Bangalore Ranks 19th Among Startup Ecosystems Globally

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The Scene in Bangalore As Per the Startup Genome Ecosystem Report, Part One

Well! The opening about India in the Startup Ecosystem Report 2012 Part One released by Startup Genome, which was done in partnership with Telefonica Digital, sends you straightaway into squelching your stomach. It says India could be one of the toughest countries for startups to flourish. India ranks 140th in the nominal GDP per capita. Considering that there are 192 countries in the world, this ranking places India at the bottom half of the list. But still it is one of the largest markets offering plenty of opportunities. Despite such difficult positioning as a country, Bangalore scores 19th position among startup ecosystems globally.

On all counts the report includes, Silicon Valley scores the first rank. The ranking for Bangalore is between a high of 10th (Mindset Index, Differentiation from SV Index) to a low of 20th (Trendsetter Index).

Bangalore                        Silicon Valley

Startup Output Index

17th

1st

Funding Index

18th

1st

Company Performance Index

17th

1st

Talent Index

18th

1st

Support Index

15th

1st

Mindset Index

10th

1st

Trendsetter Index

20th

1st

Differentiation from SV Index

10th

1st

Heartening Points About Bangalore

In terms of education, Bangalore entrepreneurs are as highly educated as their Silicon Valley peers, work harder (one hour more than their SV counterparts), have equal number of people per stage in the companies, and 30% are motivated by trying to change the world. They don’t clone proven business models.

Bangalore is as data-driven as the Valley. For product development, Bangalore startups heavily rely on in-house resources and outsource as little crucial product development. The report adds, “Founders in Bangalore are as likely to tackle markets they have had previous experience in, as entrepreneurs in Silicon Valley.” Bangalore entrepreneurs focus 50% more on niche markets compared to their Valley peers.

Thumbs Down for Sizing the Market, Using Programming Languages

In terms of sectoral focus, Banglaore startups focus more on consulting (20% vs 7% in the Valley) and non-web software (16% vs 3% in the Valley) than in the Valley and less on mobile (8% vs 17% in the Valley).

In terms of market sizing, entrepreneurs in Bangalore show reluctance to enter small markets (67% less likely than the Valley entrepreneurs). Their focus remains on $1 to $10 billion markets and they tackle this market 10% less than the Valley entrepreneurs. For markets more than $10 billion, Bangalore entrepreneurs are less likely to tackle it to the extent of 51% less than the Valley entrepreneurs.

Licence fee and transaction fee models are the top revenue grosser for Bangalore entrepreneurs and they don’t take to subscription models and advertising as much as the Valley entrepreneurs. According to the report, “There is a significant difference in terms of revenue streams between Bangalore and SV. Subscription models are 59% less likely to be used, advertising 37% less likely to be used, transaction fee models 44% more likely to be used and license fee models 3.4x more likely to be used compared to startups in SV.”

On programming languages used, the report says, “Bangalore engineers heavily rely on PHP, and Java, and much less on Ruby and Python compared to their peers in SV.”

Challenges and the scene in Bangalore

While the challenges faced by the Bangalore entrepreneur are similar to the SV peers in terms of customer acquisition, building the product, funding, and building the team, Bangalore startups receive 74% less funding than the Valley startups. Technology adoption is low in Bangalore, which adds up to one more hiccup of the entrepreneur. Serial entrepreneurs are less in Bangalore as are mentors for startups than in the Valley. And the average age of the entrepreneur is 3 years higher than in the Valley.

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One straight implication of the report is that mentoring needs a huge push, which enables a startup entrepreneur to flourish. In a casual conversation with me during NASSCOM Product Conclave 2010, Phanindra Sama, cofounder of RedBus, declared his admiration for his mentors who he turned to for even his personal problems. The lament about funding heard until a couple of years ago has waned, but going by the report, lot more needs to be done.

Still the ecosystem is maturing and the focus needs to shift more to Cloud and Mobile. Non-Web software and consulting are the primary focus now. Given that there are pointers to an explosion of Mobile in the country, we feel Mobile-First strategy would offer immense opportunities. Skilling needs a greater focus, with the languages such as Python and Ruby on Rails becoming the engineers’ primary tools.

And finally on the lighter side, we need more young entrepreneurs!

Venkatesh Krishnamoorthy, chief evangelist

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