The government of Kerala has jumped into the fray in trying to boost startups in the state. Historically, the state of Kerala has not had a huge success in attracting investments in large industries due to various reasons.
To encourage the youth in the state to bring their bright ideas into fruition, the state government has now come forward to set up a special fund of Rs 500 Crore ($78million).
This fund would be parked with the Kerala Startup Mission (KSUM) and this agency will identify viable startups and the investment in such companies will be made via reputed VCs who have to pitch in with their part of the investment also.
The arrangement with these venture capital funds would be that the business needs to be anchored within the state and that whatever funds are committed in each startup from KSUM, the corresponding contribution from the VCâ€™s side has to be double that figure. The VCs to be selected for such collaboration will be picked by KSUM.
The state government believes that the government or even a dedicated body like KSUM may not have the ware withal to understand or to evaluate these business proposals in a professional way and that is the reason for bringing in the VCs.
At the same time, the outside investor should also have some stake in the future of the project and that will only come with their committing a higher quantum of exposure in the startup. It is a kind of win-win situation the state is hoping to bring about.
KSUM itself was operating under another name earlier, Technopark Technology Business Incubator (TTB-I). The functions of this body have now been transferred to KSUM. It is believed that KSUM already has around 750 projects under its umbrella.
Unicorn India Venturesâ€™ Fund is one such VC in which KSUM has invested Rs 10 crore and there are others in the pipeline as well.
If the startup ecosystem in the state gets a fillip through this latest effort by the Kerala government, it augurs well for the state.