India’s tech ecosystem is set for explosive growth. It has enormous potential to become a significant supplier of both software and hardware to global companies. With the help of government bodies and other organizations, the country’s tech growth and development has reached the tipping point required to reach critical mass. It is time for the world to recognize Bangalore as one of the world’s leading Tech Hubs.
Bangalore, India’s Largest Tech Hub
Bangalore (Bengaluru), is the “Silicon Valley of India”. With a populations of ~8.52MM, it is the country’s third most populous city and currently its largest tech hub. According to the Compass Global Startup Ecosystem Ranking of 2015, the ecosystem is valued at between $11.9 and $14.5 billion, 55% more than the Asia-Pacific (APAC) average of $5.9 billion. Bangalore’s metropolitan GDP is estimated to be $45 billion, with the top target markets being India, the US, and the United Arab Emirates.
In 2014, over $2.2 billion USD in venture capital was deployed in the city of Bangalore alone, ranking seventh among global startup ecosystems with a venture capital growth rate of 400% since the previous edition of the ranking. This growth propelled the city into the 15th overall position, advancing from 19th in the 2012 report.
Unicorn companies (with valuations of over $1 billion), such as Flipkart and InMobi, have drawn attention to the city’s tech scene, encouraging more investors to look at the budding startups that call Bangalore home. The average seed round is $300-350k, while an average Series A round is between $4-4.5 million. About 57% of rounds are attained solely through local investors.
Around 28% of India’s startups are located in Bangalore, with the majority focusing on e-commerce, consumer services in productivity and collaboration, big data and analytics, and enterprise resource planning (ERP) solutions. Nearly 25 incubators or accelerators are also located in the city, along with offices of global VCs such as Accel Partners, Sequoia Capital, Nexus Venture Partners, Inventus Capital, IDG Ventures, Ascent Capital, Bessemer Venture Partner, Intel Capital, Kalaari Capital, Matrix Partners, Mayfield Fund, NEA, Norwest Venture Partners and more.
Tech conferences like Tech in Asia – Bangalore and Startup India Rocks are also contributing to boosting the city’s profile as a global tech hub and are drawing attention to the opportunities the city offers to both entrepreneurs and investors.
Driven by India’s young population, Bangalore boasted the youngest average founder age (28.5 years old) among the top 20 ecosystems worldwide. Surprisingly, an impressive 11% of companies there have female founders.
Startups in the city have a great talent pool to draw from, resulting in the second-shortest time to hire statistically in India; it’s a great place to find new work opportunities. Lower living costs are matched by advantageous operating costs, with annual salaries for software engineers starting at just below $10,000 per year. The lower earnings potential is reflected however in a talent pool is more limited compared to other global top startup ecosystems, mainly due to a lack of previous work experience in the startup world; 41% of employees have previous startup experience.
An Internationally Oriented City
Bangalore’s demographics are very internationally oriented; only ~30% of the city’s population is of local origin. The high amount of expats and immigrants from various corners of the world add to a unique fusion of cultures that is reflected in all facets of life there..
Infosys, an Indian tech startup, established itself in Bangalore in 1981 and is now one of the world’s largest tech companies. By 1983, another soon-to-be tech giant, Wipro, also moved to Bangalore and the tech sector began growing around these two companies. Texas Instruments was one of the first global companies to set up shop in Bangalore, opening its research and development centre in 1985. Now home to a Microsoft Technology Centre and the Google Bangalore office, the city is recognized as a great resource for talented engineering grads. Other global companies like Adobe, Cisco, Dell, IBM, Intel, Oracle, and SAP Labs also have established a presence there, bolstering Bangalore’s status as an important business centre. The number of startups grows every year as more innovators make this bustling city their base.
Bangalore has always been a science and tech capital and is home to the largest number of engineering colleges in the world. Many Indian entrepreneurs and investors that have gone off to places like Silicon Valley return to the city with their international experience and knowledge, contributing to an international and ideal environment for any budding company. Access to India’s giant market allows for quick iterations that are cost-effective, especially in terms of foreign companies.
A well-educated, English-speaking workforce that is available at less than a quarter of the wages in North America or Europe make Bangalore a desirable place to begin a company. What’s more, Bangalore has arguably the best weather in India and, while the new Bangalore airport has many direct international connections, investment in the local transportation infrastructure is still needed to bring it on par with other global centres. Recent progress demonstrates it is a great location for entrepreneurs and investors.
In order to continue its development as a top global tech hub, Bangalore will have some challenges to overcome, including competition with other Indian startup centres like Pune, Mumbai, and Delhi. While issues and challenges are continually being addressed, the most pressing issues for Bangalore’s tech ecosystem are focused around the cost and availability of workspaces, local regulations, taxes, and increasingly congested traffic.