Undeterred by the current chaos in the Indian start-up sector where investment funding gloves are mostly off and the big boys are scrambling to show profits, Kerala is keen to facilitate entrepreneurship in a big way.
Kerala, the last bastion of the Left in India, is looking for younger versions of its heroes from the capital world, the likes of Infosys co-founders Kris Gopalakrishnan and SD Shibulal, or health tycoon Azad Moopen or even pharma baron Arun Kumar.
With such tall and loaded role-models, not surprisingly then, that the Kerala government itself is one of the key catalysts of the start-up phenomenon in the state.
Just last week, the state government launched the world's first online incubator for start-ups by college students, its hashtag being a dead giveaway - #StartInCollege.
This is essentially a digital makeover of the original start-up village in Kochi which was primarily designed to help youngsters start early.
“The government's allocation for start-ups at ₹300 crore is the highest to date in the state and higher than of the central government's department of science and technology,” said chief minister Pinarayi Vijayan while unveiling the incubator.
“The state will fund 1,000 start-ups every year with ₹2 lakh for converting ideas to prototypes. The best prototypes will be given ₹1 crore interest-free loan to convert the prototype into a successful start-up,” added Vijayan. Already, between 2012 and 2015, the Kochi start-up village supported more than 500 start-ups and helped create 3,000 jobs.
This start-up village now plans to scale up its activities by reaching out to five million students in 3,500 engineering colleges across the country by providing them with a digital incubation framework.
As far as entrepreneurship inspiration goes, the state has some tall examples to look up to. Infosys co-founder and one-time CEO, ‘Senapathy’ Kris Gopalakrishnan is the fifth richest Malayalee ever according to the Economic Times, as along with wife Sudha and daughter Meghana, he holds more than 3.9 crore shares of Infosys , with an estimated market cap of ₹7,860 crore.
SD Shibulal, another cofounder of Infosys has a net worth of around ₹5,250 crore. Both he and Gopalakrishnan are products of the University of Kerala. The street value of his 2.3 crore shares of Infosys and the 700 apartments that he owns are the most significant contributors to his wealth.
Azad Moopen, chairman of the Dubai-headquartered Aster DM Healthcare LLC, has a net worth of ₹5,500 crore and is a standard poster boy for start-ups. An MBBS gold medallist, he started his career as a lecturer at the Calicut Medical College in 1982. The Aster Group now operates close to 260 hospitals and pharmacies in the Middle East and India. Moopen also owns a medical college in the Wayanad district of Kerala.
Arun Kumar is the founder and group CEO of Strides Arcolab, an integrated pharmaceutical company. While his roots are in the Kollam district, he was brought up in Ooty and worked in Mumbai. In 2013, his company sold Agila Specialties, one of its divisions, to US pharma giant Mylan for $1.75 billion. His personal net worth is estimated at ₹4,800 crore.
Clearly, Kerala is trying to bolster its already significant contribution to India’s start-up geography. Apart from the start-up village, the state also has a start-up mission in place which is the nodal agency for implementing the state's start-up policy. It mentors new entrepreneurs, creates a funding platform for start-ups and also helps them market their product and services.
It also provides a seed fund and assists entrepreneurs to obtain institutional funding from state bodies and makes arrangements to access angel investors.
The state also has a state entrepreneur development mission (KSEDM), which aims at, "Inculcating entrepreneurial confidence among the youth of the state."
Kerala is one of the few states to have set aside 1% of its annual budget for entrepreneurship development. It is also relaxing regulations such as building rules, lease details and is also supporting banks, private bodies and financial institutions to offer start up friendly lending schemes.
Despite these initiatives, an investment outlook by the NewsCorp Circle, a publisher of start-up and private equity news, said recently that that a majority of the startups in Kerala are stuck at the seed or pre-seed funding stage. “Their ability to secure investments to scale up is limited by the selective understanding of valuations, pitching methods and investment trends from the perspective of venture capitalists,” it said.
The report adds that start-ups in Kerala have garnered 28 early-stage funding deals amounting to $18.5 million since 2011. Historically, 2013 was the best year from a funding perspective, after which the two years that followed have been quite dry.
M Sivasankar, principal secretary, chairman (EC) of Kerala sate IT Mission said in a news report that the state has perhaps lost about 3,000 potential start-up ideas because there was no system in place to identify them.
An acute dearth of investor support is also a critical concern, say experts. Jayasankar Prasad, CEO of the Kerala start-up mission said in a report, “Entrepreneurs should have a plan to face the real world, should not expect all the help and support to come to them.”
Sivasankar said, “The majority of families in Kerala are well settled in terms of social security. Therefore, the time is right as most parents today are well positioned and willing to allow their kids to take entrepreneurial risks. The ecosystem is in place. The focus should now be on being competitive,” he said.
Following are some interesting start-ups designed by Malayalee entrepreneurs:
Look-up, founded by Kasargod's Deepak Ravindran, is a free messaging app that helps consumers chat with those running local businesses, now has Twitter on its side. The co-founder of the microblogging site, Biz Stone has said that it would be investing in the firm and would also act as their mentor. Lookup has raised over $2.5 million till now.
Chillr, a multi-bank mobile payment and recharge app, has raised $6 million in Series-A funding from Sequoia Capital and other investors. The company was set up in December 2014 with a seed funding of $1 million from the parent company, MobMe Wireless Solutions (MobME).MobME also runs the Startup Village, in which Infosys' Kris Gopalakrishnan is an investor. Chillr's app allows users to send money instantly to anyone in their phone book without having to know the recipient's account details.
Embrace Innovations, a Bangalore-based healthtech startup, was named one of the top 35 innovators of the year by the MIT Technological Review. One of its co-founders is Rahul Panicker, hailing from Thiruvananthapuram. Embrace is a medical device company that helps save vulnerable babies in rural areas through its embrace infant warmer. Panicker joins an elite list which includes Google founders Larry Page and Sergie Brin as well as Facebook founder Mark Zuckerberg, who are among the previous winners.
Exploride Inc has developed a hands-free display device for cars to combine music and GPS system, which was incubated at Kochi Startup Village, it has raised half a million US dollars from pre-orders within 40 days of its launch last year.
