Kerala’s startup landscape is in a transformative phase. From baby-stepping to surefooted strides, the sector has been well-guided by the Kerala Startup Mission over the years. Its current CEO,
Anoop P Ambika, is determined to make it spring ahead. In a candid conversation with TNIE, the tech evangelist and entrepreneur elaborates on the startup trends in the state, the need for embracing risks, and entrepreneurship becoming a fashionable word now.
Edited excerpts
To start with a basic question, what’s the difference between a startup and any new business venture?
A business is something that sells products that have already been invented. But when you bring out a product through innovation to serve a large number of customers and, on that path, achieve exponential growth and revenue, then that company is called a startup. For example, when I was in college, we had to wait in lines for hours to get a ticket for a film show. However, today, the same process has been made online through the BookMyShow app, where you could book tickets anywhere in the country using technology.
Before taking over as CEO of the Kerala Startup Mission, you had founded a couple of successful companies. How was the startup ecosystem back then?
Just like a normal middle-class boy, my focus was on earning good money and providing a good lifestyle for my family. I got a good job in the US. It was in my 30s that I started thinking seriously about my life. I had two options: either to start something of my own in the US or in India. To be honest, my attempts to start a venture in the US didn’t succeed. I returned to Kerala in 2003, and the next year, I started my company. At that time, a few of my friends had established their own companies here. With the help of friends, I was able to start my company. So, in a way, Kerala has had an ecosystem for some time.
Was there any resistance when you decided to leave the US and start a company here?
(Chuckles) My close relatives, especially from my wife’s side, called me up and asked whether I was out of my mind. However, today, no one will ask that question. Somebody has made a joke about how acceptance from society can be measured if you can find a bride or groom with your current job. ‘Entrepreneur’ is a fashionable word now; people see it as an option to create exponential wealth.
Can you tell us about your business outing?
I started several companies, but only a few were successful (chuckles). The one I started in 2000, Kreara Solutions, was acquired in 2015 by a US company. In 2017, I started two companies that were merged in 2019, and got acquired this year in July, again, by a US company.
You are the first entrepreneur to head the Startup Mission...
Dr Jayashankar Prasad was the first CEO of KSUM. Appointed in 2015-16, he put in place quite a lot of processes, like Seeding Kerala, devising fund-of-fund programs, and building a team and a brand. Later, Saji Gopinath took over. He was a man of vision. Jayashankar sir taught the ecosystem how to stand on its feet, while Saji sir taught it how to walk. When I went to meet Saji sir before taking charge, he told me that I must make it run (smiles). Today, if you go to Delhi, for instance, and say you are the CEO of the KSUM, you will get a chair anywhere. That is the credibility that the Mission has achieved over the period.
Our startup ecosystem is slowly gaining recognition. Can you give the conversion rate, when it comes to startups incubated in Kerala? How many can be called a success?
After taking charge as the CEO, my first exercise was to survey about 4,100 startups registered with KSUM. The data obtained from the survey showed that around 1,000 companies had achieved early revenues, while about 400 were generating steady revenues. Now, the objective is to get the around 150 companies that occupy the bottom of the funnel and then help them scale up to the level of startups such as Open [Financial Technologies].
Are these 150 startups product companies?
Yes.
Why are we focusing only on product companies?
Currently, we are focusing only on product companies under this target. You can see how product companies have created exponential wealth. Zerodha, Physics Wallah, and Zoho are to name a few very successful startups. In the case of Zoho, they haven’t taken even one penny in venture capital, and their revenue is Rs 10,000 crore per annum. Their valuation stands at Rs 50,000 crore. As to whether we have such companies in Kerala, of course, we do. Synthite and St Mary’s Rubbers are examples. We can do it. It is just that the last-mile finesse seems to be lacking. For that, we need a mindset change. And that has to be spearheaded by the youngsters.
Are you saying that these 150 companies will be helped to become unicorns with billion-dollar valuations?
I am against the term unicorn. I don’t believe in valuations. I believe in world-class products and services that people will use.
What are the major problems that you have identified in the sector?
One, as I highlighted, is the lack of last-mile finesse. We have the engineering skills and the raw material. However, we are still importing high-precision scientific equipment. Why? We lack the zeal to achieve top-notch quality.
Kerala has many firsts… Our Technopark was the first of its kind in the country. However, we have not been able to scale it up. Why is it so?
We are good at starting things. But we need to have determination to finish what we start doing. It’s called the art of closing. To bring a deal, to impress a person and to attract him to the proposition is one thing. But to have him sign the contract and write the cheque for you is the second half, and we lack skill in that. It is primarily because we did not have the business bend.
Is Kerala’s political climate, too, a reason?
Maybe. But, we started a company like Mavoor Rayons (1957-58). We were visionary enough to say that industry is required for the growth of the state. It is not that we did not realise it. But somewhere down the lane, we got lethargic.
Many startup founders believe that Kerala doesn’t have the mindset to back them. So, they are moving to Chennai and Bengaluru…
Every city has a story of growth. Bengaluru was an Army-Air Force city. Someday, somebody in the US says that San Francisco and Bengaluru have a similar climate and we will start a Texas Instruments shop there. The growth story of Bengaluru started there. Then GE came. And Infosys and Wipro started catering for these companies. Slowly, the ecosystem started blooming. Hyderabad has another story. Chandrababu Naidu made a power-point presentation and went to Bill Gates, which no chief minister had done till then. And Microsoft came to Hyderabad.
What should Kerala do to be in that league?
We need to have bigger industries in Kerala. Not manufacturing or polluting ones; but knowledge-based industries. If we look at our skills, the space sector in Kerala is one of the best in the world. We have an excellent agro-economy and people who can put technology into agriculture and value-added food. We have one of the best talent pools, and very good institutions. There are plenty of wealthy investors ready to invest. The only thing we need to do is to connect them all.
There was a project specifically for that...
Yes, the Ignite project. It is still on. We will have a network of angel investors soon.
There is a notion that Malayalis do not have much entrepreneurship skills. One historical reason cited for that is that there was no Vaishya community in Kerala. Also, we have had an aversion towards business. Do these factors affect our start-up ecosystem?
(Chuckles) I believe it’s the crab syndrome. We try to pull down others. Is it just about business? No matter which sector one is from. If we fight the system and become a winner, then everybody is with us. But, in that process of becoming a winner, you will be pulled down at every single step. I have noticed that about Kerala.
Is this crab syndrome unique to Kerala?
Need not be. But people elsewhere are willing to discuss and engage with you if you want to become a change-maker. But in Kerala, it will be immediately resisted. The first response to any new idea will be negative, cynical. If we say we can make it work, then we will become an outlier. But I think all these are slowly changing because we believe in social good.
As Startup Mission CEO, you are in the hot seat. You are dealing with two different worlds. On one side you are dealing with a vibrant space full of creative ideas, and, on the other, there is the government system with lots of red tape. How would you balance these two?
This seat is nothing compared with my experience being an entrepreneur. Compared with that, the bureaucratic challenges are minor hurdles. However, we can’t expect things to move as fast as in the corporate world. Patience is crucial here (smiles).
A large number of entrepreneurs are entering the startup world without any proper planning. What would be your advice to them?
Let them… I am a supporter of such entrepreneurship. If one startup fails, life does not end there. One should take risks, especially during the early stages of one’s career. However, my advice is to not become emotionally attached to a single project. If an attempt fails, accept it as a learning experience and move on. We should encourage a culture that embraces both success and failure in the startup world. The experience from a startup venture – even if it fails – will be of immense help in one’s life. We, as a society, should be kinder to those who fail. One failure doesn’t mean anything.
Can people whose startups failed to take off approach KSUM for help?
Sure, but not with the same project. If such people come with a fresh idea, we will help and also value their experience from the previous venture. It’s essential to learn from the failures and adapt to new opportunities. My own experience as an entrepreneur is proof that failure does not mean the end of the world.
During the launch of Chandrayaan-2, some of our engineering colleges were lauded. Are you happy with what’s happening at our engineering colleges?
See, ISRO absorbs only the toppers of the class. Even some of my classmates, who were the toppers, were absorbed by ISRO. I am happy about the precision engineering that resulted in this achievement. In this process, there are a lot of stages involved. So there is finer engineering at play. India has proved successful in precision engineering. It is about mindset. Engineering is not a big deal now. Computer programmers can now become journalists, and journalists can become programmers. So people will start learning back and forth.
Are you happy with the higher education sector in Kerala?
I am not.
What is lacking?
Here, plagiarism is the major issue. I still remember the first assignment I got as an engineering student. I was excited and completed it with much enthusiasm. But when I went to the college, my friends asked for it and copied it. Subsequently, I also started doing the same. I would give the assignments to some friends to write, offering them food treats in return (laughs out). There is no real learning happening in colleges; we are only learning to crack the exams. The majority of students are only doing that. It starts with Class X itself. Engineering colleges are still trying to help students learn how to crack the semester’s exams. I have seen many computer engineers here proudly saying that they have never repaired a computer, or have no idea about the motherboard (chuckles).
So, is it because of these loopholes in the education system that many students are migrating abroad?
Not really. The number of students going abroad to get a better education is minuscule. It is the youngsters’ desire to enjoy freedom that makes them want to migrate. They think there is freedom, there is no gender disparity, and there is no body-shaming in the west. You can be yourself there. There is an assumption that migrant people, especially students, can make money even by washing vessels. In fact, many want to chill out without depending on their parents. But there is a section of people who go abroad for better opportunities. Excellent engineers leave when opportunities come. Covid exposed the problems with migration. Most migrants wanted to return to Kerala for better healthcare. But now, many of us forgot that. Things are not all hunky-dory from outside. Some people learn the hard way.
If you were to launch a company today, which sector would you invest in?
I will definitely invest in pharma. I wonder why companies are not focusing on this sector, even as there is a high demand for medicines due to the lifestyle diseases in Kerala. We can capitalise on that. About 70 companies in Goa export medicines worth about Rs 20,000 crore. We can do better.
What are the immediate promising signs you see?
We give up to 700 grants in some years. There is a strong possibility that some good companies will emerge. We are focussing on research. We fund 19 selected research programmes. We fund seven women research scholars. At least five of the projects will emerge as extremely good companies. I have seen some good companies. These are from different sectors, statistical software, bio-clothes, etc.
Vizhinjam Port is set to be launched next month. Will there be any impact on the startup sector?
Yes, certainly. Vizhinjam port will be a great boost to the state’s economy. There will be plenty of opportunities in logistics, supply chain management, and storage sectors. Tamil Nadu has already started working on attracting business to their side. We should not be left behind. Vizhinjam will trigger our economy like crazy, provided the mother ships come and unload the goods. It will be a game-changer for Kerala’s economy.