Tamil Nadu falling behind in race to attract angel funding

Interestingly, thought Tamil Nadu may have a high concentration of small and medium enterprises (SMEs), they don’t figure among the top destinations when it comes to start-ups. Karnataka and Maharashtra, account for the highest number of venture fund-backed start-ups though they clearly do not have a big base for SMEs. Therefore, not surprisingly a decade ago, Chennai, from a position advantage that it had along with Bengaluru or Delhi, is lagging behind when it comes to venture capital or private equity funding.

Key findings of the annual report on Indian VC and PE on Start-ups, “Inspiration and Momentum for the Gladiators”, depict the dynamic nature of entrepreneurship here. The largest number of angel investors are in Delhi (i.e the NCR comprising adjacent cities to Delhi such as Gurgaon, Noida, and Okhla) followed by Mumbai and Bengaluru. The three destinations, together, account for 88 per cent of the total investors in tier I cities. Chennai, Hyderabad, and Kolkata account for only 12 pc of the total investors in Tier 1 cities. 

Speakers and analysts expressed multiple viewpoints, opining that the birthing of a start-up happens in Chennai with big-ticket investments. But the lack of talent availability for senior positions – VP and CXO levels, climate, dull bureaucracy, expensive manpower, cosmopolitan baggage remains the oft-cited reasons for the state losing its sheen. Also, investors typically push the start-ups to shift their base to other places to access high-level talent and climate factor, among other things.