In the blink of an eye, the state’s startup scene has gathered momentum, courtesy a favourable policy ecosystem and other developments coming together. Tamil Nadu emerged as the ‘Best Performer’ under the union government’s 2022 State Startup Ranking. It has consistently improved and reached the top position, moving from the bottom category in 2018. The report was released by the Department for Promotion of Industry and Internal Trade (DPIIT), which measures states’ policy efforts to build an ecosystem favourable to startup growth and tracks the evolution of policies and overall efforts.
Rankings aside, Tamil Nadu has also produced some of the country’s most innovative, design-led and research-driven startups. Players like Zoho Corporation, Freshworks, and Agnikul Cosmos are prime examples. Many startups in the state operate in business-to-business domain rather than offering direct consumer services.
Tamil Nadu boasts startups in key sectors such as aerospace, defence, space, satellite, SaaS, manufacturing tech, augmented and virtual reality, IoT, chip making, agri-tech, food-tech, and climate-tech, as well as some in nascent areas like quantum computing, Web3, and data science. The state’s skilled and talented population, coupled with an already industrialised economy and robust academic institutions, contribute to its emergence as a startup stronghold. Notably, the IIT Madras-Research Park serves as a significant ecosystem for startups, with the IIT-Madras Incubation cell since its inception having brought forward 350 startups, collectively valued at Rs 45,000 crore. In the 2022-23 fiscal, these startups generated a combined revenue of Rs 3,000 crore. Tamil Nadu also leads in the number of patent registrations.
“Educational institutions have recognised the importance of intellectual property (IP) and commercialisation of student projects. The Tamil Nadu Council for Science and Technology has established 32 IP centres, and government bodies like Startup TN and Entrepreneurship Development and Innovation Institute (EDII-TN) are reaching out to individuals,” S Thangapandian, joint Controller of Patents and Designs, told this paper last year.
A successful startup typically exhibits innovation and a good understanding of unit economics. They also drive forward novel ideas and technologies, supported by strong academic institutions, which in turn fuel macroeconomic growth and job creation. These startups further support the research and operations of educational institutions, creating a cycle of innovation-led value creation.
Tamil Nadu has the highest gross enrollment ratio in higher education and a significant number of women in various parts of the workforce, although more efforts are needed to achieve parity.
However, the state lacks some aspects of a powerful ecosystem necessary for startups to grow and scale. Compared to some metros of similar size, Chennai has produced relatively fewer startups, and many struggle to scale their businesses. Most students in the state lack awareness about startup careers and have a limited appetite for risk-taking.
Therefore, educational institutions need to be equipped to encourage and mentor startups, provide support for business models, facilitate connections with potential investors, and assist in building prototypes. Tamil Nadu requires more venture capital investments, as startups incorporated here often move elsewhere to be closer to investors. While there are efforts by the state government and other startup bodies to improve the ecosystem, more needs to be done. Initiatives such as establishing world-class startup incubation centres at educational institutions are under way.
The state is working to enhance the ecosystem with the establishment of Startup Tamil Nadu (Startup TN). Notably, the state’s efforts include developing inclusive entrepreneurship, and providing incentives, priority, and support for tribal, marginalised, women, and rural founders. Efforts are also under way to promote equitable growth across geographies, with regional hubs in Erode, Tirunelveli, Madurai, and Chennai. Additionally, startup circles are emerging in tier-2 cities and smaller towns through volunteer efforts, fostering an entrepreneurial mindset in youngsters. Initiatives like connecting startups with individual angel investors, government equity investments in startups through TANFUND (Tamil Nadu Startup Funding Platform) cohorts, and sectoral or theme-based initiatives supporting cleantech and sustainability-related startups tapping green funds markets are shaping up in Tamil Nadu. This will help address pressing issues not prioritised by market demand perspectives.
Stakeholder meetings and government procurement from startups via platforms like GeM are also changing the startup landscape. The state government of Tamil Nadu is taking steps to promote entrepreneurship as part of its goal to achieve a $1 trillion economy by 2030.
All these efforts and measures foster a flourishing startup ecosystem in the state, with some companies showing potential to drive long-term sustainable growth and create value for investors.
‘Best Performer’
Tamil Nadu emerged as the ‘Best Performer’ under the union government’s 2022 State Startup Ranking. It has consistently improved and reached the top position, moving from the bottom category in 2018. The report was released by Department for Promotion of Industry and Internal Trade, which measures states’ policy efforts to build an ecosystem favourable to startup growth and tracks the evolution of policies and overall efforts.
Hubs to promote equitable growth across geographies
The state is working to enhance the ecosystem with the establishment of Startup Tamil Nadu (Startup TN). Notably, the state’s efforts include developing inclusive entrepreneurship, and providing incentives, priority, and support for tribal, marginalised, women, and rural founders. Efforts are also underway to promote equitable growth across geographies, with regional hubs in Erode, Tirunelveli, Madurai, and Chennai. Additionally, startup circles are emerging in tier-2 cities and smaller towns through volunteer efforts, fostering an entrepreneurial mindset in youngsters.
Initiatives like connecting startups with individual angel investors, government equity investments in startups through TANFUND cohorts, and sectoral or theme-based initiatives supporting cleantech and sustainability-related startups tapping green funds markets are shaping up in Tamil Nadu, addressing pressing issues not prioritised by market demand perspectives.
Top six start-ups in Tamilnadu
Ippopay
Galaxeye
Greenportlabs
Neomoyion
Solinas Integrity
Rizel Automotive
132 startups benefited from TN grant worth Rs 13.95 crore
Portal registration from the start
Startups registered under Department for Promotion of Industry and Internal Trade
2016 to 2021 - 3,200
Till March 2023 - 5,600
SOURCE: Startup TN, DPIIT
Total startups in state at present - 8,148
Women entrepreneurs - 3,986
Research Park
IIT Madras-Research Park serves as a significant ecosystem for startups, with the IITM Incubation cell having brought forward 350 startups since its inception, collectively valued at Rs 45,000 crore.
In the 2022-23 fiscal, these startups generated a combined revenue of Rs 3,000 crore