People are evolving, technologies are advancing, and so are the startups. Even though great business ideas are cultivated in smaller cities and towns, startups continue to prefer metropolitan cities to nurture their businesses to an unprecedented scale.
People are evolving, technologies are advancing, and so are the startups. Even though great business ideas are cultivated in smaller cities and towns, startups continue to prefer metropolitan cities to nurture their businesses to an unprecedented scale. Since newbie businesses are deficient in some resources, they are reliant on the external environment. But when their environment fails to provide the much-needed resources, they relocate their businesses to metropolitan cities.
Recommended ArticlesView All
View | Pakistan Election: Will Imran Khan's changed tack from long march to resignations to snap poll work?
IST5 Min(s) Read
View | G20 Presidency: India can shape global Web3 narrative
IST6 Min(s) Read
So, what could be the reason behind it?
Less than 1 percent of overall funding in India happens outside of the metro cities. To give a perspective, Indian FinTechs and EdTechs have raised a total of over $22.7 Bn of which at least $22.4 Bn has been invested in one of the top-8 metro cities in India.
Factors affecting startup communities in non-metro cities
From healthcare, livelihood, and talent, multiple factors are impacting their growth. Let’s discuss them one by one.
1. Lack of quality talent: Unlike metro cities, the ecosystems in small towns are restricted as young minds and talents migrate to cities in search of better career growth. As every business has a dedicated plan and vision, they are always in need of highly capable, enthusiastic, energetic, and talented person, which become difficult to find in non-metro cities.
2. Diversified preferences: India is a land of diverse cultures, markets, languages, and more. This diversity is more prominent in the non-metro regions. It becomes potentially daunting for startups and businesses to understand the needs and preferences of their target audiences across multiple regions. Consequently, companies face difficulties in gaining a robust foothold in the market.
3. A dearth of experienced mentors: It is often observed that businesses in non-metro areas don’t have access to reliable sources of mentorship. This would ultimately result in limited or no exposure to lucrative business models in the rural or non-metro cities.
4. Unavailability of adequate funds: Even if a business idea originates in a non-metro area, there are high chances of shifting its base to a metro region because of better availability of capital and quality talent. After all, when it comes to converting ideation into execution, the startup ecosystem needs substantial capital and a robust team to grow its business.
5. Undermining investment schemes: Indian non-metro cities possess huge potential, especially in terms of education and financial inclusion. However, the investment thesis has been largely focused on scalable businesses operating out of metro areas.
What measures can be taken?
The problems witnessed by startups in non-metro cities are undeniable. However, the non-metro regions provide opportunities for economic growth through the development of infrastructure, telecommunication, educational institutions, financial institutions, etc. The ever-increasing mobile internet penetration in India is helping in bridging the gap between the metro and the non-metro regions. The following measures can be taken to help grow the startup community in non-metro areas:
• Promote awareness amongst investors: Awareness campaigns should be held among affluent classes to educate them about the growing economic and investment opportunities in the non-metro regions. This will help in developing an ecosystem to support local businesses.
• Facilitate local support: When it comes to offering local support and elevating the ecosystem, dedicated incubation centers should be developed in the non-metro regions. In such cases, educational institutions and universities could lend a helping hand in educating and motivating young talents to turn their business dreams into reality.
• Utilize sector-focused approach: Online mentorship programs with a sector-oriented approach should be developed for businesses and budding entrepreneurs in non-metro areas. A strong angel network, supportive role of incubators and accelerators, and mentoring startups in those areas are the need of the hour to boost the community.
There’s no denying that every entity struggles to raise funds regardless of where they are based. That said, a sustainable startup community, be it in a metro or non-metro city, can largely benefit founders, investors, and stakeholders even during the pandemic-induced crisis and beyond.
The author, Amit Ratanpal, is Founder and Managing Director at BlinC Invest. the views expressed are personal
First Published: IST