Why Nagpur’s Startup Growth is Slower Than Other Cities

Slow Startup Growth in Nagpur

Nagpur is one of Maharashtra’s fastest-growing urban centres. With its strategic location, strong educational institutions, and an improving infrastructure, it seems like an ideal place for startups to thrive.

Yet, the city has not produced major startups at the level of Bengaluru, Hyderabad, or even Pune.

While cities across India are witnessing a boom in entrepreneurial activity, Nagpur’s startup ecosystem remains relatively small. What is holding it back?

Limited Access to Funding

Limited Access to Funding for Startups in Nagpur

Funding is the lifeline of any startup. Cities like Bengaluru and Mumbai have a strong presence of venture capital firms, angel investors, and startup accelerators that provide early-stage businesses with the financial push they need.

Nagpur, however, does not have the same access to investment opportunities.

Entrepreneurs in the city often struggle to secure funding, forcing them to either bootstrap their businesses or relocate to other cities where capital is easier to find.

Angel investors and venture capitalists prefer established startup ecosystems where the success rate is higher. In Nagpur, the lack of a strong startup track record makes investors hesitant. Without enough success stories to inspire confidence, funding remains scarce.

Some businesses try to secure bank loans, but financial institutions often have rigid requirements that are difficult for new startups to meet.

As a result, many promising ideas never take off simply because there isn’t enough capital to support them.

Gaps in Infrastructure and Government Support

Lack of Startup Infrastructure and Government Support in Nagpur

Nagpur’s infrastructure has seen development in recent years, yet it still lacks the essential elements needed to support a thriving startup ecosystem.

The city has several industrial and IT parks, but growth in these sectors has remained stagnant.

Over the past decade, Nagpur has maintained only five private IT parks, a number that has not increased, while other cities in Maharashtra have expanded their technology hubs significantly.

Industry experts point to a lack of political focus, inadequate infrastructure, and limited investment in the Vidarbha region as key reasons for this slow progress.

Startups require more than just office spaces, they need reliable internet, accessible transport, and business-friendly environments.

While Nagpur has improved in these areas, it still lags behind cities like Pune or Bengaluru, where startups benefit from well-developed commercial zones and dedicated support networks.

Co-working spaces, which are common in major startup cities, are fewer in Nagpur, making it harder for entrepreneurs to find affordable workspaces that encourage collaboration and networking.

Unplanned urban development has also affected business operations. Areas like Laxmi Nagar Zone, which host several large projects, lack essential commercial infrastructure such as dedicated markets.

Instead, vendors operate from makeshift stalls, creating congestion and making it difficult for structured businesses to thrive.

In various parts of the city, encroachments have grown due to the absence of clear zoning regulations, leading to disorderly expansion that disrupts commercial activities. These urban planning issues create additional challenges for startups trying to establish themselves in a structured business environment.

Government support plays a crucial role in shaping a city’s entrepreneurial culture. Maharashtra has introduced policies to encourage business innovation, and the Small Industries Development Bank of India (SIDBI) has allocated Rs 200 crore to support new ventures across different regional divisions.

From this fund, Nagpur’s division, which includes six districts, is set to receive Rs 30 crore. While this investment is intended to promote innovation, its impact at the local level remains uncertain.

Many startup founders still face difficulties in accessing these funds due to complex regulatory processes.

Despite these initiatives, entrepreneurs in Nagpur struggle with bureaucratic hurdles. Government incentives exist, but reaching them requires navigating layers of approvals, which can be time-consuming.

Unlike Bengaluru or Hyderabad, where policies are streamlined to attract investment, Nagpur’s regulatory framework is less structured. This makes it harder for new businesses to secure grants, tax benefits, or other forms of financial support.

The involvement of large corporations can often stimulate startup activity, but in Nagpur, this connection is limited.

In cities with strong startup cultures, major companies actively invest in or collaborate with emerging businesses. Such partnerships provide financial backing, mentorship, and business opportunities that help startups scale. In Nagpur, fewer corporate players engage with startups, making it difficult for new businesses to find industry support.

Lack of Mentorship and Collaborative Networks

A strong startup ecosystem requires experienced mentors who can guide new entrepreneurs through challenges. Many successful startup founders in major cities often support new businesses by sharing their insights, offering advice, and sometimes investing in promising ventures. In Nagpur, this mentorship network is not as developed.

Entrepreneurs here often have to rely on self-learning or seek guidance from professionals outside the city.

While online resources can help, the absence of in-person mentorship limits the exchange of ideas and knowledge. Networking events, startup meetups, and industry conferences are crucial for fostering collaboration, yet Nagpur hosts fewer of these compared to other startup hubs.

Collaboration between academic institutions and startups is another aspect that has not fully developed in the city.

Universities in Nagpur produce a skilled workforce, but stronger links between educational institutions and local businesses could lead to more innovative ventures.

In cities like Hyderabad, startup incubators work closely with universities to turn student ideas into successful businesses. Without similar partnerships, many aspiring entrepreneurs in Nagpur lack the resources and guidance they need to launch their ventures.

A Cultural Preference for Traditional Careers

Lack of Startup Culture in Nagpur

The mindset of a region influences its business landscape. In Nagpur, the preference for stable, salaried employment over entrepreneurship is still strong.

Many young professionals opt for careers in government services, established corporations, or multinational companies rather than taking the risks associated with starting a business.

Family expectations also play a role. In many households, entrepreneurship is seen as uncertain and risky compared to conventional job roles.

As a result, fewer people pursue startup ventures. In contrast, cities like Bengaluru and Pune have thriving startup cultures because entrepreneurship is widely encouraged and supported.

This cautious approach means fewer risk-takers and fewer businesses emerging from the city.

When fewer people start new ventures, there are fewer success stories to inspire the next generation.

A city’s startup ecosystem grows when successful businesses attract talent, investment, and further innovation. In Nagpur, this cycle has not yet fully developed.

Nagpur has all the ingredients needed for a thriving startup scene, good connectivity, educational institutions, and a growing urban landscape.

However, the challenges of funding, infrastructure, mentorship, and cultural mindset continue to hold back its entrepreneurial growth. Until these factors shift, the city may struggle to establish itself as a major startup destination.

References

• Times of India. (2024). Challenges faced by Nagpur’s startup ecosystem. Retrieved from https://timesofindia.indiatimes.com/city/nagpur/challenges-faced-by-nagpurs-startup-ecosystem/articleshow/112908073.cms

• Times of India. (2024). Tier-2 cities like Nagpur encouraging startup ecosystems: CM. Retrieved from https://timesofindia.indiatimes.com/city/nagpur/tier-2-cities-like-nagpur-encouraging-startup-ecosystems-cm/articleshow/117311130.cms