Flush with cash, Indian angel investors are looking beyond local startups for the potential to strike it big. Can the Swiss startup scene offer prospects lacking in India?
In July, India and Israel announced the launch of a five-year, $40 million (CHF39.9 million) innovation fund between the countries. Designed to promote Indian investment in the Israeli technology ecosystem, the move was welcomed by Indian venture capitalists who had already announced plans to set up shop in Israel. Some are hoping for the same sort of partnership with Switzerland.
“Both Switzerland and Israel are good at deep technology that India is lacking. So, we are trying to take the best practices of both these ecosystems back to India,” Avnish Sabharwal of Accenture India told swissinfo.ch at the Swiss Startup Daysexternal link event in Bern.
He is on the lookout for promising Swiss startups in the so-called cleantech, medtech and healthtech sectors as well as robotics. Sabharwal’s five-day scouting trip was organised by swissnex Indiaexternal link, a Swiss government-funded initiative to promote science and innovation exchange with India. He’s not the only one on the lookout.
“I saw some healthtech startups today and it is a sector that is booming in India. We are opening four hospitals this year ourselves,” says Anjali Ajaikumar of the Indian company HealthCare Global Enterprises.
The Indian investors like what they have seen so far in Switzerland.
“The kind of technology we see in Switzerland is very deep in terms of disruption [of established industries] and innovation. We don't see as much in India,” says Prasad Vanga of Anthill Ventures, which help startups scale up.
The Indian delegation was also impressed by startups’ strong links to Swiss universities.
“There is a very good collaboration between universities, investors and startups which creates a great platform for budding entrepreneurs and allows them to grow rapidly,” says Preeti Nair of Parul University, who is looking to build ties with Swiss academic institutions.
Others attribute Swiss success to the startup funding model.
“What differentiates Switzerland from other countries is the strength of its series A and B funding with investors ready to write checks for $1-5 million,” says angel investor Neeraj Gupta.
He has received pitches from around 30 Swiss startups and has identified three that he may invest in. A regular visitor to Sweden and Canada, Gupta is particularly interested in investing in artificial intelligence, machine learning, cryptocurrencyexternal link and internet of things.
“Switzerland as a financial hub has a lot of potential to become huge in crypto,” he says.
While Indian investors were quite optimistic about Swiss prospects, they were dismayed by a lack of awareness and interest among Swiss investors and startups about opportunities in India.
“The opinion right now is, we don't know about India, doing business there may be difficult, so let's wait,” says Vanga.
The hesitation is partly to do with the cautious approach of Swiss investors. In a recent interviewexternal link, Economy Minister, Johann Schneider-Ammann – who also made an appearance at the Swiss Startup Days event - mentioned the difficulties faced by Swiss startups to raise funds to bring their product to the market. He hoped that the Swiss Entrepreneurs Fund – launched this July and operational from 2018 - that aims to raise CHF500 million to support Swiss startups will address this gap.
According to Vanga, the main challenge for European companies is making their technology global and the biggest markets that can help them achieve that are India and China. While China is getting some interest from Swiss firms that want to look East, India has been dismissed as a low-cost IT service provider, according to Sabharwal.
“India has the third-largest startup ecosystem in the world. We have ten unicorns [startups valued at over $1 billion] which is more than many other countries,” he says.
Sabharwal accepts that India is a complex country to navigate and can be viewed as difficult by investors and startups alike. He believes that partnering with the right organisation in India is key and hopes more synergies between Swiss and Indian investors might help.