Why Service Providers are the Backbone for Building a Strong Startup Ecosystem

From the time an early-stage startup enters an incubation program, it aims to leverage value additions through the strategic partnership. Free office space, expertise, mentoring, networking, potential funding and job creation are among some of the key benefits entrepreneurs can expect from the program. Another significant feature of incubators is their access to a variety of service providers that help startups with finance, high-speed Internet connectivity, accounting, legalities, human resources, electricity and power backup, administrative support (printer, copier, scanner etc), security support and infrastructure, among other areas. Such critical resources, mostly offered free of cost by the program, aid fledgling businesses set off on the right foot.

T-Hub’s incubation program Lab32 was conceptualised for this very purpose and has nurtured several success stories. Startups chosen for the program receive several benefits, including networking opportunities and mentoring, along with access to services from T-Hub’s premium partners like Amazon Web Services (AWS), DigitalOcean and Google Cloud.

Servicing startups

Across the world, service providers are increasingly partnering with accelerators and incubators as they are viewed as hotbeds for exploring new business opportunities.

For example, New York-based Entrepreneurs Roundtable Accelerator (ERA) is hoping to discover the next big tech company in the city. It conducts regular annual acceleration sessions where chosen startups receive perks like $40,000, office space, legal support and other free services, in addition to mentorship from industry players in diverse sectors.

Missouri State University runs eFactory, an incubation program that offers services to startups, such as admin support, shared equipment, mail services and virtual conference rooms.

In the Indian startup space, under the government’s Atal Innovation Mission, world-class amenities are being provided to startups by State government-supported incubators. For instance, the Government of Goa provides reimbursement subject to a maximum limit of INR 1,00,000 per quarter towards Internet expenses, software license fees and cloud services fees to startups that operate from their own premises or rented premises, and do not use the government facilities.

Thus, service providers offer free or discounted tangible value propositions for startups that need to meet several costs in their initial days. As web hosting and infrastructure are crucial to starting a new business, leading tech companies lend their support for such services. Also, the rise in cloud computing has seen the emergence of Amazon Web Services as an indispensable part of the startup ecosystem. AWS is always scouting for new startups to support in an incubation environment as it will help enhance the processes in the startup ecosystem in the long run. Likewise, Google Cloud for Startups is geared towards incubators, accelerators or those companies that are VC-funded. The initiative doesn’t support small consultancies, government and non-profits, among others.

Creating Resourceful Hubs

As such examples show, service providers lend incubators a strong entrepreneurial support infrastructure to aid in the long-term sustainability of startups, especially the early-stage companies.

The strong value proposition offered by service providers helps startups to reduce the risk of failure. Service providers are key partners for incubators as they strive to create a holistic entrepreneurial environment that allows startups to focus on innovation, collaboration, idea generation and creativity, without being distracted by the day-to-day demands of running a business.

Thus, startups that operate within incubators with a strong pipeline of service providers gain a competitive advantage as they can invest their time and effort in building the business and forging key partnerships with peers, partners and industry mentors. They don’t have to begin from scratch as they already have easy access to service providers and other community resources that enable them to optimise their productivity.

Incubators offer resources and support system to startups from different industries. Such a foundation propels startups on the path to success and makes them economically viable entities.

The road ahead

Our experience has shown that a strong backbone mechanism from incubators and accelerators is required to create a global startup economy. With the steady rise and popularity in accelerators, service providers — especially those in the IT industry — would need to stay on top of innovation and claim their place as dependable service providers for the startup community. Early-stage startups need an enabling and agile environment to create and take innovation to a new level. This is where the capabilities of incubators and accelerators to offer the best services for new businesses comes in.

Although the majority of today’s incubators are equipped with various service partners, there are still those that lack such amenities and support network. The responsibility of incubators towards startups goes beyond providing adequate office space. If incubators have to transform into world-class centres of innovation, they also need to invest extra time and effort in partnering with reliable and high-quality service providers, as such stakeholders are the building blocks essential for the success of each entrepreneur.