What’s driving start-up culture in Mumbai?

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Start-ups

According to an estimate by the National Association of Software and Services Companies (NASSCOM), India will have 10,500 start-ups by the end of 2020. Mumbai has emerged as one of the preferred markets for start-ups. While government initiatives are helping the growth of businesses in the city, sky-rocking real estate poses as a challenge.

Better known for housing the world’s biggest entertainment industry, India’s financial capital - Mumbai is home to multiple conglomerates, legacy businesses and financial institutions. While Southern cities such as Bangalore and Hyderabad are the preferred choice for any start-up company, Mumbai does not lag behind much. The city was slow to adopt the entrepreneurial culture, but now Financial technology (Fintech) and enterprise tech spaces are driving its start-up economy.

Mumbai is home to start-ups such as Bookmyshow, Justdial, Pepperfry, Quikr and Cleartrip, and holds the third position in terms of overall funding activity in India. Young entrepreneurs looking to start their ventures are attracted towards the city due to its financial power and rational background. Besides, key government initiatives including ‘Ease of Doing Business’ and thriving ecosystem have given a boost to the city’s start-up culture. Renowned businesses have also extended a helping hand to these innovative firms due to the growth potential they have.

Let us have a look at some of the key growth stimulators that have led to an increase in the number of start-ups in Mumbai:

Favourable commercial real estate destination

Start-up cultureStart-ups in Mumbai prefer renting out offices that are affordable and have good connectivity. Renting an office in Central Business Districts (CBDs) such as Bandra Kurla Complex (BKC) and Lower Parel are out of the reach of start-ups due to their sky-high rents. Powai, which is home to around 50-100 start-ups has become the popular choice for tech, edtech and hardware companies due to its mushrooming start-up ecosystem, affordable rentals and proximity to IIT-Bombay (IIT-B). In addition to this, presence of incubators such as the IIT-B’s SINE has also helped build large startups such as ThinkLabs and Webaroo. Moreover, the popularity of co-working spaces among start-ups based in Powai is also on a rise due to the professionally managed office infrastructure offered by these spaces at a cheaper price compared to a Corporate Business center.

Slew of policy measures taken by the government

The Maharashtra government has been criticised time and again for not being proactive enough in terms of funds distribution, access to government resources or providing any noteworthy benefits to startups in the State. However, the scenario has changed completely in the last 3-4 years. Not only has the local government organised entrepreneurship and investment summits, it even approved a network of 16 startup incubator centres to foster the entrepreneurial talent present in the State and offer them a startup ecosystem. Abhishek Kulkarni, Founder and Chariman, Million Sq Ft Realty Pvt Ltd, avers, “There has been a phenomenal growth in the number of start-ups in Mumbai, thanks to the slew of measures taken by the government that has thrown open new opportunities for entrepreneurial growth in the digital economy of the future.”

Increased funding in the last few years

According to industry tracker, Tracxn, Mumbai has 4,938 active startups as of February 11, 2019, 356 more than what it had by the end of 2017. These start-ups raised USD 2.73 billion in the capital between 2015 and 2017 in 617 funding rounds compared to USD 548 million in 172 funding rounds between 2013 and 2014. One of the key reasons that triggered this change is the entry of product-driven businesses in hardware and technology. While verticals such as Fintech and enterprise tech spaces continue to lead, health tech and edtech do not lag behind much. Kulkarni further adds, “With increasing emphasis on health nowadays, a large number of start-ups in the city are foraying into the wellness and fitness industries.” Besides, veteran entrepreneurs such as Azim Premji and Anand Mahindra have been providing financial aid to skilled leaders by actively pumping funds in the city’s startup ecosystem.

Challenges

One of the biggest challenges for Mumbai-based start-ups has been the skyrocketing real estate and rental values that have prompted young entrepreneurs to move towards Southern cities such as Bangalore and Hyderabad. Mumbai-based start-ups looking to scale-up often tend to move to Bangalore and Pune due to the high real estate costs in the city. A classic example of this is Ola, which initially began its operations in Mumbai but later shifted to Bangalore to sustain its business. Another major challenge is the commute time taken by start-up professionals to reach from one point to the other, which prompts them to move to other cities.

While a number of initiatives have been taken by the government in the past 24 months, a lot needs to be done to boost start-ups in Mumbai. Creation of support infrastructure in terms of affordable real estate is a critical aspect that the government needs to look at. Plus, development of a start-up central like the ‘Station F’ in Paris constituting affordable restaurants, co-working and co-living  spaces, social networking areas and conference areas, would give the much-needed boost to the city’s start-up ecosystem, thus putting it in the league of cities such as San Francisco and London on the global map.


Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. 99acres does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.


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