States perfect their start-up pitch

The latest Economic Survey has brought Delhi to the centre of the start-up universe by declaring that the capital has overtaken Bengaluru as the top destination for entrepreneurs. Even as policymakers in Delhi have started celebrating in the hope of churning out many unicorns, the neighbouring Gurugram in Haryana and Noida in Uttar Pradesh should lead the party, if any, as most well-known start-ups in the region are headquartered in those two places.

This is not the first time that Bengaluru—the original Silicon Valley of India—had to take a back seat, for right or wrong reasons. Some years ago, Bengaluru felt the heat when its famous start-up street, Koramangala, witnessed some sort of exodus. It was here that Flipkart was founded in 2007, and the area was home to hundreds of tech start-ups, small and big, in the midst of tree-lined avenues, trendy stores and rooftop bars. Investors fell for the infectious cosmopolitan culture here apart from a pool of talent and, of course, quality real estate till the rates hit the roof and infrastructure crumbled. A close by suburb, HSR Layout, became an alternative to Koramangala, but by then Bengaluru had lost the initial charm it had for the techies wanting to start on their own. Soon there were other cities from Pune to Jaipur competing to host start-ups.   

After the Economic Survey revelation, the Aam Aadmi Party (AAP) is hard selling the city’s honest and accessible government, better living conditions and good infrastructure as the reasons which have made it the go-to place for start-ups. The Delhi government is also rushing to prepare a start-up policy to promote new-age businesses. That is exactly what AAP should not do—a start-up policy would indicate red-tapism and bureaucratic procedures, which could mean a potential risk for the start-up spirit. Rather, the state government and the Centre should ensure an environment that is suitable for entrepreneurs and incubators.

The T-Hub of Telangana is one such example of providing an innovation ecosystem. Set up in 2015, it has been able to nurture close to 2,000 start-ups, both at national and international levels, through access to technology, mentors, investors and government agencies.  

Besides the T-Hub, Telangana has another factor that helps tech start-ups. Kalvakuntla Taraka Rama Rao or KTR, as he is popularly called, as industries and information technology (IT) minister of the state, makes sure that no chance is missed. More important—he is accessible. It helps that KTR is the son of Telangana Chief Minister K Chandrashekar Rao. His Tesla tweet that went viral and influenced other states to give a shout out to Elon Musk captures KTR in a nutshell. Calling the Tesla founder by his first name, he invited him to set up shop in Telangana. He tweeted that his state is a champion in sustainability initiatives and a top notch business destination in India.

Delhi Chief Minister Arvind Kejriwal could perhaps look at the KTR model to attract techies and start-ups while keeping that start-up policy on hold. Mr Kejriwal already has the advantage of a wide talent pool, possible incubator support from the Indian Institute of Technology Delhi, and all the other perks associated with a capital.

It may be another matter though that the numbers given in the Survey may not be the best way to conclude whether or not Delhi is the start-up capital. According to the Survey, more than 5,000 recognised start-ups were added in Delhi against 4,514 in Bengaluru between April 2019 and December 2021. This does not indicate the nature of the start-ups or the seed funding in these entities. The number does not include start-ups which are yet to be registered. Also, almost two years during this period, it was remote working due to the pandemic. During this period, the Delhi versus Bengaluru numbers are bound to be inaccurate as Covid-19 delinked cities and offices from workplace.

As for data, Bengaluru had moved up two ranks to 18 among the world’s top 30 cities for its start-up ecosystem, according to the Startup Genome Report 2019. It was the only Indian city to feature in that list that came out a few months before Covid-19 struck. And in September 2021, the same Startup Genome Report put Mumbai on top in the emerging ecosystems ranking. Basically, this category names cities which could be global performers in the times to come. The report ranked Bengaluru at number 23 in the top 30 global tech hub category, while Delhi missed the elite club with its 36th rank.

The Bay Area story has been playing out in India too, with start-ups choosing their destiny and destination with a similar attitude. It is the turn of the governments—both at the Centre and in states—to make their choice of how to woo this segment.