Kerala’s startup culture gains momentum after being dormant for years

Before Bengaluru or Hyderabad, it was Kerala that led the way for development of information technology, with India’s first IT park set up in Thiruvananthapuram way back in 1990. But, the state’s lead was soon taken over by Bengaluru and Hyderabad as IT capitals. But all is not lost for the state. Four years after Kerala started its incubator Startup Village (SV) in 2012 to promote IT startups, things have started to look up only now.

The state’s proactive role in promoting startups with innovative ideas like Student Entrepreneurship Policy (SEP) has managed to build a momentum for an entrepreneurial culture. But the hard challenge of sustaining the momentum, scale-up and become financially self-sustaining still looms.

The majority of the startups in Kerala continue being at the seed or pre-seed funding stage, according to an investment outlook by the NewsCorp Circle, India’s leading publisher of startup and private equity news. Kerala startups garnered 28 early stage funding deals amounting to $18.5 million since 2011.

“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.

M Sivasankar, principal secretary, chairman (EC) of Kerala Sate IT Mission paints a more troubling picture. He says that at the Techcircle Startup 2016 the state lost about 3,000 potential startup ideas because there was no system in place to identify them. A severe dearth of local investor support was one of the resounding concerns voiced by the emerging entrepreneur community.

“It is true that there are no big funding players in the state, but that should not be a constraint as you can reach them effortlessly if you have a good product or service. I am optimistic that as we mature and gain traction we could see several startups in Kerala achieve Series A funding,” Sindhu Joseph, co-founder and CEO of CongniCor Technologies said. The reason for the failure, Joseph says, is that most startups in Kerala focus on business innovation and not product innovation.