Accelerators from around the world are entering the early-stage Indian startup scene and making aggressive investments.
Hi Everyone Today We Will Talk About Global Startup Accelerators Investing In India
2 years ago, Vikram Upadhyaya, chief mentor at Delhi’s Green House Ventures Accelerator, approached one of Japan’s largest venture capital funds, World Innovation Lab (WiL), to collaborate and raise funds for Indian startups.
It was a calculated move that paid off. “They have promised to put close to $50 million into Indian startups over the next three to four years,” says Upadhyaya. Two of the startups GHV was working with, LazyLad and MyTaxiIndia, raised $500,000 each from individual Japanese investors and a Japanese travel major last year.
“By 2010, Japan was struggling to work with China. It was evident that they were looking out for other opportunities. India was the obvious pick,” We tied up with WiL, and 11 Indian startups have benefitted.”
Vikram Upadhyaya, Green House Ventures
Upadhyaya, adding that 180 big Japanese corporate want a slice of the Indian startup pie. Although WiL is a late-stage fund, it has identified India as a market and wants to invest in early-stage startups to get the maximum return on investment. Eleven Indian startups have benefitted from the tie-up.
For long, startup accelerators were considered supporting actors, merely helping a startup build business. Over the last two years, however, global accelerators, particularly from Europe and Asia, have started tying up with local accelerators to get into the early-stage Indian startup scenario and make aggressive investments.
Over the past few years, international VCs like Tiger Capital, Accel Partners, Nexus Ventures and Google Capital have been investing in Indian startups. Earlier this year, Sequoia Capital announced the biggest raise by any VC fund — $920 million — primarily for Indian startups. And now, it’s the time of the accelerators.
The interest in strategic tie-ups with Indian accelerators is coming from Japan, China, Singapore, Indonesia and Malaysia. Earlier this month, representatives of Shanghai’s Angelvest, an angel investor group that has invested in 32 companies in Beijing, Hong Kong and Singapore, came to Bengaluru to interact with early-stage startups in India.
Hong Kong-based technology company, Jaarvis, with businesses in Singapore, Australia and India, decided to launch an India specific accelerator in June 2015. It has invested up to $50,000 each in 15 startups. Ten of these are now in discussions with investors from Singapore and Japan.
“The market opportunity in India is too big to ignore. The cost of doing business is reasonable and it’s a hot market with a lot of startups,”
Brett Stevens, Director and VP of Jaarvis Accelerator.
Brett Stevens is looking to be an intermediary between international investors and India. “The government is supportive, which makes it easier and more reliable to do business here [compared to China],” says Stevens.
The potential to find more unicorns in India is another reason driving investors. And the statistics back it up. In 2015, four unicorns emerged out of India.
“We are a funnel for them. They see the possibility of a billion-dollar company emerging. So they are approaching local institutions in India to provide insights,” says Apoorv Ranjan Sharma, whose seed investment platform Venture Catalyst has been receiving a lot of interest from investor groups in Dubai. “We are in the middle of talking to a few who want to collaborate with us and invest in Indian companies.”
Indian entrepreneurs are gaining too. Gurgaon-based MyTaxiIndia founder Anshuman Mihir says Indian accelerators are helping Indian entrepreneurs understand the foreign market through these partnerships. “When we got backing from Japanese taxi firm Nihon Kotsu, it helped us gain a global perspective to scale our company,” he says.
EUROPE PLAYS TOO
UK-based accelerator Entrepreneurial Spark partnered with Delhi-based Viridian Ventures in December 2015 to launch ESpark- Viridian Accelerator to create programmes for entrepreneurship development in which they plan to invest about $300 million.
Last year, French innovation agency Paris and Co tied up with two Indian incubators, Mumbai-based Venture Nursery and Noida’s Nkube. Numa, a French accelerator, partnered with Bengaluru’s coworking space Cobalt to launch an accelerator in the city at the same time, only the second international Numa accelerator after Moscow.
INDIA HAS THE THIRD HIGHEST DENSITY OF STARTUPS.
“India has the third highest density of startups. Investors don’t want to go to the primary market. It is always the developing market as opposed to the developed that is sought,” says Naresh Narasimhan, CEO of Numa in Bengaluru. Numa has taken a 5% stake in each of the 11 startups accelerated under its six-month programme.
When Paris & Co was in India looking for partnerships last year, it approached Venture Nursery. From January, startups from both firms can visit one another’s facilities. Paris & Co, which has 200 startups and 20 incubation centres, considers India a big market and wants to internationalise its own ecosystem in the process.
After the US, India remains the fastest growing country when it comes to startups. A 2015 report by Compass on the global startup ecosystem ranked Bengaluru as the fastest growing ecosystem in terms of VC and seed investments. With a growth index of 4.9, it left Singapore (1.9), Paris (1.3), and Tel Aviv (2.9) far behind.
Numa’s COO Fredric Oru says they are looking to attract French and European VCs like Partech Ventures, Iris Capital, Balderton Capital or Index Ventures.
“By bringing Indian startups to France, we are hoping to see top VCs and angel groups spot high potential and take the risk to fund a non-European company, India’s startup growth is no passing trend; it’s a revolution.”
Fredric Oru, Numa, French accelerator
ORU AGREES: “THE NUMBERS ARE TELLING — FROM 3,100 STARTUPS IN 2014 TO A PROJECTION OF 11,500 BY 2020. THIS IS CERTAINLY NOT A PASSING TREND, IT’S A GENUINE REVOLUTION.”
Does that mean that US accelerators have taken a step back? No, they’ve stepped up their game, explains Sharma. In December 2015, his Venture Nursery tied up with Plug and Play. Based out of Silicon Valley, Plug and Play, which incubated Dropbox, PayPal, LendingClub and Zoosk, invests in 100 new ventures every year. They see this as the perfect time to launch in India.
Silicon Valley-based Spinta Accelerator launched India operations in August 2015 with a 400-member technology team, while US retailer Target launched its India accelerator and has taken three batches into its programme already.
Foreign markets are relatively easy to break into due to existing networks Indian entrepreneurs have, says Sharad Sharma, co-founder of think tank iSPRIT. “But the opposite is not the same. European and Asian players have realised that the Indian startup ecosystem is fairly big.”