GREEN SHOOTS

Neha Gupta talks to entrepreneurs in Bengaluru to learn how the Indian city has created an ecosystem for start-ups

Start-ups are flourishing in the Indian city of Bengaluru

Richa Kar is founder and chief executive of online lingerie store zivame.com. She grew up in Jamshedpur in eastern India, studied engineering at the Birla Institute of Technology and Science in Pilani, Rajasthan, and got a management degree in Mumbai. In 2011, she set up an office in her one-bedroom rented apartment in Bengaluru.

When asked why she chose to launch her business in the southern city, Kar explains: “Bengaluru has one of the most exciting start-up environments globally in terms of the sheer energy, passion and volume of activity. Apart from that, the cost of real estate here is cheaper than in Delhi and Mumbai. Also, talent is much more easily accessible here than in any other Indian [metropolitan area].”

Today, her solo operation has grown to a company of 250 people and has raised US$15 million in investments from Unilazer Ventures, IDG Ventures and Kalaari Capital Partners.

Kar’s story is one of thousands in the Karnataka state capital, where entrepreneurs have been steadily building successful businesses. RedBus, Urban Ladder, Bigbasket, Snapdeal, Olacabs, TaxiForSure and Flipkart are all examples of start-up ventures that have rapidly evolved out of here into trusted, consumer brands over the past decade.

Despite the variety of offerings, from taxi apps to furniture retailers, one common element that ties all these companies together is that they are built on e-commerce platforms. This is key to understanding why Bengaluru has so many start-ups.

Back in the 1980s, the rapid growth of IT and engineering companies here proved tempting to investors. Then came the International Tech Park in 1994, which presented the city as a gateway to India for multinational giants such as Microsoft, Oracle, IBM, Xerox and Unisys.

The city is also home to some of the nation’s top colleges in the fields of research, engineering, IT and management – the Indian Institute of Management, Indian Institute of Science, and Indian Institute of Information Technology. This automatically generates a crop of fresh minds each year, while the rising values of listed companies such as Infosys, Wipro, Bharat Heavy Electricals and NASSCOM further adds a large number of tech and engineering professionals to Bengaluru’s population.

Over the years, it is this demographic that has lit up the city with new ideas. Irrespective of what they eventually do, most entrepreneurs here come from an IT or engineering background. This ecosystem

Irrespective of what they eventually do, most entrepreneurs here come from an IT or engineering background

for tech start-ups stems from Bengaluru’s status as India’s Silicon Valley; today, these flourishing young ventures has earned the city another title – India’s Start-Up Capital.

It’s common practice for young businesses from other Indian cities, and indeed the world, to look toward Bengaluru when expanding their engineering and IT teams – classifieds portal Quikr launched in Mumbai but recently moved its headquarters here, while payment site Instamojo is moving over from California.

Online HR marketplace LocalOye, again from Mumbai, also recently moved its base to Bengaluru. Aditya Rao, its founder and chief executive, says: “For start-ups like ours, we wanted to ramp up our team from 25 to 150 employees, which would have probably taken us 18-24 months in Mumbai, but in Bengaluru the scope of scaling up the company is much quicker. Also, for a growing company such as ours, it just made sense to move to the start-up capital rather than shifting a huge chunk of people to Mumbai.”

With an abundance of jobs in engineering and IT, it is unlikely for someone to move from Bengaluru to Mumbai, where the cost of living is hard on the wallet. And when salaries of top engineers in Bengaluru are compared with those in Mumbai and Delhi, many believe that it offers a 20 per cent higher package. There aren’t any official figures to prove this, but these are the numbers that are spoken of anecdotally when conversing with graduates looking for jobs. It comes as no surprise that their first choice is a start-up here, where companies are “more challenging, expect more out of you, and are more vibrant in nature”, as one says.

The rise in entrepreneurs has already created an ancillary industry to deal with intra-city logistic services. A spokesperson from one such company, Blowhorn, explains: “We heard of logistics-related difficulties experienced by start-ups first hand, which were struggling to shift goods from one place to another. Our background in technology and logistics allowed us to easily solve the problem. What’s more, Bengaluru is a good test bed as it has a larger group of early adopters.”

Last year, Startup Genome, a website that measures local entrepreneurship communities, ranked Bengaluru the best city in India for founding a company, and the second-best city outside of the US for receiving venture capital (sixth-best after Silicon Valley, New York, Boston, Los Angeles and Tel Aviv).

India has also been ranked as the third-largest base for start-ups, with 3,100 in 2014 (after 41,500 in the US and 4,000 in the UK). There are projections for 11,500 by 2020. According to the World Startup Report, about 41 per cent of all new Indian ventures

Companies here are 'more challenging, expect more out of you, and are more vibrant in nature'

have emerged from the city, followed by Delhi and Mumbai. It is uncommon to walk into any of Bengaluru’s coffee shops without overhearing entrepreneurs discussing how to convert ideas into profitable operations.

There are several websites that guide start-ups, many directly targeted at Bengaluru-based operations. The inspiring stories of more than 1,500 entrepreneurs are available on yourstory.com, a platform that also enables them to interact with investors. Meanwhile, Facebook group Bangalore Startups (more than 13,000 likes) schedules informal chats over coffee every few months. Last September, NextBigWhat’s mobile conference bigMobilityConf brought together more than 800 founders, developers, marketers and capitalists.

Adding to all this are accelerators and incubators that contribute to making Bengaluru a conducive environment for start-ups. Accelerators provide support in the form of mentoring, seed money and buy-in equity. Programmes usually run from three to six months, after which start-ups will “graduate” to becoming independent companies.

Incubators, on the other hand, work with startups from the beginning of an idea to materialising it. Bengaluru’s best example is the NASSCOM Startup Warehouse. Along with guidance from industry experts, it arranges pitching sessions for funding.

Arjun Bhat, co-founder of travel company Travspire, says: “There is no doubt that Bengaluru is a super-friendly city for entrepreneurs. Even the city’s residents are more open to trying a new service or product. It is so encouraging. If I had to start over, I would choose Bengaluru as my base without a second thought.”

Accelerators and incubators are helping to make the city a conducive environment for start-ups