Take IPO Route to Raise FundS, Kris tells Startups
Kochi: Infosys Co-founder and Axilor Ventures Chairman Kris Gopalakrishnan has made a strong case for startups to think of Initial Public Offering (IPO) in order to tackle the fund crunch and provide longevity to their fledgling enterprises.
Infosys Co-founder Kris Gopalakrishnan was inaugurating the fifth edition of ‘Seeding Kerala’, organised by the Kerala Startup Mission in Kochi
“Startups are hesitant to do IPO, which is, in fact, not difficult. My biggest issue with the startup ecosystem today is that they are not doing an IPO. Let the Indian public own these companies. They will thus get a share of the wealth being created,” he said while inaugurating the fifth edition of the two-day ‘Seeding Kerala’, organised by the Kerala Startup Mission (KSUM) in Kochi recently.
“India has $2 trillion of wealth in private hands. Less than one per cent of it is invested in startup ecosystem. We need the money of High Networth Individuals (HNWIs) going into startups,” he said.
Gopalakrishnan advised startups to take minimum funds from angels, friends and families. They have to create a minimum viable product, and establish unit economics and evolve a profitable model, he said.
“Society needs stable businesses that create good jobs and generate wealth. Most of our best late-stage startups are owned by non-Indian entities. And, more than 95 per cent of funding comes from non-Indian entities,” he pointed out.
Noting that Kerala community is innovative, entrepreneurial and action-oriented, Gopalakrishnan opined that the startup ecosystem in Kerala is getting recognition for its innovation, ideas and path-breaking initiatives.
Gopalakrishnan said India today has one of the most advanced fintech ecosystems, which even the US considers as worth replicating.
Kris Gopalakrishnan also interacted with 10 startup founders on the sidelines of the event.
M Sivasankar IAS, Principal Secretary, Electronics and IT, Government of Kerala, who presided over the function, said, “One of the ways to address the scarcity of funds is to tap the funds from the alumni groups of engineering colleges. Besides, we need to create networks of people who have faith in Kerala’s investment climate.”
In his welcome address, Dr. Saji Gopinath, CEO, KSUM, said India is the third-largest ecosystem for startups. “We have close to around 28,000 startups registered with Department for Promotion of Industry and Internal Trade (DPIIT),” he said.
Funding for Hardware Startups to Begin in April, says IT Secretary
The first disbursement of funds under the new schemes announced in the latest Kerala budget for hardware startups will be done in April, according to M Sivasankar IAS, Principal Secretary, Electronics and IT, Govt. of Kerala.
Delineating the problems being faced by hardware startups in the State, Sivasankar said, “One of the basic things is their need to have a huge working capital, which is traditionally not funded by Angels, VCs or High Networth Individuals (HNWIs). The banks have certain financial norms like collateral security for giving credit”.
He was speaking on the concluding day of the Seeding Kerala investment summit. “We have a very large number of hardware startups in Kerala. They face challenges ranging from running companies smoothly to taking prototypes to the next level. So we had to suggest to the government to evolve a framework by which the hardware startup requirements could be funded at least to a certain extent,” he pointed out.
Sivasankar said the state budget has included a scheme under which a committee can approve a certain level of funding to a startup if it was found to have received ‘genuine’ orders for its product or service. With that recommendation, the startup can go and secure financial assistance from State financial institutions like Kerala State Industrial Development Corporation Limited (KSIDC) and Kerala Financial Corporation (KFC).
“The first disbursement will be made in April. I hope banks will also join in this endeavour in a short period of time. When we put this framework into practice, it will help solve a very big challenge being faced by these companies,” he added.
“Another interesting announcement made by the government is the ‘impact funding’. One thing which Kerala has learned in the aftermath of the last two floods is that we need to put a premium on sustainability. As per the impact funding scheme, any startup that is going to work on any of the Social Development Goals (SDGs)-related themes, will get special financial support for investing some money into kick-starting the process,” he said.
“The third thing we are planning is the introduction of a very transparent system to channelize the Corporate Social Responsibility (CSR) funding into the startup ecosystem. We have already created a set of incubators across colleges. Putting CSR money into incubators is one aspect. But more importantly, it’s about channelizing CSR funds through the incubators to the startups,” the official added.
On the impact of the event, he said: “This edition of Seeding Kerala actually created the situation wherein the participants could go back with confidence as the ambassadors of the startup ecosystem of Kerala.”
Virginia Tan, Co-founder & CEO, She Loves Tech, was the Chief Guest at the concluding session of the event. Dr. Saji Gopinath, CEO, KSUM, was also present.
The investment summit brought together leading figures in the country’s startup ecosystem besides senior government officials.
Kerala Startups Solving Unique Problems: Anil Joshi
Kerala has a very vibrant ecosystem for startups that is not just restricted to Kochi or Thiruvananthapuram but is rapidly moving to other smaller cities of the State, according to a leading angel investor who was speaking at the two-day Seeding Kerala 2020.
Anil Joshi, Managing Partner of Unicorn India Venture, who has been investing in various startups from Kerala, said, “I am very happy to share that most of the startups in Kerala are engaged in solving unique problems”.
Startups focused on finding solutions for solving the common man’s problems have more prospects in terms of achieving sustainability and economic growth, he added.
Day one of the fifth edition of Seeding Kerala 2020, organised by Kerala Startup Mission (KSUM), saw investors looking for innovative ideas from startups.
At the session titled ‘Where will I put my money in 2020 and beyond,’ speakers pointed out the importance of having startups with unique problem-solving abilities.
One of the panelists, Mahesh Murthy, Founder & Director, Exseed Space, said, “We look for startups that can be paired. We mostly invest in space tech and look for revenues from the early days. One of the best ways is to grow along with companies having similar interests.”
Complementary companies are essential for growth as they bring in business opportunities for each other, said Padmaja Ruparel, Co-founder, Indian Angel Network and Founding Partner, IAN Fund. “We invest in companies that are focused on sectors that cater to the urgent needs of the country. Having said that, for optimizing the growth parameter, one needs to look at companies that can be pitched together. We have a company that works on waste management. Similarly, we also have invested in a company that focuses on leather products made of waste. So, it is very interesting to see how they could work together,” she said.
On the inaugural day, the summit focused on investor awareness, investment opportunities and strategies, and co-investment opportunities and associated risks.
There was also a discussion on ‘My first seed round – Mistakes I made and lessons learnt’. Curated by angel investor Robin Alex Panicker, the session saw participants speaking about taking funding and the challenges involved.
Deena Jacob, Co-founder, Open Financial Technologies, said, “It is important to see from whom you take the money and whether the investor believes in your idea, and trusts your ability and philosophy. The thought process of both needs to align for future growth.”
Abhi K, CEO, Carestack and Arjun Satheesh, Head of Operations, underlined the importance of communicating every decision to the investor. “We have had our differences, but every decision was discussed and informed,” said Arjun.
Other panelists who spoke included Shihab Muhammed, CEO, Survey Sparrow and Rajan Singh, Founder, Concept Owl.
The day also witnessed a riveting discussion on ‘Opportunities in She Economy’, where the speakers discussed about the challenges being faced by women entrepreneurs and the gender disparity they have to overcome.
Seema Chaturvedi, Founder & Managing Partner, AWE Funds, said, “Less than three per cent of venture funding goes to women businesses. It shows the serious gender disparity.”
‘Startup Investment has More Growth Potential’
Investing in future innovations offered by startups is better and more sustainable rather than putting money in bigger established companies, the brain behind a well-known travel aggregator said at the fifth edition of Seeding Kerala 2020.
Rolf Schromgens, Co-founder & Ex-CEO of Trivago, said, “I would personally prefer investing in startups as the scope of growth is much more compared to established companies.”
At a session titled ‘Beyond the money: Creating value through support services,’ speakers pointed out the importance of startups attaining sustainability through various mentorship programmes and guidance.
Vinit Bansali, Vice President, Orion Ventures Partner, said, “We have a mentorship programme called ‘Misfit’ to help startups understand the areas to evolve. The idea is to provide them a platform beyond funding; to help them achieve their vision!”
Echoing similar sentiments, Rolf said, “It is not just the money that flows into the company but the mindset of the investor as well. The founders and investors need to have an aligned vision or else it will be difficult to sustain the business.”
The investors also spoke about investing in healthcare and space sectors and their potential.
Vikas Kuthiala, an angel investor who has invested in healthcare startups, said, “Instant returns are not possible in sectors like healthcare. The gestation period is longer compared to software but the sector has great potential and needs to be explored.”
At a panel discussion on ‘Investing in the final frontier – Exploring opportunities in space technology’, the experts agreed that niche sectors have huge market potential.
Mahesh Murthy, Founder & Director of Exseed Space, pointed out that 35 per cent of the world satellites comes from India, yet investment in the space sector is just about three per cent.
The day also had panel discussions on ‘Creating impact with hardware’ and ‘Financing fintech innovation’.
Startups Bag Rs. 70 crore Funds
The startups that lapped up the funds include Sporthood, Astro-Vision Futuretech Pvt. Ltd., Bumberry, ILove9Months, Entri and ZappyHire.
Bengaluru-based Sporthood, a startup for sports enthusiasts, has got investment from SEA Fund.
Founded by Rahul Antony Thomas, Arun V Nair, Nikhilesh M R and Vikram Devare, Sporthood has a community of 30,000 children and adults subscribed to the platform. It has 21 established sports clubs across Bengaluru and Kochi.
Astro-Vision Futuretech Private Limited has got investment from matrimony.com, one of the largest matrimonial companies in India. It’s the first investment by the Chennai-based firm.
Astro-Vision has been providing Vedic-based astrology solutions to its consumers in more than 10 Indian languages, for over three decades.
Bumberry, a startup that manufactures eco-friendly and reusable cloth diapers, has raised fund from Kerala Angel Network (KAN), led by a group of investors. It is KAN’s maiden investment in a startup. Bumberry was founded by Kutty Krishnan, an educator by profession. Bumberry diapers come as natural bamboo cotton pads and pocket diapers.
US-based Equifin VC will be investing in Maternia Care Technologies Pvt. Ltd., which owns the brand ILove9Months, a women-led maternity-focused startup. It is also the maiden investment venture in India by the US firm.
Another startup Entri, a learning app in local language that has over 1.6 million users, is funded by Good Capital. Founded by Mohammed Hisamuddin, Entri began functioning by providing a database of questions for government recruitment examinations in Malayalam.
Smart Sparks Angel Network will invest in ZappyHire, which gives companies the flexibility to use various tools they prefer, based on their hiring requirements, such as assessment and candidate profiling