‘Kerala may see higher funds flow to start-ups this year’

This year will mark an inflection point in the flow of funds to start-ups in Kerala, according to News Corp VCCircle, publisher of start-up and private equity news and data.

This will happen with local high net-worth individuals beginning to consider private equity as an asset class beyond real estate and gold as well as venture capital firms to invest in businesses with strong revenue generating models.

Low operating costs and a relatively untapped local market with technologically enabled solutions through Internet- enabled mobile phones would be the USP of start-ups based in Kerala.

News Corp VCCEdge data reveals that start-ups in the State have garnered 28 early stage funding deals amounting to $18.5 million since 2011.

They have attracted interest from the likes of Matrix Partners India, Helion Venture Partners and DSG Consumer Partners. A majority continue being at the seed or pre-seed funding stage.

Meanwhile, selective understanding of valuations and pitching methods and investment trends from the perspective of venture capitalists have limited their ability to secure investments to scale up.

With $0.63 million invested across three early stage deals in the state as of 2016, angel investing is expected to drive start-up investments to cross deal value of $1.13 million seen in 2015.

Start-ups in Kochi, Thiruvananthapuram and Kozhikode have attracted over 50 per cent of early stage funding and would continue to corner a major share of the investment pie in the future. But those in other towns such as Kannur, Kollam, Palakkad, Idukki, Muvattupuzha and Kottayam are set to increase their share.

Kerala has witnessed early stage investments channelled into Internet and tech-enabled businesses much like the case on a pan-India basis.

But the spread has been historically better with start-ups in analytics, e-health, social networking, hardware, robotics and IoT space.

Speaking on the eve of hosting the Kerala edition of Techcircle Start-up 2016 in Kochi, Nita Kapoor Head-India, New Ventures, News Corp and CEO, News Corp VCCircle, recalled that Kerala topped the States in receiving remittances. She hoped that it would soon become a destination for private equity funds as well.