Bengaluru beware: Under the radar town quietly emerges as startup hub !!

Bengaluru : It takes just one startup to change the narrative of an ecosystem.
Last week, Chandigarh-based PrepLadder became that startup, when the medical entrance test preparation platform was acquired by Facebook-backed educational technology company Unacademy for $50 million in a cash-and-stock deal.

The exit, hailed by founders and investors alike, it is indicative of a fledgling startup ecosystem in Chandigarh, which a clutch of homegrown venture capital-backed companies — in sectors such as ed-tech, agri-tech, content tech, Software as a Services (SaaS) and consumer goods — call home.

The founders of these startups, both are native to the city and outsiders, prefer Chandigarh’s lifestyle to that of startup hubs like Bengaluru, with its traffic snarls, and Delhi-NCR, with its pollution woes.

According to startup analytics firm that Tracxn, there are over 700 active startups in Chandigarh as of July 9 and more than one-third of these were founded in the last four years. Most have also raised decent amount of funding or are in the process of doing so.

Since 2019, startups like AgNext in agri-tech, and LetsShave in the grooming space, have raised over $4 million each from the likes of Kalaari Capital, Omnivore and Wipro Consumer Care Ventures. In May this year, ed-tech startup EduRev raised $150,000 from Silicon Valley accelerator Y Combinator, according to Crunchbase. It also reportedly raised an undisclosed sum from former Facebook director Anand Chandrasekaran in the same round.

Gunsberg, a ginger ale beverage brand which is present across 1,000 physical outlets in 16 cities, is looking to raise $5 million in Series A, says cofounder Sarthak Aggarwal, adding “revenue has grown 400% over last year.”

Some founders in this little known startup hub in north India, like Sameer Sharma, are on their second startup innings. In 2012, Sharma founded a hyperlocal deals platform – Trideal – which was acquired by Paytm company Littleapp in 2015 and merged with Nearbuy, another deals platform acquired by Paytm, in 2017.

Two years ago, Sharma founded a SaaS company, Uengage, that builds technology for small-and-medium businesses and makes Rs 2.5 crore a year in revenue. Further aiding the growing startup community in the Union territory, four-to-five major co-working spaces have also come up in the Tricity area — Chandigarh, Panchkula and Mohali — in the last three years.

One of them, called Starthub Nation, has four centres across the Tricity’s major startup hubs — IT Parks in Chandigarh and Panchkula, & Phase 8 Industrial Area in Mohali. “In six years, we’ve expanded our seating capacity from 70 to 600. We are in the process of adding 600 more to meet the growing demand,” says Param Kalra, founder of Starthub Nation, which generates Rs 70-80 lakh in revenue annually.

Besides, content-tech companies have also sprung up to assist the Tricity’s startup community, while bagging clients globally. While Ritika Singh’s Kontent Factory helps young startups articulate their business story to get funding, Nishtha Shukla’s Penpundit offers content marketing for internet businesses. And, Kartar Kaur’s PsychoLabs, does digital marketing for emerging businesses.

In short, Chandigarh’s startup ecosystem is picking up, no doubt. The question, however, is — what took it so long?

Flashback: This is not the first time that the Union Territory’s startup scene has come under the spotlight.
In 2016, on-demand ride-sharing platform Jugnoo made that news for raising $5 million from Paytm in a $10 million Series B funding round. In 2008, Sameer Guglani set up one of India’s first startup accelerators in the city, Morpheus, which incubated over 80 startups but phased out by 2014.

Chandigarh has been on the early-stage tech ecosystem’s radar, but only infrequently. Now, a few people are trying to change that. Since 2015, Chandigarh Angels Network (or CAN), a group of 50-odd angel investors from the city, has regularly conducted events in collaboration with global organisations like The Indus Entrepreneurs (TiE), to mentor aspiring entrepreneurs.

“We are creating a community where budding entrepreneurs have access to people, knowledge, and resources to build their businesses,” says Kunal Nandwani, cofounder of fintech company uTrade and a member of CAN.

To Bengaluru, or not to Bengaluru:  For scaling up to the level of a Bengaluru though, the challenges are plenty. First, hiring tech talent it is a major issue for startups here, since most people tend to move to metros to work. From the ones that have chosen to stay back, it is often “hard to hire people who’ve worked for companies that have scaled,” says Kunaal Satija, cofounder of EduRev.

Grooming startup LetsShave, however, has a bunch of talent working remotely from Bengaluru, Delhi and Mumbai, says Sidharth Oberoi, the company founder. “There’s also the mindset to create something in the IT services space given that Chandigarh is an IT hub. But those companies don’t easily find investors as they’re harder to scale as opposed to product-based startups,” notes Vineet Khurana, VP at CAN.

There are also infrastructural issues, like an airport that is still underdeveloped. The need for better talent and a better ecosystem forced Varun Kashyap to move his social services startup LetsEndorse from hometown Chandigarh to Bengaluru in October 2015.

“Talking to people who have ‘been there and done that’ is underrated and there are such people everywhere in Bengaluru. Investors and mentors are willing to support you in your journey and are open to meeting over a cup of coffee,” he says.

Changing Times: The Covid-19 virus outbreak and the subsequent lockdowns have slowly changed the way to founders evaluate the comforts of existing startup ecosystems like Bengaluru.

Earlier this week, Rahul Gonsalves, cofounder of Bengaluru-based product and strategy consultancy Obvious, asked on Twitter about cities where people would contemplate shifting to within India. His constraints were: one should be able to get good digital and physical connectivity (meaning network and airport), cultural diversity, and abundant outdoor space.

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