Can Pune Be the NextBigWhat of Startup Hubs in the Country?

Pune has more in common with Bangalore than just weather and tech companies, it is also a thriving startup hub. Here’s a look at what the startup ecosystem is like.

Pune has more in common with Bangalore than just weather and tech companies, it is also a thriving startup hub. Last Saturday, we did a Roadshow in Pune for the upcoming UnPluggd in December. I met a few startups out there and the energy is really high. However, there are some harsh realities that startups from Pune have to face too.

As far as the startup ecosystem goes in the city, it is probably where Bangalore was some time ago and has the opportunity to not make the mistakes Bangalore made early into its startup days.UnPluggd Pune (1)

Enterprise focused, inspite of being closer to Mumbai

Even though Pune is closer to Mumbai, the city has mostly produced Enterprise startups. Proximity to Mumbai means access to media agencies, advertisers etc – but the city has mostly seen enterprise startups such as Druva.  This is mostly because of  the influence that comes from mentors who typically are from enterprise companies like Veritas etc.

Having said that, the enterprise focus also results in startups quickly moving to Silicon Valley to accelerate the business (for instance, Nexus Venture Partners’ portfolio in Pune includes Pubmatic, Druva and Helpshift – all of them are global now).

Talent pool & Infrastructure

Pune has always been a good source of talent especially with the amount of IT companies and educational institutes in the city. But these two factors are just not enough to produce and inspire talent required for a startup culture.

The city also is a leading manufacturing hub in the country making it a good place for product development. The city is fast growing, yet affordable compared to Mumbai or Bangalore. There exists a small early adopter crowd too.

Funding Scene : Lack of Local AngelsUnPluggd Pune (2)

Punes proximity to Mumbai, the financial capital of the country, is an added advantages to startups in the city. Meeting potential investors or VCs is nothing more than a couple of hours drive down the express-way. However, its mostly the entrepreneur who ends up doing the driving.

But inspite of this close proximity to the financial hub of the country one of the main problems startups in Pune face is access to finance & funding, which is very essential to the growth of any startup. Raising funds beyond the seed stage into the Series A and B rounds was a challenging factor, but this trend is slowly changing. As the number of startups in the city begin to increase, the funding activity is also gaining some traction. Very recently Pune based security solutions company Druva raised $25 mn in a Series C funding from existing investors Sequoia Capital, Nexus Venture Partners and Tenaya Capital, a new investor.UnPluggd Pne1

Some of the other Pune based startups that crossed the Series A stage include digital media publishing platform – PubMatic, in-app customer support platform – HelpShift, online streaming platform – Dhingana among others.

Most Angel investors and VC firms do not have a presence in Pune and are not very active in the fuding scene. On the brighter side, earlier this this year Helion Venture Partners gave a  boost to the Pune startup ecosystem by announcing that it may invest 10% of its third fund ($255 million), it raised last year, in Pune based startups.

However, the biggest challenge is of lack of local angels who can cut a cheque between Rs 30 lakh – Rs 1 Cr, as local angels (which are very less in number) prefer to stay within Rs 20 lakh amount. And yes, there are very few lead angels (applicable to the rest of the country as well).

Service companies are a favorite, especially OPDs

OPDs/Service companies have traditionally been favorites in the community. For instance, acquired True Sparrow, it’s development consulting arm. And that’s why you will find a lot of great design and technology services companies from Pune who mostly engage in outsourced product development & consulting.

Lack of Marketing FocusUnpluggd Pne

Welcome to the geek world! 🙂

Like Bangalore, Pune entrepreneurs do not really focus on marketing.

Plus, another challenge a lot of startups in Pune seem to have is the lack of desire to seek out beyond the city ecosystem. Collaborating with startups in Mumbai would be a good way to start with and startups need not just look at Mumbai as the source of funding and Pune as just the talent pool.

What’s interesting is that inspite of the proximity, the two hubs do not share the same startup DNA and there is very little collaboration (limited to tech/development).

Working together, startups from the two ecosystem have a lot more to benefit from each other.

We hope to see the city grow into a bigger startup hub and maintain a healthy signal:noise ratio.

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