Mumbai not the city of dreams for startups

Mumbai city, or as it is fondly remembered by Mumbaikars as Bombay, has never had dearth of opportunities, especially for entrepreneurs. Still, the start-up ecosystem that started in and is now blown out of proportion, in Bengaluru, hasn’t had much success in Mumbai.

In fact, till about four years ago, the startup culture didn’t exist in Mumbai. Mumbai has always been home to small and medium scale companies bootstrapping in the retail, manufacturing, finance, and hospitality sectors. It is only now that startups are starting to raise their hood above other established enterprises.

Holachef Founder Saurabh Saxena, who graduated from IIT Bombay in 2004, says that at the time, starting up meant trying to make mini IT companies. “Over time, startups with a superior understanding of technology have dared to dream more ambitiously. It has also helped that equity financing has been more widespread than ever,” he adds.

Although Mumbai has a decent talent pool, backed by IIT Bombay, the city lags in tech and product development, says Kunal Shah, Founder, and Chairman of FreeCharge.

The company had shifted base to Bengaluru, shortly after its inception. “A lot of our business is generated in Bengaluru, and now Mumbai has become our smallest office. Our Bengaluru office has 10 times the staff we have in Mumbai,” Shah says.

Like Freecharge, Goregaon-based Webengage has also had problems in hiring relevant talent. Co-founder and CEO Avlesh Singh says, “The workforce here doesn’t come with a “technology-first” mindset, which you’d find a lot of in Bengaluru. Mumbai has a long way to go to catch up with Bengaluru in terms of B2B sales skill sets that a modern day salesperson should possess.”

Another major challenge for startups in Mumbai is high real-estate costs. Powai, where IIT Bombay is situated, is Mumbai’s startup base and home to Housing.com, Tinyowl, Toppr, and Runnr. But high living costs makes it a less attractive place for startups, who have limited cash pool to operate a business.

Combine that with the notorious traffic situation, and the city’s vastness, Mumbai doesn’t leave much elbow room for the startups to function. Abhimanyu Dhamija Co-founder of on-demand beauty services startup Amber Wellness said they had to shut down the services in May, due to logistical issues in its high demand areas like Andheri, Powai and Bandra—the suburban parts of Mumbai.

However, Mumbai has its advantages too. Considering Mumbai is the financial capital of the country, the city has a monopoly over startups in financial technology. A recent report by KPMG and Nasscom had stated that the Indian fin-tech market will see 100 percent growth in the next four years to $2.4 billion from $1.2 billion. The timing is perfect for startups in the space to announce their arrival. In fact, Mumbai’s startup ecosystem depends more on experienced professionals in the financial sector rather than on pure tech talent.

Mumbai’s diverse milieu of cultures and people also makes it an ideal place to get some hands-on experience in customer handling. “Mumbai can retain fast-growing startups by providing infrastructure as campuses need space. The presence of many banks also helps. With banks, we are trying to work on programmes that can result in a lot of online transactions,” says Shah of Freecharge.