Lack of angel investors overshadows Pune startups’ $1 billion fund record
Between 2014 and 2018, 3,200 active startups in Pune received $ 1 billion in funding according to a KPMG report, Pune 2:0 The Startup HubUpdated: Jun 05, 2019 18:54 IST
The numbers do all the talking. Between 2014 and 2018, 3,200 active startups in Pune received $ 1 billion in funding according to a KPMG report, Pune 2:0 The Startup Hub.
While Mumbai leads the startup narrative and smaller cities like Jaipur, Ahmedabad, Bhubaneshwar are showing promise, the Pune startup scenario has witnessed a seismic shift, according to the report.
It contributed 11.4 % to the state’s GDP in 2017.
Despite the fact that Pune startups saw $1 billion in funding in the last four years, the city has a dearth of angel investors. According to Dr Apoorv Sharma, founder, Venture Catalysts, that recently set up its office in the city, “Pune has a very rich startup ecosystem. Strangely it has many founders, but very few investors. I think it has something to do with the attitude. People here like to become mentors to startups and then if it’s worth their while, invest their money. They do not see startups as an asset class unlike cities like Mumbai, Delhi, Kanpur, Raipur, Lucknow. I think what’s needed is a change in their attitude.”
Says Pradeep Udhas, manager, KPMG West, “Pune has emerged as one of the most promising startup destinations in the country. This is because of multiple factors which work in its favour, large number of universities which provide great skilled workforce, in-depth expertise available due to huge presence of automotive companies. The presence of major IT firms also makes it very appealing.”
According to Kiran Deshpande, president, The Indus Entrepreneurs (TiE) Pune, a not-for-profit body that works to promote entrepreneurship, “Pune is uniquely placed because of several factors. Unlike cities like Mumbai that see a preponderance of fintech startups, or Bengaluru that is dominated by tech startups, Pune has skills in diverse verticals. We have the auto hub here, engineering, manufacturing, design, film institute so it is natural that you have startups in these diverse areas.”
However, there are areas that need looking into. According to Kiran, “Air connectivity could be much better. My personal view is that instead of building an airport at Purandar, there should be one at Navi Mumbai and the government should have high speed connectivity between the two cities.”
Initiatives such as Maharashtra State Innovative Startup Policy 2018 and Fintech Policy and the established Pune Idea Factory Foundation (PIFF) are today paving the way and helping out startups with their requirements in Pune.
Dr V Premenath, director, Venture Centre, says, “Like they do in Sweden to boost startups, the government invests an equal amount that private investors put into a fund. Moreover, the government does not share in the profits, but takes back with a fixed rate of interest. This will help science-based startups with their funding woes.”
Despite lack of an active investor community, the city’s entrepreneurs, it seems, have done pretty well.