Pune’s Startup Ecosystem — Past, Present & Future

(This article is written by Mr. Amit Paranjape, Chairperson, IT & ITES Committee, MCCIA.)

While we look at the ‘startup ecosystem’ as a fairly new phenomenon — technology-driven startups have been around for much longer; for many generations. Technologies change over the decades. In Pune as well, we can trace the activity of some early technology-driven manufacturing/automation ventures (‘startups’), all the way back to the late 19th century. Pune has been a seat of learning for centuries. Pune also has the 2nd oldest engineering college in the country — College of Engineering, Pune — established in 1853. This college has helped the tech and manufacturing startup ecosystem in the city, for over 150 years.

There is an interesting piece of history recounted by Prof Ross Bassett in his book ‘The Technological Indian’ about Lokmanya Tilak and Pune. Tilak wrote extensively about modern technology and science in his editorials in Kesari and Mahratta. He highlighted how the ‘West’ was able to lead and colonize the world because of science and technology, and why it was important for Indians to get actively into this domain. Inspired by his writings a young Pune student Keshav Malhar Bhat headed to MIT in the U.S. in the 1880s and became the first Indian to study there. He came back and set up a small engineering venture in Pune.

The early 20th century saw the birth of small manufacturing related companies in and around the Pune region. These were the early ‘manufacturing startups’. One great example of this is the venture set up by Laxmanrao Kirloskar in Kirloskarwadi, which initially focused on farm equipment.

Post-independence, in the 1950s and 60s, Pune started becoming the preferred manufacturing destination for the large automotive OEMs like Tata and Bajaj and other engineering companies. This helped in the creation of a big manufacturing supplier ecosystem and resulted in the birth of many small manufacturing units.

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The Auto-OEM suppliers’ startup network continued to expand and the 1970s/80s saw some small startup companies get into high-end manufacturing automation for a variety of processes like packaging, process manufacturing, assembly automation, material handling, etc. These companies did some non-trivial R&D as well as reverse engineering in addressing the customer requirements and created good import substitutes (Note — the imported machines back then attracted a steep import duty and hence there was a push to localize this technology).

The 1980s/90s saw the advent of many ‘electronics’ startups — taking advantage of the new trends in control systems and microprocessors. The 1980s and 90s also saw the birth of smaller companies in the chemical processing & manufacturing area as well.

The 1980s also saw the beginning of the ‘software era’ in Pune. Though some computing work was happening earlier as well in some government labs and research institutions here. Not many people know that Infosys actually started in Model Colony in Pune in the early 1980s! Even today, it can be considered as the biggest and most successful software startup, out of Pune.

The late 1980s and early 1990s saw the birth of many new software startups, focusing on IT services and related areas. Some of these have gone onto becoming Pune icons of the present like Persistent Systems and KPIT.

The top global startup ecosystem — the Silicon Valley, saw big activity from the 1970s onward. The well-known Silicon Valley Venture Capitalist Paul Graham has written extensively about the Silicon Valley startup ecosystem. He has discussed many factors for its multi-decade success. Key ones being — the presence of a top academic & research ecosystem (driven by universities like Stanford and Berkeley, and many top research labs), presence of large tech companies, ample venture funding, excellent availability of talent, good climate and quality of life, overall infrastructure and more.

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It is worthwhile to look at some of these factors from a Pune perspective. Pune does tick the boxes for many of these. The city has excellent academic and research institutions. As discussed earlier, the large manufacturing companies initially provided the starting point for a manufacturing startup ecosystem. Today, Pune has many large Software & IT Services companies. There is excellent talent availability. The city has an excellent year-round climate and quality of life — compared to some of the bigger cities in India.

These factors have helped Pune become one of the top startup hubs in the country over the past two decades. It has consistently ranked among the top-5 cities in software & IT startups. The 2000s saw many new startups in the software services and products space. Some of the early software services startups of the 1990s saw good IPO exits as well. The 2000s also saw the formation of a good software startup ecosystem, driven by initiatives and organizations such as TiE Pune, Pune Open Coffee Club, PuneTech, and others. They have provided good networking and mentoring platform for new startups. Angel Investment activity also picked up in the 2000s and 2010s. Many new startup Incubators and Accelerators were set up in the past decade.

The 2010s saw some of the leading software startups in Pune hit the ‘Unicorn’ status (valuation over one billion dollars). This list will continue to grow as we enter the new decade of the 2020s.

The 2000s also saw good development in healthcare, energy, and materials areas as well. One of the key catalysts in this process has been the ‘Venture Center’ incubator at NCL. This is one of the top startup incubators in the country and provides excellent support, funding, mentoring, and other services for startups. Thanks to the presence of top research and education institutions like NCL, IISER Pune, NIV, NCCS, and others — we have seen good startup activity in the healthcare, energy, and materials space. During the 2020 pandemic, the Venture Center startup ecosystem helped many startups launch important products and solutions around ventilators, masks, test-kits, diagnostics, and more.

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As we begin 2021, amidst the unprecedented year-old pandemic, — virus testing and vaccines have become the top focus areas for the world. The biotech & healthcare ecosystem in Pune is well-positioned with large companies (like Serum Institute of India — which is manufacturing the ‘Oxford Vaccine’ for the global market), mid-sized pharma companies, and small startups. One of these small startups ‘MyLab Solutions’ became the first one to develop a domestic test-kit for the COVID-19 virus. Another company, Gennova Biopharmaceuticals is developing India’s first mRNA vaccine for COVID-19.

Today, genetics & biotechnology are increasingly converging with mathematics and computer science. The Pune tech ecosystem today provides a good platform for such new multi-disciplinary startups of the future. The strengths and diversity of the Pune startup ecosystem will continue to help new technology startups thrive, in the coming decades.

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