SUMMARY
While the Tier 1 cities saw the maximum funding in the Q3 2019, Tier 2 cities’ funding remained negligible
With the aim to uplift the startup ecosystem in Tier 2 cities, Inc42 and DigitalOcean toured six Tier 2 cities with BIGShift
Here are some trends we saw and the challenges we witnessed
The Indian Tech Startup Funding Report Q3 2019 by Inc42 DataLabs revealed a slowdown in funding in Tier 2 cities in India. While Bengaluru, Delhi NCR and Mumbai cornered the lion’s share of funding in the country, Tier 2 startup funding has remained negligible. While there are plenty of investors, entrepreneurs, angel funds and incubators working to bring more funding into Tier 2 startups, there is a need for a bigger push.
This was evident in the way India’s Tier 2 cities celebrated the local ecosystem at the recently-concluded BIGShift series. Stopping by at Chandigarh, Kochi, Nagpur, Vizag, Indore and Ahmedabad, BIGShift proved that startups are beginning to gain prominence even in smaller cities, even though the funding has been slow.
Through this journey, Inc42 came across several innovations and viable ideas that are bucking the trend of Tier 1 startups hogging the limelight.
With over 400 early-stage startups, founders and entrepreneurs coming together, BIGShift gave a platform to over 30 startups to pitch their ideas to stalwarts from their local startup ecosystem.
BIGShift Chandigarh
BIGShift kicked off on July 19 at SpaceJam in Chandigarh. The first stop on the tour saw over 60 attendees out of which over 50 were from startups from the city. Names such as Kunal Nandwani from uTrade Solutions and Vineet Khurana of Chandigarh Angels Network (CAN) and many more from the startup community joined us as speakers. Thanks to these stalwarts, Inc42 got a glimpse of what is happening in the Chandigarh startup ecosystem.
The ecosystem of the city is small and closely-knit, and bodies such as CAN, TiE Chandigarh, Startup Punjab and more have encouraged startups and innovation. Though the ecosystem is progressing, it has been gradual. There are tons of bright ideas and bright minds, which need to be cultivated further.
Startup Trends In Chandigarh
Home to many leading universities, the city does not lack innovative minds or startups or a spirit of entrepreneurship. The strong participation witnessed from Chitkara University was one such example of the city’s cultural and educational push towards entrepreneurship.
Sumeer Walia, the director of the Centre for Entrepreneurship and Education Development (CEED) told us that the organisation is working to build this entrepreneurial spirit in the students right at the college level.
Chandigarh is catching up in the electric vehicle race in India with startups such as Zadd Bikes offering last-mile connectivity solutions. The startup, who has managed to rope in Samar Singla, CEO, Jugnoo, as an investor and advisor, is making strong strides towards a sustainable and congestion-free environment.
In addition, TickTalkTo, a startup which directly addresses mental health issues has also earned some attention. Though the country seems to be at war with the stigma around mental health issues, not many have come forward to take a stand like TickTalkTo has, which does show how open the Chandigarh ecosystem is.
BIGShift Nagpur
Our second stop with BIGShift was on August 3 at Chaos Theory, Nagpur. With a gathering of over 70 stalwarts and startups, the event saw names such as Nagpur Angels’ Shasikanth Chaudhary come forward to talk to early-stage startups and entrepreneurs in the city. From our last visit to the city, it was apparent that there was a lot of change in the air.
This time the participation we saw from the startups and young innovators. There was an energy and enthusiasm in the crowd as they all huddled to contribute to the city’s journey of becoming a startup hub
Startup Trends In Nagpur
One of the major trends we witnessed was that the city is home to a plethora of foodtech startups — right from healthy food to nutrition to dietary wellness and fitness.
Adding to this, Chaudhary pointed out, startups in the city are more focussed towards what is trending now rather than what is coming in the future. However, there is an active mentorship that the city is witnessing from stalwarts such as Chaudhary who are committed to helping the startups from ideation to seed funding and beyond.
Challenges For Nagpur Startups
While we noticed that Nagpur is blessed with the presence of many enabling bodies for startups such as Vruksh Ecosystems, VCats, Navayuvak, Global Shapers, IIM Nagpur and more, it is crippled with lack of consolidated efforts. There are many steps being taken to uplift the startup ecosystem in the city but they seem fragmented. The startups too, seem to be unaware of the benefits that they can avail and thus there is a gap between the efforts of enabling bodies and the startups.
Another challenge that we saw in the ecosystem was the false sense of the lack of capital. The city does not lack in the capital but there is a lack of awareness among HNIs regarding alternative investments (i.e. investments in startups).
There is also a need for handholding of startups to be able to grow and scale or cross “the valley of death” as it is called. During our talks with startups, we realised that it is difficult for tech talent in the city to find the right opportunities and this further contributes to struggles at seed and early stage.
BIGShift Kochi
The third stop of BIGShift tour was in Kochi on August 22 at the Integrated Startup Complex. The proactive nature of the government of Kerala in promoting its startups is a great example of Indian states can boost startups. Over 50 startups and ecosystem enablers came together to grow and network together.
Further to this, we saw an active on-spot registration from many students who came to witness the startups and enabling bodies in action. The push that Kerala Startup Mission (KSUM) provides to both early-stage startups and young innovative minds from the state was apparent with the participation and talks we had with Dr Saji Gopinath, CEO, Kerala Startup Mission.
Startup Trends In Kochi
The major trends we witnessed in Kochi during our visit were that many startups had set up operations in aquaculture, whereas there was a strong presence from hardware startups as well. In Kerala, the trends of upcoming services indicated that fintech and edtech will see the most innovation in the days to come.
The ecosystem is well supported by KSUM, which supports tech startups through the grassroot level to international expansion. This is making a huge difference in the startup community in every way.
BIGShift Indore
The financial capital of Madhya Pradesh was our fourth stop. Workie on September 6, witnessed BIGShift Indore, where more than 70 startups and enablers converged.
With many prominent names such as Parveen Singhal, founder, WittyFeed and Tanutejas Saraswat, founder and CEO, ShopKirana—two of the biggest startups from the city— Sawan Laddha, founder, Workie and more.
Our talks with the investors and startups alike led us to the conclusion that as far as the availability of capital and awareness of alternative investments go, Indore is poised to fare well—at least for early-stage startups.
Startup Trends In Indore
The major trends that we saw in the context of the startups of the city were that edtech and e-learning are a huge focus area for many startups. That’s not surprising given that Indore is known as a student city. With names such as Tetoota, Scool, Classmonitor, creating new services and products for the edtech market, this reputation is well-deserved. Further to this, the rising trend of bringing ecommerce to local stores and bringing them online has penetrated Indore as well.
Startups are looking for new and innovative ways to disrupt the retail space and find opportunities for technology to intervene.
Challenges For Indore Startups
There is one common problem that came to the fore during our experience at BIGShift Indore. And this is not just about Indore but points to a larger challenge in the Indian ecosystem. We are talking about the lack of high-quality tech talent.
This can also be attributed to the fact that while other states are proactively trying to push the entrepreneurship culture in students, Indore lags behind here. With no push towards new ideas and tech innovations, the city’s startups struggle to find the right talent to aid their growth journey.
BIGShift Ahmedabad
Ahmedabad was the fifth stop in the BIGShift tour. On September 20, DevX coworking space hosted BIGShift and here too the number of participants exceeded 70 as Ahmedabad’s startup ecosystem surpassed our expectations in many ways.
With ecosystem stakeholders such as Sanjay Randhar, GVFL, Hiranmay Mahanta, GTU Innovation Council and Mayank Patel, CEO, CrAdLE among the attendees, the startups had plenty of influential investors to meet and mingle with. Ahmedabad had the largest participation in terms of applications received for the BIGShift Pitch session, which is not a surprise considering the pedigree of the educational institutions in the city.
Our talks with the enablers showcased the startup-friendly nature of the startup ecosystem in the city and the state as a whole. With the state already earning recognition as the first state to launch an IT and electronics startup policy and a student startup and innovation policy, there’s plenty of encouragement for young entrepreneurs.
Startup Trends In Ahmedabad
During the sessions and the course of the evening in Ahmedabad, we noticed a strong presence and understanding of content marketing and niche content-based startups in the city with names such as Social Pilot, Menstrupedia and more dominating this space. The startups have not only penetrated the domestic market but have crossed over to international markets as well.
The robustness of the startup ecosystem was evident with the active participation of IIM Ahmedabad’s Innocity; and the Entrepreneurship School in Gandhinagar—EDII. The growth that Gujarat has shown is thanks to the work of ecosystem enablers such as Mahanta and Rahul Bagchandani, the founder of Gujarat University Startup and Entrepreneurship Council (GUSEC) have done. Both played a key role in developing the student startup policy of Gujarat.
BIGShift Vizag
Reaching our last destination for BIGShift 2019 at Andhra Pradesh Innovation Society (APIS) in Vizag on October 4, we witnessed a participation of over 90 startups, enablers and budding minds alike. This was the largest turnout and a great way to cap off our tour.
Joining the gathering were enablers such as Sreedhar Kosaraju, president-designate, iTAAP and Tirumalarao Chamalla, president, Andhra Pradesh IT Society among others. Conversations with these prominent names from the ecosystem made us aware of the innovation potential in this city as well as its rich talent pool. There are many efforts being made to engage the educational institutions in the state to set up entrepreneurship cells which will provide guidance and motivation to young entrepreneurs.
Startup Trends In Vizag
Among the budding startups, the major trends we observed in Vizag was in the edtech sector. Many edtech startups forward during the event, among them were names such as Learn Dost, Teacherr, Interview Buddy, Botclub and more.
Vizag is also the land of traditional businesses, such as manufacturing, steel and hardware, which is trying to find a way to modernise and cope up with new-age tech startups.
Additionally, the city is home to a vibrant pool of angel investors waiting to explore alternative investments. We also observed that while there’s no shortage of capital, the investments may be slow due to expectations not being aligned. This is one of the major reasons why not many Vizag startups have made it big, despite the turnout. In our interaction with the ecosystem stakeholders, the investors in the city seemed to be moving from traditional investing to tech investments cautiously.
The Tier 2 Startup Ecosystem In India
While Mumbai, Bengaluru and Delhi NCR usually take the spotlight when it comes to the startup ecosystem in India — and with good reason, Tier 2 cities are also emerging as a source of innovation in India. Often neglected, these cities have overcome the lack of talent and resources as well as the less robust support infrastructure such as incubators and accelerators. With the government playing an active role, Tier 2 cities are slowly coming into the reckoning.
Every state government in India has taken measures to help the growth of innovations and boost the contribution of startups in the economy. This was clearly visible in every city that BIGShift stopped by — the awareness is growing and investors will come as more innovation comes to the fore.
The first BIGShift held in 2017 helped us realise the importance of such events in Tier 2 cities and this year we decided to go big, while also checking up on the progress of startups and bring new innovation under the spotlight for everyone to see.
Don’t miss out on the opportunity to be a part of other such Inc42 initiatives as we bring the ecosystem together. Keep track of all the upcoming events here.
