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Non-metro cities, the new hub for start-up investments


Too often, entrepreneurs think they need to move to a start-up hub like Bangalore, New Delhi, or Mumbai for their business to succeed. But smaller cities have a lot to offer too. People need to understand that the need to “go big” isn’t always the right move while addressing their business.


When we discuss new start-ups the management of finance and cash flow is a difficult task. Although every business saves a certain amount of initial money, it doesn't survive long, and relying on sales to take care of bills and other necessities isn't a great survival hack. Therefore, a steady cash flow is always required, at least during the starting phase. To cope with this Angel investors are considered one of the easiest sources of finance. They are generally drawn by the lures of returns later which make them invest in the early stages of the business.


Below is a list of a few people who’ve begun looking at start-ups as full-fledged assets:-

1. Anurag Maloo is a 45-year-old owner of a warehousing and lodging enterprise in Seoni, Madhya Pradesh. He has introduced to the world of start-up five years ago. The guy has invested in more than 20 start-ups till now and has even made profitable exits from a dozen of them.

2. Mayur Zanwar, aged 40, is the founder of start-up TruScholar. It is a blockchain-based digital credential platform that provides resources for institutes, recruiters, and students. It provides paper-based or pdf credentials. They also enable customization of certificates, issuing digital certificates, verifying authenticity. Apart from this venture, he has invested in almost 20 ventures. He aims to tip his money in at least 30 ventures by the end of 2021 for which he has even liquidated all his property holdings.

3. In the town of Raipur, Chhattisgarh resides another yet diversified entrepreneur, Anup Agarwal. He has his pursuits in sectors ranging from education to construction. With investments in more than 50 startup companies, he aims to improve his strategies. Agarwal has also made an additional profitable exit from BharatPe.

4. LetsVenture is a Bangalore-based start-up. It has more than 6,700 registered buyers on its platform. The company has a portfolio worth $2 billion. The enrolling buyers are required to register themselves through a KYC (know your buyer). The platform also charges the cost of membership.


Significance of the article

I. The ticket dimension is as little as INR 5 lakh. The main focus of these new buyers is to focus on youthful startups like Dailyninja, Confirmtkt, and many more.


II. According to LetsVenture’s CEO, Shanti Mohan, "There are thriving enterprise communities in non-metro cities and these buyers or businessmen perceive enterprise and the way an enterprise may be created." But there is still room for improvement in the seed—funding investment stage, according to Nasscom's report for January 2021. In India, seed-stage investments are lower than 10 percent of the total funding, raised every year. Progressive measures need to be taken to encourage the participation of more buyers.


III. Priorities should be given to non-metro cities to find buyers for investments. In the year 2020, almost 3,700 start-ups were launched from tier-2 and tier-3 cities. They raised an amount of $3 billion from buyers. This data proves that with proper assistance and growth non-metro cities could become new hubs.


IV. In a country like India, early-stage start-ups are often capital deprived due to the lack of fund availability. Rise within potential buyers will prove to be an effective signal for start-ups. Nevertheless, it still is a dangerous ground to walk on. Hence a buyer mustn't put his money into any venture unless he understands the product, motives, aims, and objectives of the enterprise.

 

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