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The Karnataka Digital Economy Mission (KDEM) is tasked with an ambitious target to help develop the state’s startup ecosystem beyond Bengaluru to help the national $1 trillion digital economy target set for 2025.

Acting CEO Sanjay Gupta is 100 percent confident his team can help achieve this target.

He says, “I firmly believe that this [target] can only be realised if Karnataka stands up.”

Gupta sat down with YS to discuss the strategy that KDEM has been building for the last few months, and how it plans to execute it going forward.

“The Spoke Shore” strategy

Gupta was very clear that if Karnataka and the rest of India want going to reach the trillion-dollar target, it has to look beyond the metro cities.

“The $1 trillion economy cannot come from Bengaluru, from Delhi, or from Kolkata,” he says, “It will be driven by the emerging cities.”

To help empower growth in the emerging cities, or ‘clusters’ as Gupta emphasises, KDEM has designed what he calls “the Spoke Shore strategy”.

This entails building a startup ecosystem in three major state regions — the Mysuru cluster, the Mangaluru cluster, and the Hubli-Dharwad cluster.

KDEM believes that since a lot of Bengaluru’s engineering talent comes from these emerging cities, and people are used to working remotely today, there is no reason why the Indian startup ecosystem can’t create a hub-and-spoke model for its operations.

Even if companies create headquarters in larger cities, there are significant advantages to building out “spokes” for operations in these urban clusters.

KDEM believes its mission is to convince the industry to take a bet on these three clusters specifically.

“Mapping the emerging cities”

According to Gupta, the biggest disadvantage regions outside Bengaluru have is a lack of consolidated information on their cities.

From liveability indexes such as the local education or health infrastructure to real estate prices to plug-and-play options for startups, to documentation on the available policies startups can avail themselves of, KDEM has taken it upon itself to compile this information and get it in front of the right people.

The team has reached the granular level of trying to foster a local ecosystem by introducing local startups to each other.

As Gupta puts it, “To make these startups come together, they should know what other startups are doing.”

Additionally, KDEM has also worked on bringing VCs to the startups in these emerging clusters to encourage founders to continue building in their towns.

Finally, Gupta says KDEM also has the buy-in of multiple industry leaders in each cluster, creating an engaged semi-official local board for each region.

Creating “face value” for the clusters

In addition to selling local talent and larger industry members on the value of the emerging clusters, KDEM is also looking at developing a “face value” for each region.

According to Gupta, if the global startup ecosystem can recognise the three regions for particular expertise, it will be easier to attract talent, founders and investors.

“In Mysuru, we’re trying to put together a cybersecurity innovation hub of the world. In Mangaluru we’re putting together a fintech hub for the world, and Hubli-Dharwad we’re putting an AI innovation hub,” said Gupta.

Mangaluru’s strong history of banking services, Mysuru’s qualitative strength in engineering and relationship with Israel, and the great AI work fostered by the Deshpande Foundation Incubation Centre in Hubli were regions for selecting these particular industries.

Short-term initiatives

While KDEM is planning a lot of these strategies looking 3-5 years into the future, it is also working on building short-term impact.

It is already interacting with large tech companies like Accenture and IBM, and the latter has even set up a client solutions centre in Mysuru.

AI firm iMerit opened up an engineering centre in Hubli, aiming to hire 50 people to start with. In under a year, it hired 200, and Gupta expects them to hire another 1,000 in the next year or so.

Additionally, KDEM has also built a programme to help deliver a holistic educational experience for college students to improve their ability to land jobs.

According to Gupta, “There are jobs available by employers, and [we are] reaching out to students in Karnataka in Tier II and III cities, and training them over six months.”

This training is working, as multiple students have been able to land jobs at large corporations, including some who have even been able to get annual starting salaries of up to Rs 7 lakh.

According to 2021 graduate Deepti B.S. of Mangaluru, the KDEM training was invaluable to help translate her college education into a job.

When applying for jobs post graduation, Deepti said, “The initial [KDEM] training gave me the confidence to clear the job assessment, and I got placed in the company.”

According to Gupta, KDEM’s work so far has largely been to develop a strategy and test it out. Today, it is focused on executing the strategy.

“The strategy is in place, and it is an accepted strategy. We just need to scale this strategy,” he adds.

Going forward, while KDEM is currently focussed on the 2025 $1 trillion digital economy target, Gupta is convinced that the goalposts will shift by then — with a $5 trillion economy target in 2030, and maybe even a metaverse target soon after.

However, Gupta is sure of one aspect. With the work KDEM is doing, he says, “Karnataka is going to be the most important state in the digital economy in India, and the world.”