{"id":16581,"date":"2017-05-04T21:09:18","date_gmt":"2017-05-05T04:09:18","guid":{"rendered":"http:\/\/siliconeer.com\/current\/?p=16581"},"modified":"2017-05-04T21:09:37","modified_gmt":"2017-05-05T04:09:37","slug":"bangalore-startups-a-quick-guide","status":"publish","type":"post","link":"https:\/\/siliconeer.com\/current\/bangalore-startups-a-quick-guide\/","title":{"rendered":"Bangalore Startups: A Quick Guide"},"content":{"rendered":"

Cover of \u201cBangalore Startups: A Quick Guide.\u201d<\/em><\/p>\n

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@Siliconeer #Siliconeer #India #Startup #BookRelease\u00a0#BangaloreStartups #BalaMuraliKrishna #StartupIndia \u2013 Overall, it might be reasonable to believe Bangalore is losing ground within the country and in global rankings as well. For those familiar with the city, it might be easy to guess why \u2013 the city\u2019s growing infrastructure woes. But let\u2019s keep it a guess for now. Siliconeer presents excerpts from a new book by Bala Murali Krishna.<\/b><\/p>\n

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Bangalore is India\u2019s original startup city, and has been its biggest for many years now. But just how big is it?<\/p>\n

The city, located in southern India atop the Deccan Plateau, is home to five startups that have been at some point in time valued at $1 billion or more. These so-called unicorns include Flipkart, Ola Cabs, Mu Sigma, InMobi and Quikr. This much is known, but the rest of the data are less clear.<\/p>\n

According to the IT industry group Nasscom and Zinnov Consulting, Bangalore has 1,300+ startups. But AngelList India lists over 5,300 startups, and the Karnataka government counts over 2,000 registered with its Startup Cell.<\/p>\n

In funding, most estimates suggest Bangalore startups account for a third of India\u2019s total. In 2016, that came to about $1.3 billion, out of a total $4 billion for the country\u2019s startups.<\/p>\n

However, Bangalore might be in decline. In 2016, funding was down 35% from the previous year, steeper than the global 24% fall. It might also be losing market share to rival Indian cities. The combined National Capital Region \u2013 consisting of New Delhi and the neighboring cities of Gurugram in the state of Haryana, and Noida in the state of Uttar Pradesh \u2013 had an estimated 1,175+ startups in 2016. Data from YourStory.com, a media startup that covers startups, suggest the NCR has already inched ahead of Bangalore in funding; and data from the angel investing platform LetsVenture indicates the NCR has overtaken Bangalore in total seed investment.<\/p>\n

Overall, it might be reasonable to believe Bangalore is losing ground within the country and in global rankings as well. For those familiar with the city, it might be easy to guess why \u2013 the city\u2019s growing infrastructure woes. But let\u2019s keep it a guess for now.<\/p>\n

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Bala Murali Krishna, author of \u201cBangalore Startups: A Quick Guide.\u201d<\/figcaption><\/figure>\n

Just How Good Is Bangalore<\/b><\/p>\n

In early 2017, the global real estate consulting firm Jones Lang LaSalle called Bangalore the \u201cmost dynamic\u201d urban economy in the world. The city earned the top ranking in JLL\u2019s Cities Momentum Index, displacing the Silicon Valley region, because it adapts \u201cmost rapidly to\u2026technological and infrastructural transformation.\u201d<\/p>\n

Still, Bangalore never appears among the world\u2019s top 10 startup hubs in the most popular global rankings. In 2016, it was ranked 20th in the Startup Genome\/Compass rankings, down five places from the previous year, and did not figure in Spark Labs\u2019 Top 10 rankings. The Global Entrepreneurship Development Institute, or GEDI, which ranks countries and not cities, placed India at 69th, up from 98th in 2015. So Bangalore couldn\u2019t have ranked too high.<\/p>\n

Even though it is a favored exercise in India, it is too early to compare Bangalore with a far more mature startup hub like the Silicon Valley. In 2016, for example, Silicon Valley startups attracted $25 billion in venture capital, despite a 26% decline from the previous year. Bangalore startups attracted a mere 5.2% of that amount.<\/p>\n

Bangalore doesn\u2019t compare favorably even with London ($3.1 billion) in funding, or with the likes of Berlin and Stockholm on other benchmarks. A more meaningful comparison is with Asian cities such as Beijing, Shanghai, Seoul, Singapore and Tel Aviv, the highest-ranked Asian city.<\/p>\n

Beijing and Shanghai are in the top 10 in Startup Genome rankings, while Singapore is at 12th. The Israeli city of Tel Aviv, currently ranked 6th, routinely figures in global top 10 rankings, and offers a particularly good comparison with Bangalore. Notwithstanding its desert landscape and decades-long conflicts, the tiny nation has taken giant strides in startups, notably in security software, and easily beats Bangalore.<\/p>\n

Israel is a nation of 8.6 million, roughly the size of Bangalore\u2019s population. But Tel Aviv, the real startup hub, has fewer than half a million residents, and is about one-tenth the size of Bangalore. Yet in 2016, Israel pulled in $1.6 billion in venture capital, compared to Bangalore\u2019s $1.3 billion. The \u201cstartup nation,\u201d as it is sometimes called, also had three startups in the top 100 on Startupranking.com, which ranks the world\u2019s startups based on \u201cimpact.\u201d Bangalore had none. Myntra, an online fashion seller acquired by Flipkart, was the highest ranked, coming in at 116.<\/p>\n

On the positive side, Bangalore might well be on its way to overtaking Silicon Valley in head count of IT engineers. The consulting firm McKinsey expects Bangalore to become the world\u2019s single largest IT cluster in 2020, employing two million IT professionals, overtaking the world\u2019s most famous technology hub.<\/p>\n

Hitting the Pause Button<\/b><\/p>\n

Reflecting a global trend, startup activity has hit a slowdown, bringing varied challenges. Many startups have fallen in the last year, and several have laid off staff. Veteran Indian American investor Kanwal Rekhi, quite the headline-grabber, has called it a forest fire, but only time will tell if it\u2019s that bad.<\/p>\n

Many startups are learning hard survival lessons. Bangalore\u2019s biggest startups face grim challenges, among them the unicorns Flipkart and Ola Cabs, as investors run out of money and patience, and seek at least a path to profits.<\/p>\n

Flipkart, an ecommerce pioneer in the country, assumed it would be the Amazon of India. Then Amazon itself showed up, and the game changed. The global ecommerce leader is giving Flipkart a run for its money. It has been less than three years since Jeffrey Bezos rode a truck in Bangalore, wearing a sherwani, and signed off on an initial $2 billion investment. Amazon has caught up with Flipkart in many departments. It even overtook the Indian company briefly in gross merchandize value in some months of 2016. Given the quick success here, and the lack of it in China, Amazon has focused even more intensely on India, its largest market outside the United States, and has ordered another $3 billion investment for its operations here.<\/p>\n

Amazon\u2019s rise has set off alarms at Flipkart. The Indian startup has faced intense competition and a price war, and consequently lost market share. In the circumstances, Flipkart\u2019s valuation has been driven lower by as much as a third, from a high of $15 billion. Many investors \u2013 Fidelity, Morgan Stanley and T. Rowe Price, to name a few \u2013 have written down the value of their stakes in Flipkart because Amazon\u2019s entry has tempered Flipkart\u2019s projected growth and market share, besides directly impacting revenues and surely delaying its profitability.<\/p>\n

In the crisis situation, Flipkart\u2019s largest and earliest investor, Tiger Global Management, has taken control of the company, sidelining its founders. It first replaced Sachin Bansal with the other founder, Binny Bansal. But with little to show for the change, Tiger inducted its own nominee, Kalyan Krishnamurthy, in 2017. It has been a big moment of truth not only for the Bansals, but also for the entire startup community, which is coming to terms with the fact that founders don\u2019t enjoy a permanent right to run their startups.<\/p>\n

Flipkart\u2019s founders have been criticized for squandering investor money by handing out liberal stock options and fat salaries to top executives, while doing little to fight off Amazon or refine its business model and place the company on a path to profitability. Also in question is Flipkart\u2019s readiness to dance with anybody in its bid to battle Amazon, examples being a rumored partnership with Wal-Mart or its proposed acquisition of failing rival Snapdeal.<\/p>\n

The other big fish facing a similar predicament is Ola Cabs. The Indian version of Uber has raised $1.6 billion ($1.9 billion when money raised by Taxi for Sure is included) with unflattering operational results. Last available figures show that in the fiscal year 2014-15, Ola posted a loss of nearly $2 for every dollar earned. When the cab aggregator is not battling Uber, it is battling regulators and taxi drivers seeking better pay. After a big outcry over pay, a new third front \u2013 a cabbie-owned cooperative \u2013 is being formed in Karnataka that will rival both Ola and Uber.<\/p>\n

Like Flipkart\u2019s investors, Ola\u2019s backers have steadily written down its valuation. Its latest valuation, derived from a funding round in February 2017, suggests the cab aggregator might be worth $3.5 billion, down 30% from a peak of nearly $5 billion.<\/p>\n

(Excerpted from \u201cBangalore Startups: A Quick Guide,\u201d by Bala Murali Krishna. The ebook is available on Amazon Kindle and Apple\u2019s iBooks.)<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"

Cover of \u201cBangalore Startups: A Quick Guide.\u201d @Siliconeer #Siliconeer #India #Startup #BookRelease\u00a0#BangaloreStartups #BalaMuraliKrishna #StartupIndia \u2013 Overall, it might be reasonable to believe Bangalore is losing ground within the country and in global rankings as well. For those familiar with the city, it might be easy to guess why \u2013 the city\u2019s growing infrastructure woes. But…<\/p>\n

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