Chennai is very close to breaking into the top 100 start-up ecosystem status ranking globally. It has registered a massive jump of 31 places to rank 102nd in the Global Startup Ecosystem Index 2022. The vibrant ecosystem created in the last few years has helped the city emerge as a major global destination for start-ups, say industry experts.
Two cities — Pune at 90th and Hyderabad at 97th — entered the top 100 to take the total count to 5. Pune has seen an improvement of 14 spots and Hyderabad has seen an increase of 9 spots.
Bengaluru at 8 (up two places); New Delhi at 13 (up one) and Mumbai at 17 (down by one) are the other three cities in the top 100 rankings released by Israeli-based StartupBlink, a start-up ecosystem map and research center.
The second tier ecosystems of India have all seen healthy growth, the report said. A few Asian Pacific ecosystems such as Brisbane (101st) and Chennai (102nd) are getting very close to achieving a top 100 ecosystem status.
Reasons for improvement
The reason for Chennai's improvement is an increase in the quality score which reflects the increase in traction of the ecosystem's entities and high-impact start-ups — unicorns, and exits. This puts Chennai on a trajectory to overtake Pune and Hyderabad if the growth is sustained, the report said.
Arun Natarajan, Founder, Venture Intelligence, a research firm tracking PE-VC and M&A transactions in India said that Chennai is widely acknowledged as the 'software as a service capital of India'. The IIT-Madras Incubation Center is considered among the very best incubators in the country for fostering deep technology start-ups.
Further, deep tech start-ups from IIT Madras like speech technology start-up Uniphore; electric vehicle start-up Ather Energy; dairy technology start-up Stellapps; drone start-up Detect, and space tech start-up Agnikul — are making waves across the country and even the world, he said. There is healthy co-existence between start-ups and mature companies — thus making the ecosystem more stable, he added.
Agreeing with Natarajan on Chennai’s vibrant start-up ecosystem, Ramkumar Ramamoorthy, Partner at Catalincs, a tech advisory firm, said that Chennai has gained significant momentum in the start-up world.
This is because of an ecosystem play at scale — entrepreneurship promotion bodies such as TiE and The Chennai Angels; government support through emerging sector seed fund; enabling policies with funding mechanisms built-in like the fintech policy; local PE funding from the likes of TVS Capital, and innovation labs and research parks set up by educational institutions.
For a long, industry watchers have been blaming Chennai for not having a congenial social environment, including pubs, golf courses, and retreat parks, among others. It is no more the case.
For example, over 100 pubs have come up in Chennai just in the past 18 months or so. This silent revolution is making Chennai more amenable to new-age start-ups, both at the intersection of industry and technology, as well as in deep-tech, he said.
India — tops the chart
In South Asia, India retained its position as the top country for the start-up ecosystem and globally improved its ranking by one place to 19th. The Indian startup ecosystem is a regional leader in innovation and shows a positive momentum of three spots since 2020. India also ranks number one for start-ups in South Asia.
India is an ideal place to locate education, transportation, and food tech start-ups. As the most popular industries in the country, there is a sample of 1,364 education start-ups in India, 654 transportation start-ups in India, and 507 food tech start-ups in India, on the StartupBlink Map, the report said.
India has 32 cities in the 100-1,000 range. Goa and Patna have seen the highest increase of ranking in India, 272 and 218 spots respectively, to rank 500th and 522nd. In total, 37 Indian cities are ranked in 2022, which puts India in the 7th position globally in regard to the number of ranked ecosystems per capita, the report said.
Start-ups will be the engine to transform India’s informal economy into a transparent economy, which will allow the government the tax resources to finally make India the superpower that it has the potential to be.
For this to happen, the public sector will have to choose its best and brightest to be on the task of start-up economy development and strategy setting.
Considering that India enjoys good ties with most of the world, we are optimistic about its chance to continue to grow and assume a bigger role in the global start-up ecosystem. When considering India’s core advantage of an educated, young, English-speaking population, the country’s potential is immense, the report said.