CHENNAI: The state government has moved away from providing grants to investing directly in startups through equity mode in its seed fund initiative for early-stage startups (TANSEED). Under the TANSEED 5.0 programme, the government will hold 3% stakes in the startup ventures. This will help the startups gain credibility and the government will be able to handhold the startups, people familiar with the matter said.
Speaking to TNIE, the mission director and chief executive officer of Startup TN, Sivarajah Ramanathan said, “These funds are provided for business development and we have chosen the equity mode to make TANSEED initiative sustainable. If some companies are making a good exit, then it will help us invest in the ecosystem again.” The Quantum of funds disbursed have also been increased, he added.
Startup and Innovation Mission (Startup TN), the implementing agency, invited applications from startups for TANSEED 5.0 programme, under which 50 startups will be identified. The funds are expected to be distributed by the end of April. March 5 is the deadline for submitting an application. Twenty-five other startups, already identified under TANSEED 4.0 programme, is also expected to get funds by April.
As many as 28 grants were disbursed under the TANSEED 1.0 and 2.0 programme in 2021. Further, funds were distributed to 56 startups in 2022 under TANSEED 3.0 and 4.0, totalling 84 startups. The state government has targeted to provide Rs 10 crore to 100 Startups under TANSEED initiative.
Paving the way for more equitable and gender-inclusive growth in the startup ecosystem in the state, 25% of its funds will be reserved for women-led startups and 10% of the funds to startups focusing on rural impact. A recent report by INC 42 on the top 100 unicorns in 2022, 85% of the Indian unicorns have no women founder. Given this disparity, Startup TN’s initiative will ensure gender-inclusive growth and encourage participation of women entrepreneurs in the startup ecosystem.
Women-led startups
According to Startup TN, the criteria for women-led startup means the startup has one or more women
founders and or co-founder and they should collectively hold at least 75% of the stakes.