Building An Ecosystem From Scratch: Andhra Pradesh Startups Pick Up The Innovation Baton

“Over the years, the talent pool has been moving out of Andhra Pradesh to Hyderabad or Bengaluru immediately after graduation. A similar trend can be seen in startups too, this has in many ways affected the Andhra Pradesh startup ecosystem,” – Anudeep Chappa, associate director, TiE Amaravati.

As the startup wave keeps getting stronger in India, state-level policies and initiatives are making a huge difference to boost the tech ecosystems at a regional level. While the central Startup India policy is guiding the direction of the overall tech industry, state-level policies determine which areas need the most attention in a state.

Despite being a state in India for decades, Andhra Pradesh (AP) has recently had to adapt to the changes in the region thanks to the formation of Telangana. While earlier the state enjoyed the benefits of housing the IT hub of the country, Hyderabad, after the division of the state and the formation of Telangana, AP suffered a serious setback. Adding to that, the state shares its boundaries with states such as Tamil Nadu and Karnataka home to already-revered startup hubs Chennai and Bengaluru.

Thanks to this, the talent pool and the wave aspiring entrepreneurs keeps moving away from AP to more beneficial options available to them, including in Hyderabad.

“Serious entrepreneurs have been moving to nearby successful ecosystems. AP is yet to find the demand-supply match for all the requirements of an ecosystem,” added Chappa.

Although still recovering from after the formation of Telangana, AP earned the top rank in the DIPP and World Bank’s Ease of Doing Business Index and according to DataLabs by Inc42, was home to more than 800 startups in 2018.

Over the years, the state has enjoyed the attention of many prominent incubators and accelerators such as NASSCOM 10K warehouse and Startup Accelerator India. While NASSCOM had an infrastructure and space in the state earlier, in 2019, the apex body for the IT industry of the country moved out of the state and decided to help the startups virtually.

“The journey that started with 35 hand-picked startups has today grown to over 300 startups as a result of periodic screening processes and promotional campaigns. Among these, over 120 startups are being supported by state-run incubators and the rest being offered market access, PoC (proof of concept) implementation, mentor and investor facilitation services in convergence with ecosystem partners,” Pranay Siddhartha K, ex-associate director, operations, APIS, told Inc42.

How AP Govt Supports Startup Growth

Andhra Pradesh has made slow and steady progression in terms of the startup ecosystem and the government has actively participated in the rise of the tech economy. Among the initiatives of the government are policies such as state’s Innovation and Startup Policy 2014-2020, which balances both fiscal and non-fiscal incentives, such as:

• Setting up of incubators or accelerators
• Innovation fund of INR 100 Cr
• Performance-linked assistance of over INR 12K per month for startups and more

In addition to that, the government has taken several other measures in a bid to boost the startup ecosystem that seemed to be slowing down, such as:

• Andhra Pradesh Innovation Society (APIS) established in 2014
• Launched the Fintech Valley Vizag initiative in 2016
• Launched TiE Amaravati Chapter and Andhra Angels in 2018
• Partnership with Anthill Ventures for a market access programme called A-Scale

Andhra Pradesh Enablers Keep The Tech Spirit Alive

While the government is one of the biggest and strongest enablers in AP, several other bodies are contributing to the startup story. Andhra has seen many active and prominent enablers from the state come through the ranks and support the development of the ecosystem.

Investors, Mentors and Funds:

According to DataLabs by Inc42, Vizag in AP alone is home to over nine investing organisations. Among the most prominent names in these organisations such as:

• Alcove Partners chooses to focus on product companies. The organisation aims at providing not only fiscal help to the startups but also provide mentoring and introductions to other investors to help them in their growth.
• iTAAP, or the IT Association of Andhra Pradesh aims to foster the growth of the IT and ITES industry in AP. To create a startup and innovation culture across the state, its members provide both investment and mentorship to tech startups.
• Govin Capital, set up by Anand Govindaluri, is headquartered in Singapore and actively invests in startups In AP. It works on three parameters — innovate (recognising and acknowledging innovative ideas), incubate (helping startups with mentorship and go-to-market strategies) and invest (provides funds to the startups and ensures entrepreneur education).

Among the most prominent investors and mentors from the state are names such as:

• Ravi Eswarapu (Alcove)
• MV Sri Bharath (TiE Amaravathi)
• Srinivas Savaram (Alcove)
• Winny Patro, CEO and cofounder, Recordent
• Y. V. Ratna Kumar, chairman and managing director of APIMS

Coworking Spaces

Coworking spaces from the state have been a major propellent of the AP startup ecosystem. As per DataLabs by Inc42, the regional hub of the state, Vizag alone boasts over 11 coworking spaces. Among these, a few most prominent ones are:

• My First Office works with the primary aim of providing physical space to early-stage and growth-stage startups and also emphasises on building and supporting an open source community (technical and non-technical) for developers and creators.
• NANOSPACE boasts of big-name clients such as OYO and many startups such as Design Hub, TurtleMint and others. It provides young entrepreneurs with affordable office spaces as well as networking opportunities to boost growth and market-access.
• Sunrise Incubation Hub is a coworking space run by the state government and is part of the NASSCOM 10K initiative. Select startups get the opportunity to utilise the coworking facilities for free.

Accelerators

From the accelerator community of the state are many names such as:

• SAI or Startup Accelerator India was set up by Govindaluri. A global innovation network, this accelerator focusses on the early-stage startups and claims that its six-month acceleration programme saw applications of over 150 startups last year.
• Xlr8AP is a technology business accelerator powered by the Federation of Indian Chambers of Commerce and Industry (FICCI) and IC2 Institute of The University of Texas at Austin. This accelerator provides startups with training, advanced capacity-building, incubation and acceleration of tech companies into the global marketplace and more.
• Gastrotope is a ‘Farm to Fork’ accelerator. It is a joint venture of three companies, namely, Mistletoe, GSF India and Infobridge. While Mistletoe is a Japanese investment firm, GSF India is a tech accelerator in India and Infobridge an Indo-Japan business consultancy firm. This accelerator focusses on food producers (including farmers, fishermen, distributors and other stakeholders) and chefs to provide them with the right acceleration to enter the market as well as scale-up.

Incubators

While neighbouring Telangana boasts the T-Hub incubator, the incubator community within Andhra Pradesh has seen new names come up in recent years.

• The Atal Incubation Centre in SKU (Sri Krishnadevaraya University) is an incubator providing startups with both professional as well as infrastructural support. It is providing the startups with services such as business plan writing, mentoring, intellectual property protection, accounting and financial management services and more.
• AMTZ or Andhra Pradesh Medtech Zone is also working towards providing incubation to the tech startups operating in the medical sector. The state government gave 270 acres of land to set up this zone. For startups working in the zone, it claims to provide scientific facilities required to manufacture medical devices as well as over 200 independent manufacturing units.

Other prominent names in the tech incubator community include NASSCOM 10K warehouse initiative and SAI. While SAI also provides startups with acceleration support, NASSCOM is virtually incubating startups by helping them interact with the right individuals and businesses in its wide network.

Startups Taking AP Towards Development

“We do have advantages with us as well that are helping the startups in the state. Currently, AP has an agrarian belt in about four districts, industrial segment along the Tamil Nadu border, few Pharma and IT establishments in Visakhapatnam. Vijayawada has been a trading centre being at the junction between Hyderabad, Chennai and Kolkata,” Chappa told us while talking about the areas that startups in AP can capitalise on.

There are many startups that are making their way through the local markets and hitting the national level. Among them are names such as:

• Dronamaps: Incubated at NASSCOM 10K initiative, this is an end-to-end platform to collect, process and visualise drone data. Leveraging AI it helps in drawing deeper insights based on the drone surveillance maps. Through NASSCOM, it got an opportunity to showcase its products at the NASSCOM Product Conclave, NILF World Congress and the NASSCOM Innotrek Programme in Silicon Valley.
• Fluentgrid: The software product startup is working to replace the traditional energy grid with a smart grid that acts as a nervous system for smart cities running all the utilities, to promote sustainable communities.
• Teacherr: The winner of the BIGShift Pitch in Vizag, Teacherr is working towards improving the quality of education in India by building an exclusive professional community for educators and helping them get better professional opportunities.
• Eruvaka Technologies: An aquatech startup, Eruvaka develops on-farm diagnostic equipment for aquaculture farmers to help them reduce their risk and increase productivity. In 2018, the startup raised Series B funding led by Nutreco and existing investor Omnivore. With the funding, it entered into a commercial partnership with Nutreco, to help scale globally.
• anyEMI: A fintech startup, it has developed an end to end platform for EMI payments, utility payments, insurance and more. They have collaborated with various municipal corporations to ease utility payments. One such collaboration is with Indane gas for inventory management as well as online payment services

“The ecosystem in the state currently needs contribution from all stakeholders and a community effort. It needs to evaluate itself regularly and strategise on the plan ahead,” Chappa said about what startups can do to capitalise on the state’s emerging innovation ecosystem.