The fact that India is on the third spot in the largest startup ecosystems in the world list is proof enough that the startup scenario in the nation has more, many more success stories yet to be written. Falling behind US and the UK, India now boasts flourishing startups in cities other than its metros. The website, entrpreneur.com did a study to identify the best Indian cities that hold the best prospects for a startup. Here is the lowdown on their findings.
Bengaluru still remains on the top of the list of desired places for those who wish to launch a startup. Companies that have shifted their base to Bangalore owing to the overall supportive environment in the city include FreeCharge, Ola, InMobi and Quikr. Factors like a heavy density of investors, good mentorship support and a government that’s pro-active about bringing more business to the city add to Bangalore’s attractiveness quotient. The downside is the poor quality of public infrastructure which with more floating population flowing to the city, is a priority for the government to revive.
Despite the fact that Delhi has a business pedigree-thanks in large part to the trading acumen of the Punjabi and Marwari communities, the growth of the region as a whole owes a lot to its satellite towns- Gugaon and Noida. Relatively lesser rental costs and the presence of a strong consumer base have made these places attractive to businesses in different industries including education, e-commerce and healthcare. Contrasting with Bangalore, the culture of Delhi/ NCR is more conducive to traditional office set-up than a relaxed work ambience. Also, the Delhi government hasn’t yet shown decisive interest in making the region more pro-business.
India’s quintessential financial hub, Mumbai still bubbles over with business activities the volume of which most other Indian states couldn’t match. However, an inefficient public infrastructure still limits Mumbai’s growth. Another problem faced by businesses-especially startup, is the incredibly high real estate price-something which has given Bangalore an edge over the dream-city. However, the fact remains that Mumbai is a significant gateway to the nation’s imports and exports and has a strong presence of trader/ business communities. The development of Powai- a suburb in the North-East of Mumbai in recent years has added value to the state for startups. Companies that started in Powai include housing.com, toppr.com and Instamojo.
Chennai is fast shedding its image as the auto-manufacturing hub of the country. Not that they’re shutting down all those factories. Rather they are opening more business centres-this time belonging to another industry- in the Software as a Service(SaaS) sector, to be precise. The move has seen companies including ZOHO, Unmetric, Freshdesk becoming key players in Chennai catering to a global clientèle. Another significant factor is that the city has attracted 38 percent of new tech talent(as per a Linkedin report released in June, 2014). Though the figure lags behind the 44 percent for Bangalore or the 43 percent for Pune and Hyderabad, it’s still commendable all the same.
Where Chennai truly lags is in the investor-concentration. As opposed to Bengaluru’s 220, this South Indian state has just 50 angel investors. Raising the number of incubation centres for startups from the current four would also be welcome.
Hyderabad took a beating on the business front when Telengana was detached from Andhra Pradesh. In the aftermath, about 1000 SMEs that had manufacturing units in Andhra Pradesh and offices in Hyderabad shifted out of the city. But the city still boasts the presence of giant MNCs including Facebook and Microsoft-a company that has its main campus in the city. The Telengana government’s recent announcement about Google setting up their biggest campus outside US in the state is also welcome news. Hyderabad is yet to prove as a successful ground for startups. But, aside from the presence of a highly educated workforce, the low cost of living is also a factor that makes Hyderabad attractive for startups.
The industries in which start-ups are currently flourishing in Pune are e-commerce, education, ERP and marketing and advertising. Innovation is a key driver for the city’s progress and the presence of 350 corporate innovation centres is illustrative of the scenario. Compared to Mumbai, the city has a better public infrastructure and the proximity to Mumbai also works in favour of the city. Though significant startup successes are yet to happen in Pune, it’s doubtless that the city holds immense potential.
One of the cities that make up the ‘second wave’ of India’s startup hubs-the other cities being Kochi, Kolkata, Chnadigarh and Jaipur- Ahmedabad has a Centre for Innovation Incubation and Entrepreneurship that has already been the breeding ground for over 100 startups. The National Design Business Incubator plays a key role in supporting design-based startups. One aspect that works well for Ahmedabad is the government’s pro-business stand, influenced undoubtedly by the governance ethos of Gujarat.
Kochi has moved on from being a laid-back ocean-side tourist destination to emerge as a major business destination in Kerala. The incubator, Startup Village which started functioning in 2012 plays an important role in furthering the progress. Having supported 679 startups, the incubator is considered as one of the best in the country- a model that has been replicated in other Indian cities including Madhya Pradesh, Uttarakhand and Chhattisgarh. It’s mostly software product startups that are making headway in Kochi. The city has also signed a MOU with the California based Menlo Park city for an year of sharing technology ideas and talent. This would result in about 100 start-ups based in Kerala visiting Menlo Park and vice versa to understand the differences in the two markets.
Kolkata’s USP for start-ups remains the affordable realty. However, that’s one USP too short of meeting the requirements of many a startup. The industry body, NASSCOM seems set to bring a change to this as they have launched a start-up warehouse in the state collaborating with the the West Bengal Government. Absence of a strong investor-base as well as lackadaisical public infrastructure are aspects that must be addressed if Kolkata is to reach its full potential.
10. Chandigarh & Jaipur
The presence of these two cities reveal that the startup story in India is not something that’s confined to the metros. The fact that Chandigarh has a planned infrastructure plays in favour of the city whereas Jaipur’s strength remains the SME businesses in the handicrafts industry. However, at present the two cities function as feeders to Delhi/NCR. And Girnar Software-the company behind the auto classifieds portal, CarDekho is the sole success story to have come out of Jaipur on the startup front. However, the prospects certainly look bright for these cities.
With a highly collaborative work culture within organizations and a zest for innovation, startups are changing the way businesses function in the country. The impact is not just limited to business though as such changes have a broader social repercussions-take the case of Bangalore for instance- a pensioner’s paradise that’s now teeming with youngsters whose many activities would raise more than a few elderly eyebrows. More changes seem to be in the pipeline for the nation as more cities come ahead to support startups.