SEED’s two-pronged approach to supporting enterprises through direct support and ecosystem building activities is founded on the belief that enterprises rely on both internal and external success factors to grow their solutions. Global efforts to build supportive external conditions through a connected entrepreneurship ecosystem in developing countries, however, often centre on metro areas. This leaves enterprises in secondary cities and rural areas excluded from ecosystem services, and unable to tap into ecosystem networks.

The Indian government has recently made moves to address this imbalance and catalyse investment into Tier 2 and 3 city enterprises as drivers of social and environmental change. With secondary cities experiencing high growth levels, startups are flourishing, providing localised solutions that can be scaled to other contexts.^[1] Government programmes such as the Atal Incubation Mission (AIM), which has made it possible to establish incubation centres at higher educational institutions in colleges and universities in Tier 2 and 3 cities^[2], Start Up India initiative, and regional government programmes are designed to build enterprise incubation infrastructure in secondary cities and support these high potential enterprises. BDS ToT Participant Umesh Agarwal from the Atal Incubation Centre of Manipal University in Jaipur remarks that the startup ecosystem in Tier 2 and 3 cities such as Jaipur is blooming, with increasing numbers of events, activities and involvement from ecosystem players.

Despite these initiatives, training programmes are not yet in place to ensure a high-quality standard of incubation and to give business development service providers the tools they need to support enterprises in non-metro cities. “With the Atal Incubation Centres turning one year old and the Karnataka-based New Age Incubation Network^[3] just over one year, incubators are starting to see challenges in their implementation,” highlights Manjunath Gogi of Sandbox Startups. “They can have a lot of industry experience, but may not have the tools to explain value proposition or impact assessment to an entrepreneur.” There is a gap in ensuring that investment into incubation services for enterprises draws on best practices and standards in business skills development training to create optimal value for entrepreneurs.

Bringing SEED tools and methodologies to non-metro cities

The opportunity to bring SEED’s tried and tested tools and training methodology to Tier 2 and 3 cities in India to fill this gap became clear during an earlier SEED replication workshop held in Mumbai in November 2018. As the first SEED replicator workshop in India, the workshop attracted interest from participants across India who travelled to Mumbai to attend, as such workshops are rare in Tier 2 and 3 cities. This was echoed by Manjunath Gogi, a participant of the first-ever SEED BDS+ ToT held in Mumbai earlier this year, who saw “a lot of scope for learning from the tools learnt in Mumbai in Tier 2 and 3 cities. They helped me a lot when teaching business development support, and in explaining to peers in Hubli.”

Partnering with Sandbox Startups and with support from the International Climate Initiative of the BMU, SEED brought a training of trainers workshop open to participants from any Tier 2 or Tier 3 city in India to Hubli, Karnataka. Over three days, 30 participants from across India worked on case studies using the SEED tools, met enterprises in Sandbox Startup’s incubation programme, and prototyped solutions to specific challenges faced by non-metro incubators.

The SEED BDS+ training was in-depth, innovative, interactive, and has brought a real value to all participants 
- Mr. Umesh C Agarwal, CEO, Atal Incubation Centre- Manipal University Jaipur

Prototyping to find solutions to challenges particular to Tier 2 and 3 city incubators

Incubators in Tier 2 and 3 cities face specific challenges. These include challenges of shifting the mindset of the entrepreneur to encourage them to tap into available resources. Sometimes, however, mobilising resources into the ecosystem, and attracting talent in the form of mentors and business development service providers is a challenge in of itself. Manjunath Gogi notes that “challenge for us is finding good mentors in Tier 2 and Tier 3 cities. Currently, we bring in many mentors from Tier 1 cities to provide training and workshops.” This was echoed by participant Dhriti Upadhyaya from AIC Banasthali, who remarks, “you can appoint a mentor, but the enterprises are resistant to working with them and are not satisfied. It is a challenge to get mentors on board and to encourage their equal involvement in the enterprise’s development.”

Another challenge mentioned includes access to tools for monitoring and evaluating the impact of the incubators and ensuring their effectiveness. Ensuring impact through incubation is also a challenge as it relates to capacity building of the staff, who have less access to training and workshops than in Tier 1 cities.

Challenges of incubators in Tier 2 and 3 cities also occur at an ecosystem level. Umesh Agarwal points to a fragmented ecosystem with “no centre or agency organising among the incubators,” and few opportunities to collaborate and learn from peers. The fragmented ecosystem stretches available resources such as mentors among the incubators and creates competition. Participants of the training worked together on Day 3 to prototype solutions to these challenges and identify best practices for collaboration and peer learning.

Delivering benefits to BDS providers in Tier 2 and 3 cities

“When compared to Tier 1 cities, training such as these deliver impact that carries an impression for a long time,” notes Manjunath Gogi. Follow up discussions with participants highlighted a range of benefits derived from the training, including building a network, gaining insights into a toolifed and collaborative approach, and new ideas for sustainable and impactful incubator programme design in Tier 2 and 3 cities. Dhriti Upadhyaya highlighted the benefit of discussing business development support “with people from all over India, including those who were much more experienced,” especially when it came to working on different enterprise case studies, which “helped to understand what parts of a business plan to question or which questions to ask enterprises.”

Tools such as the business model canvas, financial assessment, and customer mapping helped BDS providers to further refine their BDS approach while encouraging peer learning. The benefits of collaboration between incubators and other enterprise support organisations were also apparent. Following a tour of the Sandbox Startups facilities, including a maker space and coworking labs, BDS providers prototypes solutions for increasing enterprise access to equipment, such as engaging departments at the university. As Umesh Agarwal suggested, “we all want to contribute knowledge and learn more to help support entrepreneurs in developing the country. We need to work together to leverage the strengths of each ecosystem player.”

Scaling BDS impact across non-metro cities

As the training participants further the implementation of their support programmes and integrate the tools and methodologies they learnt, SEED is ready to scale the impact of this training across Tier 2 and 3 cities. “There are a lot of incubation centres all across India, so in the future, it would be good to also have these training in other Tier 2 and 3 cities in other geographies.” – Dhriti Upadhyaya.

^[1] Himani Mishra, ‘Factors Inducing Entrepreneurship Growth in Tier 2 and 3 Cities of India.’ 04.02.19, Entrepreneur. Retrieved 17.10.19 at https://www.entrepreneur.com/article/327422

^[2] Tier 2 and 3 cities in India are classified by population size and include cities such as Jaipur, Hubli, Coimbatore and others.

^[3] NAIN is a scheme from Dept. of IT, BT and S & T (Govt. of Karnataka) to promote innovation in Educational Institutions and support them to be Entrepreneurs.