One of the world’s popular tourist destinations — Kerala — might be wearing a deserted look in the wake of coronavirus, but ‘God’s Own Country’ has different plans brewing. The state has now become a breeding ground for innovative startups that are breaking the typical mould of Indian startups and innovating in new areas, unlike most other states. This is the biggest strength for Kerala in a digital world, says Dr Saji Gopinath, CEO of Kerala Startup Mission (KSUM), the government’s nodal body that has supported and nurtured startups at the grassroot level and till the global stage.
From robots offering sanitizers to manufacturing safety kits, curbing fake news and disposable PPE kits to UV devices, ventilators and smart video conferencing tools, Kerala startups are capitalising on the opportunity that Covid-19 has presented in the form of challenges and openings. The list of startups innovating is endless.
In the last four months, the state has added close to 300+ startups, where 50% of the total 2700 startups have pivoted their products in line with the Covid-19 times, Gopinath told Inc42.
He added that nearly 10-15% of the startups are now expanding to other geographies, particularly in edtech space. KSUM followed a four-pronged approach to revive startups, where they helped them in minimising the cost, earn a steady revenue and extend their runway, technology assistants in terms of leveraging productive and communication tools, continuous guidance and support from industry experts, thought leaders and stakeholders, and hand-holding of startups to pivot their products and solutions, which is relevant to the Covid-19 prevention efforts.
For instance, social media and digital communication startup QKopy, incubated under KSUM, recently pivoted to developing an app for the Kerala state government called GoK – Direct Kerala. The app provides reliable information and updates related to coronavirus to the users (both on smartphones and feature phones) directly from the authentic source, thereby eliminating the panic created around the Covid-19 pandemic fake news.
In a bid to address the shortage of medical supplies in the country, Aerofil Filters, a startup involved in supplying air filters has shifted its focus to manufacturing N95 masks, where it dispensed close to 2 Lakh masks in a short duration of time. Similarly, Asimov Robotics gave its robots a new purpose and ran a campaign to check the spread of coronavirus. The robot came to light after Thiruvananthapuram MP Shashi Tharoor shared it on his Twitter.
— Shashi Tharoor (@ShashiTharoor) March 17, 2020
With its partnered universities and colleges, KSUM has also been running several virtual workshops and demo day to showcase products and tools developed by startups and students during the lockdown period. “All of these innovations are not just ideas, but have real implementations and use cases,” affirmed Gopinath.
Struggles In The Times Of Covid-19
Kerala is also home to plenty of hardware innovations led by Maker Village where the likes of Genrobotics and Sastra Robotics, NAVA Design and Innovation among others were incubated. These startups face minor hiccups during the pandemic, primarily in the supply chain and logistics functions as many of these startups were dependent on Chinese products. “Since there was a complete disruption in the supply chain, many of the hardware startups have now started to source from other countries such as Taiwan and Europe. However, the cost of the production has increased significantly,” Gopinath added.
Also, the delivery of shipments and assembly of products across the country has become a major hindrance for these startups. For instance, Genrobotics which has developed a manhole cleaning robot has customers across the globe, in these stressful times, it has been facing hiccups in terms of shipping their finished products to its clients, alongside the challenges in the on-field implementation.
Similarly, Aerofil Filters, which pivoted to manufacture N95 masks in the times of pandemic had to go through its own struggles. The startup had to meet the standards and protocol, and finding facilities to test their product, materials and components was a challenge.
“This is not only for Kerala startups, but hardware startups across the country have been dealing with the inefficiencies in the supply chain and limited facilities,” said Gopinath, talking about the need for a localised solution in the country to manufacture hardware components such as sensors, chips and motors among other equipment, thereby making it accessible and affordable.
Startups Search For Funding Amid Pandemic
“Obviously, to help startups scale their business, we need fresh funds,” pointed out Gopinath. He said the total amount of funding received by Kerala startups in the last four months, where startups received close to INR 240 Cr investments from various angel investors, accredited early-stage venture capital firms and others.
Besides this, KSUM said that it worked closely with Kerala Financial Corporation (KFC) and Kerala State Industrial Development Corporation (KSIDC), where startups could avail up to 10 Cr loan at 10% interest rate, without collateral security based on the recommendations of an expert panel head.
In addition to this, KSUM internal investment team also provided funding to early-stage, the second level of seed funding, and offered grants to innovative ideas.
“Funding was not an issue. During the crisis, many of the startups did face financial crunch, and these schemes helped them fuel their business and extend their runway. In fact, we have seen some of the startups with INR 10 Lakh, doing INR 5 Cr business per day, where they have witnessed 60x the revenue growth in their business,” claimed Gopinath.
Paving A Way For Strategic Collaborations & Partnerships
As time progressed, KSUM realised that Covid-19 was here to stay, and it is going to affect not only startups, but also small and medium businesses (SMBs) and large corporates. In the process of evaluating the situation, it started to identify various startups, where their solutions and products could be implemented or integrated. In fact, KSUM has partnered with leading industry bodies, including KSIDC, Bharat Petroleum Corporation, Internet and Mobile Association of India (IMAI) among others.
Gopinath said that they identified several pain points faced by SMBs and large companies during the crisis, and guided startups to address those challenges through a robust pitching model, where KSUM saw a lot of linkages and partnerships happening. Further, he said that the five-days demo day event which was started last month has worked in favour of startups, where they can participate to showcase their solution and product and work alongside SMBs and large corporates to minimise cost and optimise resources. “Many of our startups used to sell their products in India and abroad, so, in the upcoming demo days, we will be seeing a lot of their innovative solutions getting deployed across the country with a lot of stakeholders participating in it,” he added.
“Now, early July onwards, a majority of the startups are working at original capacity,” confirmed Gopinath.
Parallelly, due to the global pandemic crisis, close to 5 Lakh people have come back to Kerala from abroad and other states, where 20-25% of them are professionals, and Gopinath said that this is a huge opportunity for us as these professionals can now support the startups in the state or set up a new venture. For this, KSUM said that it will be starting a weekly ‘future plans programme,’ where it will be connecting with engineering colleges and premium institutes alumni across the state and welcome them on board to fuel the startup ecosystem.
“We believe that model of small, lean and agile startups has proved to be successful in the pandemic situation, and we are really happy to be part of this journey,” he added.
Strategy Going Forward
Gopinath said that the pandemic has paved a way for strategic investors. Previously, the ecosystem was filled with venture capitalists, angel investors and early-stage venture capital firms, and now the transition is happening, where a lot of strategic investors are forraying into India.
“Majority of the Kerala startups may not have 200X returns, but they have solid fundamentals, who will actually help solve real-world problems,” he concluded.