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View PointOpinion: Small town advantages for startups

Opinion: Small town advantages for startups

Published: 12th Oct 2021 11:45 pm

By Deepthi Ravula

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Everywhere is a potential opportunity for entrepreneurs. A big decision a startup entrepreneur makes is to finalise the location for the startup that adds value to the business. For many entrepreneurs, the list of essentials for an ideal location includes capital, customers, access to talent, industry expertise and markets. A cluster of startups, expert business support services and a quality of life that is supportive are a huge bonus as well.

There is a misconception that big cities such as Delhi, Bengaluru and Hyderabad are the only choice or established startup hubs think they will otherwise miss out on the venture’s success. However, this is slowly changing. The pandemic has tilted the scales towards having a distributed team with an innovative and proven product, which is much prized in the VC world. Some believe small towns will be the source of the next great opportunity. One of the good examples of ‘Think Local, Act Global’ approach is Sridhar Vembu, founder of Zoho Corp, who has focused on reviving villages.

In the past few years, there has been a noticeable increase in the density in smaller towns due to their ability to attract startups. When a community is small for a startup, density is easier to achieve. Often, resources are concentrated within a smaller area, making meetings with multiple stakeholders possible in a shorter time than likely in a bigger place. Companies just starting out can afford a bigger, nicer space, and they can stretch resources to build a product and test market it, by doing more with less.

Scope for Innovation
Smaller cities also allow entrepreneurs more scope for innovation and enable them to develop and penetrate social and business networks quickly for better visibility. In smaller towns, startups can make their presence known faster with word-of-mouth and a few well-planned media spots. Also, a smaller place and market allow founders to focus on the things that matter to their business, eliminating the distractions from flashier markets, and get things done.

It is easier to find the right talent in small towns as many Tier 2 and Tier 3 cities have several top-tier educational institutions brimming with eager young students in the area. With the focus of State and Central government policies towards these cities, there are adequate opportunities for job creation and innovation. More so, startups in smaller cities benefit from a whole lot of champions in the local ecosystem.

The smaller towns have a unique sense of community, which allows businesses to participate in local areas, despite the fact that networking may be easier in large cities. It also boosts the confidence of many startup founders to know that the small cities want them.

For instance, Shwetha Ravula, an entrepreneur from a Tier 2 city in Telangana, is generating revenues of Rs 1.7 lakh per month with a 20% profit margin. Shwetha left behind her career in Dubai and shifted to hometown Yadadri. After exploring multiple opportunities, she decided to venture into silk reeling and produce silk yarn. She has employed over 20 women from the nearby villages of her district, making a significant difference in their lives.

Nurturing Entrepreneurs
In the recent past, the government also has been focusing on setting up business support centres in Tier 2 and Tier 3 cities for supporting and enabling entrepreneurs. Telangana, for instance, is proactive in expanding such incubation facilities for entrepreneurs to Tier 2 cities in the State. Recently, an incubation centre exclusively for tribal women entrepreneurs was set up in Warangal. The initiative aims to digitally enable 1,250 women across the State. Ultimately, the aim is to develop sustainable enterprises through grounding, scaling and development of over 500 women-owned businesses.

Additionally, many other State governments have formulated their own ‘Startup Policies’ that help entrepreneurs access services such as financing, business plan support, incubators, research and development labs, and patent registration and management.

The goal of incubators should be to democratise entrepreneurs across the State and nation, including both urban tech startups and social-impact enterprises. To start, scale up and accelerate companies in Tier 2 and Tier 3 cities, technical, financial, government and policy support is needed. And to foster a supportive community of resources for entrepreneurs, it is crucial that government agencies, corporations, industries, academia and international agencies work together to bring about change across socioeconomic strata.

Connecting Right
Sometimes it is harder for entrepreneurs to find the innovation community in smaller cities, and these startups might also struggle to gain visibility compared to the magnetic draw of the larger, more established locations. But many small cities are working hard to provide the resources that entrepreneurs need. Connecting with startups in a similar field or at the same stage of development is valuable when beginning a startup.

A growing startup always depends on connectors to help it thrive. Hence, the best way to benefit from these connections is to become an important connector yourself. Smaller communities often mean stronger connections, but it may not be obvious to a newcomer.

Where a startup is located matters less than how the founder feels about the location and how they seize the opportunities. Being successful as an entrepreneur requires understanding the environment and creating additional value within it. It is important to understand that experience establishes a business and has as much to do with all the other parameters around it.

So an entrepreneur or startup founder can choose a small city to create new value. But, if not, a larger metro is great, too. It is important to make the decision based on what will give their business the best chance of success, whether the target market is a bustling city or a small town. Just know that there are options.

(The author is CEO of WE HUB, Government of Telangana)

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