Decoding The Rise Of Kerala’s Startup Ecosystem: Funding, Landscape, Policies & More

With its literacy rate of 92.2%, Kerala has long been known as one of India’s most literate and skilled states. Not only this, the state has effectively linked schools, colleges, incubators, government institutions, and startups to create a well-organised ecosystem. This has contributed to the state’s excellent opportunities for innovation, investment, and entrepreneurship.

Over 4K startups were launched in Kerala between 2016 and 2021, with a total venture capital infusion of $551 Mn across 110 funding deals. Fintech and SaaS (enterprisetech) startups have remained at the forefront of raising venture capital in Kerala. Together, these sectors account for 66%, or $364 Mn, of the total investments worth $551 Mn received by Kerala-based startups since 2015.

In our latest report, ‘The State Of Kerala Startup Ecosystem’, we aim to quantify the growth of the state’s local startup ecosystem and the impact of initiatives by the state’s Kerala Startup Mission (KSUM) on the entrepreneurial ecosystem.

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The Growth Of Local Startup Ecosystem In Kerala

Kerala is known for its proactive approach to assisting startups for more than a decade. The state’s distinct socioeconomic factors, such as a high literacy rate and per capita income, enable it to foster the country’s most promising startup ecosystem.

Between 2016 and H1 2022, the state’s local startup ecosystem witnessed an upsurge in capital inflow. This is because the state is home to some of the most promising Indian startups such as CareStack, Open (founded in Kerala), and Survey Sparrow, among others.

Kerala is ahead of other startup hubs in the country in terms of the scope of investment and growth for Indian hardware startups, which lapped up nearly one percent of the total capital raised by Indian startups between 2014 and H1 2022.

However, hardware product/service-focused startups in Kerala have raised $15.2 million, or approximately 3%, of the total $551 Mn raised since 2014. This is much higher than the leading startup ecosystems in the country, such as Bengaluru (0.03%), Delhi-NCR (0.92%), and Mumbai (1%).

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The KSUM Factor: 360-Degree Government Support

Both the central and state governments are now focusing on supporting the startup ecosystem through initiatives such as incubation, business grants, and investments.

Meanwhile, the Kerala government has taken a step further in ensuring that these companies grow organically with the help of the state’s various startup-friendly initiatives.

From a macro perspective, KSUM seeks to build a comprehensive ecosystem to support and sustain the state’s tech startups. Kerala’s startup mission includes special subsidies and investments, such as the Innovation Grant, R&D Grant, and Technology Commercialisation Support for Women, to encourage innovation.

Such initiatives demonstrate that the state is prepared to drive and grow innovative businesses in fields such as AI/ML, robotics, hardware & IoT, and biotechnology.

Kerala Startup Mission has a significant role in assisting India in positioning itself as a technological powerhouse competing with the best in the world and in offering the best facilities, thereby luring more and more creative minds to the nation.

This report provides a comprehensive overview of the mission’s overall impact on the startup ecosystem and highlights the stance of various stakeholders on the state’s startup-friendly policies.

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