Anushruti Singh
Indore, a city known for its pristine streets and green parks, has long held the title of India’s cleanest city. But in recent years, the winds of a different kind of transformation have begun to blow through it. Could Indore—with its unique blend of tradition and modernity, become the next Silicon Valley of India after Bengaluru?
Long renowned for its mouthwatering street food and unmatched tourist attractions, Indore is now delving into the pulsating world of start-ups. Between 2012-2015, the city witnessed 359 start-ups being founded, while over 250 began operating in the 2015-2019 period.
Today, the city has over 852 start-ups, according to traxcn, a data statistics provider. Also, the city got its first ever unicorn in homegrown climate change advisory company, EKI Energy in 2022.
Why Indore is better
Having roots in Indore, Archhana Agarwaal, CEO and Co-Founder of Joonify came back from Mumbai after a stint of start-up running, just to set up again here.
“At 25, I started my first company from Mumbai. Right from the beginning of our operations, from all the formalities to company rentals and operational costs, everything was so heavy over there. I could feel my pockets getting empty. Then something good happened. We moved our base to Indore,” she reminisces.
“TBH, Mumbai is way costlier than Indore. There I was spending a hefty amount for office rent, Rs 50,000! Now, I am just paying Rs 15,000. You can understand the difference. I am saving a significant amount of money here,” she adds.
“After relocating, my operations and rental costs have substantially decreased, which has provided me with a decent margin to work well on my costs. When it comes to start-ups, they work with a very small amount of money to flourish. So that was quite beneficial for me,” she asserts.
Indore has potential
While for Agarwaal it was the reduced costs and the ease of doing business that attracted her to Indore, for Kanhaiya Sharma of Legal251, it was the city’s potential that drew him in.
“I belong to Indore and started my entrepreneurial career at the age of seven. Now at 23, I run two companies—Legal251 and Wappgo from Indore. In my opinion, this city has everything that you need to run a company,” he says.
Sharma has worked on several start-ups, all bootstrapped. According to him, it’s Indore’s conducive environment that attracts budding entrepreneurs.
“Aspiring entrepreneurs go after big cities like Bangalore, Delhi or Mumbai to start their journeys. But I decided to stay, as there is a lot of potential in this city,” he adds.
According to him, Indore being on the cusp of development, is undergoing immense transformation. “The business inc is a mixed lot here. Numerous small MSMEs along with big companies are here. They need solutions that start-ups like us are providing,” he avers. Legal251 helps companies in auditing, bookkeeping and other legal practices.
Small city, big dreams
At the heart of Indore’s start-up surge is a vibrant community of visionaries who are not just following trends but setting them. Entrepreneurs like Agarwaal, Sharma, Chai Sutta Bar and Shop Kirana exemplify this spirit.
Rekha Acharya, Professor of Economics at Indore University, while talking about the city’s developing economic scenario, says, “If we compare the growth story of Indore between the last two decades, we find significant and tremendous change in the economic scenario.”
Professor Acharya attributes this growth to small and medium businesses.
“This sharp growth is contributed by small business joints such as Tinkus, Chai Wala, and many others like them. For faster and comfortable communication, we have ibus and e-rickshaws. The roads are better, the footpaths have broadened. And people are now more cleanliness conscious. Indore is now an attraction for many to get settled in and enjoy their lives by visiting places like 56 Dukan (a famous food street of the city),” she elaborates.
Many reasons to back up start-ups
According to Wikipedia, the nominal GDP of Indore District (excluding Pithampur Industrial Area) was estimated at Rs 64,813 crores for the year 2020-21.
Indore’s start-up ecosystem owes its growth to numerous factors. These include the city’s exceptionally low operational costs, a cost of living that won’t break the bank, and a work-life balance that’s the envy of many. Indore also has remarkably low attrition rates, fostering a stable and committed workforce.
The city’s infrastructure growth is nothing short of impressive, providing a conducive environment for start-ups to thrive. Unlike the traffic gridlock common in many metropolitan areas, Indore offers smooth and hassle-free commuting.
Agarwaal says, “Indore offers low operating costs and affordable rentals. The city has a remarkably low attrition rate, primarily because it provides excellent opportunities for start-ups to establish themselves and thrive. It’s a tier 2 city so competition is low. Also, its strategic and central location makes it an ideal choice for corporate headquarters.”
According to the biz founders in the city, many professionals who were working for MNCs in metros or other cities are returning to Indore, because of the good work-life balance and other perks that this city offers.
It’s a city of talent
Dr Somdutta Singh, Founder and CEO, Assiduus Global Inc, LP Angel Investor says, “Of course, Indore’s emergence as a start-up hub can be attributed to this combination of factors. But let’s also not forget that the city is home to a large pool of talented and skilled professionals, thanks in part to the presence of premier educational institutions like IIM and IIT.”
If we go by what Indorians say, there are about 60 engineering and more than 100 management colleges here, making it a gold mine of talent for start-ups.
Recently, a Deloitte-NASSCOM study touted Indore as one of the next technology hubs. According to this study, one of its key advantages is its cost-to-value ratio.
Companies can access good-quality talent at 25–30 per cent lower cost here, making it an attractive option for businesses looking to reduce costs while maintaining high levels of productivity, the report states.
Professor Acharya says, “These institutions have made the city an educational hub. With their innovations and management skills, they are partnering with local and state governments to resolve many strategic issues.”
Dr Singh says that Indore offers a better work-life balance, minimal traffic congestion, and a more peaceful environment compared to larger cities, which is appealing to both entrepreneurs and employees.
“This stability is advantageous for start-ups as it reduces the need for constant talent acquisition and training. Indore’s strategic location provides easy access to markets in central India, which is a growing consumer base. This proximity can be advantageous for start-ups targeting domestic markets,” she contends.
Investors are noticing
Over the last few years, the state government has been actively supporting the growth of start-ups here through various initiatives, incentives, and policies and investors are taking note of this.
Consequently, numerous incubators and accelerators have been set up here, providing start-ups with mentorships, funding opportunities, and a sense of community.
Investors are attracted to such start-ups because of their untapped potential, lower valuations, diverse investment opportunities, scaling potential, networking opportunities, and regional market access.
“As Indore’s start-ups mature, investors have the unique opportunity to get in early, providing capital and guidance to fuel their growth. In this city of untapped promise, backing start-ups across various sectors can diversify portfolios and yield substantial returns. It’s where investors can shape the future of thriving ventures while reaping the rewards of a booming ecosystem,” says Dr Singh.
This means that investors can acquire significant equity at relatively lower costs, leading to higher returns on investment as these start-ups scale. “Indore’s start-up ecosystem covers a wide range of industries, including technology, e-commerce, healthcare, education, and more. Investors can diversify their portfolios by backing start-ups in different sectors,” she adds.
But something is still missing…
Even as Indore emerges as a thriving start-up destination, certain key elements are currently missing from its entrepreneurial landscape, feels Indore inc.
While the city can boast of its favourable aspects like investment opportunities, talent, developing infra, and reasonable operational costs, these elements are still in their nascent stages of growth. Further expansion and development are imperative in all these areas.
Agarwaal says, “Everything is at a developing stage. Regarding talent, while Indore possesses a pool of promising young individuals, the degree of professionalism commonly found in metro cities is lacking here. The work ethic, expertise, and mentorship seen in larger urban centres are somewhat absent in the current Indore start-up arena.”
“One significant hurdle is the reluctance of the people here to embrace the innovations introduced by the new companies. For instance, a start-up creating toothbrushes from raw wooden sticks or recycled materials may face scepticism and resistance from consumers. To address this challenge, collaborating with established experts or larger local corporations can be beneficial,” she suggests.
Building trust in the quality of their products or services, offering a range of options, and maintaining competitive pricing are essential strategies for start-ups to gain acceptance and succeed in this market, she points out.
But despite the little issues, today, Indore stands as a testament to what vision, determination, and a pristine environment can achieve. It has transformed from being just the cleanest city in India to becoming a thriving start-up hub that can compete on the global stage.
All in all, Indore is not just a snack city anymore; it’s a city with a dream, a city where ideas come to life, a city where the entrepreneurial spirit soars high.
