Chennai: A Rs 100-crore “co-creation fund”, a “social justice venture lab”, grants to support trans-persons and people with disabilities, and funding for start-up companies launched by SC/ST entrepreneurs — these are some of the key features of the revamped ‘Tamil Nadu Startup and Innovation Policy 2023’ released by chief minister M.K. Stalin Wednesday.
Tamil Nadu is reported to have more than 7,000 registered start-ups as of September 2023, and the state’s ruling Dravida Munnetra Kazhagam (DMK) government, through the policy, is aiming to accelerate and scale up these start-ups and increase their share in the state gross domestic product (GDP) as well as social capital.
“The start-up ecosystem is the next generation of industries. Only when you have innovative and technologically advanced business models and business solutions can a country sustain itself. In that sense, every country or city is trying to create this ecosystem,” Sivarajah Ramanathan, mission director and CEO of StartupTN, told ThePrint.
StartupTN, launched in 2021, is the nodal state government agency for innovation and start-ups which is part of the department of micro, small and medium enterprises (MSMEs) which has formulated the new policy.
Tamil Nadu had framed its first start-up policy in 2018, which was valid till 2023 and which paved the way for the start-up ecosystem in the state, but at that point, no particular mission or nodal agency had been created for implementing the policy, Ramanathan said.
In the state’s new policy, the MSME department has redefined “start-ups” to include “business ventures by persons from socially marginalised communities that apply proven innovative techniques in other sectors to the economic and social problems of their communities”.
It has also coined the term “Start STEP” which refers to “aspiring non-registered entity or individual which is potentially scalable and generates wealth and employment or creates a sustainable social impact business model”.
Aiming to raise awareness about entrepreneurship, innovation, and investment, the state is also planning a television reality show called ‘Startup Thamizha‘ similar to the US’s Shark Tank.
According to the policy, the show “will feature pitching events in front of investors during prime-time television, serving both as an educational and investment opportunity for start-ups. Professional agencies will manage the programme, with an expected investment of Rs 30 crore to Rs 50 crore per season”.
Unlike the previous policy, the present one, Ramanathan said, was more intensive and specific. “It is not just spelling out the policy and then setting up infrastructure and manpower. The policy speaks about action points that can be implemented now or within the policy period,” he added.
The policy was framed based on inputs from 45 different stakeholders, including new start-ups and venture capitalists. After multiple brainstorming sessions, the policy was structured in a period of four to five months, the CEO of StartupTN said.
According to StartupBlink’s ‘Global Start-up Ecosystem Index Report, 2022’, Chennai and Coimbatore are among the top 400 start-up cities globally. The ‘Indian Startup Ecosystem Report 2022’ ranks Chennai as the country’s fourth start-up hub.
The state’s new start-up and innovation policy, Ramanathan said, was a strong step towards making the state one among the top 20 start-up ecosystems of the world in the next 10 years.
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Key features of new policy
Inspired by the Yozma (meaning “initiative”) model established by the Israeli government in the 1990s to kick-start innovative industries via investment in new venture capital (VC) funds, the Tamil Nadu government is planning to create a Rs 100 crore “co-creation fund” to support the creation and working of select private sector VC funds.
The VC firms that will be selected for the “co-creation fund” will be those having special focus on investment in regional start-ups, women-led initiatives and climate action related sectors.
StartupTN has further identified seven determinants to solidify Tamil Nadu’s start-up ecosystem — start-up literacy, innovation landscape, investment ecosystem, access to market, start-up support centres, stakeholder engagement, and equitable growth.
For start-up literacy, the policy suggests steps that can be taken to make students and young professionals think about entrepreneurship as a viable career path.
As part of the policy, learning and development portals will be launched to encourage children and young adults to complete courses covering real-time scenarios of a start-up journey. Similarly, hackathons and ideation will be encouraged at higher educational institutions for aspiring entrepreneurs.
Social justice venture lab
Ramanathan said that one of the core features of Tamil Nadu’s new start-up policy was inclusivity, and it placed emphasis on the needs of entrepreneurs from SC/ST and transgender communities, the differently-abled and other marginalised sections.
Apart from providing funding to start-up companies of SC/ST entrepreneurs, the policy has proposed a social justice venture lab — a comprehensive intervention programme that will provide tailored workshops and guidance to help entrepreneurs from marginalised communities face investors confidently and connect with the market.
“Many of the marginalised community need a lot of hand-holding, so from end-to-end, starting from ideation to idea curation, to boosting funding etc, the government will set up a comprehensive intervention programme called the social justice venture lab,” said Ramanathan.
The venture lab will also offer intensive post-investment support services to companies that get funding through the Tamil Nadu SC/ST Start-up Fund.
The new policy also promises to identify 10 start-ups promoted by trans people and the differently-abled which have failed to raise funds from mainstream sources. These will be given a grant-in-aid of Rs 5 lakh as well as special attention in the Tamil Nadu Startup Seed Fund (TANSEED), a government initiative to support early-stage start-ups.
A “smart card” will further be provided for fledgling companies under Start STEP.
Ramanathan explained that many start-up companies in their early stages need support to register the entity, for legal formalities, technology upgradation, marketing, financial services, etc.
“StartupTN has identified such needs and a start-up can, via the smart card, use the service required from a list of 50 to 60 service providers. The service is provided by the external identified providers at a highly subsidised cost or free of cost,” he said.
(Edited by Nida Fatima Siddiqui)
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