Startup Mantra: Robust rise of new successful firms
2021 has proved to a turning point for the Pune startup ecosystem
2021 has proved to a turning point for the Pune startup ecosystem. For starts, as per the Department for Promotion of Industry and Internal Trade (DPIIT), the number of startups in Pune is now 3,200 which is almost equal to the 3,274 registered in India’s financial capital - Mumbai. Pune has seen emergence of three new unicorns – including two which started out from Pune, but now moved to either Bengaluru or Mumbai – taking its total tally to six. Also, the existing unicorn companies doubled or tripled their valuations.
Startups in Pune were also on the radar of venture capital firms and this year Pune startups received a total investment of about USD 538 million – of which USD 213 million were raised by the newly minted unicorns. Financial services, agriculture, health and software-as-a-service (SaaS) startups dominated the funding space this year followed by some action in education, logistics, electric vehicles, food, robotics and biotechnology sector.
On the infrastructure side, even though the city is still in want of an international airport and expansion of metro routes, real-estate sector has seen an uptick with maximum number of small-ticket-size commercial spaces projects designed for startups and information technology (IT) companies launched in the last one year. The Pune Municipal Corporation (PMC) has also formed an EV cell to address the roadblocks on infrastructure as well as charging infrastructure. Della Leaders Club (DLC), a global community of entrepreneurs, young leaders and professionals launched its Pune chapter to come up with a support system for budding bigwigs. College of Engineering Pune’s (COEP) Bhau Institute of Innovation, Entrepreneurship and Leadership has been selected under the Startup India Seed Fund Scheme (SISFS).
The year started with Pune-based insurance technology startup ‘Digit Insurance’ turning unicorn in January month itself after raising funding of USD 18.5 million. This trend continued with SaaS company Mindtickle and cloud-kitchen startup Rebel Foods bagged the unicorn tag in August and October respectively with funding rounds of USD 100 million and USD 14.5 million respectively.
Another interesting turn of events was that two Pune-based companies – Noccarc and E-Spin Nanotech – helped IIT Kanpur’s Technology Business Incubator ‘Startup Incubation and Innovation Centre (SIIC)’ to cross the crucial milestone of incubating 100 startups which at a combined valuation stand at a valuation of more than USD 1 billion.
SaaS-based contract management company ‘Icertis’ tripled its valuation at USD 2.8 billion early in March 2021 with a fund raiser of USD 80 million. Another unicorn, cloud data protection and management company ‘Druva’, founded in Pune and turned unicorn in 2019, raised USD 147 million in April 2021 which raised the company’s valuation above USD 2 billion. Druva also announced it has surpassed seven million daily backups with 169PB of data under management.
Prime startup Epicenter
Vivek Sadhale, co-founder, LegaLogic Consulting says, “2021 started with a bit of uncertainty. As things started to look up, second wave of coronavirus pandemic played a big dampener. However, second half of 2021 has been absolutely rocking. Pune witnessed a flurry of activity both in the M&A and investment side. It was great to see a Pune company Go-digit start the year of unicorns. Technology sector is red hot. Fintech, Agritech, InsureTech, EdTech all have received attention from investors. Services companies have seen M&A. Manufacturing sector has not participated in this run as much as technology sector has. Pune has become a hub for product companies. SPPU’s innovation cell, Venture Centre, Mahratta Chamber of Commerce, Industries and Agriculture (MCCIA), National Association of Software and Service Companies (NASSCOM), The Indus Entrepreneurs (TiE), Bhau Institute, Software Exporters’ Association of Pune (SEAP), and many more industry bodies have created a vibrant ecosystem. During the pandemic this ecosystem worked as a catalyst. This ecosystem is one of the important pillars for Pune to see a vibrant 2021.”
Coming of Age
If we analyse the funding statistics available in public domain, Pune-based agritech startups have raised USD 78 million, fintech startups USD 73.6 million, health startups USD 32 million, SaaS startups USD 12.15 million and edtech startups about USD 7.22 million in funding in 2021.
Vinit Deo and Prajakta Shetye-Deo of Posiview Ventures shared, “Pune’s ecosystem also has come of age in terms of size of funding with a few large ticket size deals such as Firstcry (USD 300 million), Elasticrun (USD 75 million) and Agrostar (USD 70 million) taking place during the year. While ecommerce and infotech sectors, led the pack in terms of number of investments, others sectors such as food and beverages, agriculture, artificial intelligence, edtech and fintech saw a few transactions.”
“Pune’s startups received the fourth highest funding after Delhi NCR, Bengaluru and Mumbai as per a report by PricewaterhouseCoopers (PWC). Interestingly, Pune’s startups received almost 4x funding of almost USD 845 million in the first three quarters of this year versus USD 189 million in the same period last year - highest year-on-year growth in funding across cities. It is also important to note that this funding went to startups in a wide range of areas and not just technology.
Pune has a thriving incubation culture with non-profit organisations such as TIE, Savitribai Phule Pune University Center of Innovation Incubation & Enterprise, Bhau Institute’s Incubation Center, Venture Center and a host of institutions as well as Atal Innovation Centres taking the culture of entrepreneurships to the grassroots level starting from colleges.”
Vinit Deo and Prajakta Shetye-Deo of Posiview Ventures
Unlocking great potential
Vishesh Rajaram, managing partner and Ishika Mittal, research analyst, Speciale Invest said, “Pune has historically been a hub for technology startups and this year we saw active work in deeptech, healthcare, clean-tech, and SaaS, amongst others. We have incredible work done by a few early-stage biotech startups such as Cygenica and Synthera Biomedical. Similarly, engineering heavy startups such as Quasar - building a platform for SDR apps and Stiger - building electric fleet vehicles have also made significant progress. Also, Atal Innovation Mission (AIM) joined hands with Bill & Melinda Gates Foundation (BMGF) earlier this year to support deeptech entrepreneurship and selected Venture Centre to lead the program.
“With the rise of deeptech startup funding in India, Pune seems to be on the verge of unlocking great potential. In 2021, deeptech startups raised over $500M in funding in Q2 and Q3, comprising 19 per cent and 15 per cent respectively of all investments - encouraging numbers considering this was less than 6 per cent in 2017. Pune might soon become a pioneering space for startups in the advanced technology sector.”
Vishesh Rajaram, managing partner and Ishika Mittal, research analyst, Speciale Invest
Immense challenges and opportunities
In the words of Dr V Premnath, director of Venture Center NCL, the year 2021 has been a landmark year for startups. Two startups from Pune — Noccarc Robotics and SynThera Biomedical — bagged the top awards constituted by the Technology Development Board on occasion of National Technology Day.
Says Dr Premnath, “In this year, overshadowed by the pandemic, startups around the world stood out in their contributions to the world and inspired a new generation of entrepreneurs. The contributions of MyLab for diagnostics, ScanRay and Nocca Robotics for ventilators, Blackfrog Technologies for cold chain, and many startups for PPEs and sterilisation stand out. In the backdrop of Covid, the startup world saw tremendous interest from the investor community for startups serving a population and businesses in extended lockdowns and uncertain work environments and startups leveraging science-based deeptech to address the world’s most important problems. There was a new realisation of the importance of science-based deeptech solutions against the backdrop of the pandemic.”
“In FY 2020-21 alone, Venture Center supported over 200 entrepreneurs, and Venture Center startups raised a phenomenal ₹150 crore in investments during FY2020-21. The year 2022 comes with renewed promise for the startup ecosystem in Pune. Venture Center also expects that the country is entering a phase of action for agrotech and medtech startups.”
Dr V Premnath, director, Venture Center
Says Akshima Ghate, senior principal, RMI India – an independent think tank – “It has been an interesting year for the EV ecosystem. Despite the challenges of Covid-19, month-on-month sales of EV vehicles are on a continuous increasing trend. About 3 lakh EVs are being sold in the country while in Maharashtra, EV sales have increased to almost 2.5 per cent of total new vehicle sales. Maharashtra EV policy gives best incentives, big fiscal support, to manufactures, components, batteries, OEM, charging infrastructure. As a result, we have seen good amount of industrial activity and start-ups coming up in Maharashtra, in particular Pune and Mumbai region – around electric vehicles (EV).”
“We are working with the Pune Municipal Corporation to help them develop an ‘EV Readiness’ plan for the city. It will identify what needs to be done in next three months, six months, one year to remove the roadblocks to EV deployment in the city. We have broadly identified eight actionable steps including specific initiatives, projects and actions that different departments should undertake and implement. This will position Pune much better in terms of EV adoption and the city will get more business interests.”
Akshima Ghate, senior principal, RMI India
Commercial real-estate picking up
The ‘affordable commercial space’ segment is seen in demand. For example, managed office space provider Smartworks leased a total of 5.6 lakh sq ft at Baner, of which 40 per cent was pre-booked by IT/ITeS, BFSI and manufacturing clients.
Says Jatin Suratwala, chairman of Suratwwala Business Group, “Real-estate market was picking up after first wave ended. Buyers were taking benefits of stamp-duty incentive till March 2021 but the second wave in April (to June) was a dampener. The overall cycle came back to routine only after July 2021. We could see that the investor-class had backed out while the residential buyer, especially from the affordable segment, dominated the pre-Covid period. However, after Covid, spacious home became a need due to work-from-home (WFH) requirement. Buyers started upgrading to larger homes while the investor-class got attracted to commercial properties.”
“Maximum commercial projects were launched in last one year within an affordable ticket size of ₹30 or ₹40 lakh onwards. Small businesses, startups and mid-sized IT companies need small commercial spaces and prefer such rental arrangements. We are seeing that 80 per cent purchases of such properties is being done by investor-clients, while IT and startup companies and banks (for their back offices) are on top in terms of demand for such commercial spaces.”
Jatin Suratwala, chairman of Suratwwala Business Group