Tamil Nadu is recognised as one of the leaders in the start-up ecosystem space in the country today. The state has traditionally had a strong industrial ecosystem hub thanks to its policies far ahead of their times. The growth story of the start-up scene adds to showcase its economic development and reiterates its position as one of the country’s most industrialised states.
The number of start-ups being incubated in the state has grown over the last four years from just 2000 to over 10,000 indicating a robust structure in place. Its growth has been much higher than the national average. StartupTN (officially, the Tamil Nadu Start-up and Innovation Mission), the nodal agency founded in 2018 with the goal of fostering an innovation ecosystem in the state to help incubate start-ups and help them find their feet, has undertaken several initiatives in this regard. The state has 12 sector-specific policies that have a specific focus on start-ups, including the flagship Start-up and Innovation Policy. Recently, the State Planning Commission has also brought out a comprehensive report titled the Start-Up Ecosystem in TN: Opportunities and Challenges. The publication was the outcome of a nine-month study undertaken by the Centre for Research on Start-ups and Risk Financing, IIT Madras.
The excitement about the growth potential of the start-up ecosystem can be gauged from the success of the recent Global Start-up Summit 2025 held in Coimbatore earlier in October 2025. Held to showcase the emergence of Tamil Nadu as a leading hub for innovation-driven entrepreneurship, the two-day event saw more than 72,000 footfalls, with a whopping 429 sessions held. It saw participation of delegates and organisations from over 45 countries.
One of the key areas of the above-mentioned report is with respect to addressing the challenges to unlock the state’s full potential in the arena. By virtue of being the state’s capital, Chennai accounts for more than one-third (with more than 4,300 start-ups) of the total start-ups incubated thus far, with other districts such as Coimbatore, Kanchipuram and Madurai lagging far behind. While this lopsided growth is understandable, with the concentration of start-ups in larger cities as compared to other parts, a trend seen across many other states, it is imperative that steps are actively taken to address the imbalance.
Yet another aspect relates to funding, with private investment being low. It is heartening to note that recognising the need for participation of more venture capitalists, the Chief Minister announced the allocation of Rs 100 crores for a fund of funds at the Coimbatore event, which would be used to form venture funds in every big city in the state. Bureaucratic procedures that impede easy access to government support need to be reviewed and simplified, particularly with respect to the application process. There is also a need to create more awareness with respect to availability of various sources of funding, particularly with respect to state government funding, eligibility criteria, etc.
The state has set a target to become a $1 Trillion economy by 2030 and has seen the growth of the start-up space as being integral to achieving this objective. While undoubtedly it has gotten off to a strong start, as is evidenced by its Best Performer recognition by the Government of India in Start-up Rankings 2022 and the fact that it is recognised as the country’s third largest startup ecosystem today, it is important to recognise the obstacles and take suitable corrective measures to ensure that the early successes are consolidated and that it continues on its smooth journey.