Kerala: Powering through to 10,000 startups

How Kerala is boosting its startup sector — with incubations, networking and financial support — and aiming to hit the five-figure mark by 2020 Palai is too rich, and too well-settled to be a village. It is too mofussil, too agrarian to be considered a town. Its roads are smooth, the well-maintained houses large-fronted, and the street lights solar-powered, in the eco-conscious nouveau style. A majority of the population are engaged in Kerala’s earliest industry — plantations, growing rubber, tea, coffee, and spices. Some four kilometres from its centre, the St Joseph’s College of Engineering & Technology (SJCET) spreads out on a 56-acre campus that also houses business and hotel management schools. And it is from this small-big place that eight engineering students run Lamaara, a technology start-up they hope will save lives.

I met Anto P Biju, its marketing chief, at the first #Huddle Kerala networking conference in Thiruvananthapuram last month. Unlike many tech comrades in the audience, Biju spoke confidently about Lamaara’s main product, iBo, an easy-carry silicone bottle capable of cleansing dirty water of sediments, chemicals and microorganisms. “It can distil water from any source,” he said. “Many people don’t have access to clean water, and our product can solve that problem.” Last year, he and his partners — third-year engineering students — participated in the government-organised IDEA competition, pitching to a panel of experts that included M Sivasankar, Kerala’s Electronics and IT Secretary. Lamaara won a ₹2 lakh IDEA grant, making it possible to manufacture the iBO prototype.
So, the Kerala government funded a creation designed by some kids with zero guarantee of return on the investment.
Kerala: Powering through to 10,000 startups Making it count
Risky bets like that are part of the state’s game plan to encourage innovation in this place that you know for its loyalty to bandhs; where the artist Waswo X Waswo once burnt his artworks as protest against trade unions. Thomas Isaac, the finance minister in Kerala’s LDF government, recently said, “We have to look forward to skill-based knowledge industries. I believe in equity and social justice. I believe in distributing the cake, but to distribute it, someone has to bake a cake first.” According to the Kerala Technology Startup Policy of 2014, which set out a goal of having 10,000 startups here by 2020, much of the scope for future wealth and employment growth, ie ‘cakemaking’, lies with the entrepreneurial class.
The state’s efforts to create a startup ecosystem began with the Startup Village — an incubation facility jointly promoted by Technopark and MobMe Wireless. Since 2016, Kerala Startup Mission (KSUM) has become the primary government agency leading this effort. It has incubated 99 startups, and provided ₹4.8 crore in grants over the past two years. So is Kerala attempting a pumpkin-to-chariot transformation, into BengaluruVersion 2? No, says Saji Gopinath, CEO of KSUM. “Hyderabad and Bengaluru have existing ecosystems and the government has little role to play. In Kerala, our job is to bring investors, motivate them and educate them. And when a company is small, the state takes a risk.” His evangelism must convince parents to allow entrepreneurial kids to strike out on their own instead of haranguing them into corporate jobs; he must manage the fallout of contradictory policies at the central and state levels and offer young startups opportunities to grow.
The proselytising begins in schools, through Tinkering Labs and initiatives like the Young Innovators Programme. In 194 engineering colleges, KSUM runs Innovation Entrepreneurship Development Centres (IEDC), which have 10,000 student members. These centres run as companies do, with a student body that plays the role of CEO, COO, and CFO.
Kerala: Powering through to 10,000 startups Young ideas
KSUM hopes it will create young entrepreneurs like the ones behind Riafy Technologies. John Mathew, Joseph Babu, and four friends began developing apps as students, sitting inside Mathew’s bedroom at his parents’ home. They mostly worked on ideas based on relational intelligence, which means finding relationships hiding within massive amounts of data. Some years ago they created an algorithm that could use those patterns to predict behaviour and put it to a simple task: predicting recipes. Today, Cookbook by Riafy is preloaded on all SONY Android TVs; it is available in 23 international languages and has 5.5 million downloads, making it the second-largest recipe platform in the world. Moreover, Riafy has 40 apps live on Android and iOS stores. “We’ve never taken funding, all our apps are built in-house, and we are revenue positive,” says Babu. These 20-something engineers say they want to keep growing Riafy from Kerala, increasing its existing 25 million user base with more products. KSUM has also started two MIT USA Electronics Fabrication labs in Thiruvananthapuram and Kochi. Then there are government-run workshops, IDEA days for pitching, and networking events like #Huddle — billed as “Asia’s largest Start-Up Ecosystem Congregation” — linking entrepreneurs, investors and icons like CISCO, which just announced plans to set up a Kerala-based incubator for startups developing ideas in the Internet of Things domain.
Kerala: Powering through to 10,000 startups Adapt and improve
Valustat exemplifies a different model of Keralan entrepreneurship. Three years ago, Deepak Arackal, former head of Global Portfolio Solutions for ING Investment Management in Hong Kong, and his partners registered the company in Kerala. It works on a fintech platform to enable financial advisors and ensure the advice they provide clients is suitable, given their circumstances and attitudes. The longer term aim is to package this as a compliance tool to help institutions ensure the advice they provide retail clients is suitable, and stays that way.
The new players Rapha English: An online platform that teaches communicative English, using games to test and improve users. It is focussed on conversation styles and pronunciation.
Details: raphaenglish.com
I Love 9 Months app: A maternity wellness app that offers women fitness advice and services, including home-visits by birth companions or doulas. Nyokas Technologies: Focussed on personal safety products, Nyokas has developed the prototype for an intelligent textile that repels unwanted physical contact by conducting a mild shock, while its software can call the police for help.
Details: gust.com/companies/nyokas-technologies
Instio: A guest experience management system aimed at improving the feedback & response systems used in the hospitality industry. It helps management teams listen to customers in real-time, and derive actionable insights. Details: instio.co “Kerala is attractive because of the lower cost of setting up, and access to quality talent at reasonable costs,” says Arackal. “While Bengaluru et al have a better stock of technology talent, the attrition rates there would have imposed a high cost on our operations, given the need to train people in specialist technology skills for our product.” But for Valustat’s next phase of growth, its location could be a hindrance. “High quality risk financing is already difficult if you are situated outside India’s startup capitals, and policy hurdles such as Angel Tax almost force you to re-examine your assumptions about costs and advantages,” he says.
To counter these problems KSUM’s Gopinath presents a customised approach. For startups with revenue and experienced professionals, the agency says it can help with business development, creating opportunities for linkages to larger systems and support services. “We provide training, software and hardware support, help with registering the company, legal and recruitment support, and the government itself is a customer, because it is open to hiring startups without the tendering process.”
The Kerala government has also invested ₹10 crore in Unicorn Ventures, with the condition that the Mumbai-based venture capital firm invest twice the amount in Kerala startups. The deal allows the government to become a shareholder in the businesses that Unicorn invests in, thereby practising Gopinath’s maxim: “Put money into people and their ideas.” Unicorn Ventures most recently invested in Genrobotics, a Thiruvananthapuram-based startup which has created an exoskeleton machine that can clean manholes without human intervention.
A month after I met the students in Palai, Lamaara had become Lamaara Pvt Ltd, and secured its first customer. Federal Bank, Biju informed me, had just ordered one lakh iBo bottles to gift schoolchildren. And just like that, the risks seemed worth it.
Manju Sara Rajan is the former CEO of the Kochi Biennale and former editor of Architectural Digest India.
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