Kerala startups will survive funding winter: KSUM CEO Anoop Ambika | Interview


Almost two months into his new responsibility as the head of the Kerala Startup Mission (KSUM), Anoop Ambika exudes confidence in the sector's performance.

He took over as the Chief Executive Officer of KSUM with a rich experience in the fields of technology and entrepreneurship spanning over a quarter of a century in and outside the country.

Having co-founded several technology startups and serving as the CEO of Genpro Research, a next-generation services and technology partner for the pharmaceutical, biotechnology, and medical devices industry, Ambika identifies himself as a serial entrepreneur, organiser, and technology enthusiast.

At KSUM, the Kerala government's central agency for entrepreneurship development and incubation activities, Ambika says his focus is on the expansion of the ecosystem and nurturing of solid businesses which has a humane face.

Though a computer engineer by profession, Ambika is determined to change the perception that startups are all about IT.

In an exclusive interview with Onmanorama, Ambika says he is confident that startups in Kerala will weather cyclical challenges, be it the layoff spree or the impending funding winter.


R: To begin with, how has the past month been for you? What are your gut feelings about Kerala’s startup ecosystem after seeing it up close?

A: For the last one and a half months that I have been with the ecosystem, I was primarily travelling around -- meeting with people, hearing their ideas and problems, and looking at least at a microcosm of startups possible.

I'm extremely excited about the startup ecosystem in Kerala. We have around 3,900 startups now. Of them, 2,182 have taken the Kerala Startup Mission's unique ID, meaning they are in our system. They are exposed to all the infrastructure, investments, and business facilitation that we do.

We are trying to bring the rest in so that we have a larger ecosystem to work with.

Out of the 3,900, we have around 1,000 companies that have recorded some revenue signifying the early-stage income. While 400 companies are in the stage of steady revenue. They have been consistently making revenue for the past year or so. We have 178 startups founded by women entrepreneurs.

Anoop says his focus is on the expansion of the Kerala startup ecosystem and nurturing of solid businesses which has a humane face. Photo: KSUM/Special arrangement

This is the playground where we are starting the next step. Obviously, the task entrusted to me is to take the sector to another level wherein the number of startups and their quality increase, and the scale-up and acceleration happen in a much organised fashion.

R: From just 471 in 2016, the number of startups in India has grown to 72,993 in 2022. What do these figures actually say? And what’s Kerala’s contribution to this growth story?

A: It tells us that more and more people are venturing into the startup ecosystem. A startup is something that will adapt or innovate an existing product, process or business model using technology.

When you start venturing into startups, think about any of the processes, products, or business models you see around you; combine science and technology with it and see if you can actually serve more people, make more money and create jobs exponentially with it.

The growth in the number means that people have started to think in this line. India is a large country with a lot of processes and innovations happening. How do you apply technology to some of these things and cater to this large population that we have? That's what these guys (startup entrepreneurs) have proven.

Kerala's contribution to this scenario is the creation of the Startup Village. It triggered the entire ecosystem of the country.

R: You have taken the new responsibility at a time when Kerala is discussing business and ease of doing business like never before. What advice did you receive from the government when you were appointed as CEO?

A: They did not give me any number or objective about what needed to be done. My job role said that I need to do things that will facilitate and improve the ecosystem. But I'm going to play along with what the government has promised to the people – to create 15,000 startups during the current term.

It's a tall task, but I'm going to work towards creating those 15,000 companies. For that, we have formulated a plan. We are going to source this pipeline from universities, research institutes, NGOs, NRIs and the government itself, and rural entrepreneurs.

How do we bring all these ecosystems together? We will create programmes that will cater to each of these communities and try and bring entrepreneurs out of them.

Anoop speaks at a session at KSUM.

R: Of late there have been many reports about the ongoing layoff spree in Indian startups. It is reported that nearly 12,000 people have been laid off this year alone. This comes to around 13 per cent of the global layoffs. Does that trend worry you?

A: It doesn't. Layoffs are an eventuality of any downtime. Layoffs happen not only with startups. My take is that you don't need to be afraid of layoffs.

Why would anybody work in a startup? First, the enormous amount of experience you gain from working in a startup. Second, you get better pay sometimes much more than what you would get from a regular company. Third, you gain equity in terms of stock options which could be a path for you to make an enormous amount of wealth if the company becomes successful.

If I get laid off, the second option is still valid because you have already made a lot of money through the high salaries. If you have saved that money then you are well off for the next 12 months. Equity will have vanished but what remains on the table and what's most valuable is the experience you have gained.

If the economy is ripe, that experience is going to be useful for quite a lot of companies. The industrial ecosystem will be able to imbibe these people and make use of their expertise.

R: What’s the scenario in Kerala in terms of layoffs?

I haven't heard of any massive layoffs in Kerala startups. There were quite a few companies that had gotten into trouble during the pandemic. That was a silent death of some companies. I think the ecosystem has started to regain trust and excitement and more energy.

R: A lot of recent media reports say that HNIs (high net worth individuals) have cut down venture capital funding for startups in the country. Can our startups survive this funding winter?

A: The first question is why do startups need funding? You need funding so that you could get to markets fast. You need faster development, faster prototyping, and faster access to markets. You need all the money that you can get to do all these in a very short time. My take is that if you have a good product to offer, then there are a lot of investors who will still want to pick it up. If you are going after the valuation bubble – that is you are going to project exponential growth without a product in hand -- it might not be the best time to be in the industry. It's a personal belief. Valuations are a very complicated thing when it comes to investors and startups.

Anoop Ambika is also the CEO of Genpro Research. Photo: KSUM/Special Arrangement

There is a lot of capital available. People have already made a lot of money with the startup boom in the last 10-15 years. What are you going to do with that money? Investments will be there. Who will people invest in? One, already successful companies because it's a safe bet. Two, companies that still have an actual product and actual solution to problems that affect the masses.

I see investments coming into the service sector. The valuation of IT services companies has not been very great. Services companies were not getting valued highly but they were all recording reasonably good growth. Those companies will become valuable because that is a safe place to keep your money if a recession arrives.

Again, we are talking about recession fears, not an actual recession. We have been talking about this for the past year. Even if that happens, there's capital on the table and it will get directed to the right companies. The focus of KSUM is to create the right companies so that the HNIs of Kerala will be able to invest in our startups.

R: A funding freeze seems to be a reality. Will that have a negative impact on the startups in Kerala in the immediate future?

A: The funding deals that happened in Q1 of 2022 dropped compared to the previous year. But funding has picked up from Q1 to Q2. The funding winter has not happened. Everybody is expecting it by the end of the year. What will happen to Kerala? I would say it's a closely knit fraternity. Everybody knows each other. There are a lot of angel investors in the system. As far as I know, they are still actively looking to invest.

R: For the past three years, Kerala has been ranked the top performer in the national startup ranking. This June, we were ranked first in Asia in Affordable Talent in Global Startup Ecosystem Report (GSER). But there is criticism that 'affordable talent' only means lower salaries and there is nothing to cheer about. What’s your take?

A: I put it in two ways. I can always argue that Kerala is the most cost-effective ecosystem into which you can plug in your startup and start working. The biggest challenge for the startup ecosystem is that it is always starved for money. If I can do what I can do with Rs 10 lakh in Bengaluru with just Rs 1 lakh in Kerala, why shouldn’t I come here? That could be our marketing pitch to the rest of the country.

Anoop Ambika
Anoop Ambika took over as the Chief Executive Officer of KSUM with a rich experience in the fields of technology and entrepreneurship spanning over a quarter of a century in and outside the country. Photo: KSUM/Special arrangement

On the criticism, do you think anybody would stay in a company for lesser pay than what one could make elsewhere? Money is not always the motivation for people to come together and do things. It could also be the vision, the leadership itself, and the impact you could make on the rest of the world. When you say people here are working for lesser salaries there might be other reasons also. They like the ecosystem is the answer that I would like to give.

R: You said you want to change the perception that startups are all about IT. You also want to promote businesses that are non-IT or beyond IT. Can you please elaborate on this?

A: We need to use technology to touch upon areas where the common man comes into the picture. That's always food, clothing, shelter, education, a good environment, and waste management. When you think about KSUM, do not only think about creating a software application. Think about the technology that's going to change things that affect people's day-to-day life. That's what's going to bring a change in society. That's what's going to create exponential wealth.

A group of foreign delegates at KSUM campus.

R: What stops Kerala startups from becoming unicorns?

A: I’m not a big fan of this unicorn concept. My take is that we should create sustainable businesses that create jobs, wealth and world-class products. If a company becomes a unicorn in that process I will be extremely glad.

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