The start-up units located within the COEs will be offered tenure for a limited period of time while they test their ideas and validate the product or service offering. Once the units reach scale-up and have cash flows, they will be encouraged to exit. Typically, the different stages may take the following time period to reach scale-up.
- Stage-I (Formation Stage) 6 months
- Stage - II (Validation Stage) 12 to 24 months
- Stage - III (Test Marketing) 6 months
The total period for start-ups may be 36 months (3 years) at the maximum to reach scale-up
After successful scale-up, the unit will be considered to have 'graduated'. The performance of the units would be periodically reviewed. The units not able to perform as per stipulated indicators and not able to show satisfactory progress may be asked to exit. Exit will be both on account of success - i.e. the unit is ready to graduate, as well as on account of failure of unit at some phase - viz. either at ideation or at scale-up. The time of successful exit will be based on one or the combination of following core factors:
- Whether the start-up/ company based on its revenue growth has become cash flow positive;
- Whether the start-up/ company has orders/ market access from relevant customers,
- Whether Angel/ Ventures have invested in the start-up company,
- Has the company qualifies for Income Tax benefits under section 80 IAC and Section 56 as per the benefits under start-up India program.