The scope
According to Abhishek Punia Co-Founder Arm Digital, scope for start-ups is increasing due to hike in internet penetration.
Speaking exclusively to IndianMediaBook at IAMAI’s 2ndStart-up Summit Jaipur, Punia said, “The reach will definitely increase to the tier II/III regions and to the rural parts as the government is providing support by initiating Digital India plan. We have a large population which is a positive point. At the moment we are able to reach out to the right audience but imagine, if we have to reach out to such a big population, the scale will become bigger.”
While big metros such as Bangalore, Mumbai and Delhi’s NCR region form the core of the growing entrepreneurship ecosystem in India, many Tier-II cities like Jaipur, Chandigarh, Thiruvananthapuram and Ludhiana are also witnessing the rise of their own start-up culture, aided by start-up incubators that have multiplied over the last few years.
Commenting on the start-up ecosystem in non-tier I cities, Madhup Bansal COO Myly said, “There is a huge scope depending on the focus area. For the core areas such as education, travelling, hospitality there is enough scope in non-tier I cities. Apart from this, there are lot of advantages too, Jaipur is a peaceful city, you can spend more time in office as the travel time is lesser enabling you to think in a more productive manner, and cost benefits too as the rentals is low.”
Entrepreneurs from small towns appear to be more charged to succeed and willing to put in the hard yards to make their start-ups flourish. It also helps that costs from human resources to rentals are lower, commutes are shorter and fewer people quit jobs.
“Scope is extremely high in non-tier I cities, but problem comes with not having the right path. You need a mentor, you need somebody who has been in the field, who understands it and who can guide you. That’s why I really appreciate lots of industry leaders coming up and mentoring lots of start-ups without any equity or money”, expressed Mohit Madan Creator Cloudrino.
Opportunity to work more
Time is money and in major cities travelling takes too much of time. That’s why experts believe that in non-tier I cities there is an advantage of spending additional time at your work due to less travel time.
Sharing his views, Ankush Sharma, CEO YePaisa, said, “I believe that the biggest advantage in non-tier I cities is we can save 4-5 hours of travel every day. As a result we get more time to work as compared to tier I cities. If you have the right talent in tier II city, you can spend more time to concentrate on ideas and meet people, as you know economy is flowing towards tier I to tier II these days and money is flowing from tier I to tier II cities.”
Hurdles in networking
While you can save time in non-tier I cities, but networking is a little difficult here. Since most of the business leaders, investors and VCs are based in major cities, thus start-ups have to travel to these cities for networking.
“Networking, with business leaders is a major issue. I believe as a start-up leader or founder, one needs to visit the events happening in major cities to talk to VCs, investors and business leaders,” added Bansal.
On the other side, Sharma believes that interaction is a challenge as if you are sitting in a tier II or III city and looking forward to interact with MNCs’, then it will be very difficult task to do.
“Time and dedication is required to travel to tier I city for a discussion with a MNC and that wastes lots of time, opined Sharma.
Hiring challenge
Migration of the people to these cities is also a big challenge which all start-ups are facing in non-tier I cities.
“The biggest challenge is to get the new talent, as people tend to move to the larger cities. In fact, I am an example, who moved from a small city to metro to look at a bigger opportunities”, commented Punia.
Opportunities in tier-I cities is higher which leads to the migration of people from small towns or tier II and III cities to metro cities. But nowadays, due to the success of some non-tier I start-ups, there is enough scope in these regions.
“Having a right talent to align your start-up is a major challenge. People are migrating from small towns to major cities and it’s very difficult for an entrepreneur to convince them to bring them back to their roots”, added Sharma.
However, Bansal believes that the hiring challenge is not so challenging anymore. He informed that now start-ups are able to hire people and there are lots of people who are willing to come back to non-tier I cities from major cities.
“We are able to retain the best talent, as the attrition level in non-tier I cities is not as high as it would be in any major city,” expressed Bansal.
Funding issues
Whether it’s a metro city or a small town, start-ups depends on funding, raising funds is a tough task and it takes a lot of time and energy. But experts have a different point of view.
“As an individual we start looking for funding before putting ideas in place. People need to step back a bit, funding helps you to get a certain base. However, we first need to build that product or service as core and put some numbers behind it and then looking for fund will be a lot more easier,” opined Punia.
There is no doubt that the most difficult tasks for a new entrepreneur is raising enough start-up capital to market their business ideas. But nowadays, start-ups are focusing more on funds instead of paying attention on their product and services.
Sharing his thoughts about funding, Madan added, “Funding shouldn’t be the core. Profitability should be the first concern, as a normal business or standard business works on profitability. But nowadays, start-ups are selling the product lesser than the purchase price and it is fundamentally wrong. It not about the valuation, it’s about creating something unique and we’ll create an audience for it.”
Recently Prime Minister Narendra Modi initiated Start-up Action Plan. Enterprising graduates from Tier-II and Tier-III towns are now keen on starting and building companies from their hometowns and not migrating to the big cities. Multiple angel and early-stage funds are spending a lot of time meeting with entrepreneurs from these cities via events to foster overall growth and promote the ecosystem.
