(The Weekend Insight) - Why Most Indian University Incubators Don’t Create Scalable Startups

In today’s deep-dive, we explore why most university incubators in India fail to produce real startups. Outside IITs, IIMs, and BITS, incubators often look impressive on paper but lack real outcomes. Empty rooms, underused resources, and idea-stage projects reveal deeper issues - student mindsets, poor mentorship, limited funding, and cultural barriers. We unpack what’s broken and what must change.

In India’s booming startup ecosystem, it’s hard to miss the enthusiasm around university-led incubators. Government schemes advertise them, college websites showcase them, and brochures proudly list the number of startups "incubated." Yet, walk through the corridors of most of these incubators - especially outside of IITs, IIMs, and BITS - and you’ll find empty seats, unused 3D printers, and startups that are little more than pitch decks and WhatsApp groups.

At the surface, the intent is clear: universities want to support student entrepreneurship. But the outcomes tell another story. Most university incubators in India don’t produce scalable startups. The failure is not about a lack of ideas, but about a lack of ecosystem. The reasons behind all this are not new; they've been around for a long time and consistently lead to the same disheartening outcomes.

Let’s start with the student mindset. For many college students, “entrepreneurship” is something to mention on a resume or a LinkedIn profile, and not a full-time obsession. They join incubators because they think it will help them stand out during placements. Their ideas are rarely market-tested, and the goal is often participation, not persistence. Some join for certificates or to participate in business-plan contests, often mimicking startup jargon without a real grasp of execution. While there are a few exceptions, they don't happen very often at all. For example, in a survey conducted at Sant Longowal Institute of Engineering and Technology, over 85% of student-led startups incubated between 2019–2022 dissolved within a year after failing to receive continued support or traction.

Then there’s the professor’s perspective. Most incubators are faculty-led, and many professors don’t have startup experience themselves. Their incentives are tied to publishing research papers, not building real companies. As a result, mentorship tends to be theoretical. When a student startup faces real-world problems such as acquiring users, pricing products, managing burn; there’s little practical guidance. Unlike Stanford or MIT, where professors often co-found startups and have deep industry networks, most Indian professors are disconnected from the startup world. Even worse, in some cases, professors block entrepreneurial pursuits if they clash with academic schedules.

The lack of quality mentorship is one of the most cited reasons for incubator failure. A well-run incubator is not only a co-working space, it’s a learning ecosystem. But many university incubators mistake infrastructure for enablement. They offer desks, Wi-Fi, and a few demo kits, but no structured feedback loops, no customer connect, and no real-world guidance. Events are often photo-ops. As a result, students ideate enthusiastically but lose steam soon after.

Funding is another structural weakness. Incubators at IIT Bombay’s SINE or IIM Ahmedabad’s CIIE have access to grant money, alumni networks, and early-stage VCs. A student team at these institutes can raise a ₹50 lakh grant with the right pitch. But in most of the other colleges, the incubator barely has a budget for air conditioning. Startups here rely on bootstrapping, prize money from business plan competitions, or family savings - all of which dry up fast. Without capital, students cannot test, iterate, or scale. Their ideas stay stuck at PowerPoint level. Even where grant programs exist, the application process is bureaucratic and delayed. For instance, at Madan Mohan Malaviya University of Technology (MMMUT) in Gorakhpur, two student-led teams waited over a year for disbursement of a ₹2 lakh prototype grant from the Department of Science and Technology, which eventually led both teams to shut down prematurely.

But perhaps the most invisible problem is the disconnect with industry. Most university incubators outside top-tier institutions have weak, or no ties with real-world businesses. There are no weekly sessions with founders, no guest lectures from operators, no pitch days with local investors. Students build solutions in a vacuum, rarely engaging with actual users. In contrast, successful incubators like SINE host demo days, connect students to alumni founders, and bring in early adopters for product feedback. That ecosystem advantage is not accidental, but it’s cultivated over the years.

There are few efforts like Kerala Startup Mission or T-Hub that try to bring in private sector mentors and create statewide networks. But scaling that into thousands of colleges is a different challenge altogether.

The cultural backdrop also matters. In many parts of India, especially tier-2 and tier-3 cities, families still see entrepreneurship as risky and unpredictable. Government jobs are preferred. Parents hesitate to fund or support startup ambitions. Even within colleges, peer culture doesn’t always encourage risk-taking. Entrepreneurship cells are often small clubs without much traction. In such a setup, even motivated students struggle to go beyond the idea stage. One example is the case of a Bhubaneswar-based student from Kalinga Institute of Industrial Technology (KIIT) who built a freight management tool during his final year, but shelved it entirely after his co-founders accepted MNC job offers during campus placements. In another case, a biotech student from Jaipur National University discontinued work on a low-cost water testing kit due to pressure from her family to focus on government job exams.

Government schemes like Startup India or the Atal Innovation Mission have tried to bridge these gaps. They offer grants, incubator recognition, and incentives. But the execution varies wildly by region. South India leads in adoption, but in many northern and eastern states, incubators exist on paper and in press releases more than in practice. Bureaucracy also slows down disbursements. For example, at Dr. A.P.J. Abdul Kalam Technical University (AKTU) in Lucknow, faculty managing the incubator reported that funds for 2021 startup grants were delayed by 14 months. Meanwhile, two of their most promising student startups, one in agri-mapping and one in vernacular content delivery, had already shut down due to lack of capital.

New education policies like NEP 2020 do promote entrepreneurial thinking and mandate incubation centers in higher education institutions. But implementation depends on each university’s leadership. Top institutions have the autonomy, faculty, and culture to integrate these ideas. Others do it to tick boxes. It’s not uncommon to see incubators with flashy names but no full-time staff, no structured curriculum, and no follow-up with startups once they graduate from a program. Even industry partnerships, when signed, remain dormant MoUs filed in plastic folders.

In rare cases, student startups from smaller incubators do scale. MyHarvest, incubated at Anna University, has expanded its customer base and raised modest capital. Genetico, from Amity Innovation Incubator, received funding from BIRAC and IIT Mandi for its health-tech platform. But these are the exceptions. And they succeeded because of determined founders who went beyond what the incubator offered, not because of it. In most cases, students who succeed either self-teach from the internet, find mentors outside college, or hustle through Twitter, Reddit, and local meetups.

Some universities like BITS Pilani, with a strong alumni base, are able to bridge the gap. BITS alumni have founded companies like Swiggy and redBus. The Pilani incubator has supported over 75 startups since 2004. But again, this success hinges on a larger support system - one that blends academic freedom, funding access, and entrepreneurial culture. Without all three, incubators remain shells. In fact, BITS Pilani often benefits from students starting early in first or second year and continuing their work through internships, summer breaks, and alumni introductions. That long runway makes a difference.

Compared to India, university incubators in the US and Israel follow a different playbook. They prioritize deep industry collaborations, offer founders access to angel networks, and hire former entrepreneurs as mentors-in-residence. At Stanford, the startup community is closely interwoven with venture capital, allowing a founder to go from an idea to seed funding in under six months. MIT’s incubator not only gives space - it gives strategy, connections, and credibility. That maturity is still rare in Indian institutions.

University of Wisconsin-Madison’s Discovery to Product (D2P) program has shown how mid-tier public universities can foster scalable startups through partnerships with local industries, access to seed capital, and dedicated entrepreneurial training. Startups like Fetch Rewards (a consumer loyalty app now valued at over $2 billion) started out of the University of Wisconsin ecosystem. Similarly, the University of Maryland’s Startup Shell incubator has supported ventures like Leverege (IoT solutions) and Kinglet (workspace marketplace) by cultivating student-founder-led initiatives with flexible credit systems and seed mentorship.

So, what can actually work in India? For one, incubators must stop trying to be everything. It's better to concentrate on one thing than to try to do too many things at once. An incubator that only backs hardware ideas, or only D2C ideas, or only biotech ideas, can attract relevant mentors, filter better startups, and focus on building capabilities in a defined domain. This sectoral clarity helps avoid generic advice and brings in real community champions who care.

Second, mentorship should come from doers, and not academics. An ideal incubator should have a roster of alumni founders, visiting entrepreneurs, angel investors, and product folks from the industry who spend time with student teams. Virtual mentorship models can also help smaller colleges plug this gap without spending a fortune. Programs like UpSurge, NEN, or Atal Tinkering Labs can be made more integrated, with peer-to-peer founder circles and local founder cafes.

Third, the measure of success should shift. Instead of counting the number of startups “incubated,” universities should track the ones that raised capital, found product-market fit, or exited. That mindset shift, from activity to outcome, can change how incubators operate. Metrics like Net Promoter Score (NPS) for founders, follow-on grant success, or real user traction should replace vanity numbers.

Policymakers also have a role. The government could launch a micro-grant program that rewards student teams for validation milestones, such as shipping a prototype, getting their first 50 paying users, or making ₹1 lakh in revenue. These signals matter more than paper-based metrics. Also, public funding should be tied to transparency. Incubators should publish annual reports, detailing what worked and what didn’t. Without accountability, the system will keep producing flashy failures. A real-time dashboard of incubator outcomes, updated quarterly, could improve visibility and comparison across states.

Finally, cultural change is slow but not impossible. Entrepreneurship must be seen as a real career path, not a backup plan. It starts with stories. Colleges should celebrate startup journeys, even if they fail. Invite not only unicorn founders, but also those who tried, learned, and pivoted. Show students that it’s okay to build, and fall, before you fly. Stories from small-town founders, blue-collar techies, or micro-entrepreneurs on WhatsApp can inspire more than polished TEDx speakers.

Because behind every failed university incubator, there are students who tried. Some half-heartedly, but some with real conviction. They deserve more than a dusty desk and a laminated certificate. They deserve an ecosystem that bets on them before the world does.