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SUMMARY
Bengaluru Beats Delhi To Emerge As H1 2017’s Favoured Funding Destination For Startups
The game of thrones between Delhi NCR and Bengaluru has always been a most-interesting topic of discussion when it comes to the startups the two cities have spawned. Adding to its glory, India’s very own Silicon Valley, Bengaluru took the first spot in overall startup funding activity in H1 2017.
Startup Funding: Delhi NCR Vs Bengaluru
Delhi NCR and Bengaluru have always been locked in the battle for the top slots (although Delhi consists of Gurugram, Ghaziabad, and Noida far larger scope) and this continued for H1 2017 as well.
While Bengaluru is known to be home for Flipkart, InMobi, the capital city has been known for spawning companies like Paytm, Zomato, Snapdeal. In totality, as per Angellist, Bengaluru and Delhi NCR houses 6000+, and 4000+ startups respectively.
A quick look at the data from Inc42 Datalabs – since January 2015 to June 2017 shows that – 686 startups from Bengaluru and 760 startups from Delhi has raised $6.34 Bn, $7.2 Bn in funding respectively. The numbers are close and so the game of thrones goes on for another season.
Going beyond Delhi NCR and Bengaluru – the financial capital of India i.e. Mumbai, Hyderabad, Pune, and Chennai have also started emerging as active destinations for startup funding activity in last few years.
According to Inc42’s Indian Tech Startup Funding Report H1, Delhi contributed 39.6% of the total funding competing closely with the tech city whose contribution was 40.5% with $2.17 Bn being raised. As far as deals are concerned, Delhi witnessed 128 deals and Bengaluru 144.
Since H1 2015, Delhi/NCR has maintained its top spot in terms of the number of deals and amount raised by startups. However, as per QoQ data, in terms of funding, during Q2 2015, Q3 2015, and Q1 2017, Delhi/NCR slipped to the second position.
Bengaluru: Still The Most Preferred Startup Destination Of India
Bengaluru houses the maximum number of startups in India, with about 6000+ startups out of which about 1,800-2,300 are active tech startups.
As of October 2016, the top six Indian cities account for 90% of startup activity in the country. These include Bangalore (28%), Delhi-NCR (24%), Mumbai (15%), Hyderabad (8%), Pune (6%) and Chennai (6%). However, Kolkata, Ahmedabad, Kochi, Jaipur, and Thiruvananthapuram are the next emerging locations.
According to a global Startup Ecosystem Report published Compass in 2015, Bengaluru was ranked amongst the Top 15 startup ecosystems around the world. However, Delhi failed to make the cut. The report further mentioned that the growth in VC investment in Bengaluru was 4X during that time and was also quoted as the city with fastest annual growth in the number of seed rounds over the last two years were with 53%.
Bengaluru has also been in the top 22 tech cities across the world in affordable living, as per the Savills Tech Cities Index. Overall, the city ranks a low 20 amongst the tech cities in the world, with Austin topping the list, followed by San Francisco and New York.
And when it comes to the cost of living index, Bengaluru tops the charts with a weekly residential rent for tech employees and household standing at $236 – compared to the other tech cities’ average of $368.
Location plays an important role when it comes to startup success. A lot of things are considered by the founders in choosing the ideal destination for their startups. There are several factors contributing on why Bengaluru has been one of the most preferred choice for startups, few include:
- It showcases an impressive set of companies including the ecommerce unicorn Flipkart, InMobi, among others.
- It is the headquarters for global companies like Amazon, Microsoft Accelerator, Qualcomm, and Cisco.
- Provides a good opportunity to find good technical employees. However, there are difficulties around access and quality.
- Bengaluru also has access to the best technical talent (engineering as well as marketing), as showcased by this report done on startup salary trends by Cutshort.io.
- The city houses a lot of angel investors and VCs.
- Availability of planned infrastructure and coworking and collaborative spaces.
- Lastly, active engagement of government with the startups has also been one of the major reason for success – for instance, the recently launched ELEVATE 100 programme, a fund of $1.4 Mn for the women entrepreneurs, allocation of $1.5 Mn fund for agritech startups, among others.
But Delhi NCR has a few aces up its sleeve when it comes to startup funding and even facilities for startups. With the presence of big-ticket companies such as Paytm, Zomato, Delhivery, Snapdeal among others, the capital of India will likely keep duking it out with Bengaluru in this game of thrones.
This article is part of Inc42’s Indian Tech Startup Funding Report, released last week. As per the report, about $5.56 Bn was invested across 452 Indian tech startups during the period January-June 2017. In the next article of this series, we will be highlighting the funding trends witnessed in the last three years.
