Our focus is on building tech startups in Tier 2 & 3 cities: Sivarajah Ramanathan, CEO, StartupTN

Tamil Nadu is surprisingly a late entrant in building a state level nodal agency for startups. While Kerala startup mission was built as early as 2006 and Telangana’s T Hub began operations in 2015, Tamil Nadu did not have a state nodal agency till 2021. However, different educational institutions have a robust incubator network built without the guidance of a state nodal agency.

Sivarajah Ramanathan spoke to indianexpress.com on the strengths of the Tamil Nadu startup ecosystem, their robust incubator network, their impact philosophy and the challenges of building a state startup nodal agency from scratch. Edited excerpts:

Venkatesh Kannaiah: StartupTN is a bit late to the startup game when compared to other states. How are you going to catch up and what is the strategy?

Sivarajah Ramanathan: You are right. We are a bit late for a variety of reasons. However, we are learning from others and are finetuning our strategy. Maybe a decade earlier, the emphasis would have been on setting up incubation centres or acceleration centres and putting up the building blocks for the startup ecosystem. Now, there are more than 100 incubators in the state, with varying levels of expertise. It does not make sense for building one more incubator. What we are building now as a nodal agency is to be an enabler of the ecosystem, helping the incubators and building the requisite connections with state and union government agencies.

We also recognised that in certain aspects Tamil Nadu is weak in its entrepreneurial culture and to change the mindset we had held 300 programmes across the state, to enthuse potential entrepreneurs. We have two kinds of programmes —a general inspirational programme, and a deep knowledge programme with mentor clinics, validating startup ideas and creating a business mentor network. Such intensive programmes are unique to Tamil Nadu and are not seen in any other state.

We have a large number of incubators, but to be frank we found that perhaps only 10-15 per cent of them are working as per plan. Some educational institutions are running these startup incubators with the hope that it would help them in their rankings. We are working to change the mindset of these incubators. We are also trying to build a self assessment tool and protocol for incubators in the state, helping them to improve their process management systems, facilities and improve their outcomes. We are collecting large amounts of data on their impact and outcomes and are building an incubator maturity model and the data on outcomes and impact would be released soon.

We have also initiated capacity building projects at the incubators and hope to build the right international connections for them. We have begun showcasing them at various locations. The first stopover was in Israel and the next one was in Dubai.

Venkatesh Kannaiah: What is the tech focus of startups from Tamil Nadu?

Sivarajah Ramanathan: You must understand that we have some world class incubators built by institutions over a period of time like at IIT Madras, PSG Coimbatore and Crescent engineering college. Our idea is to build on such strengths and add value.

Tamil Nadu has had a robust industrial growth over the last 50-60 years in various sectors such as automobiles, engineering and textiles. Interestingly, the startups too have focussed on areas like robotics, AI, microfactories and have been providing solutions to these large companies. Chennai was earlier known as a SaaS city, with a large number of startups focused on SaaS products. Now, we find that our startups have diversified. Around 900 of our startups in TN are focussed on core, deeptech areas.

Venkatesh Kannaiah: You come from wide experience with startups from Tier 2 and Tier 3 cities. How has it helped StartupTN?

Sivarajah Ramanathan: As per data from the DPIIT registration of startups, Tamil Nadu had around 2300 startups in April 2021, and now in 2024, it is around 7500. Earlier, most of the registered startups were from Chennai and around 70 per cent of all the startups were from the city. Now after a lot of outreach in Tier 2 and Tier 3 cities, we are seeing that fresh startup registrations are happening from smaller towns. Now the percentage of startups in Chennai has come down from 70 per cent to 47 per cent and the proportion from smaller towns have increased.

We are also focussed on creating 10 regional hubs in various other metros in the state. We have built three and seven are on the anvil. It is very basic. We have say 5,000square feet of space and 20 seats at each of these locations. These are provided free of cost to startups for meetings or other events. You would be surprised to know how such minimal investments have energised the system.

We are looking to have a sectoral focus to build startups. We have formed 30 sectoral groups and have created forums for each of these sectors. It could be for example; Electric Vehicles. It is an informal group with startups, incubators and investors and they look to sort out issues that arise in these sectors.

We are also looking to build corporate innovation programmes and like in these sectors and have signed MoUs with companies like Bosch, Mahindra, Hero Honda and others. The corporate innovation programme is another bet of ours, as we find that it has not reached the maturity level of say a Singapore, and there is a lot of scope in India. With our manufacturing base and the existing focus of our startups, it will pay off.

“We are also trying to build a more inclusive startup ecosystem in terms of regions, bringing in more rural startups,” Sivarajah Ramanathan says on inclusiveness in his mentoring of startups. (Photo credit: StartupTN)

Venkatesh Kannaiah: How are you planning to bring in the theme of inclusiveness in your mentoring of startups?

Sivarajah Ramanathan: We do not actively pursue the unicorn model. Instead of spending all our energies and resources on trying to incubate a unicorn that too merely in terms of valuation, we are looking to build 80 companies with Rs 100 crore in top line revenues.

We are also trying to build a more inclusive startup ecosystem in terms of regions, bringing in more rural startups. We are also looking at a gender and caste lens for promoting startups.

We are unique in India with a focus on startups built by SC/ST entrepreneurs. We have a fund of Rs 50 crore for funding of startups where SC/ST entrepreneurs at least have a 51 per cent equity. We have so far funded 26 companies and some of them are doing excellent work. Our normal ticket size is from Rs 25 lakh to Rs 5 crore for these ventures.

We also have an early stage grant fund, where we fund Rs 10 lakh for companies in general, and Rs 15 lakh if they are founded by women, or if they are in the arena of climate action. There are 132 such companies which we have funded.

Venkatesh Kannaiah: Tell us about some of your startups which have had a significant social impact?

Sivarajah Ramanathan: One of the startups we are funding through our grants schemes is Solinas which works on developing robotic and AI solutions such as pipeline crawler, and septic tank and manhole cleaning robots to revolutionise the pipeline and sanitation industry. They also have come with India’s first septic tank and manhole cleaning robot that comes with cleaning blades, suction mechanism, storage and transportation options.

We have also invested in Unibose, which specialises in building robots for storage tank cleaning and cleaning of oil tankers and rail wagons. This startup uses robots for various cleaning tasks which are hazardous in nature.

We have invested in Esandhai, which has built a transparent and traceable platform, using advanced Supply-Demand Prediction technology to optimise agricultural supply chains.

We have also mentored Kaigal, a job matchmaking platform intended to organise the unorganised blue-collar jobs sector. The company offers a platform for unskilled and low-skilled workers to find better employment opportunities, and a specially created identity card and a business card listing all skills and experiences in one place.

We have mentored NativeSpecial, a company which focuses on collecting sweets, savouries and delicacies from different regions of Tamil Nadu and markets them under a common umbrella at an online store and also delivers them abroad. Another interesting startup mentored by us is Nativekrea, an art and culture startup which brings together artists from across the state on a common platform and helps them market their products.