The number of startups in the incubators space has been increasing every year, according to the number of companies that are funded by investors, but there are still too many that are not being properly vetted and managed.
According to a report by the Startup and Entrepreneurship Development Centre (SETDC), India’s biggest incubator accelerator, the number has grown from 11,000 startups in 2013 to 28,000 in 2017, with a projected growth rate of 22%.
The report, titled India’s Accelerator Industry: Trends, Prospects and Opportunities, says that the incubation process in India has become “fuelled by a desire to attract more startups, rather than to help them to succeed”.
While there are a number of factors that contribute to this, the report also says that “it is also a function of the amount of capital available in India and the availability of entrepreneurs”.
The study notes that a large number of the companies that were funded by VCs in 2017 had not gone through a rigorous screening process, which was also a major reason why the report does not suggest a specific path for getting the funds to be invested in these startups.
“The focus of the report is to highlight the key trends that are driving the increase in the number and size of startups,” the report says.
“While we have seen an increase in funding of these startups, it is the nature of the investment that is driving the growth.
There are a lot of risks associated with this investment, and these risks can be addressed through the appropriate screening process.”
The report also highlights a number other risks that are associated with funding startups.
For example, a lot more startups are still waiting to get the funding that is available to them, as well as other factors such as lack of financing and lack of experience.
“Many companies, such as startups, need to be in place for the funding cycle to be successful,” it says.
The study also mentions that there are also other factors that can be a barrier to getting funding from investors.
“These factors include a lack of transparency regarding funding and other details regarding the company, as this can be difficult for startups to navigate.
These issues may also impede a company from entering the marketplace,” it said.
According the report, a company that does not have sufficient experience to manage a venture is less likely to get funding.
“It is important to note that there is a huge gap between the experience of founders and investors in India,” it added.