Why India is Not the First Destination of Choice in Asia for International Growth-Stage Startups For decades it has been China and now it's the South East Asian countries, the favourite being Indonesia

By Pritish Sanyal

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For international growth-stage startups, Asia is a north star market, but India is not their first destination of choice. For decades it has been China and now it's the South East Asian countries, the favourite being Indonesia. For growth-stage startups and startup investment funds, the new darling is Indonesia.

Indonesia's popularity is not a surprising phenomenon—the credit for it goes to the nation for positioning itself as an attractive destination for international startups and Western and Asian investment funds. It's population — the third largest in Asia and fourth largest in the world — a growing GDP and most other macro indicators to match, make it an attractive market for startups. Indonesia sure has its ducks in a row to lure the new-age entrepreneurs. Indonesia's GDP per capita in 2017 was $3,845 — approximately twice that of India.

It is perplexing how a country with a billion opportunities, a strong GDP growth, a startup-friendly progressive government, does not attract the attention of startups the way China and Indonesia do. Both countries have common challenges regarding language, data and market accessibility, still they are attractive, unlike India.

Where the answer lies
The answer lies in the image that India projects internationally. A country with great promise and talent, yet weak in infrastructure and beset with confusing and often tedious rules and regulations. A growth-stage Hong Kong-based startup was reluctant to consider India because the founder perceived that India has no digital payment infrastructure, which was a critical part of his business. This comes as a big surprise, given Paytm is an Indian household name now, but a founder who has operations in seven countries in Asia had no knowledge about it, let alone the Indian fintech revolution.

The market share

It would come as a surprise to many that India is WhatsApp's biggest market. India is also Uber's biggest market outside of the US. Since demonetisation, blue collared workers, including housemaids, are now paid through bank transfers and all use WhatsApp for communication. The "paan wala" street hawker has the same expensive phone as many of us do, but the only difference is, he is on a six-month EMI scheme and we, perhaps, on three-month EMI scheme. All of this is happening in a country whose GDP per capita is half of Indonesia's and quarter of China's, but consumer spending is 3x of Indonesia. Not sure, if the world is aware of these facts and the opportunities that lies within them.

The present administration has been promoting India as a startup nation at a regional and international level for the past four years with some success. If at all, the country wishes to meet its aspiration than it would have to shift gears and better market itself.

Things to learn

India can pluck a leaf or two from the Chinese marketing handbook. Despite the concerns of the international community about IP violations, duplication and a closed and opaque market insulated by language, China has been able to attract many startups to its shores.

The greatest learning for India is how the Chinese government has over the years laid down clear guidelines on how startups can establish a business in China, provide entrepreneur visas for international talent, provide funding and financial help to growth-stage startups and provide production infrastructure and resources. China has left no stone unturned in marketing itself as a startup nation across the world and taken every opportunity to talk about and promote the success that Alibaba, Tencent and others have achieved in China. They celebrate Jack Ma, Pony Ma, and others and treat them as national heroes, who in turn go around the world and spread the word.

A well-developed ecosystem

India needs to market its strengths and build an ecosystem that helps international early-stage startups thrive and grow; collaborate with international incubators, accelerators and venture funds and help their portfolio startups launch in India. The government must formulate and implement policies that attract startups to Indian shores. Along with efforts such as single window clearance and fast-track approvals, India needs to work on providing infrastructure and funds for these startups to get the business up and running. Promote and celebrate our startup entrepreneurs and talk the about success they achieve through their work.

It remains to be said that India has the hunger, the talent, and the market to be the leading destination of choice in Asia for growth stage startups, notwithstanding the challenges that it poses — real or perceived.

Pritish Sanyal

Director of Investment, AngelHub


Pritish is an experienced operator, with over 10 years of experience in building and scaling early and growth stage startups across Asia. He has worked with HYPE (Venture Studio by Airbnb and WeWork team), Surkus, GrowthKungFu, Gormei, HKU, and Accenture.

He completed his MBA from The University of Hong Kong and London Business School, and engineering from RV College of Engineering in Karnataka.

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