UK-India: Potential for collaboration for cross border start-ups

Cross-border teams that complement each other’s technical and business strengths will define the future of successful start-ups. Britain with its vision and India with its technical expertise offer a win-win partnership solution.

India has taken its place as the world’s leading start-up base with the presence of more than 4,200 start-up ventures. By registering a growth of 40 per cent over the last year, the country has overtaken Israel to become the third largest start-up base after the US (40,000) and the UK (4,800).

Unlike the US, start –ups are a relatively new phenomenon in both the UK and India. In Britain, it was only in 2010, when creating a successful start-up ecosystem in London and elsewhere received attention from No. 10 and rest of the government. Aside from tax breaks offered by the Conservative led coalition government through the Small Enterprise Investment Scheme, the government played a proactive role including using the public purse to achieve this.

In India, it has been similarly gaining ground over the last six years thanks to availability of funding, the growth of the mobile market and creation of an ecosystem of angel investors and accelerators. The new initiatives by the Narendra Modi government will no doubt further the start-up environment.

While ostensibly the start-up train in UK and India seem to move on a similar trail, there is a lot of difference in the two environments for a start-up investor.

India is the youngest start-up nation in the world, with around 72 per cent of its founders less than 35 years old. In the UK, start-up creators are much older and usually folks seeking a mid-career change or professional women looking for a work-life balance post child-birth. This leads to the failure rate of start-ups in the UK less than in India.

UK start-ups tend to have a later stage entrepreneurial start by funding their own businesses as compared to India. This also means that these entrepreneurs in the UK have greater expertise and experience in a particular industry and, more often than not, tend to start-up in areas they see an opportunity within their own industry. In India, the entrepreneurs are more like “bright young things” who try and replicate the success stories of the West in terms of execution and by achieving scale.

Britain is a tiny island with a population of 60 plus million whilst India has over 120 million smartphones expected to reach 700 million in the next four years. The vastness of the country means ecommerce becomes the best option of buying the latest and the best. An old archaic service delivery system means greater opportunities.

This leads to funding levels in India is being far higher than in the UK. In 2015, Indian start-up founders managed to raise capital to the tune of around $9.2 billion, an increase of over 125 per cent over the previous year.

In the UK, the funding has been around the $2.5 billion each year for the last couple of years.

Therefore, British and Indian respective start-up strengths can complement each other. I have already come across a number of cross-border teams and ideas, feeding in the knowledge gap that is currently limiting many start-ups based in the UK and India.

The UK has strengths in the less tangible aspects of developing and propagating a business, such as branding, marketing and design. Indian technical expertise complements these strengths well, as does the fact that Indians have a different set of cultural references. If you go to any technological networking event in London, you will find that the vast majority of founders there are looking for a “technical co-founder” to help them realise their vision. The chances of running a successful technical start-up with founders who have no technical expertise are slim.

So, my advice to all of them is to partner in India. Similarly, for B2B cloud-based businesses looking at international markets getting a UK-based cofounder is a good idea as it would bring gravitas, domain knowledge and international market experience into play.

I see more and more cross-border founding teams coming through in the near future and this would cross-pollinate and enhance the start-up environments of both the economies.

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