State: Tamil Nadu
Language: Tamil, English, Telugu, Urdu, Malayalam
Population: 70,90,000 (2011)
Weather: Hot and Humid
Food: Steamed Rice, Idli Sambhar
Places to Visit: Marine beach, Government museum, Kapaleeswarar Temple, Rippon building and Sri Parthasarathy Temple
Industry Specialisation: Automobile, Software, Fintech, Electronic Hardware, Medical Tourism
Chennai’s Own: BankBazaar

 

Chennai, a city known for its rich history and vivid culture, has recently shifted its primary focus to its diverse startup ecosystem. Even though small, the ecosystem is thriving and has finally found its groove by positioning itself as a capital of deep tech startups and Saas – Software as a Service. The city houses one of the 5 IITs- making it a prime location for startups to bloom. The sudden increase in the number of startups in Chennai has led to an increased interest of investors and well as mentors.

Read about Chennai as the SaaS capital –
https://qz.com/india/1681154/chennais-startups-investors-co-working-spaces-mapped/

Chennai, The Ecosystem

Chennai’s startup ecosystem is semi-mature, having only started to grow in recent years considerably. Its proximity to startup capital, Bengaluru has given the Chennai ecosystem a newfound zeal to compete giving rise to a beautiful ecosystem, one that was initially predicted to be doomed because of their isolation and conservative nature.

The well-documented rise of startups like Zoho, Freshworks, GoFrugal, and many along similar lines has allowed for the Chennai ecosystem to be synonymous with SaaS innovation. One thing to note is that ex-Zoho employees run a lot of successful Chennai startups; this has created a network for them in the city and a shared playbook.

Their startups fall under a variety of categories, dominating the Fintech, AI, and Deeptech industries. Other than SaaS, Chennai also specialises in B2B operation. Over 2% of tech startups in the country are born in Chennai. However, that hasn’t stopped them from giving them the world household names like Bharat Matrimony, CaratLane, TVS Automobiles, Flintobox, etc.

Read about all the prominent startups in the state –
https://inc42.com/features/tamil-nadu-startup-hub-an-ecosystem-of-entrepreneurs-focused-on-sustainability/

Funding

The city houses some of the most sustainable businesses- having raised two unicorns with relatively little funding when compared to Karnataka, Delhi, or even Maharashtra. In 2018, 26 Chennai-based startups raised close to USD$2.3 Bn in funding.

Brands like Chai Waale (INR 1.75Cr), The Indus Valley (INR 2.5Cr), Specsmakers (INR 23Cr), BankBazaar.com (USD$3.8Mn- Series D), and Flintobox (USD$7.2Mn- Series B) are some of the best examples how well funding has started to take flight in Chennai.

Funding opportunities in Chennai have grown multifold with The Chennai Angels, a firm with over 89 angel investors. They’re known for nurturing early-stage startups by giving them access to capital, mentorship, network, experience and entrepreneurial wisdom. There’s also close to 18 Venture Capital firms, including Omnivore Partners and Speciale Interests. Let’s not forget TVS Capital Funds Limited, a well known private equity player in the country.

Read about how Chennai has found its groove in the funding and investing sector:
https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/chennai-is-the-new-hotbed-for-deep-tech/articleshow/70514504.cms

Incubators, Accelerators, and Stakeholders

Another contributor to the ecosystem in Chennai is Headstart Chennai. Over the past 2 years, they’ve impacted 285+ budding and existing entrepreneurs through 9 editions of their flagship event, Startup Saturday. A platform for networking, motivation, and knowledge, Startup Saturdays, and Headstart, help entrepreneurs form a better collaborative tight-knit community. If you’d like to reach out to our team in Chennai, write to chennai@headstart.in

Chennai has acquired over 13 incubators including Paypal’s incubator- Start Tank. PayPal India partnered with The Indus Entrepreneurs (TiE) Chennai in 2014, to induct up to five start-up companies into the Start Tank Incubation Center located on PayPal, Chennai. A lot of these incubators are in the IIT Madras Research Park; one might go far enough to say that the heart of this ecosystem lies there.

One of the best academic/governmental incubators run in the city is by IIT Madras, the IITM Incubation Cell. The Incubator has helped close to 200 startups, generated over INR 435 Cr in revenue, and had investors invest INR 1677 Cr in its incubatees. Other such incubators include Villgro Innovations Foundation, Vel Tech- Technology Incubator, and A.C. Tech Campus.

The Government

Chennai’s growth has the Tamil Nadu government’s aggressive promotion of the blossoming of the startup ecosystem to thank. Due to Special Economic Zones- 18 of which are in Chennai- where business and trade laws are different, Chennai has a competitive but hassle-free climate. Their moderate standard of living furthers the notion and makes it the most preferred destination for startups.

Conclusion

While Chennai is now a hub for startups, the ecosystem still has a long way to go and many goals to achieve. Currently, there is a State Government Policy that is working on understanding the startup ecosystems trends and needs. For the future, the founders hope to be in talks with the government and convince them to be more supportive of the startups.

The Startups operating in Chennai are changemakers and undoubtedly make a lot of money. The ecosystem is expected to grow exponentially in the next few years and see an increase in the number of startups reaching unicorn status.

Meet Kaleidofin, a startup that embodies the vibrancy of the Chennai ecosystem here!

Contributed by:

Anoushka Chopra & Sanskriti Bhatnagar
Headstart Network Foundation