Bangalore- Startup City

For many months now some of us have believed that Bangalore is the most favored place for startups. Of course, we didn’t have any data to back it. When Vijay Anand of Proto.in, a good friend who spends most of his energies in promoting startup ecosystem in India contested that Bangalore may not the best destination for startups, I had a different opinion on it. 

Some of us who have started out in Bangalore have a bias for Bangalore and that may have clouded our assumption that Bangalore is more suited for startups. Then, may be not! We now have some data coming from the recent TATA NEN exercise.

Before I venture further, let me clarify my position on this competition. I am a strong supporter of many startup events that happen in this country. I do my best to participate in them and promote them where necessary. 

However, we have decided not to participate in this TATA NEN competition. There are few reasons for that. I believe the competition has some weaknesses. Here I list them. 

#1. Not every startup got the same start in the competition. If the startups are chosen by voting, how can some candidates be fielded earlier and some later? It’s like fielding few candidates in a poll early on, and after people start voting, you add few more candidates later on. It just doesn’t make sense to do that. Someone at TATA NEN got the whole thing wrong.

#2. Polling a startup? How does that work? Startups are virtually unknown. Nobody other than the employees and few friends and family know about a startup. Only consumer focused startups tend to draw larger audiences while high-tech startups catering to enterprises may be completely unknown. So how can someone vote for a startup they don’t know about? It’s not the same as voting for HCL or Satyam- almost every engineer knows about them and hence voting can make sense. How does voting apply to virtually unknown startups? That’s when you start doubting the whole rationale of this exercise.

But TATA NEN exercise has given us some insights and observations. For the first time, it has pooled so many startups onto one forum.

1. Bangalore is number #1 startup city with 25% of the nominated startups. That’s 1 out of every 4 in the country – thus establishing our belief as a fact that Bangalore continues to be the most favored destination for startups.

2. Most common form of initial funding is personal savings. More than 70% of the companies start that way. Friends and family comprise 17%. VC funded companies comprise only 2%. Angel investments comprise only 4%. 

3. About 42% of the entrepreneurs are in their 30s, 76% come from first-generation family backgrounds, and about 17% of them have studied abroad.