The success story of Kerala's Startup Village

With plans to create 1,000 product firms in 10 years, Startup Village in Kerala is set to leave a mark on India's IT landscape.

As you enter the 240-acre Kerala Industrial Infrastructure Development Corporation (KINFRA) Hi-Tech Park at Kalamassery near Kochi, the Kerala government's focus on the sector is apparent.

At a small facility, some distance into the park, a group of youngsters is working on a revolution.

The Startup Village, a facility in the KINFRA Park, is a public-private partnership model technology incubator. It is promoted by the department of science and technology (DST) under the central government, Technopark (Thiruvananthapuram) and the private sector.

...

Though Kerala had the country's first technology park (Technopark) in 1990, it saw few success stories after that.

SmartCity, a project the state believes would change the information technology landscape, hasn't taken off yet.

Incubators in India usually foster student entrepreneurship in educational institutions such as the Indian Institutes of Technology, National Institutes of Technology and the Indian Institute of Science, through industry-academia partnerships.

...

Birth of the village

The idea of Startup Village was conceived in 2008 by Sanjay Vijayakumar and his team (the group also founded MobMe, a start-up in Kerala), students in the College of Engineering, Thiruvananthapuram.

"When we started, we had informed the DST we would incubate 48 companies in five years. But the response from the student community was immense. The initial project was charted for five years. Within 12 months, we have fulfilled all our commitments and would submit the project completion report to the government," said Sijo George Kuruvilla, chief executive of Startup Village and co-founder of MobMe.

Startup Village, registered as a not-for-profit organisation, started operations in 2012 and received grants worth Rs 5 crore. Of this, Rs 2.5 crore came from the government, while the private sector accounted for Rs 2.5 crore.

...

S Gopalakrishnan, co-founder of Infosys and chief mentor of Startup Village, says, "During one of my visits to Technopark in Kerala, I met a team of youngsters who wanted to create a company out of Kerala. They formed MobMe. Today, the same team wants to create an ecosystem for students in Kerala."

The 5,000-sq ft incubation centre in the park has four halls that house 13 companies. On a wall of the innovation room (one of the halls) is a portrait of Gopalakrishnan, along with an inspirational message for the innovators of tomorrow: "We started Infosys in a room of about this size; it is your turn now."

Startup Village is the first centre in the country and the second in the world to have 1 gigabit-per-second connectivity.

...

Merely a year into operations, it has around 600 applications and about 200 companies are on incubation mode here. Of these, students account for 66.

In the next 10 years, the incubator aims to create 1,000 start-ups out of Kerala. Though the centre is open to all across the country, those running it hope a company created here would also have operations in Kerala.

The centre has helped many start-ups such as MindHelix, WowMakers, Yummybay, Finahub and Asimov Robotics make a mark in the market. MindHelix, founded by Kallidil Kalidasan, 24, has already become part of the US-based Alchemist Accelerator Programme for enterprise product start-ups.

...

As part of the programme, the company has received $30,000 in seed funding, as well as an opportunity to showcase its products to Fortune 100 companies in the US.

The centre aims to create a group of start-ups under one roof. This would help the companies collaborate, co-create and innovate.

Any student with an idea can use the facility's innovation zone. Once an idea is finalised, the project is shifted to the discussion room. If accepted by the board, the project is eligible for space in the incubation centre.

For students such as John Mathew, Joseph Babu and Binoy Joseph, it would have been impossible to turn their summer project into a company and business idea, had it not been for Startup Village.

Their company, Riafy, works on social media analytics. The company's product can predict the success rate of a movie, its collections, as well as theatres in which a particular film is likely to be successful -- with 90 per cent accuracy.

...

John Mathew, chief executive of Riafy, says, "We did this as part of our summer project in college. We decided to approach Startup Village and it helped us set up the company."

Of the top 20 promising start-ups from the Village, HedCET, STAD, Bluebag, QEdge Code Studios and DION are student innovations.

Policy changes

The efforts of the incubation centre to push reforms have started showing results - understanding the need to nurture an entrepreneurship culture, the state government has brought out a policy on this front.

It said universities would provide student-entrepreneurs enrolled in incubation programmes in technology business incubators grace marks of up to four per cent, as well as attendance relaxation of up to 20 per cent.

In its recently-announced budget, the state government also set aside Rs 75 crore for various start-up schemes.

...

Kerala Chief Minister Oommen Chandy says, "The state needs to grow, in terms of investment. It should also gain a foothold with regard to productivity, especially in modern avenues such as IT and related fields. Though Kerala made headlines by coming up with the first technopark in the country, there hasn't been impressive growth in the IT sector, in terms of expansion, investment and employment generation."

Mentoring

Apart from Gopalakrishnan, Startup Village has roped in leaders such as MindTree chief executive Krishnakumar Natarajan, former Yahoo! research and development India head Sharad Sharma, angel investor Freeman Murray, Nishant Verman of Canaan Partners and Sasha Mirchandani of Kae Capital.

"It is an important initiative for Kerala; young entrepreneurs have a self-help community to support growth," said Sharad Sharma.

...

Ecosystem

Infrastructure partner Kerala Industrial Infrastructure Development Corporation is constructing 1,00,000 sq ft of infrastructure space; an additional 20,000 sq ft is ready. For student start-ups, the infrastructure is provided free of cost for a year; for the rest, the fee is Rs 1,000 per seat.

Another initiative by the centre, in partnership with the Rajeev Motwani Foundation, is SV Square, which provides start-ups and students from Kerala access to Silicon Valley experience. A Startup Village team has also visited the UK.

"A start-up from Kerala is now selected for a US-based accelerator programme. With our 'Startup Village to Silicon Valley' programme, we are sending students to the Valley. These are some signs of what we are trying to achieve," says Sanjay Vijayakumar, chief executive of MobMe and chairman of Startup Village.

...

Start-up school

Another feature of the incubation centre is the Startup School. The campus offers accommodation to students during trying times.

As part of a three-month residential programme, under the guidance of technology entrepreneur Freeman Murray, students interested in creating mobile and web start-ups are provided food, a place to sleep and access to the internet. The programme also offers a full-time resident mentor.

Under the leadership of Gopalakrishnan, a Startup Village technology leader has formed the Kerala Angel Network, which aims to create a network of 1,000 successful Malayalee entrepreneurs.

...

Gopalakrishnan says, "The perception of Kerala is changing. There are many successful businessmen across the globe who have roots in Kerala. With this network, we intend to bring them together and create a network to help start-ups."

The 'Startup Village Fund', an angel fund of $10 million, would invest $20,000-250,000 in companies that show potential for growth. Members of the fund wouldn't hold board seats.

If required, they would take up minority positions in start-ups and exit in the next round of investments, to ensure the founders have substantial stake in the company.

With the necessary framework in place, can Kerala create a new tech culture and groom 1,000 start-ups? Time alone would answer.