Cities drive change. Therefore, understanding the dynamics which enable cities as start-up hubs becomes critical as India’s start-up growth story matures. An evaluation of 44 cities spread across all regions and population tiers on factors such as knowledge edge, funding and investment, human capital, infrastructure and facilities as well as safety and legal environment have thrown interesting insights into how these dynamics operate.
The metros, or Tier I cities, with population of over 50 lakh, have performed much better than their smaller counterparts on a large number of metrics. Cities in southern region have performed better than the ones in northern and even western regions. Bangalore leads the pack by a huge margin. The next two cities, viz. Mumbai and Delhi, have scores which are at least 30% to 40% lower than that of Bangalore in various categories. There is, again, a significant drop, in the score of the fourth ranked city, i.e., Chennai, as compared to the third ranker Delhi. However, the scores of next few ranked cities drop at a lower rate after that.
A prominent legacy aspect is subsumed in most of these factors. City rankings show that Bangalore is ranked at the top with a margin that is almost unbeatable in the near future. Its stellar performance appears in categories which are not just weighted the highest, but also require multiple years, even decades, to build. Bangalore, as India’s own Silicon Valley, clearly has the first mover advantage. It is in this city where, even before start-up became a buzz word, India’s first start-ups were born, grew and either flourished or died. This cycle of life and death created a vibrant start-up ecosystem where hope has existed in close proximity to a Darwinian process of natural selection. The city, therefore, remains the top choice of most budding start-ups and hosts more than a third of all growth-stage start-ups in the sectors covered in the Outlook Start-Up Outperformers 2023 rankings. Likewise, Mumbai and Delhi will keep competing with each other for the runner’s up position. The race, among cities other than these three, is, therefore, for the fourth position onwards.