Andhra Pradesh catching up with startup binge

The startup ecosystem in AP is taking off. Many researchers are submitting their thesis to the universities but not taking them to commercial space. With new tech incubators, there is a possibility for commercialisation. Few startups from AP will get big ticket funding in next 2-3 years

Visakhapatnam: Despite a lot of initiatives, most of the startups in Andhra Pradesh are still at a nascent stage. There is a huge scope for them, as the new State has immense growth potential, especially in the Information Technology (IT) and IT-enabled Services (ITeS) sector, for which, the State government offered a range of benefits and incentives.

The startups from the IT/ITeS industry are permitted to file self-certifications. They are granted permission to be available for three-shift operations, including women working in the night for startups. However, such startups shall take the necessary precautions with respect to safety and security of their employees.

Apart from these, land will be allotted to only IT/ITeS startups, with at least 100 employees, based on their business proposal and investment capacity. They are also eligible for a rebate on the cost of land at Rs60,000 per employee for mega IT projects and Rs40,000 per employee for small-scale IT projects, up to a maximum of 80 per cent of the land cost.

Other than these incentives, the startup ecosystem in AP needs more resources from the government both at the State and national level for the development of startups. Many States like Kerala, Gujarat, Maharashtra, Tamil Nadu and Telangana are doing a much greater job in promoting the startup ecosystem.

The Centre is encouraging academic institutions through various government-funded schemes. Apart from the existing schemes to provide infrastructural support to these academic/non-academic incubators, there are plenty of schemes available for startups to provide seed funding and other grants.

The Government of India schemes include – Startup India Seed Fund Scheme (SISFS), National Initiative for Developing and Harnessing Innovations (NIDHI) - Seed Support Scheme (SSS), TIDE 2.0 and NIDHI - Entrepreneur in Residence (EIR) programme/ NIDHI's PRomoting and Accelerating Young and ASpiring technology entrepreneurs (PRAYAS).

The Government of AP is also working towards creating a startup-friendly environment through a separate body called AP Innovation Society (APIS) which is trying to push the next-generation entrepreneurs through various collaborations including academic institutes and ecosystem enablers in the State.

The APIS has four technology business incubators at Visakhapatnam, Kakinada, Tirupati and Tadepalli for budding and scaling startups. It is looking for more tieups to strengthen the startup ecosystem in the State. It offers a range of services including provision of co-working spaces, as well as help with intellectual property (IP) rights and patent filing.

Lavanya Chimata, Joint Director (Administration and Infrastructure) of APIS, said: "The State government is intending to create a Fund of Funds of Rs100 crore to meet the funding requirement for scalability of startups. A Seed Grant up to Rs3 lakh per start-up shall be provided for validation of idea, prototype development and other initial activities."

She adds, "AP has over 1,000 startups working in various sectors spread across 26 districts. The APIS has incubated around 360 startups working in a wide range of sectors including artificial intelligence, agritech, electronics, e-mobility, healthcare, fintech and biotech. They have collectively raised about Rs150 crore investments from various funding agencies."

The APIS has tied up with the National Research Development Corporation (NRDC) to help startups across the State in filing for intellectual property (IP) rights, patents, trademarks and designs. The NRDC's Technology Development, Validation and Commercialisation (TDVC) program will facilitate the manufacturing startups with funding up to Rs1 crore.

Bijaya Kumar Sahu, Head of NRDC-Intellectual Property Facilitation Centre, Visakhapatnam, said: "We have a mechanism for product innovation startups to provide fund for scale up, validation and commercilisation support. We have provided handholding support to more than 100 startups till now."

The State government policy includes services to support startups including financial support, clearances to set up new units, tax exemptions, and a single-window provision to establish startups within a minimum time. It is possible when the State government takes the startup ecosystem as a primary task and ensures provisions for their economic growth.

Dr K Raja Sekhar, Additional Director, Center for Innovation, Incubation & Entrepreneurship (CIIE) and Professor, Department of Computer Science and Engineering, KL Deemed to be University, says: "Out of five academic incubators and two private incubators operating in the State, CIIE is the only incubator supported by the Centre's four incubation schemes."

He said, "these government-funded schemes are allowing the establishment of incubation centres with state-of-the-art infrastructure and modern equipment to support the startups with technology, manpower, capacity building programmes and seed fund. Several startups can avail of financial support through these incubators and subsequent schemes."

The fundamental objective behind all these schemes is to encourage the startup ecosystem in the State and to provide a good number of employment opportunities to the local community. This can be possible with the help of the State government through its policies and support for strengthening the startup ecosystem. "The startup ecosystem in AP is taking off. Many researchers are submitting their thesis to the universities but not taking them to commercial space. With new tech incubators, there is a possibility for commercialisation. Few startups from AP will get big ticket funding in next 2-3 years," says ETV Ravi, CEO of Andhra University Incubation Council, also called as A-Hub.

He further said that both policy framework and affordable infrastructure are already available to the startups in the State. Rather than government policy or infrastructure, the startups require a conducive ecosystem. The potential startups mainly need mentorship, funding agencies and business plan support.

More startup unicorns are emerging from cities like Delhi NCR, Mumbai and Bengaluru thanks to the growth-oriented entrepreneurial ecosystem over there. The startups from Hyderabad, Chennai and Pune are also successful because of favourable business environment as well as the support from their respective State governments.

The startups from Vijayawada, Visakhapatnam and other cities of AP have both challenges and opportunities. The new State opens up endless possibilities in infrastructure projects. The State has the second longest coastline in the country, which offers enormous scope for maritime-related projects. Without confining to the IT space, the startups must tap the growing demand in such sectors.

The governments shall also aid the startups from all sectors instead of limiting the benefits to IT sector alone. The startups in the State want equity-free seed funding, subsidised co-working space, collateral-free working capital loans, and subsidised interest rates on business loans. The incubation hubs were unable to connect the startups with industries and funding agencies.

The incubation centres turned out to be a big business with numerous incubators mushrooming across the State. If they enable few startups, they get lakhs of rupees as grant money from the government. There are also some incubators that exploit the innocent entrepreneurs by pushing them to sell off bigger stake for lesser valuation.