Startups suffer from very high mortality rates—much higher than those of larger, well‐established companies. Many researchers believe that business incubation (BI) acts as a helping hand and encourages entrepreneurial development by creating a network of knowledge and resources. Still, few have studied the effect of the incubation on knowledge gain, which leads to quicker innovation compared to their competitors. This study used a resource‐based view and organizational learning theory to explore the effect and mechanism of incubation on the absorptive capacity (ACAP) and innovation speed (IS) of startups in the Indian context. Using survey data from a sample of 344 technology intensive incubator firms in India, we demonstrated that the incubation mechanisms, namely business incubator selection performance, monitoring, and business assistance intensity and resource munificence, help startups to explore, transform, and exploit knowledge and information to bring technology and products to market quickly. Data were analyzed using hierarchical regression, and mediation was tested using Baron and Kenny’s (1986) method and a Process macro developed by Hayes (2013). The results of this study prove that absorptive capacity dimensions such as exploratory, transformative, and exploitative learning among startups are augmented by business incubation services, which results in the rapid commercialization of technological products.