Neil Banerjee
SME Futures spoke to Prasad Kokil, Founder and Director of Marathwada Accelerator for Growth and Incubation Council (MAGIC) on how it provides impetus to upcoming start-ups and budding entrepreneurs, including the rural ones. He also speaks about the entire process that MAGIC adopts to crystallise an idea, from its inception to its final form.
Here are excerpts from the interview:
What’s the whole thought and idea behind setting up MAGIC?
MAGIC is not just an incubation centre but also an accelerator and business incubator. It’s an initiative by an industrial association – the Chamber of Marathwada Industries and Agriculture (CMIA). CMIA is a 55-year-old organisation; it has played a catalytic role in the development and promotion of the Marathwada region in the industrial landscape. The idea was to help budding entrepreneurs by giving them guidance and business knowledge. For this, we started an incubation centre in 2015.
What’s MAGIC’s role regarding start-ups? How does it help them?
To answer this, we must first know what a start-up needs. The most important thing that a start-up needs is to convey its idea and thought, and an ear that will listen to them. People need approbation that their idea is good, and this is something that MAGIC can work on with them to further crystallize it.
If the idea is innovative and good, some pertinent questions arise: Is there a possibility for hand holding? Are incubators willing to give a certain degree of mentorship and time to it? Will they provide space for the setup? Will the startups be provided with workshops, if required? Will anyone provide assistance for industry access? Will we get help and funding for making prototypes of our products? These need to be answered.
We have started an initiative called ‘Saturday Clinic’ to pay heed to these requirements at the fledgling stage of a start-up. For our ‘Saturday Clinic’, we meet around 9 in the morning. It went virtual during the pandemic. Now we’re running it in hybrid mode.
People come to us directly and tell us about their ideas; we keep crystallizing them. We identify the shortcomings in their ideas and suggest ways to plug the loopholes.
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During the mentoring sessions, either a person breaks or stands strong for his/her idea. This shows us whether a person is actually serious about their idea or not. When a person sticks with us after 3-4 sessions, it shows that he/she is really serious about the idea. After this, we hold one-to-one mentorship sessions with that person. We provide him/her with 4 hours of mentoring each month: 1 hour per week. If the person feels like there is some concern, we coordinate and allocate the required time to them. The whole process is a journey of 1 -2 years.
So, what kind of questions do you put up in the Saturday Clinic sessions? What do you look for in a person during these sessions?
The sessions are for 2-3 hours, and we only take in around 3-4 entrants. We ask them for a presentation; we provide them pre-made templates in which we ask various questions. We question them about their product. We ask: What is your problem statement? Is your product a vitamin or a painkiller? What is your target audience? Have you conducted any surveys? How many people did you include in the survey? etc.
A product needs to connect with the audience. Mock drills are held to understand how clear the person is about their idea. This helps us further crystallise the idea. Questioning and focusing on a path helps to further clear the doubts and strengthens the idea’s foundation.
How do you take the idea forward once you know it will stand its ground?
After the idea is conceived, we start working on the making of a prototype, also known as a Minimum Viable Product (MVP). After successfully creating an MVP, the person is keen to start selling their product in the market. We sort out for them their first potential customer and notify them about all the developments. We also help them to send their proposal to the customer, identifying elements like what is the customer base of the product and its business potential? What are the technical and commercial resources associated with it? What are some of the government schemes available in the domain and so on? When the person gets a hold of the market and starts to learn more about it, we suggest to them to start pitching their products to companies to accelerate their growth. They may either get a grant or they need to share their equity to get funds and resources for quicker growth. When the start-up receives a grant, it is well received but it’s a long-winded process.
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Where do you go from here?
When the product has completed around 18 months in the market and is performing well, we ask the start-up to acquire loans and funds for their working capital. For this, we have signed an MoU with the Bharatiya Yuva Shakti Trust (BYST). BYST consists of retired bank managers who help to submit the forms to the banks and the banks too approve the loans knowing that BYST carries out thorough checks and thus they trust them with relatively quicker approvals.
Even after getting bank loans, the start-up needs help in planning their layout, sourcing, jig fixture etc. These technical aspects of mentorship are provided by our technical experts. We make sure that the start-up focuses on their annual turnover, and also manages their top-line and profit.
Start-ups have a problem with channel margins: to determine the cost that goes into making the product and then at what price to sell it to the consumers. With cross questioning, we can develop a top process. We have setup a co-working space for 20-30 people in MAGIC where they get table space and common facilities.
The process is free for a year if you are selected in the incubation process. After a year, we charge a nominal rental fee.
How far-reaching has been MAGIC’s impact and contribution?
We have supported 14+ start-ups that have now moved on to become full scale businesses and currently, we are mentoring around 128 teams. Out of the 128, we have provided co-working space to 28, while the others connect with us virtually. We have start-ups from various institutions like the Bharatiya Hindu University (BHU) in Varanasi, and from states like Delhi (IIT) among many others.
We have tie-ups with around 35 organisations that include Marathwada University, the ICT Mumbai campus, and the Shri Guru Gobind Singhji Institute of Engineering and Technology in Naned among others.
We conduct hackathons every year and it has helped us to reach a pan India level. We use this pipeline to channelize and use the links accordingly.
What has been your experience with grassroots entrepreneurs?
We support grassroots innovators. We’ve found such wonderful innovations from the rural space. A person made a razor similar to the Gillet’s disposable one for which he won a prize at the national level. Then, there was another innovation which stunned us. A person made devices/apparatuses for a motorcycle that could turn it into a vehicle that could do the tasks that a tractor does.
There’s a pool of rural talent. They know the engineering aspect, but they are not so good at doing business and marketing. We help them by acquainting them with chartered accountants and bankers. They teach them about how to make profits and also dispel their doubts and iron out their concerns.
We give them grades on their tasks and they must acquire a certain amount of credits to qualify for the continuing procedures. They are given further exposure through workshops, where they are taught more about pitching their products and selling them.
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The SME culture is growing in India. Do you see any change in the SME landscape in the country? Also, what common problems do the start-ups face?
One marked change that we have witnessed is that students have started to respect start-ups. They feel excited about doing something innovative and want to try it out on their own. They want to experiment with it. Students from even the remotest of areas want to do something in the start-up space.
People who want to participate in the start-up space need a support system. They need someone to assure them that they are behind them in every step that they take and during every mistake that they make. Support systems, as such, are increasing as well. Many colleges and individual initiatives (like ours) are coming to the fore to act as support systems. Colleges and academic institutions, which earlier focused on packages to promote their institutions, now work to support individual ideas and entrepreneurs as they want such people to come out.
MSMEs are the backbone of our country. It is the most agile, flexible and resilient sector of the country. With government support, and the upcoming and ongoing initiatives, the growth and development of India’s MSMEs will further accelerate.
Talking about the challenges, one of the major problems that start-ups face is to find funding for their prototypes. To have support in the initial stages is very important. Entrepreneurs must be given the chance to prove themselves.
Start-ups have a lot of work on their plate and having to wait for university grants to be cleared is a big demotivating factor.
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How does MAGIC earn its profits?
This is a platform where we want to give. There comes a phase when you earn money and open your business. Then comes the second phase where you want to pave and develop the path that you have come through for the future generations. This is to help the budding entrepreneurs surmount the difficulties (which we already have) in a shorter period of time. MAGIC gains goodwill and acknowledgement and feels proud that more and more people want to connect with it. These are our assets.
We plan to launch our MAGIC Angel platform where we will focus on promoting young entrepreneurs to get associated with it and teach them about investment and reserve funding to enable them to easily venture into the business world.
