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Growing entrepreneurship: Tier-II cities witness startup action

MUMBAI: Earlier this year buddies Nikunj Agarwal and Veer Mishra launched mYwindow.me, a social networking website. The duo came together on a campus, like many other young entrepreneur teams, but what made the venture from these 22-year-olds rather different was that they chose an unlikely location to start it: Nagpur.

They're not alone in picking smaller cities. Virat Khutal, founder of gaming company
Twist Mobile, zeroed in on Indore to start his outfit while Nikhilesh Tayal set up recruitment site CVbhejo in Udaipur, Rajasthan. Others like 32-year-old, ex-investment banker Kunal Nandwani chose Chandigarh to start Utrade Solutions, an online stock trading platform. 

Several reasons underlie this rather significant shift, say experts. 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 startup culture, aided by startup incubators that have multiplied over the last few years. 

'Cost advantages huge' 

"Unlike in years gone by, 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," says Karan Mohla of 
IDG Ventures India, a San Fransciso-based venture capital firm. Having invested in Myntra, vserv.mobi and firstcry.com, among others, Mohla is currently part of Startup Village, a programme being run out of Thiruvananthapuram, which is incubating and helping grow mobile phone-related ventures. 

Larger organizations are also pushing this startup culture in smaller towns. Microsoft, for one, through its 'BizSpark' programme is engaging with tech startups across India and offering them mentorship, guidance and access to free software. "We are at the beginning of a long cycle of entrepreneurial rejuvenation in India, whose epicentre is in small town India," says Rajesh Sawhney, founder of GSF Accelerator and former president of 
Reliance Entertainment. Avnish Bajaj, MD, Matrix Partners India, a Silicon Valley fund, says, "The increasing participation of small town entrepreneurs in this phase is indicative of how the India market is deepening and how technology can contribute to inclusive growth." 

About half of the founders GSF backed in its first season had origins in small towns. Many of them went to IITs and other well-known academic institutions in big cities but clearly want to give back to their towns and communities, Sawhney adds. Other incubators also attest to this trend. VentureNursery, launched last year by Shravan Shroff and Ravi Kiran, saw a third of its applicants coming from cities like Ahmadabad, Bhopal, Calicut, Hyderabad, Indore, Nasik, Kanpur, Lucknow, Bhubaneswar and Pune. 

Sameer Guglani, who runs The Morpheus, a Chandigarh-based startup accelerator, says while interest in such new-age entrepreneurship is increasing in small cities, the lack of infrastructure and a captive market opportunity problem eventually forces teams to move to a bigger city. But some entrepreneurs have found ways around this, especially given the cost advantages are huge compared to, say, a Delhi or Mumbai. Khutal of Twist Mobile, for instance, admits that after having worked in Hyderabad with Gameloft, a French video game developer, he found it difficult to hire talent after moving back to Indore. Tayal of CVbhejo, who earlier worked with 
InfosysBSE -2.67 % and Bosch, says he tweaked his hiring process to recruit for Udaipur. "People are not aware of startups and how they operate in smaller cities. So we consciously changed our selection process. We now pick the candidate with the right attitude and then try to make him/ her understand the startup culture," says Tayal, while Khutal too has since scaled up and brought in people from other parts of the country.

And while most of these young entrepreneurs want to diversify into bigger cities, they want to keep their core team at their home base. "Our products, developed over the last couple of years, are already working well with our clients across Delhi, Mumbai, London and Singapore. And while we prefer keeping our core team in Chandigarh itself as we grow, we do plan to have some marketing and support teams in various cities where our clients are," says Nandwani of Utrade Solutions, pointing to what's really been the greatest enabler -- the power of the internet and new technology to shrink old geographical boundaries. Agarwal of mYwindow.me says being in a small town is not something to be feared, "because today the power of the internet has made the world so much smaller".