The government of Tamil Nadu will set up a ₹100 crore ‘Co-creation Fund’, a unique model designed to participate in private sector venture capital (VC) funds.
According to details in the ‘Tamil Nadu Startup and Innovation Policy 2023’ that was released by Chief Minister M.K. Stalin on Wednesday, the fund, to be managed by investors and coordinated by The Tamil Nadu Startup and Innovation Mission (StartupTN), is inspired by the Yozma (meaning ‘initiative’) model, established by the Israeli Government in the 1990s to kick-start innovative industries by investing in new venture capital funds.
The State government will contribute 40% (with a ceiling of ₹10 crore) in regional, rural impact, women and climate action-focused funds and 20% (with a ceiling of ₹5 crore) in other thematic funds promoted by the private sector. As per the regulations, the fund size should be ₹20 crore and above, in case of a new fund. The government will bear 75% and 50% of the fund setup costs, respectively, for the above-mentioned categories. The operations will be managed by the fund promoters.
This policy is valid for a period of five years from the date of its notification or till a new policy is formulated. The government has also said that startups promoted by transpersons and persons with disabilities, that have failed to raise funds from mainstream sources will be identified, and 10 such startups will be given a grant-in aid of ₹5 lakh in addition to giving them special attention in the Tamil Nadu Startup Seed Grant Fund (TANSEED) programme.
Social Justice Venture Lab
The policy also said that StartupTN (the nodal agency of Tamil Nadu responsible for promoting startup and innovation activities) will establish a Social Justice Venture Lab, a hybrid platform that assists SC/ST founders in validating their solutions right from the early stage, identifying and utilising technology, building a team for scaling, receiving mentorship, and obtaining regulatory support. The Venture Lab will also offer intensive post-investment support services to companies that have received funding through the Tamil Nadu SC/ST (Scheduled Caste/Scheduled Tribe) startup fund.
Another key point of the policy, which has over 50 action points, was Smart Cards for Start-STEPs (budding entrepreneurs) and startups. This will be issued with support features to register companies, to avail of recognition from the Department for Promotion of Industry and Industrial Trade (DPIIT), to apply for patents and trademarks, for statutory compliances, for a web presence, vital coaching services, technology upgradation, marketing, financial services and other support services required for an early-stage company to take its first few steps.
The beneficiaries of this initiative may also access facilities developed by State/select government of India supported labs and institutions. The Smart Card will be loaded with these benefits and services at a subsidised cost, the policy said
