As special chief secretary and IT adviser to the chief minister of Andhra Pradesh, JA Chowdary has his work cut out—create a technology ecosystem that focuses specifically on startups, strengthen the talent pool to fuel that ecosystem, generate jobs and mobilise investments for the state. Luckily, Chowdary, 63, has had prior experience in building a similar ecosystem not too far away. Back in the mid-1990s, when N Chandrababu Naidu launched a mission to turn the state’s former capital Hyderabad into an information technology (IT) investment destination, Chowdary was brought on board to design an IT hub for the city. Hyderabad ceased to be the state’s capital in 2014 after the Telengana region became a separate state.
Starting up from scratch is also something that Chowdary understands well. The IIT Madras alumnus is also a serial entrepreneur and an angel investor. His first venture PortalPlayer, a startup best known for making the chips that powered Apple's revolutionary music device iPod, was acquired by US-based graphics processing firm NVIDIA for $357 million in an all-cash deal in November 2006. PortalPlayer had gone public on Nasdaq two years prior to the acquisition. Later, he founded TalentSprint, a skill development and talent management company, and co-founded angel network Hyderabad Angels.
In an exclusive interaction with TechCircle on the sidelines of the recently concluded Vizag Fintech Festival 2018, a state government-organised event aimed at attracting fintech startups and investors to Vishakhapatnam, Chowdary spoke about his vision for the new state in its quest to become a startup hotbed. Edited excerpts:
What is the overall vision to create the ideal startup ecosystem for Andhra Pradesh?
Our idea of a healthy startup ecosystem is one which offers greater access to business opportunities, a world-class talent pool, a friendly regulatory environment and early-stage financial support.
For a startup to survive and thrive, access to business is the most important factor. We are trying to create an ecosystem where startups are given an opportunity to tap business avenues, not just in this state but across the country. With a population of 1.3 billion, India is the world's largest data consumption country and data is the new oil. If startups coming to Andhra Pradesh can crack it here, we will help them grow pan-India and internationally with the various programmes and partnerships we have created.
What key initiatives have you created to attract startups?
Navigating through bureaucracy is one of the major challenges for startups when they deal with governments. We are a new state and we are here to make it easy for them. None of the states in India are fully digital, but Andhra Pradesh is a 100% paperless government. The chief minister doesn’t sign on any papers in his office. That’s the kind of digital environment we have created.
We are creating a credible line of institutions such as the International Institute of Digital Technologies (IIDT), India's first digital university, besides inviting renowned private institutions to establish centres here, so that we develop a high-quality skilled labour force from the ground up.
We are also forming special partnerships with startup hubs in many countries such as Israel, US and Hong Kong to give our startups exposure to global markets. These partnerships open up co-innovation programmes for them in addition to enabling them to set up businesses in international markets. We are also doing it vice versa, allowing international startups to come to Andhra Pradesh to explore the Indian market.
From an investment assistance perspective, we have created an early-stage startup fund that will soon start investing.
Being a new state, is it easier for Andhra Pradesh to create a friendly regulatory environment for startups?
As a new state, it’s very important that we create a friendly regulatory environment for our innovators. We are very clear that regulatory and bureaucratic hurdles should not hinder growth in this state. We are looking at creating new policies and standards to help our entrepreneurs.
Could you elaborate on the startup fund that the government is setting up?
We are creating a Rs 500-crore Andhra Pradesh Innovation fund. The government is contributing Rs 100 crore while private limited partners will pool in the other Rs 400 crore. The Rs 100 crore from the government is already budgeted, the money is available and now we are in the process of appointing an agency to bring a structure to the fund. We will have a fund manager to run the fund and make investment decisions. We will soon issue a request for proposal (RFP) to select the fund manager.
Later on, we will increase the fund size. We may also launch a growth-stage fund later or make necessary arrangements with our limited partners to co-invest with us in our seed startups in their follow-on rounds.
In addition to that, we are working with Andhra Angels (a new angel network being set up in the state) to match every investment they make. We will be sector agnostic in our investment approach.
Why is fintech a major focus of the state’s startup initiatives?
Fintech is a horizontal play because it’s a common element across sectors, be it agri-tech, health-tech, e-commerce, etc. We have addressed pure fintech in version 1.0. Now, we think it’s time to broaden the concept to attract more new generation companies and that was the focus for Fintech 2.0. Our focus right now is to create a vibrant ecosystem to attract the best fintech startups to Visakhapatnam.
We have created Asia’s largest fintech use case repository and a similarly large one for e-governance solutions. These are our IPs and we will give startups that set base here access to them. We are confident that when these startups become mature and successful, they will create many jobs and become a large revenue source for the government.
Which other sectors are you focused on?
Currently, our efforts are to facilitate soft investment (in fintech, education, etc.) to create a base on which a strong startup economy can be built. Outside those, we have identified certain sectors with huge opportunities.
With about 1,000 kilometres of coastline, tourism is a big opportunity, as is electronic manufacturing. We are creating an entire ecosystem for manufacturing, named ‘Silicon Corridor’ in the Tirupati-Nellore-Chennai belt that will focus on electronic components and devices.
Just-in-time inventory is very important for manufacturing companies as they prefer to source the components for their products within a 30-40-kilometre radius. We have created that ecosystem for them where all the components including plastic and cables are available in this belt.
We already have some of the largest manufacturers, including mobile phone companies, consumer electronics makers and automobile companies, present in this corridor. Andhra Pradesh is going to be the largest electronic manufacturing hub in the world after China and Taiwan.
A strong startup ecosystem needs a strong pool of investors. How do you plan to attract angels and venture capitalists to the new state?
We had a strong show of VCs at the demo day at Vizag Fintech Festival 2018. Most turned up voluntarily because they were aware of the good deal flow they could find in Visakhapatnam.
We had about 40 companies from across the world including US, Israel, Hong Kong, Paris and Canada, pitching to investors at this event. We are sure if we can successfully enable good deal flow, we will attract enough angels and VCs.