Forbes magazine, who are famously fond of lists, recently had an article about the top ten ‘rising cities for startups’ in America. The list is definitely a great idea, given how cities like San Francisco or New York, the default choices for starting up, are bursting at the seams today.
My interest in this list was less about what the top ten cities were, and more about how Forbes decided that these were the top cities, and if and how something similar can be applied to the Indian startup scene as well. Because even in India, cities like Bengaluru and Gurugram have been saturated with startups, and the time is right for other cities to attract entrepreneurs who would have otherwise started up in overcrowded cities.
So, to come up with this list, Forbes looked at a lot of factors. Factors related to costs (business and living), education levels, college presence, entrepreneurship rates, working-age population growth and venture capital investments (density, total number, dollar value and growth).
If you look at these factors from an Indian perspective, the count of venture capital deals may not be a great thing to look at, given how the venture capital scene in India focuses almost exclusively on big cities. There are notable exceptions. But they are also notably, exceptions. But all the other factors do apply, and those are something that some sharper ones among VCs should capitalise on while building their portfolios.
- Some of the best colleges in India, are in places quite far from what are today the startup hubs
Of all those factors, two of them are especially relevant. Firstly, college presence. Some of the best colleges in India, especially when it comes to engineering colleges, are in places quite far from what are today the startup hubs in India. Places like Kanpur, Pilani, Calicut (naming only three of many, please do not outrage if I missed your college town) have an outrageous amount of engineering talent. There are also places like Manipal and Vellore that have top engineering and medical colleges, both. It is a letdown that some excellent medical devices startups have not taken root there.
The other factor that is quite relevant is that of entrepreneurship rates. This is a topic we have dealt with in this column a couple of times in the past. Indian history and geography have enabled certain regions and certain ethnicities to be far more entrepreneurial than others. Yet, we do not see towns like Surat or Karaikudi to be great startup hubs.
But then in India, there is one debilitating factor that overrides some of the strongest enabling ones — the lack of dependable infrastructure. Infrastructure in terms of roads, in terms of assured power supply, in terms of many such fairly basic things. And here, channelling the work that this year’s Nobel Laureate in Economics, Paul Romer, has done, is an excellent opportunity for government interventions to make market economics work. Either in the form of investment, or as subsidies. For as soon as that happens, there is no doubt venture capital will also flow in.
As a parting shot, if I loosely apply the metrics that Forbes magazine did, a lovely city named Coimbatore seems to come right on top as a rising city for startups in India.
