More start-ups are founded every year in Bengaluru than in San Francisco

Bengaluru, the start-up hub of India, is giving its global counterpart, San Francisco, a run for its money of late. As per data from Tracxn, a firm that tracks investments and financials of private companies and start-ups, the number of start-ups founded in Bengaluru has been significantly higher than in San Francisco in the past five years.

For instance, in 2015, 3,080 firms were founded in the Indian city, as against 2,040 companies in the US’s San Francisco. Similarly, in 2018, 1,564 start-ups were founded in Bengaluru as compared to 1,278 in San Francisco. Likewise, in 2020, Bengaluru’s count stood at 805, whereas the US city’s figure was 619.

However, in terms of value of amount funded, San Francisco still attracts five times the amount invested in Bengaluru.

Room for trial and error

Bhaskar Majumdar, Managing Partner, Unicorn India Ventures, said that one thing that sets apart Bengaluru from other global cities is the proven track record of the city, right from the 90s when the IT outsourcing wave hit India, and the birth of IT behemoths such as Infosys and Wipro certainly also helped the profile of the city.

Majumdar added that as the start-up ecosystem in India and Bengaluru is relatively new and there will be more people launching new-age businesses. Some seasoned professionals turning entrepreneurs, some first-time young entrepreneurs and some trying their hand to see if they are founder material.

The Indian city currently has over 13,000 active start-ups, and is home to unicorns such as Byju's, Swiggy and BigBasket. Consumer, enterprise applications, retail and ed-tech are among the top sectors that have the highest number of active firms there, as per data from Tracxn. Companies that have been founded since 2010 have been considered for this analysis.

According to data from a recent Dealroom.co report, Bengaluru has been the world’s fastest-growing mature tech ecosystem since 2016, with venture capital investment growing 5.4 times from 2016 to 2020.

However, basis overall investments made in start-ups founded since 2010, Bengaluru is ranked only ninth globally, Tracxn data showed. Right on top of the list is San Francisco, followed by Beijing and New York City.

Areas to focus

Experts said that while hubs such as San Francisco and Beijing have been breeding and cultivating start-ups for decades, the Indian start-up ecosystem itself is not more than 15 years old. Despite that, Bengaluru being positioned in the ninth spot is no mean feat. But there are a few areas the city can up its game in, such as improving its infrastructure and connectivity, and founders taking their businesses to markets where bigger investors are present.

Anup Jain, Managing Partner, Orios Venture Partners, said that the city lacks dependable and fast mass transit connectivity, adding, “One lands at the Bengaluru airport and has just an option of travelling by taxi across to most of the business centres, not leaving enough room for more than one good meeting and a meal in peace!”

Keeping in mind that Bengaluru has globally comparable talent and funding available, founders should attempt to scale up faster and launch business ideas that are relevant globally, Majumdar noted, “They should realise that while India is one of the biggest markets in the world, entering top international markets like the US and UK will give them global recognition and attention from investors and even strategic buyers,” he added.