Southern India houses 45% of start-up incubators in India: Report

IIM Bangalore’s start-up incubator NSRCEL and the Centre for Research on Start-ups and Risk Financing (CREST), IIT Madras found in a study that the number of active start-up incubators in India is more than 1,100.

According to the study titled ‘India Incubator Kaleidoscope 2024’, the southern region of the country leads the chart, housing 45% of all incubators. Though the Tier-I cities house almost half (48%) of the Indian incubators, the mix of incubators, viz., those hosted by academic institutions, industry and public sector, shows significant variation across cities.

The list of academic incubators was topped by Chennai (82%), while Bengaluru (71%) and Gurugram (84%) have high proportion of the industry incubators. A key area of concern is the incubator density of 0.8 per million population, which is way behind that of the US, UK, and China, where the density ranges between 8 and 10 incubators per million.

The findings reflect that in the third largest start-up ecosystem, only 8.2% of all start-ups undergo incubation. Further, 98% of the incubated start-ups are supported by only 10% of the incubators. Incubation is sought after by students, young professionals, women founders, and those with modest financial resources. This is a positive trend that indicates that the support system is working for those who need it. 

The rate of incubation is high among deep-tech sectors such as AI/ML, data analytics, biotech and others. Start-ups across these sectors have an upward incubation rate of 12%.

While 27.1% of the incubated start-ups that received their first-round funding within one year of incorporation, the corresponding data for the non-incubated was 15.4 %. Interestingly, the annual average revenue in the initial years for every 100 incubated start-ups has been about Rs 1,590 crore.

Commenting on the findings, Professor Srivardhini Jha, IIM Bangalore said, “Incubators play a crucial role in making entrepreneurship more accessible and inclusive across the country, but their activities and impact are not well understood. This report addresses that gap and highlights the need to both raise the level of incubation activity and enhance the quality of incubation efforts nationwide.”