Kerala tops list of startup destinations in India: report

The state has made an impressive compound annual growth of 17 per cent since 2012

startup [File] Representative image

Kerala has emerged as one of top startup destinations in the country, according to a report compiled by digital media platform Inc 42 in association with TiE Kerala.

The state has made an impressive compound annual growth of 17 per cent since 2012, taking the total number of ventures based out of the state to 2,200 and displaying high competence in netting funds, said the report.

In a single year since 2018 alone, the number of startups marked a steep increase of 35 per cent, said the report unveiled at the valedictory function of the TiECon Kerala 2019 in Kochi on Saturday.

Subramanian Swamy, MP, released the report titled Kerala Startup Ecosystem 2019' in the presence of CEO of Kerala Startup Mission (KSUM) Saji Gopinath, organisers of TiECoN said in a press release in Kochi.

Kerala-based startups kept up their competence in getting funds by raising USD 89 million till date, and compared to 2018, till September this year startups clocked an 18 per cent uptick in securing funds. In 2019, startups netted $44 million funding spread across 13 deals.

As many as 47 startups have raised funds from outside and 13 startups received funds in 2019. KSUM has designed and executed a set of programmes and schemes as per the revised Kerala Startup Policy (Technology Innovation and Entrepreneurship Policy) to identify and support technology startups in the state. In the last six months alone, KSUM incubated and funded over 200 startups, said secretary, Electronics and IT, government of Kerala, M. Sivasankar.

Many of the key policy interventions formulated by the Kerala government to support startups and measures to ensure inclusivity in innovation were now being adopted by other state governments as well, Sivasankar said.

To ensure investment opportunities, KSUM has come out with an innovative fund scheme to invest in alternative investment funds (AIFs). A combined corpus in excess of Rs 1,000 crore of investment capital has been made available for startups through this scheme by committing less than 10 per cent of this amount into various AIFs, said the CEO of KSUM.

Investments worth more than double the deployed amount have already happened in Kerala-based startups in the last one year. It is heartening to note that this early stage fund has enabled some startups to grow substantially during the last one year, he said. Of the 2,200 startups based in Kerala, as much as 13 per cent were registered in the first three quarters of 2019, the report said.

Ernakulam and Thiruvananthapuram were top choices for startups in setting up their headquarters as about 59 per cent of startups were located in the two cities.

Kochi accounts for 36 per cent of them, followed by Thiruvananthapuram with 23 per cent. "In 2019, the Indian startup ecosystem recorded 553 funding deals, which together crossed the $9-billion funding mark. Interestingly, it is Kerala which has emerged as one of the top startup destinations of the country," said the report. "Around 75 per cent of the Kerala-based startups are product-driven companies and 25 per cent of startups are service-driven. Sector-wise, 28 per cent of startups offer IT and consulting services followed by health tech and edtech with 8 per cent and 7 per cent respectively, it said.

About 41 per cent of the startups have two founders each while 39 per cent startups have single founder.

However, only five per cent of the startups have women founders.

Moreover, 14 per cent of startups have parity in number of men and women employees. The Kerala government has earmarked investments of over Rs 1,000 crore in the state startups over the next four years," it added.