The latest States’ Startup Ranking 2019 has left the Telangana government stumped, with the state scoring zero for incubation support, seed funding support and venture funding support. The Telangana government, which has often been lauded for developing Hyderabad as a startup capital, has now registered its protest with the central government and has asked it to re-evaluate its score.
Under other parameters, Telangana scored 1% on awareness and outreach, 15% on institutional support, 37% in simplifying regulations and 34% in easing public procurement.
This assessment and the rankings has left the state surprised, especially because of the aggressive push state IT minister KT Rama Rao has given to the state’s startup industry since he took charge of the ministry in 2014. He set up an incubation Centre in Hyderabad called T-Hub in 2016, which has attracted global companies such as Facebook, Intel, Uber, Boeing, Microsoft, Samsung, Qualcomm, among others as corporate partners.
According to the state's Principal Secretary for Industry and Commerce and IT, Jayesh Ranjan, the state is of the opinion that it has done a lot more than what the rankings reflect, and they have asked the Centre to re-value the rankings.
“It is fair on our part to bring it to the knowledge of the government of India. There may have been a mistake in calculations. There are three items where we got a score of zero. We have clarified with the Centre that the actual situation is much different and have furnished all the supporting information. We have asked them to verify their records and re-evaluate and review our ranks,” Jayesh told TNM.
Telangana has over 30 state-supported incubators and dozens of private ones. Among the popular ones are KTR’s brainchild T-Hub, spread over 70,000 square feet, housing over 200 startups. There is also a women entrepreneurs-focused incubator WE-Hub and CIE, which is among the oldest in the state.
The state’s startup ecosystem too was surprised to see the state rank poorly, especially when it comes to incubation.
Ramesh Loganathan, Professor of Practice (co-innovations) at IIIT-Hyderabad, who was also the interim Chief Innovation Officer for Telangana before RedBus founder Phanindra Sama took over, said that the rankings seem like a terrible oversight, especially Telangana getting zero for incubation.
“Even if they are ranking the state only based on government efforts, Telangana has one of the most organised efforts is in the city. No other state has an entity like T-Hub and WE-Hub, and the upcoming makers facility T-Works, which will be largest in the country with state-of-the-art machinery. Telangana also has a state innovation cell, over 30 state incubators, agri-focused labs and defence lab,” Ramesh says.
He also says that Telangana has the largest number of central government-funded research labs (non-academic), all of which have incubators in them.
“State supported incubation in Telangana is highest in the country. Whichever way you look at it, incubation can't be zero. It is as far away from reality as possible,” he added.
According to the Centre’s report on Telangana, under the incubation support parameter, it mentions that the evaluation is based on “setting up of incubators supported by the state governments to release funds to the startups, thereby creating a unique mechanism to provide subsidised incubation and operate acceleration programmes in partnership with the industry.”
While the report talks about T-Hub, IIIT-Hyderabad and the work they do, it hasn’t mentioned reasons why a score of zero was given.
Harsha Bavirisetty, COO of an electric mobility startup Gayam Motor Works in Telangana, says that while he is not aware of the parameters based on which Telangana was judged, it is very surprising that it has been given zero points for incubation. Gayam Motor Works was a T-Hub incubated startup.
“When we launched our electric bike, we were introduced to Uber through T-Hub and were able to demo to the Asia-Pacific head of Uber and were exposed to markets in Canada, Singapore, Hong Kong and UK through T-Hub. The corporate programs run by T-Hub also helped us work with Intel. We also got a chance to meet many big industry veterans like Ratan Tata,” he says.
However, Harsha points out that there are some missing links in the startup ecosystem, one of which is that many investors and fund houses do not have a physical setup in Hyderabad like they do in Bengaluru, Mumbai and other large cities.
“Having a presence here will give them a better exposure to the startup ecosystem here. That is the only missing link,” he adds. Telangana scored zero in venture funding support.
Vikrant Varshney, Co-Founder & Managing Partner at SucSEED Venture Partners based in Hyderabad, says that while whatever is happening in III-T, T-Hub or Indian School of Business (ISB) itself is a good enough a reflection on what happens in incubation.
On the seed funding front too, there is activity that happens in the state, he says. Telangana scored zero on seed funding support as well.
“In IIIT-Hyderabad, we run the Avishkar program where we offer startups funding and have also invested in several startups in the state. We are a seed fund focusing on early stage companies, so for someone to say there is nothing happening in the state could be a reflection of their wrong understanding of the term,” Vikrant says.
Vikrant also says that the government offers support to startups by becoming their first customer if the product is relevant to the government. “I haven’t seen other states doing that, maybe apart from the Rajasthan government. If you are a startup with the right product fit, Telangana government will readily become your customer,” he adds.
Mani Kishore Vajipeyajula, co-founder and CEO of Hyderabad-based plastic recycling startup Banyan Nation also says that customer validation and traction is one of the most important things for a startup, and the Telangana government was one of the first customers for Banyan’s data intelligence platform. Banyan Nation is also the first ever Indian firm to win the Dell People’s Choice Award for Circular Economy Entrepreneur as part of the Circulars Awards at the World Economic Forum being held at Davos in January 2018.
The state government is now hoping that the Centre re-evaluates documents submitted by the state and fix its ranking and score. "This is a correctable mistake and they should be able to correct,” Jayesh said.