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Pune (India): A Perfect Symbiosis of Culture and Start-Ups CIV City Case - Pune (2011-2017)

Location: Pune, Maharashtra, India

Timeframe: 2011-2017

City Inhabitants in 2011: 5,060,000

City Inhabitants in 2017: 6,510,000

The Geographic Context:

Pune is a hilly city situated at a height of 1840 ft. above sea level on the western margin of the Deccan plateau and on the right bank of Mutha river.

Pune is the second largest city in Maharashtra after Mumbai, situated 149 kilometers south-east of Mumbai (state capital of Maharashtra). Mumbai is a financial hub and is also known as the financial/business capital of India.

Pune is known as cultural capital of Maharashtra as it epitomizes Marathi culture which lays more emphasis on education, arts, crafts, music, theatre, etc. Pune is also an educational hub with almost half of the total international students in the country studying in various educational institutions in Pune.

The geographical area of Pune district is 15,643 square kilometers.

Relationship with Government

Pursuant to ‘Start-up India Initiative’ by the Government of India in 2016, the Maharashtra Government unveiled ‘Maharashtra State Innovation and Start-up Policy, 2017’ – a five-year plan (2017-22) to promote start-ups in the state. This policy aims to:

  • attract $775 million of investment in the development of incubators and start-ups;
  • provide $385 million for youth entrepreneurship activities (1% of Annual State Budget);
  • establish an average of 3 incubators in each of the 12 different sectors (at least 1 incubator per district);
  • develop at least 2000 start-ups in next five years;
  • facilitate venture capital funding of minimum $300 million, especially for start-ups in the state; and
  • develop at least 1 million sq. ft. of incubation space within the state over next five years.

The draft policy also proposes ‘Entrepreneurial Development’ classes in all schools to foster an entrepreneurial streak among students.

Pune has been selected for development as ‘Smart City’ under the Smart Cities Mission promoted by the Narendra Modi Government in 2015. The Pune Municipal Corporation (PMC) received an AA rating from Fitch rating agency in 2015 for its sound balance sheet and fiscal prudence. In 2017, PMC raised an amount of $30 million from municipal bonds under its ambitious plan of raising $350 million in five years for providing 24*7 equitable water supply across the city.

The Pune Smart City Development Corporation (PSCDC) has also set up a new subsidiary, Pune Idea Factory Foundation (PIFF) in 2017 to take forward the commitment of the Government of Maharashtra to make Pune the number one startup hub in the country by 2020.

Anchor Institutions

NameDescription
College of Engineering, Pune (COEP)COEP, founded in 1854, is one of the oldest engineering colleges in India with more than 4000 students. It promotes entrepreneurship through its Bhau Institute of Innovation, Entrepreneurship and Leadership started in 2014.
Mahratta Chamber Of Commerce, Industries & Agriculture (MCCIA)MCCIA, founded in 1934, is a non-government and non-profit association which plays a significant role in accelerating the industrial and economic development of Pune through its 30 committees consisting of reputed experts, professionals, and entrepreneurs.
National Chemical Laboratory(NCL), PuneNCL Pune, established in 1950, is a constituent laboratory of the Council of Scientific and Industrial Research (CSIR), Ministry of Science & Technology, Government of India. It is internationally known for its excellence in scientific research in chemistry and chemical engineering as well as for its outstanding track record of industrial research involving partnerships with industry from concept to commercialization. NCL hosts a Venture Center for technology business incubation and promotion of entrepreneurship.
Defence Research and Development Organization (DRDO)DRDO, formed in 1958, is a network of more than 50 laboratories and more than 5000 scientists who are deeply engaged in the development of defence technologies covering various disciplines like aeronautics, armaments, electronics, combat vehicles, engineering systems, instrumentation, missiles, advanced computing and simulation, special materials, naval systems, life sciences, training, information systems and agriculture, etc.
Serum Institute of India Pvt. Ltd.This institute, established in 1966, is now the world’s largest vaccine manufacturer by the number of doses produced and sold globally. It employs the most modern laboratories with high-tech machinery and computerized equipment.
Symbiosis International (Deemed University)Symbiosis, established in 2002, is a private deemed university having a confluence of more than 15000 students from over 85 countries.
Indian Institute of Science Education and Research (IISER), PuneIISER, established in 2006 by the Ministry of Human Resource Development, is a premier autonomous institute dedicated to research and teaching in basic sciences. In 2012, it was declared as an Institute of National Importance by an Act of Parliament.

Venture Statistics

According to Inc42 ( a start-up analytics media company), 72 start-ups from Pune raised an amount of $435 million between 2014-2016, out of which in 2016 alone they raised $250 million in 45 deals. As per an estimate, Pune is the base for over 1,200 start-ups.

Some successful start-ups from Pune which raised VC funding are Persistent Systems, Quickheal, Druva Inc., Pubmatic, Sapience Analytics, Firstcry, Faasos, Shopsocially, Swipe Technologies, Tastykhana, Buzzfactory, Mobikon, Wicfy, Helpshift, Mindtickle, Truesparrow, Dhingana, Profitbooks, Framebench, ICustommadeit, etc.

Strengths

  • Pune is known for its pleasant weather throughout the year, which attracts more migrants.
  • Pune has a strong manufacturing base of automotive, IT and engineering-based industries. There are around 225 German companies represented in Pune. A large number of automotive companies such as Bajaj Auto, Tata Motors, Mahindra & Mahindra, Mercedes Benz, Force Motors (Firodia-Group), Kinetic Motors, General Motors, Land Rover, Jaguar, Renault, Volkswagen, and Fiat have set-up their greenfield facilities near Pune.
  • Being just 150 km. far from Mumbai (the state capital of Maharashtra) helps Pune in building strong connections with the financial industry hub in Mumbai.
  • Because of the presence of a large number of educational institutions, Pune is also known as ‘Oxford of the East’. With large migration from other states as well as foreign countries, Pune has truly become a melting pot of diverse & young minds.

Weaknesses

  • The development of city infrastructure doesn’t match the increase in the city’s population. There are more traffic jams, bad condition of roads, lack of parking facilities, poor water supply along with water drainage and sewage problems.
  • There is a little vacuum in terms of angels/VCs available in Pune. Therefore, a lot of new ventures have to look for funding by angels/VCs from Mumbai.
  • Almost all colleges in Pune have started ‘Entrepreneurship Cells’. However, they haven’t been much able to foster entrepreneurship among graduating students as more and more students look for traditional comfortable jobs.

Ecosystem Players

NameDescription
Several incubators/acceleratorsThese include MITCON Technology Business Incubator, Bhau Institute of Innovation, Entrepreneurship and Leadership (COEP, Pune), Design Incubator, Venture Center (NCL, Pune), Growth Lab (Science and Technology Park, Pune), DesignGuild, EduGuild, IT Vertical (IIM Ahmedabad-CIIE), S.O.S Incubator, Pune International Incubation Center, Auto Nebula, Algo Analytics, Symbiosis Centre for Entrepreneurship and Innovation, Investronaut, Nasscom Start-up Warehouse, Innovation and Incubation Hub (AIT, Pune) etc. The presence of these incubators/accelerators in the city makes the whole ecosystem vibrant and full with an exchange of new ideas.
VC FundsKalaari Capital, Nexus Venture Partners, Helion Venture Partners, Blume Ventures, Infuse Ventures, Accel Partners, SAIF Partners, Intel Capital, IDG Ventures, Sequoia Capital, Lightspeed Venture Partners, Inventus Capital, Seedfund are most active VC funds in Pune. Besides, a lot of funding comes from VCs in Mumbai.
IT Parks/work spacesPune is home to several IT Parks located in areas of Magarpatta, Kharadi, Yerwada, Aundh, and Hinjewadi. Several MNCs Microsoft, Google, TCS, Infosys, Wipro, Tech Mahindra, Capegemini, Cognizant and Persistent have their touch base in Pune. The steep rise in co-working and shared workspaces further strengthen the whole ecosystem.
Start-up NetworksPune Open Coffee Club, Pune Tech, Mumbai Angels, The Startup Hub India Pune Chapter, The Indus Entrepreneurs (TiE) Pune, National Entrepreneurship Network (NEN) Pune, Fundtonic, 5F World, Indian Angel Network (IAN) Pune Chapter organizes regular networking meet-ups and events.

Strategies Employed

  • Indian Software Product Industry Roundtable (iSpirt) organizes bootcamp, playbook roundtables for experiential learning as well as it engages in software product industry policy discussions and recommendations to the government.
  • The Startup Leadership Program (SLP) is a highly selective, 80-hour, 6-month world-class training program organized every year in Pune. SLP was founded in 2006, operates in 28 Cities in 13 countries with 1300 successful start-ups which have raised more than $500 million in funding.
  • The Software Exporters Association of Pune organizes its flagship event ‘Pune Connect’ in November every year which includes panel discussions and start-up pitches.
  • The Confederation of Indian Industry (CII), Pune and Nasscom, Pune also organizes various meets and conclaves for policy discussions and deliberations to the government.
  • Part of the global TiE worldwide community of entrepreneurs, TiE Pune organizes the annual flagship event ‘TiECON’ as well as various ‘My Story’ sessions, half-full day workshops and a 6-8 month long ‘Nurture program’ for early-stage entrepreneurs.
  • Pune City Connect is a collaborative platform of Corporates, Government, Citizens and NGOs to enable equity and sustainable living through Quality Education, Digital Literacy and a Clean Pune. This also helps in channelizing CSR activities of corporates.

Results

Pune ranks next to Delhi (NCR), Bangalore and Mumbai in terms of the number of deals and VC funding. The start-up ecosystem of Pune is evolving rapidly. There is much excitement for start-ups among young IT/engineering graduates from the city which is a positive sign for the growth of start-ups in the city.

With the development of an IT industry in last decade, Pune has seen rapid expansion in city boundaries with heavy real estate development and shooting property prices.

Lessons and Conclusions

  • Despite all the hype about start-ups, what needs attention is the real innovation. An active collaboration is required between industry and academia to foster that innovation and make unicorns emerge out of Pune.
  • The rising city population and the increasing number of vehicles on roads require an immediate attention for the development of city infrastructure, roads, parking and other basic amenities at the grassroots level. The governance needs to be increased and government officials should be made accountable for non-improvement of civic amenities.

About the Author

Dr. Ambuj Gupta is an Associate Professor in Finance at Institute of Management Development and Research, Pune

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