In May we laid down the reasons why startups should do business in India. And while everybody knows that preparation is key, we show you today the importance of being earnest explorers: What does it really mean to get to know the Indian market and how can our India related offerings help with internationalization.
The Development of the Indian market
Learning the hard facts and figures about the country and market your company thinks about expanding is a no-brainer. As the second-most populous country in the world, India’s middle class counts about 300M people and – roughly as many as all the markets of the European Union together. India also takes the third place right after the US and China when it comes to the size of the startup-ecosystem. The economic liberalization from the 1990s combined with stable politics, progressive regulatory systems and much entrepreneurial spirit has made India an attractive market for startups searching for opportunities to enter the Asian market. Especially the sectors Enterprise Tech, AI, Manufacturing, HealthTech, Logistic, and AgriTech offer opportunities for German and European startups.
Since the start of the global pandemic, startups located in India have been affected not only by negative consequences. Indian startups were able to raise more money than ever before, reaching US$16.9B in venture capital funding in 2021. These successful funding rounds produced many new unicorns with 24 unicorns in the first 8 month of 2021 alone. Some of these startups were the first in their field – like HealthTech, social commerce and epharmacy – to be valued this high in India. The challenges of the pandemic also triggered a shift in Indian startups: While many companies had concentrated more on growth than on costs to scale their business, COVID-19 forced a change of behaviour and made startups more durable.
Get to Know the Indian market
Knowing facts, figures and doing research is an essential element of preparing for internationalization. But real knowledge of the market should cover much more than that. India is a highly diverse country: it is home to people from different cultures and religions, that speak multiple languages, which all vary across the country. These cultural nuances play a big role when establishing a startup in India as they influence not only the business culture but also the consumer trends, needs, and demands. How can a program help with that? Participant in the EU-India-Innocenter Program Michael Willemot from OXTO Energy sums it up: “If you really want to invest time and go forward, then this type of programme is essential. Because the only other option you have is to go there and spend months on site. That is very expensive and very difficult for small companies.” Connecting with a local network of experts does not only help you to understand the country and its culture but also tackle specific problems and questions to the individual product because there is no one-size fits all approach – something a thorough internet research will not be able to do. That presupposes openness and willingness to learn and change or as EU-India Innocenter-participant Pekka Viilto from Rundit puts it: “This program does not solve all of your problems. But it gives you hints and directions where to go and already that can be super important.” Cezar Nourescu from CBN Agrotech gives an example: “India is the second largest wheat producer in the world. But we never knew that it actually is one of the biggest rice producers in the world. They are producing more rice than wheat. That was something we learned in the program.”
Entering the Indian Market
To have the right direction can mean different things for every startup. All the knowledge from the deep dive can help to answer the crucial questions:
- Yes or no? India is a big market, but its immense size is no guarantee that a startup will strive there if it does not offer a solution to a problem. But while there is a need in Germany, India might not have the same need or no need at all. Learning about beneficial trends and existing risks is helping also with the decision, if and when to expand to India.
- Where? Not only is the market big: India belongs to the ten largest countries of the world with various industry hubs around the country. Depending on the startup’s area of business there are multiple cities to choose from: While Bengaluru is India’s Silicon Valley, startups in the health business may have a better start in Hyderabad. Pune and Chennai are the choice for companies in the automotive industry and FinTech is at home in Mumbai.
- With what product? Even when it is clear that the Indian market is ready to value the startup’s offering, the chance is high that there are needs for adapting it to the circumstances. Sensitivity to the nuances of the local business culture helps shape product, specifications, business model, pricing, customer segments and value proposition accordingly.
This is how a thorough exploration should look like to set up startups for a successful internationalization to India.
Curious? – We got you covered!
The EU India-Innocenter is a community of highly experienced euro-indian ecosystem builders. The programs prepare and support European mature startups, SMEs, and entrepreneurs on their journey to India. Starting from learning the basics of the Indian market, discovering business opportunities, connecting with our strategic network in India and finding first local clients – everything follows the individual needs of the participating startups. Besides crash courses and preparation training, the EU-India Innocenter offers exploration programs and activities to find your first Indian clients as well as expanding your local network. Due to the ongoing traveling constrictions, all programs are currently taking place virtually. Learn more about this program in an interview with our program managers at EU-India Innocenter about possibilities for European startups in India.
The German Accelerator is proudly financed by the German Federal Ministry for Economic Affairs and Energy (BMWi) and helps German startups on internationalization to USA and Asia including India. With insights from and connections to dedicated market experts, the program gives participants access to our mentors and the respective ecosystem. Our India Market Discovery program helps German startups validate the suitability of their business in the Indian market. Through the 5 – 7 week program, startups gain first-hand market insights, explore individual business opportunities within the Indian ecosystem, and directly connect with potential customers and partners on the ground. Due to the ongoing traveling constrictions, all programs are currently taking place virtually. Learn more about this program in an interview with our program managers from German Accelerator about possibilities for startups in India.
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