India may be good at producing unicorns but its cities still lag behind in startup investment activity

India is the world’s third largest ecosystem after the US and China in terms of the number of unicorns it produces. But the country has a long way to go to break into the global start-up rankings based on overall investment activity.

In data from research firm Pitchbook’s new start-up hub ranking, which compares global cities based on the size and maturity of their start-up ecosystems, no Indian city is in the global top 25. Bengaluru is ranked 28th.^This It is India’s largest start-up hub with an overall score of 41.5. Mumbai is ranked 33rd^third dot, Gurugram 39^This and New Delhi lags far behind with 70^This rank. Southern cities such as Hyderabad and Chennai are ranked 93rd.^third and 94^This positions respectively.

PitchBook’s rankings are based on the size, maturity and growth rates of the location’s VC ecosystem. Emphasis is placed on the ability of city-based start-ups to secure capital, grow and generate exit. This is assessed using PitchBook’s proprietary data on financing deals and exit actions.

For example, 28 years old^This Between September 2018 and June 2024, Bengaluru recorded 150 deals worth around $14.5 billion. The city saw 202 start-up exits worth $20.7 billion. In comparison, the top three global start-up cities (San Francisco, New York and Los Angeles) recorded several times higher venture capital deals than Bengaluru during the same period. Exit activity (number of exit deals) was also 10x, 5x and 4x higher than India’s top-ranked Bengaluru.

“Beyond China, Seoul, Tokyo and Singapore are the main challenges for venture capital activity in Asia,” PitchBook analysts wrote in a note. But the report is also optimistic about India. “India has the third highest number of unicorns at $118.4 billion, and capital invested stands rank fourth among our top nations. “Both metrics bode well for India as it seeks to leverage its vast technical IT talent and leverage it into entrepreneurial venture capital ecosystems,” he added.

While US-based cities make up four of the top 10 locations, China’s cities of Shanghai (5), Beijing (9) and Shenzhen (10) are also among the top centers. While larger populations tend to result in higher-ranking venture capital ecosystems, this is not always the case. For example, England, with a population of approximately 67 million, is also in the top 10.

Professor Thillai Rajan A, Head of the Center for Research on Startups and Risk Finance (CREST), IIT Madras, said the primary needs for a start-up company are capital and markets, and the city’s investment community network largely determines success. one of its start-ups. “All else being equal, investors prefer to invest in start-ups with geographical proximity,” he said. “The city’s tendency to create an initial market for start-ups in terms of people’s willingness to try innovative products is also contributing to growth,” he added. Regarding India’s position in global rankings, Rajan states that in countries like the US, Israel or China, various stakeholders (government, investors, universities and others) act together by supporting each other and the same is required for India. cities.