Moringa soup to millet flakes/ pasta/ noodles to banana granola/oats, startups in Tamil Nadu are feeding the consumer’s shift towards healthier food. There are 1,054 DPIIT-recognised startups, half of them set up in the last couple of years (see table). More than 110 startups got venture capital and govt grants of 5,245 crore (see table).
Some are looking at the export markets targeting the diaspora, focusing on product innovation, diversification of platter (protein, fibre-rich alternatives for rice, wheat), and increasing shelf life (coconut chutney and pulicha keerai that last 6 months).
They also work in animal husbandry, dairy farming, horticulture, organic farming, farm machinery, Startup TN data shows. They can tap into vibrant small and medium sized food processing units in TN which has 764 units, second highest in the country.
MABIF in Madurai, an early agri incubator floated by Nabard (National Bank for Agriculture and Rural Development), provides office space, common machinery for processing & packing, and labs to 385 startups and 517 farmer producer organisations (FPOs) from TN and surrounding states.
“We help with market linkages, create a space for branding and promotion of products, provide mentorship support, tech transfer and networking opportunities,” says Sakthi Balan A S, AGM, Nabard. “Startups are infusing tech in processing and packaging — retort and high-pressure processing, freeze drying. They visit international food fairs to identify potential markets and learn market-specific quarantine and food safety norms.”
The sector is capital intensive, with large investment going for plants, but has small-ticket funding, says Sakthi Balan. “PE investments are mostly less than 1crore, but the food-tech startup ecosystem is maturing.”
While there are many attempts at product innovation, most struggle with packaging, branding. A few startups TOI spoke to acknowledged the problem. Scaling with publicity and promotion is difficult due to high cost of customer acquisition and lack of sophisticated distribution channels like those of larger corporations, they say.
Sriram Prasad G, founder and chief executive of Keerai Kadai Ventures, says he exports to Middle East and Europe, but 70% of customers are from the Indian diaspora.
“It takes a year to bring out a viable product, including six months for validation of shelf-life, and costs 3lakh-4 lakh at the minimum. Then we need to get customer feedback and go for a beta launch. Startups need to focus on presentation to gain trust of the consumers,” says Sriram Prasad.
Southern states have huge opportunities for export of agri and marine products and startups should be promoted, says Ravichandran Purushothaman, president of Danfoss India and chairman of CII national committee on cold chains. “We must promote startups for tech intervention in solving labour shortages, market intelligence and to increase value addition.” Food products exports will go from $40 billion to $200 billion for southern states; TN should spend on skilling and creating food processing clusters, he says.