Kerala Start-up Ecosystem To Be Back on Investor Radar: News Corp VCCircle

News Corp VCCircle has shared its investment outlook for the start-ups in the state of Kerala on the eve of the Kerala edition of Techcircle Start-up 2016 .

Key Pointers: A Facilitative Ecosystem

• While start-ups in Kochi, Thiruvananthapuram and Kozhikode have attracted over 50 per cent of early stage funding in Kerala and would continue to corner a major share of the investment pie in the future, those in other towns such as Kannur, Kollam, Palakkad, Idukki, Muvattupuzhal and Kottayam are set to increase their share.

• Though Kerala has witnessed early stage investments channeled into internet and tech enabled businesses much like the case on a pan-India basis, the spread has been historically better with start-ups in the Analytics, E-health, Social networking, Hardware, Robotics and IoT space likely to continue winning investor interest in 2016 and beyond.

• Government led initiatives such as Kerala Start up Mission (KSUM) (having strong presence in the three nodes of the states namely Thiruvananthapuram, Kochi and Kozhikode along with the network of incubators such as NIT TBI in Kozhikode, Technolodges, BIC s’ etc. have played a key role in creating a congenial start-up ecosystem of over 300 start-ups in the last five years. This number is likely to double in less than half the time with policies and initiatives that encourage students to take up entrepreneurship. The Kerala Technology Innovation Zone in Kochi promoting multi sector incubators will be a start-up destination in the state.

• Low operating costs and catering to a relatively untapped local market with technologically enabled solutions through internet enabled mobile phones would be the USP of Kerala based start-ups.

Funding Trends

• News Corp VCCEdge data reveals that start-ups in Kerala have garnered 28 Early Stage Funding deals amounting to $18.5 million since 2011.

• Start-ups in the state have attracted interest from big funds of the likes of Matrix Partners India, Helion Venture Partners and DSG Consumer Partners.

• Majority of the startups in Kerala however still continue being at the seed or pre-seed funding stage. Selective understanding of valuations, pitching methods and investment trends from the perspective of Venture Capitalists limiting their ability to secure investments to scale up.

• With $0.63 million invested across 3 early stage deals in the state as of 2016 YTD, angel investing is expected to drive start-up investments to cross deal value of $1.13 million seen in 2015.

• With local HNIs now beginning to consider Private Equity as an asset class, beyond real estate and gold as well as Venture Capital firms scouting to invest in businesses with strong revenue generating models, the flow of funds to start-ups in Kerala will see a major inflection from 2016 going forward.

Speaking on the eve of hosting the Kerala edition of Techcircle Start-up 2016, Nita Kapoor Head - India, New Ventures, News Corp and CEO, News Corp VCCircle said, “It is our objective to help the entrepreneur community in Kerala by bringing them together and empowering them with the know-how to scale up their business by bridging them to big ticket angels and venture capitalists. While Kerala tops the states in receiving remittances, we are optimistic that it would soon become a destination for private equity funds.”