Small-town startups: Why this company is based in a Tier 2 city despite running global operations

For founders, employees and investors in Indian startups, events have always been important. Investor annual days, company off sites, seminars and conferences, were all thronged by hundreds of the most influential people in the ecosystem, not Samar Singla.

“In San Francisco, there are 6-7 events everyday, at the end of which I have drank beer, eaten pizza and learned nothing. It is white noise,” Singla, the founder and CEO of mobility startup Jugnoo, says.

Based in Chandigarh, he is much happier, less distracted and unlike many, doesn’t miss the hustle and bustle that startup events in metro cities depend on.

Yet, Jugnoo is not your typical ‘local’ startup. Jugnoo started in 2014 planning to aggregate auto rickshaws and make them more accessible and easy to find. Then he saw Ola and Uber try similar models by burning billions of dollars with no profits in sight, and after trying for a few years said, “No thanks. I can’t burn this much money.”

Although he made that decision much before the Covid-19 pandemic which dealt mobility a huge blow, it looks like the right call,

Tongue in cheek, Singla goes as far as to call Jugnoo bootstrapped- he has raised ‘only’ about $20 million in funding, from investors such as Rocketship.vc and Paytm, compared to the billions his cab-hailing rivals have raised.

“A disproportionate amount of money is chasing the market based on future market value,” he says. This is also why Ola, Uber, Didi Chuxing and others raised billions at high valuations years ago, thinking that the market will become large enough for all companies to operate and become profitable at scale some day. Even before the pandemic, that promise was looking shaky, and today, even more so.

Today, Jugnoo runs a software-as-a-service model, a taxi dispatch software targeted at cab and auto drivers in smaller cities in India and abroad- in regions such as Singapore, the Middle East and Europe.

80% of Jugnoo’s revenue currently is from abroad. In that sense, it is hardly an Indian company. But 35-year-old Singla’s roots and the Chandigarh connect- a definite factor in Jugnoo’s scale or relative success, make it Indian.

“The quality of life here is so much better. Anywhere I want to go is 20 minutes away. So while hiring young talent is sometimes an issue- they obviously want the bigger cities- but if I train some college graduates for six months in Chandigarh, we are able to retain them,” Singla says.

The smaller city thesis extends beyond Chandigarh for Singla. He wants to open an office in Canada once the pandemic eases, but is already looking to open the office in a smaller city, something a couple of hours away from the hubs such as Toronto or Montreal.

And Singla knows his cost structure well. Jugnoo is currently profitable on an Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) level- a metric of operating profits in startups, and has a revenue of $2 million a month.

90% of his 40 employees are also based in Chandigarh, and the choice of city does reflect Singla’s thoughts on the mobility space as a whole.

“I have never thought of ourselves as an India-centric or Chandigarh-centric company, but running a startup here gives you the best of both worlds. The quality of life is really good,” he says.

Follow the entire Small-Town Startups series here.