When KT Rama Rao, Sircilla’s MLA and the son of Telangana Rashtra Samithi K Chandrasekhar Rao became the Minister for Information Technology in 2014, he placed a lot of focus on making Telangana — and more specifically Hyderabad — a startup hub. Various initiatives such as an IT and startup policy, the establishment of startup engine T-Hub, Research and Innovation Circle of Hyderabad (RICH) and a state innovation cell helped put Telangana on the global startup map.
Through these initiatives, the startup activity in Hyderabad and Telangana accelerated, and even saw some global flagship events such as the Global Entrepreneurship Summit come to the country for the first time.
But now with TRS back in power, the question of how the government will work to further improve the startup ecosystem of the state remains. TNM spoke to a few entrepreneurs and ecosystem players to understand what they hope will happen during the TRS government’s second term.
Mukesh Chandra, the co-founder and CEO of Paymatrix, says that there is a need for more awareness to be created on the availability of funding opportunities for startups in their initial stages of growth.
“While significant funds are earmarked for investments into startups, many of the startups don't know the right channel to reach them. In many cases, the application process is cumbersome and exclusive, so the majority in need are left out. Better presentation of information on the Fund of Funds and the available fundraising opportunities can help,” he says.
Meghana Kambham, founder of health-tech startup CarenGrow shares a similar view. She says that while the government has helped startups in a big way in terms of exposure and mentoring opportunities, funding matters at the end of the day. “The government should invest directly in startups, rather than just promote them. Promotion helps on a very superficial level. Similar to the Andhra Pradesh innovation society, which invests directly in startups, the Telangana government also needs to invest in startups directly, which will help a great deal in their growth,” she says.
Ashok Reddy, CEO of coupons and deals marketplace GrabOn, differs. He says that the government has given startups access and liberty with respect to funds, which has helped the state grow into one of the country’s biggest technology startup hubs.
“In the coming years, we hope there are more startup policies that are helpful in bringing out new ideas that will lead towards more innovation and economic growth,” he says.
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, also echoes that the government needs to come up with specific initiatives to aggressively enable promising startups in order to ensure market success and rapid growth, as it been sufficiently targeted so far. It will also ensure that many Hyderabad-based startups march towards becoming unicorns.
According to CarenGrow’s Meghana, one of the ways to ensure startups have market access is for the government is award more tenders to startups.
“The government promised this, but it hasn’t been done enough. It still comes down to competing with large companies such as Microsoft which makes them a better option, given there is a criterion of a certain amount of revenue. The government needs to relax this and award more projects to startups and help them work with schools and companies. This gives startups a better reach to the market,” she says.
Umesh Thota, founder of cybersecurity startup Authbase holds the same opinion, and says that there should be a startup inclusion program. “Most startups would love to have government as a customer, except for the fact that the process of putting up a tender is very new and time consuming for them. It would be helpful if there is a startup inclusion program or an open house of startups, where they can showcase solutions for issues that the government or the industry is facing. The rest of the process also should either be fast-tracked or well assisted,” he says.
Availability of talent
Jay Krishnan, partner at Sri Capital and former T-Hub CEO, says there is a need to ensure that there is sufficient supply of quality talent, especially in the tech space.
From a startup point of view, Mukesh from Paymatrix says that most startups still spend a significant amount of time in hiring talent.
“The key challenges in the process are finding the right channel to hire and cost associated with hiring. We do believe that there is great talent in Tier-1 and Tier-2 towns too (apart from the cream talent in the esteemed colleges) who don’t have access to the opportunities floated by the startups,” he says.
Mukesh believes the reasons for this can be the lack of a proper open channel or a knowledge gap.
“Any initiative by the government to democratise the talent repository and sharing easy access to the same to all employers including startups can open up opportunities. There have been initiatives in this regard, but none have manifested into the right model and nor have they got the scale,” he adds.
Mukesh also wants the government to assist startups in the safeguard of intellectual property and patent registration. He says that central government initiative Startup India registration at the Department of Industrial Policy and Promotion (DIPP) offers a waiver on the application of patents, but the application fee is a very minor amount in comparison to the other charges involved in the patent application process including patent search, consultant fees and re-application fees.
“Even a discussion with patent consultants reveals that benefit to startup in real terms is limited. Streamlining the process, especially with a zone-wise listing of patent consultants and a comprehensive benefits to the latter linked to the completion of patent application and grant, will help,” he adds.
Speaking of assistance, Jay also brings up the issue of angel tax, that is currently a mammoth issue plaguing the startup industry.
“One of the key ingredients in any startup ecosystem is to ensure policies that assist the growth of innovation. Currently, if the draconian angel tax — albeit a central government issue — is not addressed, it will ensure that startups flee India. Given India’s income tax lens through which startups are penalised and the need to improve tech talent, I’d urge the TRS government to assist startups in these two issues,” he says.
IIIT-H Professor Ramesh also says that while there have been several domain-specific initiatives and national visibility for the startup ecosystem in the state, the next five years will be about creating some deep and visible results from this foundation.
“I feel two areas hold the opportunity to help us become a hub of deep IP and research-based innovation. First is to have some serious initiatives and incentives to seed startups coming out of research, directly from researchers or through support from researchers. With over 25 central government-funded research labs and over five academic institutions of national prominence, we will have amazing startups if there can be some mechanism created to connect this with entrepreneurs and incentivize creating market connected products,” Ramesh says.