Gujarat ranks among the states that foster start-up growth environments the best, but experts think that the state’s startup ecosystem needs to improve its investment culture.
“How a nation or state performs in any sector depends on the culture in the industry. Startup culture is not about money only, along with funds, it also includes networking, market reach, mentorship and hand-holding of the idea”, said Jatin Trivedi, president, The Indus Entrepreneurs (TiE) Ahmedabad, a global non-profit venture devoted to entrepreneurs in all industries.
According to the states’ startups ranking report, 2021 published by the Department for Promotion of Industry and Internal Trade (DPIIT), ministry of commerce and industry, Gujarat is the best performing state among the category A or big states. The report said that the state scored 100 percentile in capacity building and access to market but the score for mentorship support is zero percentile.
Trivedi said the startup ecosystem in the state is good and currently stable but it needs to be improved so the industry can be stable and in good health. “Because the traditional investment opportunities like real-estate and stock market are prevalent among investors, the tendency of treating startups as investment opportunities only exists in the state. But it is witnessing a shift. Investors should hand-hold and guide the startup idea using his own expertise”.
“The start-up ecosystem has seen slow and steady growth in Gujarat. The entrepreneurial culture among Gujaratis has kept them a little reluctant towards new technologies, but the new generation is more open-minded about business. They are willing to accept investors as business partners”, said Mihir Joshi, Chief Executive Officer, Ahmedabad based venture fund, GVFL Limited.
A total of 4,920 start-ups in the state are listed as DPIIT-recognized in the DPIIT report. The department recorded 1,717 start-ups from Gujarat in 2021; by 2022, that number had dropped to 973. It should be noted that this decline is not unique to Gujarat; rather, start-up registrations nationwide fell to 12,314 in 2022 from 20,160 in 2021.
Talking to FE, Trivedi said, “The tech-revolution has extended the use of technology to all sectors of the economy which is why investors should look at start-ups as new and emerging areas. When it is about start-ups, there is a gap of experience and expertise in the sector and the investor should bridge that gap by coming forward”. Maybe because of these gaps and weak culture, Gujarat, despite being one of most industrious states, has not been able to produce a unicorn, he added.
When asked about the future expectations of the start-up sector, Trivedi said, “Increased average age of individuals and the changed health priorities after Covid pandemic may mean that healthtech based startups may witness a remarkable growth in the coming time”, while Joshi also agreed with him.
It is worth mentioning that worth Rs 200 crore financial support, 180+ incubators or centers of excellence, 8000+ registered start-ups and 970+ women-led start-ups indicate a brighter picture for Gujarat’s start-up ecosystem.