More than a year ago there was a post on contentsutra and an article on Live mint on the same subject. Both the articles covered few startups, in cities like Nagpur & Trivandrum ( Including my earlier startup) and echoed the opinion that its not the location that matter but the product & the people that matters.
Let us take the example of a Start up , a mobile game developer who was among the first few companies to develop games and other applications to Reliance. Based out of Trivandrum , this company was the only one till date to win the Dhirubhai Ambani Developer Program ( DADP) twice in a row and many other awards including best mobile application from Nasscom, also they were the first to port games for reliance colour handsets. Other players in the market during this time where Nazaara & Mauj . While both Nazaara & Mauj was able to raise first & second round founding from leading VC’s , this startup remained as a small player in the market irrespective of it’s strong tie-ups with Reliance & Tata Indicom as well strong media coverage ( CNBC , leading business mags & blogs, every body had covered them). So only reason why they where not able to grow in the same pace as that of Nazara or say a Mauj is becuase of it’s location and their founders also preferred not to re-locate. Being in the mobile VAS space & being not close to the VAS head who is sitting in Delhi or Mumbai means you are loosing out on a lot of things. Firstly it requires frequent travel, presentations & follow up which could be a costlier affair for a startup if they are not located near to the operator.
Coming to my own experience, most of our alliance partners ( who forms a major part of our value chain, where located either in Mumbai or Bangalore or other big cities), which forced us to initiate discussions & finalize things over mail, phone or online conference. But most of our partnerships got delayed because we couldn’t travel down for an eye-to-eye meeting or presentation due to a lot of constraints. Again frequent travel also eats up valuable time which in turn affects the productivity of the organization ( especially if the startup is really small), leave alone the financial burden you incur for flight tickets ,stay etc. Again as we started growing from a 10 member outfit to a 50 member organisation we were searching for experienced people in senior management positions like Banking Alliance, retail etc. Most of whom we approached where not ready to move to Cochin even though they were looking forward for challenging opportunities in startups.
But being in Cochin has it’s own advantages especially on running costs,HR etc (In Cochin you can get an office space for rates ranging from Rs 27/sq ft to 80/sq ft for rent…what about say a Mumbai or Bangalore?).
Being in a small city or town has got it’s own advantages as well as disadvantages. My suggestion to startups facing similar constraints would be hold on in your existing location
( this has it’s own advantages like support from parents, network of peers to support you..etc) till you become stable & parallely you can use a one seater office + virtual office from Regus or DBS which will reduce cost as well as serve the purpose.