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 (the city formerly known as Bangalore).
When asked why she chose to launch her business in the southern city, Kar says: “Bengaluru has one of the most exciting start-up environments globally in terms of the energy, passion and volume of activity. The cost of real estate here is cheaper than in Delhi and Mumbai, and 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 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 among these companies 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. Meanwhile, 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 for tech start-ups stems from Bengaluru’s status as ‘India’s Silicon Valley’. Now, these flourishing young ventures have 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 to 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 relocating from California.
Online HR marketplace Local Oye, again from Mumbai, also recently moved its base to Bengaluru. Its founder and chief executive, Aditya Rao, 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.”
Mumbai has a higher cost of living than Bengaluru, and when salaries of senior engineers in both cities are compared, many believe the difference leaves the Bengaluru engineer 20 per cent better off. 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 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 put it.
The rise in entrepreneurs has already created an ancillary industry to deal with intra-city logistic services. A spokesperson from one such company, Blowhorn, says: “We heard of logistics-related difficulties experienced by start-ups first hand, which were struggling to shift goods from place to place. Our background in technology and logistics allowed us to solve the problem easily. 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, around 41 per cent of all new Indian ventures have emerged from the city, followed by Delhi and Mumbai.
It is uncommon to walk into a Bengaluru coffee shop without overhearing entrepreneurs discussing how to convert ideas into profitable operations. Websites such as Yourstory.com help profile entrepreneurs and enable them to interact with investors. Last September, Next Big What’s mobile conference, Big Mobility Conf, brought together more than 800 founders, developers, marketers and investors.
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 start-ups from the beginning of an idea to realising 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’s 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.