Incubator Funds in India: Idea Crucible?

As part of the discussion in the post India Needs More Incubation Funds, Dave Chen raised an important point:

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Rather than use the term incubator, I’d propose we ask what problem are we trying to solve?

In Oregon we have a very large chip company with several thousand very intelligent dedicated employees and executives. This company dominates its sector; its chips are the heart of an entire industry and ecosystem of applications suppliers. Every so often we have a person or team that wants to leave to start “their own thing.” They have IQ. They have technology and they have passion … but often they lack a sense of the “problems that need to be solved.” They come to us asking where they can apply their talents.

This sense for the problem (aka: know what the questions are, derived from domain expertise & understanding the “pain”, etc) is often more important than the technology (aka, the answers).

In some ways, this is more about “exposing” this richness of talent to real world experiences, needs and gaps. Smart people are really good at solving problems: but what are the problems?

Running an idea crucible is even harder work than an incubator … but it may be what is needed.

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Over the past 9 months since I wrote the first piece on this subject, I have talked to many entrepreneurs from India. My net conclusion happens to be that very often, entrepreneurs are working on the “wrong” problem. Even though Sujai Karampuri had strongly objected to Dave and my hypothesis on this, saying, that entrepreneurs who don’t know what problem to solve are not worth working with, (long discussion; to read it, please go to the comments on the original post), I happen to disagree fundamentally on this point. I am sticking to my original hypothesis, especially now that I have validated it over the last 9 months.

A lot of Indian entrepreneurs are starting their entrepreneurship journey with really bad ideas.

And you know what? Bad ideas produce bad (read unfundable) businesses.

So what shall we do? Ignore these entrepreneurs?

Well, that’s what the VCs sitting with piles of cash in India are doing.

I think, however, many great entrepreneurs have all the attitudinal attributes early on, but simply haven’t had enough business experience to know what problems to go after. I know, because during my first venture, I did not have a brilliant idea. But I had energy, courage, leadership skills, voracious learning capacity, huge creativity, risk tolerance, … the market related stuff I learned later.

This is why, I strongly believe that putting a bunch of young entrepreneurs with those attitudinal skills in an incubator, under some systematic mentoring from someone who knows what (s)he is doing, would potentially develop a pool of great serial entrepreneurs.

In doing so, often, the original “idea” with which the entrepreneur started, may need to be thrown out of the window, to be replaced by something more “viable”, perhaps developed under “adult supervision”. However, I wouldn’t throw out the baby with the bathwater.

I strongly feel that my specs for an Incubator Fund would include what Dave calls an Idea Crucible.

Related reading:

* Indian Incubator Fund: Specs (Part 1)
* Indian Incubator Fund: Specs (Part 2)
* Concept Arbitrage (This series, lately, has become more about ideas and opportunities that I notice, and would like to see some of you, entrepreneurs, take up.)

This segment is a part in the series : Incubator Funds in India

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Incubator Funds in India: Management Team - Sramana Mitra on Strategy Friday, November 16, 2007 at 9:59 AM PT