Bangalore fires a booster to make its startups take off

A government startup cell went live today in the state of Karnataka, whose capital city is Bangalore. Startups that register with it – subject to due diligence from a panel of experts from the government as well as the startup ecosystem – will become eligible for a slew of benefits.

True to his promise in an interview with Tech in Asia last week, Karnataka’s new IT minister, Priyank Kharge, unpacked a goodie bag for startups that goes far beyond funding.

1. Cloud services

The government is making cloud credits available from Amazon Web Services, Microsoft Azure, IBM Bluemix, and Digital Ocean. This is a big help for startups at an early stage, especially in areas like software-as-a-service (SaaS). The Karnataka state electronics development corporation (Keonics) will also make its current generation IBM mainframe computer and enterprise class storage available for proof-of-concept testing.

2. Internet plans

The government has tied up with telecom companies BSNL, Airtel, and Vodafone for discounted rates of high speed internet access for startups. Net connectivity cost is one of the pain-points that startups face – although the ecosystem as a whole needs better infrastructure too. Cloud telephony services are also being made available through partnerships with Knowlarity, Ozonetel, Exotel, and mGage.

3. Testing tools

The government is roping in providers of software testing and debugging tools for app developers. At the outset, these include CanvasFlip, which provides actionable feedback from users at early stages of product design to fix usability issues; Headspin, which has a cloud-based testing platform for debugging apps on a mobile carrier network; Aerospike, which will provide its enterprise database at a subsidized cost; and FlexingIT, which provides access to tech talent.

4. Payment gateways

Quick activation and free credits or discounted rates are also being made available from payment gateways and other financial services. These include Citrus, Instamojo, and Razorpay. Accounting software from ProfitBooks will be available free of charge for a year. More such support can be expected to be added, depending on requirements of startups.

5. Incubation facilities

The Karnataka government has taken up seats in the Nasscom Startup Warehouse, 91 Springboard incubator, and IAMAI Mobile 10x facility. These seats will be available at a subsidized rate to startups registered with the government’s startup cell. Currently, 300 of the 725 available seats are vacant. The government also has similar incubation facilities for biotech startups at the Institute of Bioinformatics and the Bengaluru Bioinnovation Center.

6. Funding support

To begin with, the government has an INR 2 billion (US$30 million) fund of funds for investing in VCs backing tech startups in various sectors. The IT minister expects to mobilize an amount ten times as much from corporations, investors, and other stakeholders with the aim of supporting an ecosystem of 20,000 startups by 2020. Priyank Kharge would like at least one-third of those to be product startups bringing a new wave of innovation to Bangalore, which is the IT services back office of the world.

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Apart from these specific benefits, there are also tax incentives, mentoring and networking support, as well as marketing and sponsorship avenues through the state government. Most of all, the minister told Tech in Asia last week that the government intends to provide product validation help to startups in association with various state-run corporations and services.

The young minister in his late thirties, who was once a techie himself, is keen to see Bangalore maintain its position as the startup capital of India and rise up in the pecking order of the world’s startup hubs. Several state governments in India are now rolling out incentives for tech startups, but the Startup Karnataka Booster Kit unveiled today appears to be the most comprehensive of them all. The partnership with tech biggies, in particular, is something that India’s Silicon Valley is in a better position to do than anywhere else in the country.

To a question from Tech in Asia on the response to this initiative from the Bangalore startup ecosystem, Priyank Kharge admits it has been “lukewarm” so far. But it’s early days, and with the launch of the startup cell today, one can expect things to snowball.