“She is a quaint city with quirky street names…She offers global cuisines on roadside carts, Piping hot idlies at the stroke of midnight… Is it denims,dry fruits or spices you want? Books, electronic or musical instruments? Name it and she will let you have it… She is the modernity that villages lack and the tradition long forgotten by cities.” – Source: YourQuote.in

These few lines perfectly describe Tamil Nadu – also known as the land of temples. The Madras Presidency was established in 1773, while the state of Madras was formed in 1950. The state was renamed as Tamil Nadu (land of Tamils) on January 14, 1969. Since then, Tamil Nadu has graciously embraced both its age-old traditions and new lifestyles. It is ranked as one of the top seven developed states in India based on RBI’s “Multidimensional Development Index” Report 2013, and is home to eight UNESCO World Heritage Sites.

Over the years, the state has also taken significant steps towards digitalisation and has been a forerunner in the IT sector. As part of its proposed e-governance initiatives, a large part of government records and major state government offices have also been computerised.

In keeping with the startup frenzy taking over India, the Tamil Nadu state government is also keen to promote entrepreneurial projects in the state. Recently, the state government revealed plans to set up a $77.4 Mn (INR 500 Cr) venture capital fund to boost the startup ecosystem in the state, reported Hindu Business Line. The fund is proposed to be run with the help of industry experts.

As stated by Mangat Ram Sharma, Principal Secretary, Department of MSME Tamil Nadu, “The State government will provide money for the fund, which can start with $7.7 Mn (INR 50 Cr) or $15.4 Mn (INR 100 Cr) and gradually increase it to $77.4 Mn (INR 500 Cr).” He further stated that, “A global annual sourcing fair on the scale of the Global Investors Meet is being planned to be held in Chennai to provide both domestic and international companies a platform. The department will spend $1.5 Mn (INR 10 Cr) a year on this.”

Reportedly, Gopal Srinivasan, CMD, TVS Capital Funds Ltd has also urged the government to formulate a startup policy.

Other Government Initiatives To Boost TN’s Startup Ecosystem

In January 2015 , the Tamil Nadu government planned to set up an incubation facility for startups under Nasscom’s guidance. This plan got conceptualised in March 2016 when Nasscom announced a partnership with Tamil Nadu Government to open the state’s first warehouse in Chennai.

, the Tamil Nadu government planned to set up an incubation facility for startups under Nasscom’s guidance. This plan got conceptualised in March 2016 when Nasscom announced a partnership with Tamil Nadu Government to open the state’s first warehouse in Chennai. In September 2015 , Uber announced that it had signed a Memorandum of Understanding (MoU) with the Tamil Nadu Government to create over 30K entrepreneurial opportunities in the state for drivers, as well as an opportunity to work with the government to together develop programmes to improve technology as part of the region’s economic development. It will include training programmes, building infrastructure and working on public-private partnerships around R&D.

, Uber announced that it had signed a Memorandum of Understanding (MoU) with the Tamil Nadu Government to create over 30K entrepreneurial opportunities in the state for drivers, as well as an opportunity to work with the government to together develop programmes to improve technology as part of the region’s economic development. It will include training programmes, building infrastructure and working on public-private partnerships around R&D. In October 2015 , The Madras Chamber of Commerce (MCCI) launched SEE (Startup Entrepreneurial Ecosystem) to mentor and provide an ecosystem for startups.

, The Madras Chamber of Commerce (MCCI) launched SEE (Startup Entrepreneurial Ecosystem) to mentor and provide an ecosystem for startups. In September 2016 , the state government decided to offer maximum support to startups, provided they follow the mandatory rules and regulations in order to create a fair economic system.

, the state government decided to offer maximum support to startups, provided they follow the mandatory rules and regulations in order to create a fair economic system. In December 2016, the Amma Venture Capital Fund with a corpus of $29.5 Mn (INR 200 Cr) was also announced. The fund will work in conjunction with the functioning biotech incubation centre in Chennai. This incubation center, The Golden Jubilee Biotech Park for Women’s Society, is spread across 5000 sq. ft., and has been set up exclusively for women entrepreneurs. It aims to benefit 500 women by 2021.

The Flourishing Chennai Ecosystem

Tamil Nadu’s capital city Chennai, nicknamed “The Detroit of India,” has been a manufacturing and automobile hub for years and is now emerging as a successful playground for startups too.

The creation of several active mentor organisations like TiE (The Indus Entrepreneurs), CIIE Startupreneurs, IIT Alumni Clubs, and Nasscom’s Million Dollar startup programme, has definitely given a push to the startup ecosystem in Chennai. In recent years, the city has become home to many accelerators and incubators, including PayPal’s incubator and Start Tank. Not to mention the growing funding opportunities, which include Chennai Angels and TVS Capital Funds Limited.

So far, Chennai has produced 932 startups as per Angel.co and the ecosystem is growing. Community activities like Chennai Open Coffee Club, Chennai Geeks, Madrasters (Designers), Pecha Kucha Night, Filter Kaapi Maﬁa, Youth Startup Conclave – Aarambh’16’, networking event for SaaS startups – SaaSX2, have been successful in bringing a flavour of Chennai’s unique culture and universal robustness to the ecosystem. Headstart and the IIT-M Incubation Cell have also been actively engaged in fostering young entrepreneurs and facilitating growing startups.

The state has also attracted a series of marquee investors including Inventus Capital Partners, Nexus Venture Partners, The Chennai Angels, Accel Partners, Matrix Partners, Sequoia Capital Partners who have invested in the Chennai based companies. As per an Inc42 report, 70 Chennai startups have been funded between 2014-2016, with a total amount of $467 Mn. About $137 Mn was infused in SaaS startups alone, contributing 30% of the total funding between 2014-2016. In 2016,30 deals were made amounting to $212.12 Mn in funding, as per Inc42 Datalabs.

In February 2017, the central government’s NITI Aayog Atal Innovation Mission selected six institutions that promote startups in India to provide them with funding support. This included Tiruchirapalli-based NIT TREC-STEP – a model, full-fledged science park situated on 50 acres of land, which provides comprehensive, end-to-end support for startup promotion and growth, with five dedicated, venture incubation packages such as strategic support, infrastructure, funding, IPR strategy facilitation and internationalisation, and ICT support.

Notable Startups And Investments In Chennai: 2017

Chennai is the fastest-emerging SaaS hub of India with Zoho, Freshdesk, and Indix already active in global territories and taking on global contenders. Amongst the other well-known names is finance marketplace BankBazaar.com; subscription and recurring bill solutions provider Chargebee; and Caratlane.

Zarget, Cloudcherry, Sales Neuron, Codemojo, UTOO Cab, Silvan, Edsix Brain Lab, Perfint are some other startups that have gained investor attention in the last two years.

As of Q1FY18, funding in Chennai startups has seen a bit of a dry spell with only seven deals taking place, amounting to $8 Mn, as per Inc42 DataLabs. Reports also surfaced about a possible $35 Mn investment by Alibaba Pictures into TicketNew – an online events booking portal founded in 2008 by N Ramkumar, V Sasi Raman and Ravishankar Ramanujalu.

Here is a quick overview of Chennai-based startups/companies who have raised funding in 2017 till April 19, 2017:

Founded In: 2003

Founder(s): Vilva Natarajan

Funding: In March 2017, it secured $494K (INR 3.3 Cr) for its flagship product ManageArtworks from early-stage venture fund Ideaspring Capital.

Karomi is a global technology solutions provider, with significant focus across two principal industries – Life Sciences and CPG (Consumer Packaged Goods). The company is headquartered in Chennai and the US, with a partner presence in the EU, Latin America, and Australia.

Founded In: 2016

Founder(s): Ashwin Ramasamy, Shrikanth Jagannathan, Murali Vivekanandan

Funding: In March 2017, it raised $1.1 Mn (INR 7.3 Cr) in a Seed round of funding from IDG ventures, Axilor Ventures, Emergent Ventures, Indian Angel Network and others.

PipeCandy is an enterprise SaaS startup, with an aim to help companies discover very relevant prospects in their respective target industries. The startup further aims to provide contextual insights to sales representatives to make authentic and well-researched sales pitches.

Founded In: 2011

Founder(s): Balachandar R, Durga Das

Funding: In February 2017, it secured $3.2 Mn in Pre-Series A round from Anil Jain (MD at Refex Energy), HNIs from India, and the Middle East.

Wassup is an on-demand service provider which currently offers services like laundry, dry cleaning, shoes, and bag refurbishments at the user’s doorstep. It has a young team of entrepreneurial professionals in the hospitality, retail, and laundry industry.

Founded In: 2015

Founder(s): Karthik Venkateswaran, Nandha Kumar Ravi, Sundar Natesan

Funding: In February 2017, it raised $300K from The Chennai Angels and Freshdesk founder and CEO Girish Mathrubootham.

GoBumpr is an auto services startup which provides doorstep services for car and bikes including general service, wash and repairs. Currently, it is operational only in Chennai and Coimbatore.

Founded In: 2016

Founder(s): Subbu Viswanathan, Kuljit Chaddha

Funding: In January 2017, Learntron raised an undisclosed amount of funding in its Pre-Series A round from Mumbai-based Kae Capital.

Learntron caters to the learning needs of both educational institutions and enterprises. The USPs of Learntron’s platform includes the latest learning design principles – like bite-sized learning, social learning, gamification and micro-learning. These USPs have created a solid, feature-rich product. A key element of Learntron is live learning which works in low-bandwidth conditions.

Founded In: 2015

Founder(s): Karthik Jayaraman, Sanjay Dasari

Funding: In April 2017, it secured $2.7 Mn from early-stage venture capital firm Aspada Investments.

Waycool aims to fix the disorganised perishable supply chain. It is an omnichannel fresh produce distribution company that distributes fruits and vegetables to multiple, end-use segments spanning small local shops, modern retail outlets.

Editor’s Note

With just $8 Mn raised in funding, Q1F 2017 data does not add Tamil Nadu in the list of burgeoning startup ecosystems like Maharashtra, Andhra Pradesh, or Karnataka. However, the state government efforts to encourage entrepreneurship and empower startups are worth watching out for. As per The Hindu, on the other hand,the state is fighting with challenges such as lack of startup incubators, poor positioning, and funds. But universities and institutes are trying to foster entrepreneurship within their environment hailing over 56% of the incubators.

The growth of startups like Zoho, Zarget, Cloudcherry, Freshdesk and more is proof positive that an ecosystem does exist – but existing gaps need to be mended for exponential growth. The first issue to be solved is to bridge the the gap between startups, investors and other startup ecosystem entities so that ‘Whistle Podu’ Chennai can become known as not just the Detroit or SaaS capital of India – but a formidable, multi-sector robust startup ecosystem in its own right.