While the Kerala Government led by Chief Minister Pinnarayi Vijayan says it is keen to promote its AI and deep-tech start-ups, funds haven’t been easy to come by. The government’s standard start-up grant of ₹15 lakh per start-up hardly accounts for much, either.
However, the Kerala Start-up Mission (KSUM), a state-level agency that works under the government, thinks it might have an ace up its sleeve – a familiar, yet under-tapped source of venture capital funds: the “mallu” diaspora.
“From a capital front, in terms of running a company and its operational expenses, we are trying to create angel investments,” says Anoop Ambika, CEO at KSUM, “The mallu diaspora is all over the world and they are now at a stage where they can spend a lot of money; so, I urge the NRIs out there to come together and create a fund.”
The government’s pitch to the Malayalee diaspora comes at a time the state’s start-up ecosystem finds itself with a whole lot of unrealised and under-utilised potential. While start-ups here have grown to 6,100 registered companies that have created 62,000 jobs as of December 2024, there is still a gaping hole in early-stage funding.
According to the latest figures from venture capital tracker, Tracxn, Kerala’s start-ups attracted a paltry $7 million through all of 2023 – a massive drop of 32% from $10.3 million the previous year. As a result, most early-stage start-ups have either remained bootstrapped or are banking on angel funds or grants, to survive.
Multiple Kerala-based start-ups that CNBC-TV18 spoke to, at Huddle Global, the state’s flagship start-up conclave are yet to move beyond initial angel rounds of funding: “We have raised ₹24 lakh from angel investors and another ₹20 lakh through grants,” said Saurabh Chatterjee, Founder at Vashishtha Research. “We have received somewhere around ₹30-40 lakh from angel investors,” Arshad Ali, Founder at GenesysLabs, added.
Some others are fully bootstrapped, like Medical tech start-up, Heka Medicals that has raised the bulk of its ₹9.9 crore from internal accruals while only raising ₹1.5 crore through external sources. In most cases, investors are entities or individuals living with roots in Kerala but presently based in the Middle East. It is more of this money that Kerala says it is hoping to secure in funding.
However, if early-stage capital, or the lack of it, is a concern, late-stage funds are near non-existent. Tracxn’s data does not indicate a single late-stage transaction in Kerala’s start-up ecosystem over the last five years. The combination of poor early-stage funds and non-existing late-stage support have resulted in the state’s start-ups reporting modest revenue numbers.
“Our revenue is ₹2.5 crore and is expected to be geared up slowly,” says Jeesh Venmarath, CEO at C-DISC Technologies. “We are targeting about ₹4 crore in revenue,” says Binu August, CEO at Heka Medicals.
To its credit, the Kerala Government has announced big-ticket tech infra like a ₹350 crore investment towards an emerging technology hub to incubate deep-tech start-ups, and a proposal to create GPU clusters in partnership with tech heavyweights like Nvidia, AWS and Microsoft. However, at the end of the day, though, it’s all about the money – and Kerala’s start-ups are hoping the ‘mallu’ diaspora coughs out a bit more of it to help these companies grow.
