Photo Source: Unknown
The Rise of Hyderabad
by Rishi Narahari
March 27th, 2021
As India continues to compete as an international superpower, development across different regions of the nation have reflected the immense growth of the nation. Cities like Mumbai, Bangalore, and Delhi have witnessed the creation of hundreds of new startups and millions of venture capital dollars flowing into their regions. However, a black sheep contender for “golden child” of the Indian Subcontinent, must go to the city of Hyderabad. Hyderabad (and the greater state of Telangana) has taken numerous steps to create a strong foundation for long-term success, and this can be seen in three key areas: Community & Government Buy-In, A Developing Educational System, and the Creation of Vital Onramps for Development.
Hyderabad, traditionally known as the city of pearls, is a bustling metropolis found in the South Indian state of Telangana, home to nearly 9.7 million people in the greater metropolitan area, but more importantly is seen as a vision for India’s future. Beginning with the establishment of Hyderabad Information Technology and Engineering Consultancy City (HITEC City) followed by the establishment of the Financial District, Hyderabad’s recent rise has put the city with the likes of Bengaluru, Mumbai, and Delhi-NCR, with many individuals now calling the city, “India’s Next Silicon Valley”, due to the sheer level of economic output and growth in its young startup culture. We will be referring to Hyderabad and Telangana as synonymous terms for the regional ecosystem.
The Charminar was built in 1591 as a monument and mosque in Hyderabad.
Source: Ron Hansen
In their most recent Global Startup Ecosystem Report (GSER), Startup Genome, the world-leading policy advisory accelerator for start-up ecosystems, analyzed the future of Hyderabad and the greater Telangana area, stating that the region is in, what Startup Genome refers to as, the Activation Phase of development (“…an ecosystem with limited Startup Experience (founder know-how, experienced investors, advisors/mentors, and community behaviors that support startup success), low Startup Output of around 1,000 or fewer startups, and challenges like resource leakages to later-stage ecosystems that make it difficult to grow”). This stage of activation, coupled with the consistent top 100 emerging ecosystem rankings, represents the tremendous growth potential of the city.
Growth of Cities GDP Per Capita (Before community buy-in)- GDP per Capita Growth Rates across Indian Cities
Source: Rishi Narahari
Given this, what led to Hyderabad’s transformation into the golden child of the Indian subcontinent? The answer is three-fold: community and government buy-in, developing educational systems, and the creation of vital onramps that give more individuals the ability to create startups.
Community and Government Buy-In
Currently, the Telangana region houses around 4000 startups, which accounts for roughly 15-20% of the total number of startups in India. However, the startups in the Telangana region grow annually at a rate of 28%-32% compared to the nationwide average of 15%-20%. With a level of discrepancy this large, clearly the government had a sizable role to play.
The World Economic Forum discusses the importance of the government in regard to the restrictions, policies, and funding provided to help the community grow around a unified vision. Creating policies and programs that help accelerate the growth of small businesses help alleviate the financial stress of businesses, which inherently give leaders increased bandwidth to create meaningful development. Hyderabad bought into the entrepreneurial ecosystem development and has helped create a more connected environment in multiple ways.
First, Hyderabad developed their main metro system, a wide-reaching train system that allows for individuals to travel, at a cheap price, across the city. This is particularly important because most major cities in India are extremely dense. To put the density of Hyderabad into perspective, a close approximation that one could use would be stuffing the entire urban population of Chicago into half the land area. During peak hours, a 10-mile (16 km) drive can take upwards of two to three hours. Going from one side of the city to the other in the middle of the day, would take hours upon hours. The size of the city did not allow for the physical interaction and intermingling of different areas of the city. So, just like how the New York City subway is a highly effective form of public transportation, Hyderabad and the Greater Telangana government invested into a rapid transit rail line, which helps increase general accessibility to other parts of the city, on top of the existing public bus lines, public taxis, and auto rickshaws, which as the Kauffman Foundation explains, is a crucial mechanism to the success of any city.
However, the key differentiator of Hyderabad from other major Indian cities is that Hyderabad has invested into developing a suburban rail system to further connect the city with the outskirts. Cities like Bangalore, Delhi-NCR, and Ahmedabad, all highly developed ecosystems, are still in the planning phase of these projects, or are just beginning construction. Hyderabad’s government made an investment to ensure the overall connectedness of the city, making it a priority for future development needs. The holistic approach to gather individuals in the general area is what sets Hyderabad apart.
Map of Hyderabad Metro Rail
Source: Telangana State Info
Developing Educational System
The Kauffman Foundation explains that two key elements of an ecosystem are an excess amount of talent that can help companies grow and a strong foundation of people and institutions with knowledge and resources to help entrepreneurs. Naturally, universities are thus the cornerstone to any entrepreneurial ecosystem. The Copenhagen Business School further reports that universities play a “critical (and often underappreciated) role in local economic development, but that the norms and governance of universities play a unique role in promoting growth entrepreneurship conducive to long-term economic [expansion].”
Due to the sheer size of Hyderabad, universities have established their roots in the city and have reaped the benefits of a thriving ecosystem. The University of Hyderabad, Indian Institute of Technology (Hyderabad Campus), Osmania University, Nalsar University of Law, and Birla Institute of Technology and Science (Hyderabad Campus), are all world renowned facilities, some even ranking in the top 50 universities in the nation of India. The Indian Institute of Technology (IIT) and Birla Institute of Technology and Science have been established as a world-leader in the STEM fields and have set standards of excellence to the likes of the Massachusetts Institute of Technology (MIT). Both of these education systems have set up universities in the city of Hyderabad and have made significant investments into improving existing facilities and programs. The vast benefits these institutions bring allow for new talent to circulate into the city, which continues the growth of existing businesses and fuels the development of new ones.
However, this is a major area in which Hyderabad still has a way to grow. Connective entrepreneurship programs that teach students outside the classroom are necessary to give future leaders hands-on experience that is easily transferable in the corporate or start-up development worlds. Mumbai and Delhi currently house more than half a dozen entrepreneurship programs respectively and Bengaluru has about four programs. Hyderabad, even though they have extremely strong programs partnering with Goldman Sachs and the Wadhwani Foundation, currently only has two top-tier programs run by the same organization, the Indian School of Business along with the IIT Hyderabad Center for Innovation and Entrepreneurship. IIT Hyderabad has also teamed up with iconic hardware manufacturer, Nvidia, to create an AI research center and help develop commercial adoption of the technology.
IIT Hyderabad Dorms
Source: Unknown
Outside of university investment, Hyderabad does have an organization called TiE Hyderabad which aims to support youth entrepreneurs, but since the organization is young, the tangible impact is still low. To continue to compete for resources and talent, and attract established organizations, Hyderabad must continue to develop their educational programs so that there are better established connections between businesses and students in highly accredited universities.
Entrepreneurial ecosystems need holistic growth to be successful, and Telangana has taken the steps to create that top to bottom growth. Outside of entrepreneurial programs, the state of Telangana has also teamed up with the international conglomerate, Toshiba (specifically Toshiba Transmission & Distribution Systems), to create the first Japan-India Institute for Manufacturing. The goal of this institute is to train 120 undergraduate students of industrial training schools each year in areas like welding, assemble, etc.
Vital Onramps for Development
“It is such a pleasure to know that the entrepreneurial spirit is very much in Hyderabad, with high ambition, in all the folks involved with T-Hub”
- Satya Nadella (CEO of Microsoft)
Onramps, in terms of entrepreneurial ecosystem development, are the platforms with which aspiring entrepreneurs gain mentorship, advisement, funding, and networking opportunities. As Vice President of Cintrifuse Eric Weissman highlights, in newer ecosystems this starts with the development of incubators and accelerators along with a hub that acts as the central node to connect all the stakeholders in the ecosystem (these may include large corporations, startups, and investors).
Hyderabad’s ecosystem includes a plethora of organizations: TiE Hyderabad, Hyderabad Angels, Anthill Ventures, Endiya Partners, NASSCOM 10,000 Startups, Confederation of Indian Industry, SRI Capital, Indian Angel Network, and the central hub that connects the entire region, T-Hub, among many others. These organizations help citizens who may not have been privileged with the resources or education to start their own partner to gain the funding, mentorship, and advice they need to be successful.
T-Hub is Hyderabad’s claim to fame. Being the largest accelerator in the entire Indian subcontinent, T-Hub has had a positive impact on more than 1000 startups, raised over $200 million (1800 Crore INR) through startup programs, created more than 75 programs, has helped host more than 850 events, and has enabled the creation of over 1500 new jobs with over 325 international corporate connections from 40 different nations. T-Hub is Hyderabad’s differentiator, as no other organization in the entire nation of India can compare their accelerators to the tangible impact T-Hub has created for the Hyderabadi and Greater Telangana region.
A collage of investors and VCs.
Source: Rishi Narahari
In 2017, Hyderabad showcased their talent and ecosystem organizations in the 8th annual Global Entrepreneurship Summit (which was held by the city). The event highlighted the accomplishments of female entrepreneurs and focused on four extremely high-growth industries: healthcare and life sciences, digital economy and financial technology, energy and infrastructure, and media and entertainment. The event was led in coalition between the Hyderabadi government, NITI Aayog (a policy think tank for the Indian government), and the US Government. The event was attended by more than 1500 individuals and 300 investors, with the showcase of the Women Entrepreneurship Platform by Amitabh Kant, the CEO of NITI Aayog.
Hyderabad was the first and only Indian city to date to host the Global Summit and continued their focus on empowering female entrepreneurs in the community like previous host cities. Through this summit, the city was able to bring focus to the different programs that are available in the city, as well as offer organizations in the community the ability to network with international investors and create the meaningful connections that can help bring more resources to start-ups and youth innovators, and enable the region to prosper.
The City and Beyond
The future of Hyderabad is bright. It is now a world-renowned name with momentum behind its actions, able to differentiate itself in numerous ways from the rest of the nation. Hyderabad’s holistic buy-in from the government, to the educational system, to the entrepreneurs, to the regular citizens, are the building blocks to create a strong entrepreneurial ecosystem, and it has become clear that the city has shown no signs of stopping. Now, the question has to be raised: what’s next for the city?
Acknowledgements: I would like to thank both Elad Raymond and Andrew Ma for supporting me through the writing and researching processes, my parents and sister for being a soundboard as I worked through ideas, and Jill Raderstorf for helping me understand the fundamentals of the industry and being a constant support pillar as I enter my professional career.
About the Author: Rishi Narahari is a student at Miami University of Ohio studying Finance, Accounting, & Entrepreneurship. He is passionate about issues related to macro-economic development and issues within South/South East Asia and Africa. Prior to joining the Onero team, Rishi worked in the luxury retail, venture capital, and pharmaceutical industries. In the future, he would like to work in venture capital and become an entrepreneurial ecosystem builder in the state of Ohio.
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