Firm footing: Bengaluru is still India’s technology startup capital

BENGALURU: For nearly a decade now, Bengaluru has ruled the roost as the Startup Capital of India. So a recent TiEZinnov report stating that Delhi is No.1 in terms of number of startups and unicorns has caused a stir.
But a check with the authors of the TiE report and industry insiders tells a complex story — the parameters used by the TiE-Zinnov report are different from earlier reports by those like Nasscom.The latter focused on software/tech startups, while the former included a broader range of startups.

Nasscom’s 2018 report on startups placed Bengaluru at the top of the charts with a 25% share of India’s 7,100 tech startups. Delhi came in second with a 21% share. “But this year, the numbers could change, with Bengaluru having a 24% share as smaller tech-startup ecosystems in Hyderabad and Pune eat into Bengaluru’s tech dominance,” said an industry expert.
The TiE report said, “Delhi-NCR has a thriving ecosystem with over 7,000 startups, 10 unicorns and a cumulative valuation of $50 billion. And Bengaluru 5,200 startups. Delhi will become one of the top 5 global startup hubs with 12,000 startups, 30 unicorns and cumulative valuation of $150 billion by 2025.”
TiE included startups founded from 2009 (a 10-year period), while Nasscom has a shorter time frame of five years. Another difference is the inclusion of non-tech enabled startups in the TiE report. “For instance, if you were a consumer product firm selling omni-channel, including tech platforms, you would be included in the report. Or if you were a hardware firm. Typically, Nasscom being more tech-focused would never include such startups in its space,” said Atit Danak, manager and head of CoNXT, a startup collaboration practice of consulting firm Zinnov that worked on the TiE report.
“Bengaluru still has the most comprehensive startup tech ecosystem, and fosters talent. When it comes to deeptech and innovation, it has a clear edge. In fact the second part of our report, clearly shows that,” said Danak.
In the TiE report, Bengaluru ranked ahead of Delhi in terms of affordable office rentals and co-working spaces; in outcome driven programmes for boosting tech talent; and in terms of early stage seed-funding. Nasscom industry initiatives V-P KS Viswanathan says, “Bengaluru has been ranked 3rd largest global startup hub. Different metrics can be used to assess different factors. But what cannot change is Bengaluru’s depth, scale and growth; you cannot see such a supportive startup ecosystem anywhere else.”
A thumbs up by Nasscom report
A sector review last year showed that Bengaluru was the country’s tech startup capital, and some experts believe the city is on course to retain the spot.
Indian IT industry body Nasscom is putting together its annual report on the tech startup scene; it is expected to be released in October.
Nasscom’s 2018 review had placed Bengaluru ahead of Delhi-National Capital Region and Mumbai in the number of tech startups. Globally, Bengaluru was ranked among top three cities for launch of such ventures. Silicon Valley and London were the first two.
India held on to its place as the third largest startup ecosystem, with 1,200 tech startups emerging in 2018, taking the number of players to up to 7,700. The Nasscom report said the ecosystem created over 40,000 direct jobs last year, taking the employment in the segment to 1.6 lakh-1.7 lakh. Close to 5 lakh people are estimated to be employed indirectly.
Seed funding dipped 21% to $151 million in 2018, whereas early-stage funding rose 4% to $1 billion, according to the report. Startups from tier-2 and tier-3 cities reported growth. In fact, 40% of the startups operate outside Bengaluru, Delhi-NCR and Mumbai, up from 35% in 2017.
Top industry verticals for startups are enterprise software (15-17%), fintech (13-15%), online marketplaces (11-13%), and health-tech (7-9%), edtech (5-6%).
Not a race, say experts
Industry experts said on Wednesday that Delhi and Bengaluru were not competitors for startup development but participants in India’s growth story. They termed the debate over the two cities as a comparison of apples and oranges.
“It’s not about one city competing with another. If Delhi grows as an ecosystem, it’s a boost for India. Look at what we are comparing — a cluster of three cities with a population of 40 million to Bangalore’s 8 million,” said Ravi Gururaj, president of TiE’s Bengaluru chapter.
Atit Danak, manager and head of CoNXT, a startup collaboration practice of consulting firm Zinnov, worked on the TiE report. “This is not about Bangalore vs Delhi. Neither are we trying to disparage Bangalore’s prowess,” he said.
KS Viswanathan, vicepresident (industry initiatives), Nasscom, Bengaluru, also said that it was not a competition, but a collaboration.