With a total of $4.7 Bn raised across 355 deals between 2014 and 2023, the city is one of the fastest-growing startup hubs in India
Besides geographical advantages, the city benefits from a strong industry-academia interface, a supportive state government, and the rising zeal of the young to become entrepreneurs
Until 2019, Pune wasn't on the list of cities with unicorns, but now, the city has minted close to 10 unicorns in just four years
The tremors of the explosion of India’s startup ecosystem are now being felt in smaller towns and cities, too. While Bengaluru, Delhi NCR, and Mumbai continue to wear the crown for being the top tech startup hubs of the nation, their reign is being challenged by cities like Pune, Hyderabad, Chennai, Ahmedabad and Jaipur, which are currently being touted as more conducive for budding entrepreneurs.
Interestingly, per Inc42’s report, ‘Indian Tech Startup Funding Report H1 2024’, Pune is the most promising emerging startup hub to have garnered significant investor interest. With a total of $4.7 Bn raised across 355 deals between 2014 and 2023, the city is also one of the fastest-growing startup hubs in India.
In the first half of the year alone, Pune-based startups cumulatively raised more than $241 Mn across 18 deals. In fact, Pune was one of the top emerging startup hubs of 2023, when it raised $211 Mn in 30 deals.
Notably, some of the top investors who have shown faith in Pune’s potential to foster startups are InnoVen Capital, Elevation Capital, and Accel. Consequently, the city has become home to some of the most promising startups, including FirstCry, logistics unicorn Xpressbees, lending platform Fibe, SoftBank-backed B2B ecommerce unicorn ElasticRun, and cloud data protection unicorn Druva.
In the first half of 2024, Fibe raised $90 Mn in its Series E funding round led by TR Capital, Trifecta Capital and Amara Partner; housing finance startup Altum Credo bagged around $40 Mn in its Series C funding round, and deeptech startup Ecozen raised $30 Mn in funding.
Among the other top Pune-based startups raising funds in H1 2024 were OneCard, AmberStudent, and EV manufacturer EKA Mobility.
Speaking with Inc42, Aditya Oza, cofounder and chief marketing officer of Pune-based EV maker Emotorad said that the city has grown by leaps and bounds from where it used to be a decade ago. Until 2019, Pune wasn’t on the list of cities with unicorns, but now, the city has minted close to 10 unicorns in just four years, he noted.
The electric bicycle manufacturing startup, Emotorad has been operating from Pune for more than four years. It is backed by MS Dhoni and VC firms like Green Frontier Capital, Panthera Growth Partners, and more. The startup has raised more than $23 Mn to date.
Meanwhile, it is imperative to note that several factors align to elevate Pune’s position as the next Bengaluru in the making. For one, Pune has a location advantage like none other due to its proximity to India’s financial capital, Mumbai.
Besides, it is a renowned industrial hub and one of the top contributors to Maharashtra’s economy. The city enjoys pleasant weather around the year.
Access Free ReportSo, What Else Makes Pune A Worthy Candidate?
Alongside geographical advantages, several key factors contribute to Pune’s growing role in the startup ecosystem. For instance, the city benefits from a strong industry-academia interface, a supportive state government, and the rising zeal of the young to become entrepreneurs.
“Recent years have witnessed significant improvements and policy initiatives aimed at bolstering the city’s startup landscape. Moreover, a significant number of Pune’s 5 Mn residents are between the ages of 15 and 35, making the city an ideal location to attract young, ambitious talent,” venture principal at Green Frontier Capital, Karan Mehta, said.
Green Frontier Capital, which is a climate-focussed VC fund, has invested in two Pune-based startups so far – Emotorad and agritech startup Nutrifresh.
Mehta added that the Maharashtra government has introduced a range of policies to foster entrepreneurship in the region. He also noted that Pune has become home to multiple incubators and accelerators in the recent past, including Venture Center, T-Hub, and Startup Oasis, which offer mentorship, funding, and networking opportunities to aspiring entrepreneurs.
Consequently, VC funding in startups based in Pune is also witnessing a noticeable increase, especially in sectors such as fintech, health tech, and edtech.
Meanwhile, Emotorad’s cofounder observed that the city’s startup fervour has given a positive nudge to salaries in the region. He said that the rise in salaries in the past few years has increased the cost of living to some extent.
However, a 2023 report by Stanza Living suggests that the cost of living in Bengaluru is about 15% higher than in Pune. This makes the city an attractive proposition for entry and mid-level talent.
“The city has exploded in population, especially the young folks… what will happen to Pune in the next ten years is what happened to Bengaluru,” Oza said.
Meanwhile, Green Frontier’s Mehta believes that the proximity to esteemed institutions like the Indian Institute of Science Education and Research (IISER) and the National Chemical Laboratory (NCL) has also facilitated collaborations between academia and industry, driving innovation.
Roadblocks On The Way
Despite optimism, the city is far behind Bengaluru, Delhi NCR and Mumbai in several areas. For instance, talent is still a challenge in smaller cities like Pune. Another major challenge is that the city is an industrial hub, Maharashtra’s second largest, and therefore the availability of tech talent is scarce.
“Talent availability is increasing in some areas only. But we still have a lot of catching up to do compared to Gurugram and Bengaluru,” Oza said.
Besides, Green Frontier’s Mehta notes that Pune needs to improve its connectivity to major cities such as Mumbai, Delhi, and Bengaluru. This would help the city enhance market access and capital flows for its startups.
“Pune is also facing challenges related to infrastructure and public transport, leading to increased travel time within the city… However, it has the potential to expand beyond the city limits. One potential solution could involve the government establishing large complexes similar to GIFT city, along with tax incentives on income and investments,” Mehta added.
He believes that streamlining bureaucratic processes and improving the overall ease of doing business will also support the growth of startups in Pune.
Overall, Pune is carving out a prominent spot on India’s startup map, thanks to the state government’s seriousness towards fostering entrepreneurship. Nourishing this is the growing interest of investors who have seen several unicorns galloping from the region.
In addition, the industry-academia interface in the region is worth noting, given the city’s deep industrial roots. While much has yet to be done, Pune is only slated for a north-bond journey in becoming a crucible of Indian startups going ahead.
Meanwhile, despite the funding winter that plagued the ecosystem for the past two years, India’s startup funding surged past the $150 Bn mark in the first half of 2024.
[Edited By Shishir Parasher]
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