host institutes/incubators for developing/scaling up the incubation capabilities. Navratna incubators shall be identified only after achieving the count of minimum 50 incubators recognised under Start-In-UP program of GoUP.