Tamil Nadu entrepreneurship gets boost after MoU

Ritu Jha-

A Tamil Nadu government-run agency has signed a memorandum of understanding (MoU) with a U.S.-based non-profit to tap expertise, funding and connect with successful businesses in the United States. The Tamil Nadu Start-up and Innovation Mission (TANSIM) CEO Sivarajah Ramanathan signed the MoU on July 7 in Milpitas, CA, along with Lena Kannappan, the founder of American Tamil Entrepreneurs Association (ATEA), an organization that fosters entrepreneurship among members of Tamil community in the U.S.

Kannappan, a serial entrepreneur and currently a board member and head of strategy at Healthcare Triangle, told indica that ATEA was established in 2016 to help aspiring entrepreneurs from the southern states of India. “This is the second MoU with a Tamil Nadu government agency,” he said. ATEA had in 2019 signed up with Guidance, a state agency that promotes investments in Tamil Nadu and facilitates single-window approvals for industries.

ATEA launched the digital accelerator program the same year to help early-stage start-ups to raise money, get mentored by subject matter experts and connect them with customers and partners.

Three years ago, the then Tamil Nadu chief minister Edappadi K. Palaniswami’s delegation announced a ₹50 crore grant for start-ups. Kannappan said the fund got into effect last year, and that the first cohort of start-ups is taking shape now. He said the Guidance cohort became operational after the pandemic hit in the middle of 2020 and “now we have over 50 start-ups with 80% of them originating from the U.S. and the rest from Tamil Nadu.”

TANSIM, Kannappan said, “is focused on tier 2 and tier 3 towns and villages. There, the companies are brimming with ideas, and while they focus on their ideas, we will curate those companies. We have small and mid-size investors, and we help provide the companies with the legal framework to work in Silicon Valley.”

ATEA, he said, will assist qualified U.S.-based start-ups to setup offshore development operations centers as well as support the U.S. start-up with a qualified talent pool from Tamil Nadu.

TANSIM CEO Sivarajah Ramanathan said the current program is different from Guidance, which was established to promote investment in general. TANSIM, on the other hand, will focus on promoting and facilitating a start-up ecosystem for state-based entrepreneurs, including bringing in big-ticket investments. Their advice portfolio includes, Ramanathan said, “mentorship, creating incubators, running accelerators and devising a go-to market strategy.”

To be sure, TANSIM is sector-agnostic. “The government encourages every organization… “If a business can scale or is designed for scaling, we will support it,” Ramanthan said.

He added, “The state government has created a ₹30 crore ($3.7 million) fund for companies promoted by Scheduled Castes (SCs) and Scheduled Tribes (STs) and a ₹50 crore ($6.25 million) fund for emerging technology firms. For companies to qualify, they will have to be registered in Tamil Nadu and will have to create jobs in the state. “If you are U.S.-based and are interested in opening a back office in Tamil Nādu that will create, we are willing to look at those options as well.”

Ramanathan, an entrepreneur himself who later launched the ‘Native Angels Network’ that has over 300 angel investors, said it was his passion to promote entrepreneurship that made him join government. He said there is a huge rise in the start-up culture in India, and with so many unicorns coming in the country, the next generation of entrepreneurs is already here.

“It is not just about creating a new company. It is the responsibility of government to help existing companies to be exposed to the tremendous technological and management changes.”

Ramanthan said associating with ATEA will accelerate the start-up cohort, and will such companies to raise funds in the U.S. and expand their market. “There are a lot of investors in the U.S. and we want to them look at Tamil Nadu as a viable option. We can be a gateway to those wanting to investing in Tamil Nadu. We will create jobs and back offices.”

He said state governments have limited policymaking power when it comes to laws and regulations devised by the Central government. “The state government has limited access on ease of doing business,” Ramanathan said.

Instead, the Tamil Nadu government is focusing on what policies principled on social justice to ensure that there is no hierarchical approach and women are given equal rights everywhere. Ramanathan said they also plan to teach intricacies of financing to up-and-coming firms. “Investing in a start-up requires a different kind of knowledge,” he said. “Investing in a start-up is not like investing in a mutual fund or fixed deposit in a bank. The percentage of failure in a start-up is very high.”