Jammu & Kashmir is fast emerging as a start-up hub, but challenges remain

Government data shows that there are nearly 1,800 registered start-ups in Jammu & Kashmir though the union territory features among those with the lowest number of start-ups in the country.  

Only the north-eastern states along with Ladakh and Himachal Pradesh have a lower number of start-ups than J&K.

The region, however, featured among the five 'Top Performers' in the Start-up India States' Ranking 2021 while scoring high on parameters like incubation support, institutional support and fostering innovation & entrepreneurship.  

Interestingly, the start-up ecosystem in J&K comprises of local versions or mimics of national players like Ola, Uber, Amazon, Flipkart and Zomato as these unicorns have minimal presence in the region in terms of service areas or penetration level.

More importantly though, the regional entrepreneurs have been quick enough in identifying the pain points and are working towards solving issues that are typical to the region even while battling on many fronts including getting investments to scale and take their start-up to the next level.

But while innovations and growth are visible, start-ups in the union territory are fighting their own battles as investor community seems to be staying away due to concerns related to scalability of the venture and overall stability in the region.

Further, the union territory of J&K has one of the highest unemployment rates in the country because of which the youth of the region is moving out in search of job opportunities.  

A combination of these factors has made the all-important community of investors stay away from start-ups from J&K even as entrepreneurs say that the scope for growth is immense. The geography or terrain of the region is another challenge – a fact corroborated by the complete absence or minimal presence of prominent digital players like Zomato, Ola or Amazon to name a few.

Till a couple of years back, Internet connectivity – the most important infrastructure for start-ups – was also an issue but a ruling by the Supreme Court in January 2020 has ensured that the region is not subjected to long durations of suspension of Internet services.

Internet services in the region were suspended for nearly six months from August 2019 when the abrogation of Article 370 was announced.

Apoorva Ranjan Sharma, Co-founder, 9Unicorns & Venture Catalysts, believes that while a combination of factors like government incentives and setting up of incubators in J&K will help the youth of the region in battling unemployment, certain uncertainties are still keeping investors away.

“It is heartening to see that the start-up ecosystem in J&K is growing with about 500-odd start-ups registered in the valley since the abrogation of Article 370. While it is the good intention of the central government to help start-ups scale rapidly, the VC ecosystem is still not very confident in pumping in a huge amount of capital because of the uncertainties and political volatility in that state that leads to Internet shutdowns,” says Sharma.

Indeed, for on one hand, the region boasts of a growing number of start-ups but on the other there is hardly any presence of local angel networks that play a crucial role in the initial journey of any start-up.

Around a year and a half back, however, Kashmir Angel Network was set up and it currently has around 10-15 angels as part of its network that has already invested in three ventures and seven more are in the pipeline.

“The start-up ecosystem in J&K has been growing at a good pace in the last couple of years,” says Irtif Lone, a start-up evangelist and advisor, Kashmir Angel Network.

“Every time a start-up from J&K had to raise capital, it had to reach out to investors in cities like Mumbai or Delhi. But with Kashmir Angel Network, the smaller investments that start-ups need at the initial level are coming their way. The network also helps start-ups connect with larger networks,” adds Lone who has earlier been associated with JKEDI as well.

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