Kerala has come a long way with regard to its start-up ecosystem but still needs to improve the conversion rate, observed V.K. Mathews, founder and executive chairman of technology major IBS Software.
He was speaking to The Hindu on Wednesday on the sidelines of a function kick-starting the silver jubilee celebrations of the company. IBS is the largest unicorn in Kerala, valued at $1.5-2.0 billion (2021 report by Credit Suisse).
Mr. Mathews said that while the change in social psyche, government support, and infrastructure have helped create start-ups, not many of them have made it big.
He observed that Kerala needed to improve the conversion rate, which called for more investors and mentors. “Conversion is possible only through mentoring and investment. Not many may volunteer to mentor as a goodwill gesture. The government has to come up with schemes whereby mentors are also benefited,” said Mr. Mathews.
Analysing the conversion rate, he said most start-ups were working on horizontal themes that could help anyone. “But that makes it more difficult to succeed because there are big players. For instance, Microsoft is a horizontal player, while IBS is a vertical player. We play in a smaller area where we can be an expert,” Mr. Mathews said.
‘Experience matters’
Explaining the reason for the disproportion between service start-ups and products start-ups in Kerala, he said product-based start-ups required business understanding. “It is a bit difficult to have that when you are coming straight out of the university. Problem solving requires understanding the sector concerned and not just knowledge of the technology. One should know the problem that needs solution. IBS was a success because I had 14 years of experience in the airline industry when I set it up,” Mr. Mathews said.
He said IT industry never faced any problem in Kerala, though the same cannot be said about other industries. He felt that Kitex Group opting Telangana for investment was a loss for Kerala. “We really need to create jobs, for the government to be able to fund welfare activities,” Mr. Mathews said.
IPO-ready
He said IBS Software was IPO-ready and would go for it when market conditions were right. “There are positives in getting listed publicly, but we are not hard-pressed to go for it,” he added.
“We only stand to gain and nothing to lose. We don’t need to raise capital for our global expansions, since we are quite adequately funded. As a publicly listed company, we can use our stocks as currency for mergers and acquisitions,” Mr. Mathews said.
He felt the present market conditions remained volatile owing to the huge supply chain constraints caused by China and the panic in global economy owing to the Ukraine crisis.
