Tamil Nadu’s Startup Ecosystem On What’s Driving The State’s SaaS Revolution

Tamil Nadu startups have become synonymous with software-as-a-service (SaaS) innovation, thanks to the well-documented rise of startups such as Zoho, Freshworks, Orangescape, Chargebee and many others. It’s also home to some of the most sustainable businesses, having brought up two unicorns with very little funding relative to neighbouring Karnataka or Delhi or Maharashtra. 

According to Reihem Roy, partner at Omnivore, which invests in agritech and food sectors primarily, one of the reasons for TN’s SaaS revolution is easy to access to engineering talent because of the heavy bent towards manufacturing. 

“Startups here may not have access to the best marketing talent which definitely Mumbai or Bangalore would have, but in terms of pure technical talent, Chennai stands out,” Roy told Inc42. 

The prominence of B2B startups in Tamil Nadu is also being connected to the relatively lower inter-state migration in Tamil Nadu. When it comes to habit-forming consumer businesses, Chennai has a slow adoption rate as compared to Bengaluru or Mumbai or Gurugram, Roy said, but because the traditional Chennai consumer base is not looking for as many solutions as the migrant population usually do in other metros, the available products and services have significantly great engagement. 

But that does not mean startups do not have challenges to tackle. Roy said Chennai is not considered as a traditional VC destination and so startups here would generally relocate to Bengaluru or Hyderabad or even further out to Gurugram and Mumbai in search of funding. But this trend has been changing because of the increased investor attention brought in by the success of Zoho and Freshworks.

However, Suresh Sambandam, founder of OrangeScape, which makes workflow management product Kissflow said that funding is not the number one challenge for entrepreneurs in Tamil Nadu but there is a need for mentorship in the state. 

“Tamil Nadu needs a huge number of sector-specific accelerators to rapidly grow the startup ecosystem. There is also a need for seasoned founders who can commit their precious time to mentor up-and-coming entrepreneurs in a pure pay-it-forward model,” Sambandam added. 

In our conversations with the Tamil Nadu startups and investors, the ecosystem is time and again referred to as an ecosystem of sustainable businesses. Tamil Nadu entrepreneurs are said to have a strong focus on strengthening unit economics instead of focussing on becoming a unicorn company with tonnes of funding or a company that spends as much as it earns.  Here’s taking a closer look at some of these sustainable businesses:

Aquaconnect:

Shanmugha Sundara Raj, Sanjai Kumar and Rajmanohar Somasundaram founded Aquaconnect in 2017 to streamline India’s massive shrimp farming industry. The Omnivore-backed company has built a big data and artificial intelligence (AI) enabled mobile application — FarmMOJO — to advise farmers on their pond operations based on constant monitoring of the shrimp pond and other data captured by IoT platforms. 

BankBazaar:

BankBazaar is a fintech marketplace founded by Adhil Shetty, Arjun Shetty, and Rati Shetty in 2008. The company hosts a wide range of financial products from most Indian public sector and private banks, NBFCs, and insurance companies.

WayCool:

Founded in July 2015 by Karthik Jayaraman and Sanjay Dasari, WayCool is an omnichannel fresh produce distribution company. It distributes farm-sourced fruits, vegetables and other products to local shops and modern retail outlets. The company claims to process the distribution of 250 tonnes of produce, staples and dairy products every day across its distribution channels to over 8K clients.

Zoho:

SaaS unicorn Zoho Corporation was founded by Sridhar Vembu in 1996. It has more than 40 integrated online applications aiding multiple business operations such as sales and marketing, finance, email and collaboration, information technology and help desk, human resources and custom solutions like app creator and analytics. 

Freshworks:

Founded by Girish Mathrubootham and Shan Krishnasamy in 2010, Freshworks is the other unicorn from Chennai and provide companies with SaaS customer engagement solutions. The company’s product suite is said to help the company’s support, sales and marketing functions to communicate effectively with customers. The Chennai-based SaaS unicorn claims to have more than 150K clients worldwide.

Orangescape:

Founded by Suresh Sambandam in 2003, OrangeScape is a SaaS-based enterprise-level workflow and business process automation platform. OrangeScape’s flagship product Kissflow claims to have over 10K users across 160 countries.

FR8:

Founded in 2016 by Vasanth Immanuel and Jayendran Panneerselvam, FR8 is a technology-driven logistics service provider, offering long-haul trucking solutions to large corporates, SMEs, and the agribusiness ecosystem. It also operates as an online marketplace helping consumers move truckloads between cities. The company was selected in Inc42’s Startup Watchlist for the logistics sector.

Chargebee:

Chargebee is an automated subscription billing software platform that integrates with payment gateways to automate payment collections, invoicing, email notifications and customer management. Founded in 2010, its products enable clients to optimise revenue operations, compliance and revenue recognition. The company claims to cater to 1800 businesses across 53 countries, with three offices in the US and Amsterdam.

Agnikul:

Incubated at IIT Madras, AgniKul is a spacetech company building affordable space vehicles. The company claims to be currently working on orbital-class rockets for micro and nano satellites. AgniKul’s team includes engineers, former bankers, and space lawyers. 

Pickyourtrail:

Founded by Hari Ganapathy and Srinath Shankar in 2014, Pickyourtrail enables users to intelligently customise their international travel plans by accounting for factors such as duration, travel time, and user ratings.

Uniphore:

Uniphore enables businesses to deliver customer service by providing an integrated suite of software products for conversational analytics, conversational assistant and conversational security. The company was founded by Ravi Saraogi and Umesh Sachdev in 2008.  It is currently developing solutions in speech analytics and virtual assistant verticals such as auMina and akeira.

Netmeds:

Netmeds was founded in 2010 by Pradeep Dadha. The startup is a licensed pharmacy marketplace that offers authenticated prescription and over-the-counter (OTC) medicine digitally along with other health products.

Hippo Video:

Founded in 2016 by former Zoho employees Karthi Mariappan, Nilam Chand Jain and Srinivasan S, Hippo Video is a platform that takes care of the entire life cycle of video from creating, to editing, hosting, sharing and tracking. The startup was selected in Inc42’s Startup Watchlist as one of the media and entertainment startups to watch out for this year.

Sulekha.com:

Founded by Satya Prabhakar in 2007, Sulekha is an online match-making platform for local service businesses and consumers in India. The company claims to be matching over 20 Mn consumers with 50K service professionals in about 40 Indian cities. Sulekha focuses on expert services clustered around home, life and self. It is funded by global investors such as GIC (Singapore), Norwest Venture Partners, Mitsui & Co and SIW.