Delhi-NCR (National Capital Region) is catching up with the country’s Silicon Valley, Bangalore, to become the new start-up destination.

At present, it boasts of having incubated several successful online firms such as, Snapdeal, Jabong, Yebhi, Cleartrip, Alacurity, Fashionandyou and Meritnation, among others.

While a few industry experts attribute cheaper rentals and better infrastructure for making Delhi-NCR the new start-up hub, others feel there is more ease of doing business here compared to most other metropolis.

According to research firm Ernst and Young, while about 929 start-ups have come up in Bangalore in the last one decade, in Delhi the number has jumped to an impressive 810. Of the total 3,402 start-ups, about half are present in Delhi-NCR.

Manmohan Agarwal, founder of fashion portal, said that it makes sense for online retailers to start their business in the region as northern India is the main sourcing hub for the country.

About 60-70 per cent of raw material is sourced from the manufacturing units present in the region. Besides, all the major distributors are present in the region.

“Gurgaon has lots of space, thus making it good for warehousing purpose. Besides, most online retailers need good air connectivity for delivery of goods, which is there is Delhi,” Agarwal added.

Another major factor is that Delhi-NCR has always been a trader’s hub and of late, the evolving ecosystem has forced a number of venture capital and seed funds to set up offices in the region, said Prasant Tandon, Co-founder of healthcare portal,

Meanwhile, Nitesh Bhasin, Managing Director (Delhi-NCR), Jones Lang LaSalle, said several developers are constructing IT parks and SEZs to boost infrastructure and other facilities for these firms contributing to the start-up ecosystem.

Senior investment manager with seed fund Aavishkaar, Madhukar Sinha, said, “Our earlier assumption in June was we would focus on start-up funding deals in Mumbai, but suddenly we realised that about 20 per cent incremental deal flow was coming from Gurgaon, for both offline and online start-up models. This shows that Gurgaon has overtaken Mumbai in start-ups though Bangalore continues to retain the top slot.”

Some of the recent Gurgaon based start-ups include, and offline start-ups such as The App Kiosk among others.

While some such newbies have concrete business plans, others are just at the conceptual stage with consumers both in the B2B and B2C space.

“While the success rate of these new start-ups remains to be seen, the fact that there is lot of interest and activity, coupled with several incubators coming up across India to streamline their business models and develop an ecosystem, augurs well for this sector.

This is just the starting point for start-up boom and it is far from getting saturated guaranteeing growth potential in this segment going forward,” he added.

According to the founder of midnight delivery service FlyByKnight, Neha Jain, Gurgaon is a preferred option for start-ups given the relatively lower cost of operations as compared to Mumbai and even Delhi.

“Owing to the IT boom, Gurgaon offers a ready target group of young professionals staying away from their families and in need of services that are supplied by start-ups. Moreover, the operational cost including rentals and salaries is higher by 40 per cent in Mumbai, which is a huge cost for a small start up that needs to minimise its cost and maximise revenue.”

(This article was published on November 22, 2012)
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