Public funding, govt aid help Gujarat keep lead in DPIIT Startup Rankings

Gujarat may not have large valuation startups but it is a top performer in the Department for Promotion of Industry and Internal Trade (DPIIT's) States' Startup Rankings 2021 on the back of public funding and institutional support.

DPIIT evaluated states based on 26 action points across seven reform areas, putting Gujarat as the best performer for the third year in a row. The seven reform areas include institutional support, fostering innovation and entrepreneurship, access to market, incubation support, funding support, mentorship support and capacity building of enablers. It is here that Gujarat scored 100 per cent in terms of access to market and capacity building of enablers. It also scored 94 per cent in institutional support, followed by funding support (90), incubation support (88) and fostering innovation & entrepreneurship (87). However, the state's performance in terms of mentorship support was dismal, scoring zero percentile.

Incubators and startups in Gujarat say the state government forms more than 80 per cent of funding and market support and private capital is lacking.

Gujarat has more than 8,000 registered startups, with the state government giving 180 incubation centres financial assistance of Rs 200 crore.

"While a large part of it is public funding through multiple government schemes and policies, the private funding continues to be a major gap compared to other hubs like Bangalore and Mumbai. Be it corporates, HNIs or even SMEs, these are important stakeholders who can bring private capital where Gujarat needs to catch up since today 80 per cent of funding comes from the government," said the spokesperson for a leading incubator on condition of anonymity.

Investors in Gujarat are also more focused on revenue than valuation. "This helps both startups and investors to not get carried away and engage in long-term, result-oriented work. Also, most of the investors here come from manufacturing backgrounds so they think in terms of topline and bottomline," said Sumeet Mohanty, co-founder of Phycolinc Technologies Pvt. Ltd., an Ahmedabad-based startup.

The startup has developed a Google Assistant-styled tool called 'KrishiMandir' for farmers to help them diagnose crop disease and connect them with the nearest agro retailer.

Such has been the difference between valuation and revenue in Gujarat that a state government analysis found that of the 300 startups that received combined seed capital of Rs 53 crore, 200 clocked combined revenues of over Rs 500 crore, said Dr Rahul Gupta, IAS, Industries Commissioner and State Nodal Officer of the Startup Gujarat Cell. The Industries Commissionerate is the nodal department of the startup ecosystem in the state.

"In the last few years, Gujarat has come up with several policies to assist early and mid-stage startups. Also, a large number of startups have been revenue positive. However, there is also a general perception that Gujarat is not the preferred destination for startups due to lack of skilled manpower which is driving startups to metros in later stages. Hence, we are now onboarding academic institutions and ITIs even as courses pertaining to these skill sets are being offered to especially attract tech startups," Gupta said.