Karnataka to launch fund for startups

The Karnataka government plans to launch a fund for tech startups in the country under its start-up policy announced in 2015, the state's IT minister Priyank Kharge stated during a media interaction in Bengaluru today.

The minster invited startups from across India to register in Karnataka to avail of the benefits.

In 2015, the Karnataka government had launched a fund with a corpus of Rs300 crore, to back startups across different sectors such as biotechnology, tourism and animation under its start-up policy.

Entrepreneurs can avail of the proposed funding by registering their companies under the Karnataka Shops and Commercial Establishment Act, 1961, Kharge who is Karnataka's minister for information technology, biotechnology and tourism, said.

"We want to take our startup policy to the national level this year. We will support startups from across the country provided they pay taxes here," Kharge said.

The minister did not elaborate on when the new phase will kick off and whether more funds will be allocated. About 5,000 startups have registered with the Karnataka government so far under the policy, Kharge said. The state had given funds to 250 firms in 2017. In the five-year startup policy plan, the state government had set a vision of boosting 20,000 technology-based startups by 2020 in Karnataka and creating 6 lakh direct and 1.2 million indirect jobs in the sector.

The move to attract entrepreneurs from across the country has its own advantages and challenges, some startup ecosystem members said.

"There is a good side to this and a bad side. The good part is it will attract great talent and businesses here, and will boost employment," said Naganand Doraswamy, founder of VC fund Ideaspring Capital and former president of TiE's Bangalore chapter. "However, Bengaluru is already congested, and the government will need to find the right place, maybe outside the city," he added. Many of the unicorns (startups valued over $1billion) in the country, including Flipkart, Ola, Mu Sigma, InMobi and Quikr are based in the state.

Despite the state government promises, startups continue to face hurdles in the state, from infrastructural issues and regulatory issues while poor infrastructure has bleakened the prospects for several startup hopefuls.

It may be noted that the recent floods in Bengalure and its surroundings has affected several startups and their staff, like many residents of the city.

Among options are an increase in the tax exemption limit, a return of standard deduction as well as extra benefits for health insurance and even bank FD.