ENTREPRENEUR STARTUP SPECIAL .....................(1) Start Upcountry

ENTREPRENEUR STARTUP SPECIAL (1) Start Upcountry





Entrepreneurs are spreading their wings in the unlikeliest of locations, thousands of kilometres away from the well-travelled and storied startup hubs

Startups in India absorbed over a billion dollars in the first quarter of 2015. For the most part, the investors chased ven tures based in India's largest cities: Bengaluru, Mumbai, Delhi and Chennai. However, in the last few months, they have also been casting their net fur ther afield into India's hinter land. Historically, India's non metros and small towns have been a poor place to do busi ness --much less try to seed and catalyse the growth of a startup -but things have slowly begun to change.

Venture capitalists (VCs) point to some of these trends.

“As an early-stage tech fund... we are focused on discovering the next wave of entrepreneurs from emerging parts of India,“ says Karan Mohla, executive director & head of digital con sumer investments, IDG Ven tures. “There has been a signifi cant increase in digital consum er activity, especially in the last couple of years and more of this is being driven by consum ers beyond the Top 10 cities.

Tier II and III cities are growing faster in terms of their online consumption of goods and ser vices compared to bigger cities and often drive 60-70% of transactions of ecommerce companies.“

Entrepreneurship and start ing up is no longer a big city phe nomenon. As the success stories of Indian entrepreneurs are cel ebrated, more people in the hin terland are being emboldened to try their hand at starting up.

Across small town India, in plac es as diverse as Dharamshala, Udupi, Udaipur and Guwahati, the startup culture has taken hold and is producing dozens of entrepreneurs with nifty ideas.

Udupi, a town in coastal Kar nataka, is best known as the birthplace of Darshini, a chain of quick service south Indian restaurants. However, Robos oft, a startup based there, has attracted millions of dollars from VC funds for its range of mobile apps and games. Hubli, also in Karnataka, has gone from a budding software ser vices destination to a hub of startups, backed by the likes of Gururaj Deshpande, an early technology entrepreneur. In Dharmashala in Himachal, ventures such as Mindgrep, Moonpeak Media and Earth Store have all been founded and nurtured in the bracing climate offered by the Himalayas.

Serial entrepreneurs Karthic Ravindranathan and Abhilash Thirupathy chased their startup dreams with Shakti Aerospace and Healthcare Magic r e s p e c t i v e l y, both in Bengalu ru, but for their latest cleantech venture, Surya Power, they came home to Coimbatore in Tamil Nadu. “Our products are targeted at the hinterland and we want to be close to our markets,“ says Ravindranathan.

Arohan Foods is possibly the only VC-funded venture in the northeast and its three founders, Anabil Goswami, Arindom Hazarika and Rana Pratap Brahma, gave up careers in Mumbai to head for Guwahati. “It made no sense being in a large city for our business; we wanted to be close to the source,“ says Goswami, who co-founded the branded pork venture four years ago. Investors say that entrepreneurs from small towns appear to be more charged to succeed and willing to put in the hard yards to make their startups flourish. It also helps that costs -from human resources to rentals -are l o w e r, c o m mutes are shorter and fewer people quit jobs. “Many employees prefer to be in smaller towns... [they are] closer to family, [have] manageable work hours ... In the end, there has to be a net long-term productivity gain for the model to work,“ says Kumar Shiralagi, managing director of earlystage VC firm Kalaari Capital.

Robosoft, where Kalaari has invested, is in Udupi for its talent base alone. “The proximity to good educational institutions (Manipal Institute of Technology, whose graduates include Microsoft CEO Satya Nadella, is an hour away) in the region has helped,“ he adds.

But is this enough? Some entrepreneurs suggest that while a small-town launch may be handy to keep costs low initially, moving to a large city may be only a matter of time.Unni Koroth, Abdul Hisham, Arvind GS, Arun Raveendran, Abdul Salam and Vishwajith A started Foradian Networks, a provider of technology solutions for the education sector in Kasaragod, perhaps Kerala's most backward district. While being in the boondocks helped keep early cash burn low, hitting the big time required the founders to shift to Bengaluru.“Our business has been growing 300% year on year since we moved two years ago,“ says Koroth. “We all had families and deep ties to Kerala. This was our most difficult, but necessary move.“

The startups we have profiled in the following pages may also be confronted with such tough choices. Yet, as they try to make it big, they'll surely inspire many more in small-town India to take the big leap and start out on their own.

Rahul Sachitanand

ETM31MAY15