Not a city for startups anymore?

Not a city for startups anymore?

Bengalureans have always been open to new ideas, a reason for the once flourishing startup ecosystem here. However, that is not the case anymore.

In a report by Startup Genome, India's Silicon Valley has been placed at the 20th position in the global startup ecosystem ranking.

This is down from the 15th position it occupied in 2015.

The report has taken into consideration funding, talent, market reach, performance and overall experience. Startup professionals tell Metrolife about the different issues they see for startups now.

Abdul G Sait and Sunjay Krishnamurthy, co-founders of a startup, Entrepreneurs in Training (EOT), agree that it is not an encouraging scene in Bengaluru now compared to a few years ago.

"There are many things that have come into consideration now. The funds are not in abundance anymore. The risk or initial capital that was being spent out on an idea earlier has slowly dried out because of losses incurred in the past. Growth capital is available now but the initial capital, which is utmost important for any startup is not easily available," says Abdul.

Benefits like delayed payments or concessions on payments with local vendors or associates have also become difficult. "Any benefits like the option to pay rent late are not available now as people's notion about startups have changed. Everyone thinks that startups are financially loaded," he says.

Aishwarya Jain along with Akshay Katyal, started Strike, an application which brings all tools on though one platform -- email. Aishwarya says, "A big change that has happened in the ecosystem is that corporate companies, from technology-related ones to banking institutions are innovating now. Every corporate company has an accelerator programme which helps with equity-free grants etc. Every second month, a big company is
setting up its office in Bengaluru, which provides an environment for smart minds to sit and innovate. While earlier only startups provided such an environment, things are changing now," points out Aishwarya.

Aishwarya adds that earlier investors used to invest in multiple startups and if a particular investor put their money into a particular segment, others would aim for competitors. "Now, most investors join hands and invest in the same company as everyone wants returns. They feel that the best shot they have is the company they have all agreed to fund," he adds.

Access to talent is becoming difficult and expensive, he adds. "Machine learning and artificial intelligence developers are becoming inaccessible, as they are the need of the hour yet come at a price," says Aishwarya.

Swati Bondai, founder and director of Center for Learning and Advanced Preparation (CLAP), says that acquiring talent can be quite a task now in Bengaluru.

"We moved our operations across the country because of this, though our headquarters are here. The talent here is demanding much higher as they know that startups are competing with each other," she says.

She adds that reaching out to government officials is an easier task in other states. "Whenever a permission or a certain scheme has to be availed, we have done a lot running around. Things are much easier in other places, like in Orissa."

Unreasonable expectations

"The expectations of investors are also unreasonable now. Everyone wants a startup to
turn into a unicorn and do profitable business within minimal time, which mounts up the pressure."
ABDUL G SAIT, Co-founder of Entrepreneurs in Training

Money matters

"Founders of startups are becoming more diligent. Since startups do not have a good initial risk capital to start off with, they try to and work on a solid business model from day one."
AISHWARYA JAIN

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