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Hyderabad – The Future Startup Capital of India

April, 2017

CFO Insights on Innovation

Hyderabad, the city of Nawabs, has been known for its sumptuous and authentic biryani, pearls and of course Charminar to a lay Indian and probably true by most yardstick. It doesn’t occupy the same mindshare as Bangalore when it comes to IT and startups. The reasons are mostly common-sense – Bangalore sports a much larger pool of IT companies, IT talent pool, R&D houses and has had a big lead compared to other cities in India. Today, Bangalore also sports the most number of startups in the country, most number of venture capitalist and is the most happening city for deal closures and startup events. There is not much debate on what is the current startup capital of the country – Bangalore by a good wide margin with few others playing catch-up or playing second fiddle.

Advantage Hyderabad

This opinion piece will try to make a case for why Hyderabad can become a future startup capital of India and the umpteen reasons supporting that hypothesis.

Vision and Foresight in Governance

Hyderabad has seen many changes over the last 1-1.5 years. The biggest of them being a stability on the political front that has given rise to a new state Telangana which houses Hyderabad as its state capital. The uncertainty had cost the city by way of deferred investments and some moving to other cities. All of this is behind us now. Telangana now has a very stable and forward looking government. It has an extremely savvy and charismatic IT Minister, Shri K.T. Rama Rao, who has changed the perception of the state from people’s perspective as well as from an external investor’s stand-point. He provides the comfort of a statesman and the brilliance of a strategist. There is no wonder that he put his vision of making Hyderabad the startup capital into action, no sooner he took charge. It was a very forward looking vision crafter by the minister and put into reality by Srinivas Kollipara, the founder of what is now T-Hub.

Infrastructure is Key

Let’s look at the bigger picture of the state and why it is different and nimble compared to other states in the country. Hyderabad has one of the best infrastructure compared to other cities like Bangalore. It also has a huge talent pool of IT, BT and R&D resources, which are essential inputs for growth of any knowledge hub. It also has one of the cheapest commercial real estate prices, making it an extremely attractive business destination and offshore centre.  It also has a very progressive bureaucracy and has industry and IT policies that are among the best in the country.

Human Capital driving the Ecosystem

Let’s now look at what’s unique about Hyderabad and what startup’s today thrive in the city of pearls.

Hyderabad is home to numerous research institutes like CCMB, NIN, NARM, ICRISAT; defense institutes like DERL, DMRL, BEL,ECIL; other institutes like IIT, IIIT, ISB, NALSAR etc, among many others which provide for a very simulating and young talent pool and extremely analytical and smart professionals.
 

SPECIAL FEATURE

This allows for enough home grown talent that can be harnessed by newer knowledge intensive industries like IT, Telecom and now the startup ecosystem. Hyderabad is home to somewhere around 3000 startups out of the 20,000 startups in the country.  It is among the top-3 buzzing startup ecosystem in the nation and houses quite a number of incubators, accelerators, and co-working space which are beehives of activity. These places form the platform for startups to connect with fellow startup’s, find talent for their team, find mentor or advisor, find angel investor, find venture funds and many more things, which will provide a better chance for the startup to  be successful.

SPECIAL FEATURE

Now that we have covered the macro picture, let’s dive deeper into the most happening, attractive and the best innovation centre in the state and the country – T-Hub.

T-Hub: India’s Largest Startup Incubator 

T-Hub is today the crown jewel of Hyderabad when it comes to Innovation, Startups and Entrepreneurship. It is India’s largest startup incubator, housing 200+ startups on a spectacular 70k+ sq. ft. with 700+ seating capacity , many huddle rooms, board room, cafeteria, fun zone, mentor garage and a spacious event room. T-Hub is a unique PPP model, where the Govt. has contributed on the capex side and has allowed an independent management team to run the day-to-day affair, governed by a board of very high pedigree. It is today a very busy and bustling building full of energy and exuberance.

It is witness to many marquee and VIP visitors both from the country and outside. Some of the big names who have visited T-Hub to-date are - Ratan Tata (who inaugurated the building), Satya Nadella, Ravi Shankar Prasad (Union IT Minister), Manohar Parrikar (Union Defense Minister), Amitabh Kant (Niti Aayog) and many other dignitaries.

T-Hub is much more than a flamboyant building. It is a thriving ecosystem of startups, mentors, co-founders, and support services, and an un-paralleled number of events that dots the campus. It is a living and breathing community where startups get bevy of varied services at a steeply discount price whether it is incorporating the company or HR services or financial book-keeping or legal services. All of this is available to the startups at the campus rather than they going hunting for it which is a big hit on time and resource and is something the startup can’t afford to waste. Startups at T-Hub also enjoy an enviable list of mentors to choose from – both from within the city and from outside.

SPECIAL FEATURE

Let’s take a closer peep into T-Hub and why it is pitted to be a game-changer for startups in Hyderabad.

Industry Connect

Today at T-Hub there are events with all quarters of the industry, which includes the likes of  - Microsoft, IBM, Intel, Amazon, Google, Samsung, Yes Bank, ICRISAT, SalesForce, Cisco, HPE, Nasscom, TiE and many more. All of them bring a lot of product and technology know-how,

amazing amount of credits to help startup use many of this at less or no cost at all.  This is huge from a startup’s stand-point and we at T-Hub understand this well and make every effort to line up all of this and many more right at their door-step.

Capital Raising

There are atleast 2 dozen startup’s who have been successful in raising their next round of funding (of atleast $100K or more) or have stuck big partnership with marquee corporates in a short span of an year in the incubator. Majority of the startup raise in the city has been around the $100K - $150K (angel round) and fewer in the $ 0.5-1M VC round. This will change soon and we should hear more big ticket raises as many of these companies hone their product and go-to-market strategy and start getting into bigger revenue play.

Partnerships

There have also been partnerships between startups operating from the campus, which is a key advantage of a massive incubator having hundreds of startups. Beyond the incubator, T-Hub also has many corproate partnerships for those who wish to engage with the startup community via one of the many structured programs. A popular one is the accelerator program that few of the corporates have already kick started.

The Rising Stars at T-Hub

Let me also touch upon a few amazing startups that are trying to break upon the door to success. There is – Gayam Motor Works (maker of electric cycle and auto), Hug Innovation (maker of multi-utility smart wearable watch), Loop Reality (maker of mixed reality cycling +VR), ATL (1 of the top P2P lending startup) and many more exciting one’s who are the torch bearers for Hyderbad’ startup success. The success of 1 or more of this will be the moot point in the history of the city, which will open the seam for many more success and create a much larger ecosystem that what exist today.

T-Hub in Future

There is also plan of a much larger and more ambitious T-Hub Phase-2, which will be 5 times the size of the current one and when operational in 2018, will be the world’s largest startup incubator. It will have most number of startups under one campus anywhere and a perfect melting pot for all things innovation and entreprenuship. By that time there will certainly be few big success stories from the current bunch of startups that already exist and which will start to have a mushrooming effect around the time when the larger playground will be ready to unleash.  Given all of this – it’s only fair to say, that Hyderabad will breed most number of startup’s and thrive as the best startup ecosystem in the country. Hence it has a good chance to be crowned as the “startup capital” of the country and an example for other cities to emulate, making india the “startup capital” of the world.

Hyderabad: Way forward

I am extremely positive and confident that Hyderabad, the city of pearls is sitting on a pent-up gold mine, which is slowly being scrapped at the surface and the shine starting to glitter. So I guess the question is not – “If Hyderabad will become a startup capital or not” but it should more appropriately read – “When Hyderabad will become the startup capital of India”. In my view it may only be 5 or 6 years away. 

Opinions expressed in the article are the author’s own.

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