THIRUVANANTHAPURAM: The startup sector is poised to become a major driver of growth of the state economy owing to the investments raised by companies over the last decade. Eight startups raised Rs 982.26 crore in just the first five months of 2023.
Over the full-year of 2022, as many as 22 firms accounted for Rs 1,525.28 crore in funding. In 2021, 29 companies raised Rs 1,550.41 crore, while 27 startups raised Rs 517.01 crore in 2020 when the pandemic was at its peak.
This represents a steady growth in investments attracted by homegrown startups. In 2014, four startups raised Rs 1.85 crore, according to data available from the Kerala Startup Mission (KSUM).
Online meat and fish delivery company FreshToHome (US$286 million/approx Rs 2,300 crore) and neo banking platform Open ($187 million/approx Rs 1,500 crore) top the list in terms of total funding received. In 2023, FreshToHome raised around Rs 800 crore. Although based in Bengaluru, its main operation is in Kerala. Open – founded in Thiruvananthapuram’s Technopark and now based out of Bengaluru – is the only unicorn from the state.
A unicorn is a privately-held startup with a valuation of over $1 billion. According to top officials with KSUM, startups registered in the state have been performing well in terms of investment and funding. The mission has various programmes and initiatives to ensure funding for startups. In addition to liaising with investors, big events such as Huddle Global help companies with innovative products and solutions.
“The mission is building an angel investment network so that more startups get funding. We have just launched the Startup Infinity Programme, under which many NRI investors have evinced interest in working with startups. KSUM also has a fund-of-funds scheme to attract more venture capitalists (VCs). Likewise, we are in the process of making good investments for startups in the state. Similarly, many initiatives are in the pipeline to ensure a robust ecosystem,” said Anoop P Ambika, CEO of KSUM.
All the startups based in the state are either service- or product-based, and hence hold the potential to attract more funding from VCs or angel investors. As per data, Kerala’s hardware startups command a higher share (3%) of early-stage venture capital investment compared with even Mumbai (1%) and Delhi-NCR (0.93%).
According to a recent ecosystem report published by KSUM, fintech and software-as-a-service (SaaS) startups in the state are at the forefront of raising venture capital. Together, the sectors accounted for 66% of total investment bagged by Kerala-based startups since 2015. Fintech startups accounted for 39%, followed by healthcare (26.7%), SaaS or enterprise tech (23.3%), deep tech (4.6%), and transport tech (2.9%).