Chennai start-up failure rate lower than NCR and Bengaluru

Investors in TN capital conservative, bet on good ideas

The percentage of start-ups failing in Chennai is lower than in Bengaluru and the national capital region, considered to be the hubs for start-ups.

Lakshmi Narayanan, vice-chairman of Cognizant, said the percentage of start-ups funded by the Chennai Angels Network surviving beyond three years was almost double of that of start-ups funded by angel networks in other Indian cities.

According to Venture Intelligence data, the failure rate among start-ups in Chennai between 2010 and 2014 was one per cent. The rates in Bengaluru and the NCR were six per cent and seven per cent, respectively.

Arun Natarajan, founder, Venture Intelligence, said Chennai had higher resilience in the business-to-business (B2B) and software as a service (SaaS) businesses and that the city's start-ups had a clear focus on the business and revenue models. "Chennai does not follow the me-too concept," he said.

Bengaluru and the NCR have a head start in large enterprises and these cities have investor communities willing to experiment with new ideas. Investors in Chennai, on the other hand, are more conservative and bet on good ideas.

"It may be worth comparing five years hence how many ideas and enterprises have survived," Natarajan said.