Most of Kerala's wealthy park their funds in the real estate sector and startup investments remain unfamiliar to them.
When four engineering students in Kerala went knocking on doors for some finance from the local high networth individuals in 2016, there was hardly a positive response. The cyber grapevine has it that some were even sceptical of their idea of launching a robot that can do manual scavenging.
Fast forward to 2023, Genrobotics, launched by Vimal Govind MK, Rashid K, Arun George and Nikhil NP, was showcasing their products at the Davos summit in Geneva and generating interest even from European powerhouses like Germany. The company got to the stage thanks mainly to financial backers from outside the state who provided the lift off funds after the governmental grants and awards furnished their initial base.
The list of investors who backed the Kerala-based firms has some of the well-known financiers in India like venture capitalists Anil Joshi of Unicorn India Ventures, Sridhar Vembu, Anand Mahindra, and Google India's Rajan Anandan.
Many Kerala startups could relate to the experience of struggling to find funding locally. Despite an abundance of wealth in the state, most investors continue to focus on traditional practices like buying land and gold, and investing in startups is yet to find a spot on their radars.
“I understand the outlook of my father's generation. They were using the money they saved up and financial security of their family was their main focus. So they brought land and gold for traditional reasons,” says US-based Vinod Jose who in 2013 founded the investment group Konglo, which has invested around 5 million US dollars in over 20 Indian startups till date.
The Calicut Regional Engineering College graduate says he also followed the traditional route by joining Accenture in 2005 after graduation but changed tack to become an investor through extensive reading on the subject.
Investing in startups is not a fool proof idea, as statistics show that eight out of ten bids fail to reach a sustainable level. However, there are risks involved in other investment areas as well, such as real estate, which requires regular spending to maintain the property while inflation would eat into the value of the fixed deposits with banks.
“I wouldn't call buying property an investment. We should label it as speculation. There is no or little fixed return from that asset and it is acquired in the hope that its value will rise over time,” says Vinod. He says he is not against buying land and property, but believes that as more successful startups mature into profitable businesses, people will start recognising the value of investments in that sector too.
“Investing in a startup has a wider vision than simply focusing on the near and dear. It also has a social role, as it helps society and encourages wider economic activity. This shift is a generational thing,” says Vinod, who, along with Hurun India founder Anas Rahman Junaid, recently launched a 4 million dollar venture capital fund, Callapina Capital, with a primary focus on Indian companies. He says there is an increased interest among Kerala investors about joining such funds.
While investors in other areas are constantly sifting through pitches to find the diamonds in the haystack, many local high networth individuals remain on the side lines. Despite this, networks of angel investors have been active in the state, such as the well-known Kerala Angel Network and Malabar Angel Network, while some individuals have created their own private funds to get involved.
“There are some startups in Kerala that have genuinely good ideas,” says Faiz Mohamed Haneef, CEO of NeoITO, a firm that helps newcomers with product development. He has backed an up-and-coming deep-tech firm, Vashishta Research, with investment and says he was impressed with their team and their vision. “Revenue should not be the only criterion when you are looking at a startup firm. There are other parameters one should consider, such as the core team, their ideas, and effort,” says Haneef.
Right now, networking with people involved in the IT sector is the gateway to become a part of the angel investing scene. The Kerala Startup Mission (KSUM), which has been the prime source of funding for young entrepreneurs till now, is starting more initiatives to familiarise those with the capacity to invest in startups about seed capital initiatives or becoming part of Fund of Funds in association with some venture capital entities.
Despite the challenges, the startup scene in Kerala has been attracting a healthy amount of capital. A back of the envelope calculation shows that during 2022, over a quarter billion US dollars worth of funding was channelled into the sector, according to Robin Panicker, a Venture Partner at Unicorn India Ventures. He has been in the investing business for over a decade and keeps track of fund flows to startups in Kerala.
“This funding scene is completely organic and that is very healthy. Instead of seasoned investors who are familiar with the traditional business sector, the startup scene is witnessing the emergence of a new breed of investors: young, dynamic players, many of whom started out as startup founders themselves,” says Panicker.
He is not convinced that traditional investors and those who find safety in fixed deposits with banks or buying real estate will change their investment philosophy anytime soon. He believes that enough awareness attempts have been made over the years and none of them have helped.
This is a dichotomy that Kerala faces. While everyone bemoans how young people are leaving Kerala in search of opportunities elsewhere, very little is done to make the place attractive enough for them to pursue their interests here itself.
To create a conducive ecosystem for startups, every actor has to play their role. In the Kerala startup scene, one player who has yet to step up to the plate is the private investors.
(This article has been updated at 16:00 on 31-01-2023 to correct names of Anil Joshi and Sridhar Vembu. We regert the error in the earlier version)
Appu Suresh blows the whistle against hate speech
During the Arsenal-Manchester United clash last Sunday, a Keralite was on the pitch to kick off an even bigger event. Founder of the social media app Pixstory, Appu Esthose Suresh was at the centre of the pre-match activity to help launch Arsenal’s campaign against hate speech, a problem many football players face on social media. The event was watched by 50,000 fans as Suresh along with NBA star and Pixstory brand ambassador Dwight Howard explained the campaign. Pixstory allows users to create personal, evidence-based stories with up to 12 photos and 360 words per post, or a one-minute audio: an innovative multi-dimensional template for displaying posts that allows users to challenge inaccuracies or abuse and support quality content.
Suresh had worked as an investigative journalist in India before moving to England as Senior Fellow, International Inequalities Institute, London School of Economics. His book The Murderer, The Monarch and The Fakir: A New Investigation of Mahatma Gandhi's Assassination had won critically acclaim when it was published in 2021. The app launched in the same year had found favour with some other top European football clubs like Juventus and Paris Saint-Germain women’s team which also had similar anti-hate speech campaigns. Some of the tall personalities in the global technology, such as Chris Mattmann, chief technology officer at the NASA Jet Propulsion Laboratory is also involved in the app. Kerala’s former IT secretary Aruna Sundarajan is also among the board members of Pixstory.
Journalist outsources his memory to an app
Spending hours to locate something that you read just a while ago is a frustrating exercise that many of us go through. Help is at hand now. A memory assistant powered by artificial intelligence is just the thing for you. Heyday automatically scanning everything you look at on your browser and sorts what you've read into categories based on topic or on how much time you spent on something. “Once it's added the information to the catalogue, it provides dynamic prompts next to search results or within articles themselves to help resurface the information you've already read,” writes Subham Agarwal in Business Insider. The Ahmedabad-based journalist says he has simply outsourced this recall function of his brain to the app and dismisses concern that it will make his brain less active. He says given the overwhelming amount of data we access everyday, this app is genuine help and that he is happy to use it.
How many experts does it take to switch off school lights?
A Massachusetts high school has a problem: it can't switch off the lights since August 24, 2021. The sprawling structure, built a decade ago, occupies over 23,000 square metres and has 7,000 lights. At that time, under an energy-saving plan, a software was installed to control the LED bulbs to adjust brightness automatically, but that system has blinked out. The lights are now locked into the default “On” position and no one can switch it off. The authorities went looking for the company which installed it and discovered that it had changed hands several times, but after months of searching, managed to find the original people who installed the system. Their experts finally figured out what was wrong, but a needed spare part to solve the problem had to come from China and the Covid situation meant more delay. NBC News reported last week that the shipment has finally arrived and the school may switch the lights off soon.