4 cities power India's start-up rush, but emerging hubs may be key to the future

May 07, 2022 01:49 PM IST

A record 44 start-ups turned into unicorns in India in 2021, when India overtook the United Kingdom as home to the third highest number of unicorns after the United States and China.

Earlier this month India reached a major milestone - home to 100 unicorns, or start-ups with a valuation of over US$1 billion. The speed with which we achieved this milestone is truly marvellous - this happened in merely 11 years. The first Indian start-up to achieve unicorn status was in 2011.

By January 14 of this year we had 83 unicorns. Now we have 100.(HT File Photo)
By January 14 of this year we had 83 unicorns. Now we have 100.(HT File Photo)

A record 44 start-ups turned into unicorns in India in 2021, when we overtook the United Kingdom as home to the third highest number of unicorns after the United States and China.

By January 14 of this year we had 83 unicorns. Now we have 100.

Among other things, what these numbers indicate is our success at creating start-up hubs - cities that cradle start-ups. It is, at least in part, because of these cities and the enabling environment that they provide that India has the third largest start-up ecosystem in the world.

Currently, four cities - Delhi, Bengaluru, Hyderabad, and Mumbai - are the larger start-up hubs in the country. Then there are cities fast emerging as viable hubs with effective start-up ecosystems - cities like Chandigarh, Ahmedabad, Bhubaneswar, Indore, Chennai, and Pune. This is thanks to the convergence of a range of factors like the availability of quality talent, cheaper real estate, and improving access to capital with increasing density of investors and mentors.

But what is it like to birth a start-up in any of these emerging hubs?

I would like to explain with the example of Indore.

The largest city in and the economic capital of central India, Indore has an Indian Institute of Management and an Indian Institute of Technology, as well as other quality higher education institutions. These ensure availability of high-quality manpower.

Additionally, the state government has talked about making Indore a 'start-up capital', i.e., encouraging start-ups in drone technology and IT, for example.

In addition, policymakers in Madhya Pradesh are about to unveil the state's new start-up policy which will assist entrepreneurs with easy financing and banking facilities, as well as facilitating day-to-day business activities.

Among the many start-ups that call Indore home are agriculture technology initiatives like Gramophone and Farmkart.

Founded in 2016, Gramophone is an app-based platform providing farm input products and information to farmers. It enables farmers to purchase crop protection, crop nutrition, seeds, implements, and agricultural hardware products. It also provides agronomic data such as weather information, latest market prices, expense calculator and advice, and best cropping practices.

The start-up has attracted US$ 18 million in funding from 16 investors, including Info Edge Ventures. It has over 300,000 app downloads and has fulfilled more than 400,000 orders.

Farmkart's solutions are designed for farmers who are not tech savvy. It focuses on providing inputs such as fertilizers, pesticides, fungicides, seeds, and farm equipment to their doorstep with no delivery cost. The team at Farmkart has grown to more than 150 serving over 100,000 users across 5,100 villages in the country.

Prime minister Narendra Modi lauded Farmkart's innovative technology solutions and lockdown initiatives in the 70th edition of Mann ki Baat.

It helps that these start-ups are based in Indore, which is at the heart of the grain-growing agricultural powerhouse that is Madhya Pradesh.

To build start-up hubs, policymakers must understand that what attracts and makes start-ups tick is political will, policy predictability and clarity, enabling physical infrastructure and market demand.

Policymakers in cities like Indore, Pune, Chandigarh, Bhubaneswar are trying to provide an enabling environment that encourages creativity, ingenuity, and entrepreneurial spirit.

Way ahead

The Covid-19 outbreak in early 2020 forced governments across the world to restrict businesses and the movement of people to curb the spread of the contagious disease. The banking system was therefore flooded with liquidity which led investors to emerging markets in search of high return.

Private market investments, just like public market investments, got a boost in India since 2020.

Apart from this, India will continue to witness growth in start-ups thanks to its favourable demography, large talent pool and fast-growing market.

What policymakers must now do is to take the next step and go out to attract talent to their cities. They must go the extra mile by lowering, or even removing, regulatory and compliance-related hurdles.

At a time when policymakers face pressure to accelerate job creation, start-ups provide employment to white-collared workers apart from supporting a multitude of blue-collared jobs.

The competition among cities for supporting more start-ups is only going to get fiercer, especially since start-ups hold the promise of supporting Covid-battered state coffers and create colossal economic value for all stakeholders.

States and cities that offer more to talent by way of reform are set to reap rich dividends.

Saloni Sachdeva is a young professional at NITI Aayog. She has worked in the start-ups domain.

The views expressed are personal

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