T-Hub: An incubator with invisible start-ups

Recently, I came across a news headline – “Telangana to house world’s largest incubator. T-Hub has completed two years of operation in November 2017 and has achieved 346 start-ups, 835 associated start-ups and 190 alumni start-ups, besides raising $33.6 million start-up funds”.

The above piece of information came on 22nd March 2018 in The Hindu, when it ought to have been reported in November 2017 on the 2nd anniversary of T-Hub. Why does an Indian state government report financials in $? In all its more than two years of existence why has the T-Hub, but not its startups, been in news always? Got me a little intrigued. So I scratched the surface and this is what I figured out.

The Idea:

The visionary leader – KTR (as per the T-Hub official website) who was instrumental in setting up the T-Hub had described the process as “Walk in with an idea and walk out with a product”. But, now after two years of inception, T-Hub CEO Jay Krishnan said, “A person with an idea can still come in, but we are looking at revenue positive start-ups because the market has validated that the idea will work.” Well, I suppose, ¬†ideas do change with times.

The Start-ups:

The T-Hub website does not list even a single start-up. Its Programs link has many programs, Events link says that there are no events currently listed and its Blog link takes us to all sorts of theoretical blogs that can be found anywhere under the sun. No mention of the start-ups at all.

I checked their Facebook page from 29th March 2018 to 1st July 2017 (nine months but two days), and all I could find were 4 start-ups selected for Forbes 30 Under 30 Asia 2018 list, 20 start-ups selected (out of which 7 were from Hyderabad) for a certain programme, some start-ups covered by Yourstory.com and Atom – The News Minute (about 8-9 in number), a couple of start-ups getting some awards and that was about it.

The Youtube channel had one start-up, 14-year-old Chandrasekhar’s innovation at T-Hub, mentioned.

I have not checked their Twitter account.

I suppose funding of 220 Cr is an achievement, but for whatever reason, this does not get listed anywhere on the T-Hub website or its digital channels, not even for a single start-up. And even more surprisingly, I could find only 4-5 start-ups, on the internet, that have claimed to get venture capital, but no mention of the money part and Crunchbase also has no data for them. It is almost like one should not talk about money when in T-Hub.

Hyderabad hosted the Global Entrepreneurship Summit in November 2017. Back then, Jay Krishnan publicly shared that T-Hub start-ups are participating in GES, but he cannot disclose their names or their numbers. Wondering why so much of secrecy?

Marketing:

T-Hub shows off all the distinguished visitors it gets and all the programs it conducts. One is deluged with the activities of its CEO Jay Krishnan and COO Srinivas Kollipara. Of course, there is the omnipresent KTR all over the T-Hub. Just that the mention of the start-ups is extremely limited. Seemingly, T-Hub does not exist for the start-ups but start-ups happen to be just incidental in the self-centred world of T-Hub.

Financials:

Currently, T-Hub charges Rs. 7,000/- + taxes for a work-station. It has a sitting capacity of 800. That makes revenue at Rs. 56 lacs for a month (with cabin-sitting, it might vary, but not by a great deal). Apart from rentals, T-Hub does not charge for any of its infrastructure/facilities.

Gachibowli area, where T-Hub is located, has a rental of Rs. 50/- per sq ft for office space. With all the facilities of T-Hub, its rent should ideally be more, but let’s take it at the base minimum of Rs. 50/- per sq ft. T-Hub has an area of 70,000 sq ft, so it should earn Rs. 35 lacs as rentals at market value. Add, the other expense heads – maintenance, internet, security, and housekeeping; leave aside the staff costs, T-Hub will be hard done by to cover the operational costs for itself. With the staff costs, it is sure to lose money, forget about recovering the investment of Rs. 40 Cr for this facility.

On top of it, there is another facility – T-Hub Reactor which is 3.6 lac sq ft, that is coming up in a year’s time. The government has started similar such incubators in 4 district HQs, and if it cannot recoup its investment in the current T-Hub, other incubators are going to bleed.

Conclusion:

Government’s intentions are noble as always and instead of facilitating, it gets into providing by itself and in the process, creating loss-making entities all around, like the case has been ever since with the intentions getting moth-balled and the results nowhere to be seen.

Can the state government make public – the list of start-ups with its investments raised and its own financials in setting up these incubators with the timeline of earning back the investment? There will be some qualitative benefits of brand equity and all for the state, and the government can write that as an asset in the balance sheet, but what about the P&L of T-Hub? And to think of it, T-Hub is touted as a model for other states to follow.

All the start-ups will surely not succeed, but if the government continues to work like this, even the incubators will not succeed and their failure will even be bigger than the start-ups. All said and done, instead of encouraging entrepreneurship, such misadventures are only going to make a big dent in the public finances, people’s trust and the way our eco-system gets driven.¬† Incubators will only sink and with them, the public money; nothing new for the government though.

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