ERIK AZULAY, Executive Director, Nexus Incubator, New Delhi, and Founder and President, Alliance for Commercialization and Innovation
Research, Austin, Texas.
Q. What draws you to India in a very specific capacity of supporting entrepreneurship and startups as Director and President of ACIR (Alliance for Commercialization and Innovation Research)?
I moved to India and, with the help of the US government, ACIR built Nexus, an innovation hub and business incubator situated in New Delhi. ACIR is a nonprofit organization that promotes innovation and entrepreneurship education. When people ask us why we come to India to work with the startup ecosystem, I respond that because the USA and India are the oldest and largest democracies, respectively, we have a unique relationship that is only getting stronger. I have spent the last ten years working in India where I have witnessed the development of new levels of economic, cultural, and educational relations between the two nations. Given that India is currently the third- largest startup ecosystem in the world and is also the most populous country, the potential for innovation and entrepreneurship are unrivalled in this country. The startup ecosystem’s rapid expansion and the shortage of knowledgeable incubator managers and mentors who can support these startup entrepreneurs as they launch and expand are the current challenges. This is why I travelled to India as a serial entrepreneur. India currently has a one-of-a-kind potential for impact. I wanted to share my experience with you in the hopes that you might benefit from what I’ve learned, avoid some common blunders, and learn from American best practices for invention, incubation, and entrepreneurship
What are your thoughts on fostering economic development by enhancing innovation infrastructures, technology commercialization, and startup incubation?
India faces distinct challenges. Startups and entrepreneurship face India’s massive population and innovation size. Second, scaling a technology to have an effect in the price-sensitive Indian market is tough. Thus, expanding companies to a level where price is comparable or acceptable to the target market is exceedingly difficult. However, if one can succeed in India, they can position their startup to grow locally and internationally. India’s startup ecosystem will thrive if its technology or solution can be scaled and be cost-sensitive to users. We’ve seen Indian firms thrive and expand globally.
Q. What steps would you prescribe for deep tech startups founders to move out of the development phase and take new technologies to the market? How can one ensure that new ideas cross the “innovation chasm” and actually see the light of day?
Deep tech firms have gained popularity due to US-India agreements on emerging and deep technologies. Deep technology has gained prominence in recent years. Deep tech’s obstacles and complexities set it apart from other entrepreneurship programmes. Deep tech startups face market fit and financial concerns. Deep tech takes longer and demands more capital upfront. Due to the fact that deep technology sometimes requires a longer incubation period, the topic of market-fit arises, and you are unsure of where this will fit in the application process. Unlike traditional entrepreneurship, one may immediately offer the prototype to industry and learn how it meets requirements and solves problems. Deep technology takes a long time to develop and requires upfront money for capital-intensive expenditures, making financing difficult. My advice is that startups should seriously consider a combination of private and public funding if they are operating in the deep technology sector. The government usually wants to finance and advance this technology because it’s in the nation’s best interest. Therefore, if one can use those initial grants to get moving before approaching private investors, it will buy one some time until one needs to approach the latter. This cycle is harder and longer. I underline these two points when I talk to business owners about their challenges: how to achieve market fit early on so investors are interested in your business and you are not building something obsolete in three years. The second is how to get the initial funding and continue to bring your technology to the market.
Q. One of the key challenges is organizations treating innovation as business as usual and not accepting the uncertainty that innovation brings. What are your “known unknowns” and “unknown unknowns” when it comes to the entrepreneurial ecosystem?
That’s a great question because entrepreneurs talk about incremental or disruptive innovation and how we work with the industry, but if you were a large industry partner and doing well, disruptive innovation would disrupt your business model. Which is fine, because you should be looking towards the future of innovation, but not many organizations are willing to modify what works now and bet on this new technology. It’s challenging to deploy disruptive technologies and garner corporation’s full support until they see the benefits. You’re right— innovation is business as usual—how can I make my model 10% better or solve this challenge 5% faster? Entrepreneurs must know that. So of course, there are the traditional unknowns: technology, financial, and market risks of disruptive innovations collaborating with large firms are underestimated. And traditionally there are many countries in the world including India, where you will observe a healthy skepticism between academia and industry. Entrepreneurs must know that. So, the idea whether a disruptive technology works with the industry is a known unknown that entrepreneurs should reckon with.
Q. What are your views on growth v/s sustainability in startups, especially considering funding challenges such as the “Funding Winter” and falling valuations in many startups?
Growth vs. sustainability is intriguing. You know that when markets are up, one method works, and when markets are down, another does. After a period of growth-at-all-costs attitude, the concept now is that value is more interesting.
Personally, I firmly belong to the value camp. Bootstrapping and organically expanding your firm to solve market challenges and show traction will attract funding regardless of the cycle. Your evaluation may be lower, but I feel this strategy is more sustainable and builds a stronger, more reliable organisation.
Q. During your last visit to Indore, you witnessed some of the technologies being nurtured under IITI DRISHTI CPS Foundation and interacted with founders. What is your view about the work being carried out at DRISHTI CPS and any suggestions for the foundation?
I was astonished in Indore. I visited IITI DRISHTI CPS Foundation for the first time and was impressed by the startups, especially your initial cohort. It takes time to set up the system and attract the right startup to show people your worth. Running an incubator or accelerator is all about people. You must bring the right folks. Incubators go beyond government-funded buildings. That is only the beginning.
When it comes to attracting higher value businesses, incubators stand out because they have a team who has managed startups in fields unrelated to their own and can help them avoid common errors and missteps. Startups and incubators need those people, as well as entrepreneurs running the incubator, entrepreneurs living there and providing them with tools, IP team members to protect your work, tax and compliance experts, and industry experts. It’s challenging to have the right individuals, but once you do, you’ll stand out from other incubators and accelerators around the nation.
When I visited the DRISHTI CPS Foundation, I was impressed since the team seemed informed, had clear goals and firsthand experience, and was partnering with numerous industries. Your excellent foundation for helping entrepreneurs to create a bright future, aroused my curiosity in knowing more about your TIH and how you work with your incubated startups.
Q. What initiatives could a technology innovation hub like IITI DRISHTI CPS foundation do in light of India’s constantly evolving and expanding innovation ecosystem in order to lead, promote, and improve this ecosystem even more?
Maintaining contact with industry partners is essential because while excelling in technology development is one area, commercialization requires consideration of the business side of things. For me, an incubator takes brilliant scientists or specialists who are well-versed in their field and have developed something incredibly intriguing. It is then crucial to determine whether this is a strong business idea. In this approach, we may endeavour to create a scalable, profitable, and sustainable business model for the technology, benefiting society. Building a successful incubator will depend on your ability to bridge the gap between industry and academia by bringing in industry mentors, industry partners, and other members of the business ecosystem.