Talent, state play boost startups in non-metros

Mar22,2024


Mumbai: Guwahati-based D2C fashion startup Littlebox recently bagged a rare all-investor deal on Sony Liv's reality TV show Shark Tank. The clarity of the founders on the fundamentals of the business and the good growth of the firm prompted one of the investors to inquire about the state of the startup ecosystem in Assam.
Startup States like Rajasthan, Uttarakhand, Bihar and Odisha also pushed for investment – ​​and although not all raised funding, it underlined the trend that the startup idea is becoming mainstream and beyond Bengaluru, Mumbai and Delhi-NCR. Cities are being built. A breeding ground for entrepreneurship.
The emergence of startups from Tier-2 and 3 cities is not new, but it is on the rise, helped by better availability of talent, partly thanks to the setting up of regional offices by IT and tech companies, support from the government Support can be given to a stronger one. Digital infrastructure.

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In fact, the share of seed stage deals for startups beyond the top three metros has improved from 2022 to 2023, said analysts at Bain & Company, categorizing Nashik and Jaipur emerging Startup Hub. About 24% of the 628 deals were captured by startups from other cities (including). non metrosin 2023, tier-2 cities) compared to 20% of the 970 deals in 2022. With the pool of venture capital expanding, investors are looking for opportunities “beyond the obvious” and looking for better deals in early and early stages which requires funding, Ramadoss Sitharaman, senior partner at McKinsey & Company, told TOI. , Deploying small amounts of capital.
Today, the startups have extended their reach to over 600 Indian districts. A NASSCOM study conducted last year showed that small cities produce 60% of the total graduates and an estimated 11-15% of the tech talent is located in tier-2 and 3 cities. It is not surprising that startups are being created in sectors ranging from fashion, mobility, food and beverages and technology. Unicorn startup CarDekho, valued at $1.2 billion, is based in Jaipur, while Molbio Diagnostics, which became a unicorn in 2022, is from Goa.
Better infrastructure is also enabling people to work remotely without compromising the quality of talent being hired. “Improving infrastructure allows startups to set up companies in low-cost locations,” analysts said.
Incubators and accelerators have also contributed to the expansion of the startup ecosystem, with government-backed incubator programs and educational institutions like the IITs playing their roles. Incubators bridge the network and resource gap for startups in tier-II cities and beyond. For perspective: The Bain study showed that more than 200 startups have received more than $80 million in funding from the Rajasthan government's iStart incubator program since its inception in 2017.
Sitharaman said India will see the emergence of more deep-tech, innovation-based startups over the next decade and some of these are likely to be located in cities with good institutions that can provide them with relevant resources and expertise.



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