Known as the "Silicon Valley of India," Bangalore, the capital of the Indian state of Kamataka, is known globally as a center of information technology, housing international giants in the hardware and software industries. The city's first major step towards its IT reputation began in the late 1970s with the formation the Electronics City cluster, a 332 acre industrial park home to some of the biggest names in IT.
Other business clusters have since taken root in Bangalore, including the Whitefield cluster, which formed from the construction of the International Technology Park Bengaluru in 1994. The six building, 2 million square foot region houses offices for Accenture, Symbian, Dell, IBM, Intel and Oracle among others. Other clusters such as the Inner Ring Road cluster, and the Bellandur Outer Ring Road cluster include companies like Microsoft, Yahoo, McAfee, Target, Lenovo, Cisco, Nokia and Honeywell.
Bangalore, like Silicon Valley, saw a rapid increase in startups around the turn of the century with the dot-com boom, spawning companies like Live Documents, Minglebox and Vaakya Technologies. Recently, however, startups in the region have fallen victim to hesitation from cautious investors. Deepti Chaudhary of the Indian business news site Livemint says that startups across India are struggling despite help from the nearly 40 Indian incubators.
"It's an act of both desperation and instinct," writes Chaudhary. "The country's most prominent incubators are raising early-stage funds so their fledgling firms have the money they need to grow... VC firms, for reasons ranging from poor mentoring to a lack of quality entrepreneurs emerging from the system, seem to have lost faith in incubated companies."
Chaudhary points out that Ojas Venture Partners, an Indian early-stage venture capital firm backed by one of Infosys' co-founders, has failed to invest in a incubator-bred startup since 2008. Another large VC firm, IDG Ventures, last invested in an incubated startup in 2007. Other India-centric and Bangalore-based VC firms include Artiman Ventures, Sequoia Capital, Helion Venture Partners and Nexus Venture Partners.
Another obstacle in the way of entrepreneurs across India is the dichotomy presented by cities like Bangalore and the smaller villages nearby. Those in the larger cities like Bangalore and Mumbai have a greater opportunity to find venture funding due to the numerous investors, organizations and events. Entrepreneurs in smaller villages, where the Internet access is less readily available, are additionally hampered by a lack of access to business resources.
It is also more difficult for entrepreneurs from smaller regions to focus on large market solutions, the kinds of solutions venture firms look to invest in. However, according to the news agency Press Trust of India (PTI), Infosys' Narayana Murthy recently encouraged startups to focus on smaller niche markets. PTI explains that "new start-ups have to demonstrate that the ideas which they are bringing to the table are not ideas which the big companies are working on."
Despite these struggles, Bangalore has become a hub for information technology, research and development and an excellent incubator for Indian startups. With the help of events like Startup City, Barcamp Bangalore and Startup Saturday Bangalore, the city's potential for innovation and entrepreneurship is quickly expanding.
Much like London, Bangalore will continue to grow as more 2nd and 3rd generation entrepreneurs begin providing their own funding to the area's startups. The area's universities will provide the technical expertise and entrepreneurship needed for these companies, and the wide variety of businesses located in the city will be eager to snatch up the best of them.