Business incubators around the world — and at Indiana State — help start-ups get a stronger footing during the precarious beginning stages.
The corporate world isn’t for everyone, and Indiana State students interested in being part of the next generation of creators, inventors and moguls can learn what it will take to spread their wings through Scott College of Business Professor Aruna Chandra.
Since she began studying business incubators in 2003 and conducted her first interview with Rose-Hulman Ventures, Chandra has interviewed or visited more than 70 business incubators worldwide, from Latin America to China, India, Thailand, Morocco and Italy to study how countries aid startup and early-stage companies with speeding up growth and success during their most vulnerable time.
“If I have a good idea, come up with a business plan and I meet entry criteria set by a business incubator, I can apply and if I get in, I can get physical space,” Chandra said. “I’ve been interested in the framework or enabling conditions for entrepreneurship in developed and developing countries. When I started my research on business incubation as a support system for entrepreneurship in 2003 and 2004, this phenomenon was very under-studied.”
That is no longer the case, though. In 2011, the U.S. had 1,250 incubator programs with a majority — 93 percent — operated by nonprofits, including universities, economic development organizations and government agencies, according to the National Business Incubation Association.
Worldwide, the International Business Innovation Association estimates there are about 7,000 business incubators.
“Studying incubators at home and abroad give students knowledge about what they are and the services they provide, so if at some point they want to start a business ,they’ll have an idea of where they can go for assistance,” Chandra said.
Startups may turn to incubators for tangible and intangible services, such as secretarial services, phone or internet connectivity, needed to get a business off the ground and will often develop a network of relationships with accountants, lawyers and others so entrepreneurs can connect with resources they need.
“This is a general model of the first-generation of incubators. Today, when you travel the globe you see many models of incubators — physical, virtual, accelerators,” Chandra said. “Brazil has social incubators where they help entrepreneurs who want to start social value to improve maybe health or education in the community. They take and operate on the same entrepreneurial principles, but instead making a profit for themselves, they’re creating social value.”
In 2009, Chandra received a Fulbright FAPESP Science and Technology Grant funded jointly by the State of Sao Paulo and the Fulbright Foundation and spent four months with business incubators in Sao Paulo, Brazil, conducting interviews and collecting qualitative interview data and quantitative survey data, which were later published in research papers.
“This all started by first talking with incubators in the United States, which has the biggest incubation market in the world, followed by China, Germany and Brazil,” she said. “When you study incubators in other countries, over time you see the similarities and differences, and one thing that incubator models do is adapt to the local context.”
The U.S. introduced the incubator movement in the 1980s, followed in the 2000s by Brazil’s focus on social incubation to address poverty-related issues. Chandra led Indiana State students to Rio de Janeiro in 2012 through her course on social entrepreneurs.
Two years later, Chandra took Indiana State students to Morocco to see incubators in a country where the concept is just beginning. In August 2015, she accompanied students in the Networks Professional Development program to the Italy, where they visited the European Space Agency incubator.
This spring, Chandra and fellow Scott College Professor Bill Wilhelm accompanied students to Chiang Mai, Thailand, to visit incubators, including adiCET — an incubator that supports “green” businesses.
“(Incubators) have certain elements of standardization, but every country develops them in a different way so it’s interesting for students to see that support for new venture creation in comparison to where they are from,” Chandra said. “When we’ve visited incubators, students learn about how different countries in different contexts go about supporting entrepreneurship and they get a miniature picture of how a country offers support to develop entrepreneurship.”
Industry-wise, Kasemsak Uthaichana, deputy director of the Science and Technology Park at Chiang Mai University, said Thailand focuses on three types of startups — IT software, agri-tech, hard-science tech.
While the ecosystem for startups in Thailand is not as mature as the U.S. or Singapore, Uthaichana said studies have shown that startups are more likely to succeed with support from incubators.
“(Small and medium enterprises) have been the backbone of Thailand economy for a long time and are recently are facing competition from other companies around the globe,” he said. “We are trying to help startups come up with the right business model, so they can compete on their own when they leave our incubator.”
The country with the most diverse incubator types is Brazil, which Chandra said also has a cultural incubator in Rio de Janeiro to support the arts- and culture-
related entrepreneurs. She added that China uses a “very top-down model” with much government-injected funding, compared to India’s more grassroots approach to business incubation.
“Incubators are not the only place that can offer support for entrepreneurs, but the failure rate for very new ventures is very, very high, and new ventures are most vulnerable at the early stages,” Chandra said. “Incubators offer some kind of structure and support at the most vulnerable point of early-stage ventures by doing things like helping the business write grants, provide connections, finance or may even directly invest in start-ups.”
Wabash Valley entrepreneurs can look to Indiana State’s Business Engagement Center and Sycamore Innovation Lab to turn their ideas into tangible businesses.
“Regions compete for jobs and new businesses, so if we don’t start working with these new companies when they’re starting out and they become the next Angie’s List out of Indianapolis, then we’ve missed the boat,” said Daniel Pigg, director of the center.
The center is an innovation lab that provides small companies and nonprofits prototyping, financing, logos, websites and videography services as well as seminars and business planning assistance to increase chances of success.
“Our students get experiential learning opportunities through helping with real-world projects, like when we created a new logo for St. Anne’s Clinic and integrated it on their website and then followed through with the design and creation of their annual report,” Pigg said. “We also work with students from all academic departments who want to launch businesses and act as a mentor and advisor as they think through everything it will entail.”
In 2007, $1.2 million in federal earmark funds and Housing and Urban Development grant dollars helped Indiana State open the Center for Business Support and Economic Innovation — a business incubator and accelerator space. Indiana State, Rose-Hulman Institute of Technology, Terre Haute Economic Development Corporation and the city of Terre Haute set up the Terre Haute Innovation Alliance to solicit and review applications from innovative companies and startups interested in establishing workspace in the new center to help propel their ideas.
The selected businesses received $100,000 each — $40,000 for commercialization and business acceleration start-up services with Indiana State faculty and staff, $40,000 for commercialization and business acceleration start-up services at Rose-Hulman and $20,000 in discretionary funds for purchases to help grow the business, including equipment, patent assistance and outside advisory services.
“The intent was to help these small businesses that were trying to accelerate or were just a concept get going to create more area jobs. Hopefully, it would snowball so that five employees became 10, and so on, and the company would then be able to go out and establish their permanent operation in the community,” Pigg said, adding that of the last five business that left Indiana State’s campus in 2013, three of the businesses remain local.
Now known as the Business Engagement Center and housed in the Myers Technology Center basement, the center assisted 43 start-up and existing businesses last year and offered students, faculty and community members space to generate ideas, including six of the 120 employees from PrecisionHawk — a North Carolina-based commercial drone manufacturer and leading agricultural aerial data solutions company.
PrecisionHawk pays for office space and shared services, like Wi-Fi, printing capabilities, administrative support and lab equipment. In turn, Pigg said, the company has access to Indiana State faculty and students, including seven undergraduate and one graduate student from a variety of majors who work at the center.
Entrepreneurship has caught wind, thanks in part to media coverage and TV shows like “Shark Tank,” where budding entrepreneurs have an opportunity to bring their ideas to fruition by presenting before a panel of five entrepreneurs who have successfully turned their ideas into lucrative empires.
It has catapulted interest in entrepreneurship at colleges and universities. At Indiana State, Chandra is developing a sustainable innovations course as part of the entrepreneurship concentration in the Scott College’s management program.
“What is happening today is greater awareness of the gains associated with entrepreneurship as a result of the media and popular press talking about it, so students should look at entrepreneurship as a viable option in their career path because not everybody is cut out for a corporate job, so entrepreneurship is a pathway that needs to be emphasized more in the college curriculum,” Chandra said. “When you say ‘entrepreneurship,’ you have to do what you are passionate about and find out what the market value is for that, then success can follow.”