For Mumbai to become the most preferred destination for startups, infrastructure building in terms of affordable real estate along with availability of skilled technology talent and an insurance policy for such ventures are the important elements.
According to the 2019 KPMG-TiEcon startup report, various startups which initially began their operations in the city later shifted to other cities in order to sustain their business, a popular example being that of Ola.
The major challenges highlighted in the report include high real estate and rental costs, availability of better tech talent in IT domain cities like Bengaluru, and longer commuting hours.
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Addressing a conclave at TiEcon Mumbai 2019, KPMG Office Managing Partner, Pradeep Udhas, recently proposed to the government a structure called ‘Mumbai Innovation Central’.
“We are suggesting and discussing with the government a startup central where you have co-working spaces, affordable restaurants, social networking areas, meeting and conference areas, and most importantly living areas which startups can rent for the next six or seven months,” said Mr. Udhas at the TiEcon, the largest entrepreneurial leadership conclave in Mumbai.
“They can simply walk out of their apartment, meet some investors and strike a deal in the coffee shop,” added Mr. Udhas while citing the example of Paris where there exists ‘Station F’, the world’s biggest entrepreneurial ecosystem built on an ancient abandoned railway station and converted into a unique co-living space for entrepreneurs.
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“If you really want to compete with the likes of San Francisco or London, you need to create co-living spaces for startups, because for them to commute two or three hours could mean chances of draining creative faculties, leading to discouragement,” he told The Hindu.
Apart from the living scenario, lack of availability of tech talent has also appeared as a major drawback for startups in Mumbai. Mr. Udhas shared a combination of both supply as well as retention issues given the lack of technical universities that in turn leads to migration to other places.
“The government should mandate colleges to have Computer Science and AI in the curriculum to encourage a technical interest,” he said.
Among other incentive-inducing proposal, he spoke about a startup insurance scheme explaining that owing to the high premium by insurance agencies, established companies with huge employee base can negotiate a good policy for their employees which is difficult for limited-numbered employees in startups.
“We propose to the government to work with insurance companies and come out with a cheaper insurance policy for startups that will encourage talent retention,” said Mr Udhas.
According to the startup report, Mumbai has the third largest startup base in India and holds first rank in terms of number of startup registrations in 2018 which was 2787, followed by Karnataka (2107), Delhi (1949) and Uttar Pradesh (1201).
The financial capital along with Pune managed to raise ₹377 billion between January 2014 and September 2018.
Globally, India has the third-largest startup base with a seven-fold growth from 7,000 startups in 2008 to around 50,000 by the end of 2018 spread across various sectors like e-commerce, healthcare, financial services, education to name a few.
The major growth drivers, mentioned in the report, incluide supportive ecosystem in terms of a presence of multiple venture capitals, huge customer base and the city’s favourable connectivity with other parts of the world.
The report also mentioned e-commerce, fintech and consumer services as the three popular sectors in Mumbai having the highest number of startups with close to 50% share.
The report also revealed the prominent emerging startup hubs in the state – Pune for automotive and electrical sectors, Nashik for healthcare firms, Nagpur for renewable energy, and Aurangabad for agri-business companies.