Karnataka, particularly its capital, Bengaluru, has firmly established itself as a global hub for startups and innovation. With over 15,000 startups registered in the state and Bengaluru ranking 8th globally in the Startup Ecosystem Index 2023, Karnataka’s rise in the global startup arena is a testament to its conducive environment for entrepreneurship and innovation.

A Thriving Ecosystem
The significant achievements of Karnataka’s startup ecosystem can be attributed to several key factors:

• Remarkable Growth and Exits: In 2023, Karnataka witnessed a 57% increase in exits over $50 million and a substantial rise in unicorns, boasting 43 within the state. This highlights the growing maturity and potential of startups in Karnataka.
• Investment Proposals and Economic Impact: As of December 2022, Karnataka had proposed investments worth Rs 70,695 crores, according to the Department for Promotion of Industry and Internal Trade (DPIIT). In 2023 alone, the state received 62 industrial investment proposals worth Rs 3,607.19 crores, generating employment for over 10,000 people. This influx of investment has reinforced Karnataka’s position as a leading tech hub in India.
• Global Recognition and Rankings: Karnataka has consistently ranked high in various national and international indices. It was named the “Best Performer” in the DPIIT States’ Startup Ranking in 2021 and 2022 and was a ‘Top Performer’ in 2018 and 2019. Additionally, Karnataka secured the top spot in NITI Aayog’s India Innovation Index for three consecutive years (2020, 2021, and 2022).

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Sector-Specific Policies and Initiatives
Karnataka is the first state in India to implement sector-specific policies, which have been instrumental in fostering growth in various industries, including IT, biotechnology, animation, visual effects, gaming, and comics (AVGC), electronic system design and manufacturing (ESDM), and electric vehicles (EVs). This strategic approach has positioned Bengaluru as a sought- after destination for global capability centers (GCCs) across various verticals, hosting over 31% of all GCCs in India.

Investment Surge and Challenges
Despite a 74% decline in late-stage investments from 2022, Karnataka’s tech startups still attracted $2.3 billion in 2023. This drop reflects a broader global trend but does not overshadow the record-breaking $32 billion in startup investments Karnataka secured in the same year, according to Invest Karnataka. This investment surge underscores the state’s resilience and attractiveness to investors.

Focus Areas and Strategic Goals
Karnataka’s focus has been multifaceted, targeting economic growth, employment opportunities, technological advancement, talent development, export promotion, and global recognition. The state employs a Triple Helix approach, promoting collaborations between the government, industry, and educational institutions. Some key areas of focus include:

• Economic Growth: Startups significantly contribute to Karnataka’s economic growth by attracting investments, creating jobs, and generating revenue through exports
• Employment Opportunities: The startup ecosystem creates numerous job opportunities, providing employment to thousands of people in various sectors.
• Technological and Innovation Advancement: Startups drive technological advancements and foster innovation, making Karnataka a leader in tech development.
• Talent Development: Karnataka encourages the growth of entrepreneurial talent and mindset through various initiatives and programs.
• Export Promotion: Karnataka enhances its export potential by supporting startups that create innovative solutions and products.
• Global Recognition: The state aims to position itself as a global hub for startup activities, attracting international attention and collaborations.

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State Initiatives and Programs
Karnataka has introduced several state-specific initiatives to support startups at every stage of their journey. These include:

• Karnataka Startup Policy: Designed to provide comprehensive support across the startup lifecycle, from funding and mentorship to infrastructure and market access.
• Elevate Program: This flagship program identifies and supports early-stage startups, providing resources and exposure to scale their operations. It has aided 983 startups with a committed grant of INR 224.06 crore.
• Beyond Bengaluru Initiative: Aimed at nurturing innovation beyond the traditional hubs, this initiative ensures that startups across the state have access to necessary resources.
• Incubation and Acceleration Programs: Karnataka hosts incubation programs for over 350 startups, acceleration programs for 150+ startups, mentorship programs for 160+ startups, and capacity development workshops for 190+ startups.
• Centers of Excellence (CoEs): There are 14 CoEs in fields such as Artificial Intelligence & Data Security, Aerospace & Defence, and Cybersecurity, which address skill gaps, build awareness, and facilitate innovation in emerging technology.
• Youth Entrepreneurship Development: The New Age Innovation Centers (NAIN) throughout Karnataka support young entrepreneurs in building a mindset for innovation and risk-taking.
• Tax Incentives and Regulatory Advantages: Karnataka offers a range of tax incentives and simplified compliance procedures for eligible startups, allowing them to focus on growth.
• International Partnerships: Karnataka has established MoUs with global innovation hubs such as Silicon Valley, Israel, and Germany, facilitating knowledge exchange and cross-border collaborations.

Conclusion
Karnataka’s proactive approach to fostering a robust startup ecosystem has yielded impressive results, making it a leader in innovation and investment in India. With continued government, industry, and academia support, Karnataka is poised to maintain its position as a global leader in the startup ecosystem, driving economic growth, technological advancement, and global recognition.

Insights shared by Karnataka Innovation and Technology Society (KITS).

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