Startup Karnataka: Second to Bay Area, but catching up fast

Karnataka is heralding the era of AI, Big Data, and Deep Learning in fields such as healthcare, manufacturing, and enterprise IT.

Innovation, they say, is the change that unlocks new value. Nations know that technology powers their dominance in the world of trade and commerce. While the Bay Area in the US fuelled the enterprise IT revolution with intellectual property, Boston and Cleveland – in the same country – became the innovation hubs for pharma and healthcare.

Now imagine a platform where all these combinations are available. In one state, four major cities.

This is Karnataka. Perhaps the only state in India to have innovated in many ways and at many levels. From the enterprise IT services business in the mid-nineties to the startup revolution beginning 2010, it is now heralding the era of AI, Big Data, and Deep Learning in fields such as healthcare, manufacturing, and enterprise IT.

According to YourStory Research, Indian startups raised close to $9 billion in 2015 and only $4 billion in 2016. This year, the amount is expected to cross $6 billion by the end of December. With this as a backdrop, one must understand why Karnataka is key to unlocking the startup revolution.

Priyank Kharge, Minister, IT and BT, Sci-tech and Tourism, Government of Karnataka, says:

“Our policies are copied by several states. We have been pioneers from the mid-nineties in creating a policy not just to support startups, but to ensure that they succeed.”

And succeed they did. Flipkart, Manthan, Bugworks Research, Practo, Ola Cabs, and MuSigma are some of the names that crop up when you think about Bengaluru.

A place for curiosity

Did you know the last antibiotic to fight superbugs in hospitals was discovered in the 1970s? Now a small company tucked away in C-CAMP at the University of Agricultural Science campus in Bengaluru is determined to renew the fight against superbugs.

Bugworks Research has just got CARB-X, a public-private initiative established last year, to support the global development of novel antibacterial drugs that address multidrug-resistant (MDR) infections, to make an initial investment of up to $2.6 million, with potential option payments of up to $3.5 million.

Anand Anandkumar, CEO and Co-founder of Bugworks Research, says: “We decided to start up in Bengaluru because the biotech talent is in this city and it has several pharma companies that can help with our research. Karnataka has created a rich ecosystem for biosciences startups to be incubated.”

Apart from this grant, the company had raised more than $2 million earlier. This is significant because only big names like Dr Reddy’s Labs or other larger pharma companies are able to take on such innovation.

Naganand Doraswamy, Founder of IdeaSpring Capital, says: “These ideas happen because of Bengaluru and Karnataka’s ability to combine learnings from its manufacturing past, the IT services business and the influx of technology ideas from western markets.”

At C-CAMP in the UAS Campus at Hebbal, there are over 30 bio-sciences startups working on impact-based businesses. So the global grant received by Bugworks is significant because of the work they are doing for the world.

CARB-X Executive Director Kevin Outterson, Professor of Law at Boston University, stressed that combating the threat of antibiotic-resistant bacteria will require greater global and private support.

This is certainly a feather in the cap for Karnataka and its support to startups. The policy itself offers comprehensive support to ideas and will then connect them to corporates. The government has created an emphasis on building a startup ecosystem in Belgaum, Gulbarga, Hubli-Dharwad, Mangalore, and Mysore.

The Karnataka startup policy

According to the policy, the State Government will assist in the setting up of Technology Business Incubators in institutions of higher learning with well-developed research and development facilities to foster a strong link between R&D and commercialisation of technologies so developed.

The following areas have been earmarked and are underway to create an ecosystem.

• Information & Communication Technology (ICT)/Internet of Things (IOT)/Software Products
• Manufacturing, including electronics systems design
• Robotics and 3D Printing
• Manufacturing 4.0
• Healthcare and bio-pharma agriculture and allied fields such as cleantech, energy, water and recycling, education, nanotechnology, and composites

The policy clearly lays out:

“The State would invite the private sector, including globally and nationally well-known accelerators and incubators to set up world-class incubation centres and accelerators or expand existing facility/operations on PPP basis. Such centres must provide all necessary infrastructure for the given sector such as R&D labs, common centre for prototyping, common testing/QA/QC labs, design studios and tool rooms, fab labs, biotech wet labs, green houses, animal houses, office spaces, small and large conference rooms, office spaces for collaborative work and other modern amenities as required, including shared services like legal, accounting, patents, investment banking, community events, mentoring, promotional and marketing support for startups. Land or built-up space would be provided at the applicable rates in industrial/ITparks/SEZs developed by the government in two-tier cities.”

No wonder, Karnataka is the only state to have invested in close to 200 startups. In fact, in 1999, Karnataka Information Technology Venture Capital Fund (KITVEN) was set up by the Government of Karnataka to support startups and has invested close to 50 companies.

ALSO READ: How Karnataka’s IT hub is readying for the future

Recently, a Karnataka programme called Elevate has funded over 100 startups and has set aside a Rs 35 crore fund to seed these ideas.

Of course, not all selected companies would get the same amount. While some would be eligible for grants up to Rs 50 lakh under the idea2poc scheme, others would be able to tap into the Rs 400 crore funds available with the department under various schemes.

“There are biotech and meditech companies that have already spent some considerable time on their ideas. Such startups would get funds from designated KITVEN funds where they have to part with equity and be eligible for higher amounts,” Priyank Kharge said.

He listed 27 startups in ESDM and IOT, 26 in IT and ITeS, 19 in meditech, 11 in biotech, three companies in agritech, six dealing with clean tech, and four in AVCG fields.

The government also inked agreements with nine companies to help these startups. These include Google and Amazon, which came forward to give cloud credits to these selected companies, with PWC for mentoring and consulting, Yes Bank and Kotak Mahindra Bank for banking and filing tax credits, Indian Law Practice for legal help, and with Digital Ocean and Zoho for cloud-based apps.

The government has set up the following infrastructure facilities across the state for startups:

• INSTITUTE FOR BIOINFORMATICS AND APPLIED BIOTECHNOLOGY (IBAB)
• GANIT LAB
• CENTRE FOR HUMAN GENETICS
• INSTITUTE OF AGRICULTURE BIOTECHNOLOGY (IABT)-DHARWAD:
• NUTRA - NUTRI PHYTO PHARMACEUTICAL PARK, MYSURU - KARNATAKA:
• CENTRE FOR BIOTECHNOLOGY RESEARCH - UNIVERSITY OF HORTICULTURAL SCIENCES, BAGALKOTE
• BIO INNOVATION CENTRE (BBC)
• CENTRE FOR NANO SCIENCE AND ENGINEERING (CENSE)
• SEMICONDUCTOR MEASUREMENT, ANALYSIS & RELIABILITY TEST LAB
• IIITB- INNOVATION CENTRE
• COE-IOT
• Central Manufacturing Technology Institute

The government has also set up the following incubators:

• GOK NASSCOM 10000 STARTUPS WAREHOUSE: GoK-NASSCOM Startup warehouse is a subsidised co-working space spread across 30,000 sq ft. This facility will help create a very robust ecosystem to support early-stage companies by getting angel investors, VCs and enterprises to play a more active role in Bengaluru and getting more startups to succeed.
• GOK INCUBATOR FOR TECH START-UPS(GIFTS): The Department of IT, BT and S&T, Govt of Karnataka, has identified a private partner, M/s Springboard Solution Pvt. Ltd as Program Manager (PM) to operate its first incubator operated on a truly PPP mode. This will help all startups in AI and deep learning.
• GOK-MOBILE 10X START-UP HUB: This hub is set up as a Centre for Apps Excellence for innovation and entrepreneurship in app development. It provides early-stage app startups and developers with highly affordable co-working space, training centre, testing lab and design centre conveniently located in the city.
• BANGAlORE BIO INNOVATION: The Bangalore Bioinnovation Centre (BBC) is a first-of-its-kind and the largest bio-incubation centre in the country and is an initiative of Department of IT, BT and S&T, Government of Karnataka. Nestled between the academic zone comprising Institute of Bioinformatics and Applied Biotechnology (IBAB), Centre for Human Genetics (CHG) and bio-industrial zone, the centre aspires to create a seamless value chain connect from ideas to startups and ventures. With a total funding of 56 crore in building, labs and instrumentation, the facility presently has 50,000 sq ft of state-of-the-art incubation and instrumentation euipment. Sixteen top-notch BT startups selected through a rigorous selection process are benefiting from the infrastructure.

The scale of operation in Karnataka for startups far surpasses any other State. Only Telangana, Gujarat, Rajasthan, and Andhra are among the other states pushing for a startup revolution in this country.

While others follow, Karnataka is already setting up a centre of excellence for BigData, AI, Blockchain, and CyberSecurity. The state is clearly poised to be a leader in biotechnology and nano-science.

The future is in Karnataka because the quality of startups is getting better every year and the industry connections are only going to make Karnataka an innovation hub.

(The Bengaluru Tech Summit is scheduled for November 16-18. For details visit http://www.bengalurutechsummit.com/)