Why isn't there an Europe India corridor yet?

Maybe its waiting for something...

Sorry for the long hiatus. With the India England test series just ending (what a series!), thought it might be an opportune time to write about this.

Over the last 18 months, I’ve made significant trips to London and it’s become one of my favourite cities in the world. I also relocated to London (yes, in the middle of the pandemic) in 2020 and so have had time to observe the ecosystem from up close. 

I’ve been quite surprised to see the almost absence of a Europe<>India startup corridor . 

There’s ofcourse multiple reasons for this, and after conversations with numerous people I have some hypothesis around why this is the case. But the Tl:dr version of this seems to be:

  • Increasing institutional investor interest from Europe, however this is more opportunistic.

  • Lack of any serious angel activity between the two regions owing to lack of awareness.  

  • Lack of large companies having engineering centres in India (GICs)

  • Lack of startups considering Europe as a major market since 

Increasing Institutional Investor interest from Europe:

Institutional: While Europe has given the venture ecosystem a lot of LPs (especially in the impact investment space), a lot of this has been driven by developmental financial institutions like CDC, FMO, KfW, LGT etc. However over the last decade there’s been a lot of investor interest (initially by Rocket Internet via their venture builder model) and later through funds like Global Founders Capital, Kinnevik, Sofina, Hummingbird as well as talent incubators like Entrepreneurs First, Antler and the likes which have opened local chapters. In a recent Clubhouse discussion that I hosted, we also uncovered that over the last 24 months, a lot of Europe based family offices have started looking at India aggressively and opportunistically.  

Minimal to non-existent Angel activity between Europe & India: 

I’ve noticed that investor interest is typically one way (Europe -> India) and is more of capital infusion. This is in contrast to an ecosystem approach, where it's a 2 way thing. There is a serious lack of folks who are “ecosystem bridges” beyond a few individuals. A few folks who’re based in Europe get their deal flow via their alumni networks in India or places like Indian Angel Network, but for example you don’t really see syndicates out of Europe that are investing actively in India. This is clearly not because of lack of capital, since there’s enough HNIs in Europe with capital to deploy. And Indian investors often aren’t even aware of the work happening in Europe (say in deep tech), because perhaps there’s enough deal flow in India & US to keep them occupied. But Europe is pretty awesome for an angel investor, there’s definitely a lot more companies in SaaS that are in the $10M+ ARR mark and above, consumer is thriving, it’s literally the fintech capital of the world and looks like there’s potentially more M&A here and my hunch is there’s potentially better and realistic exit scenario here as well (this is my hunch, I’ll have to validate this).

In addition, I’ve noticed governments of most of the European countries are trying to excite Indian entrepreneurs to build in Europe (UK, Ireland, Estonia, Lichtenstein among the ones I’m aware of), though I don’t think led to a crazy momentum (would love to be proven wrong here!). 

Customer Markets:

When it comes to SMB markets, Indian companies have found certain European markets to be very useful, but these markets are always part of a larger strategy with the US at its core. For example, during Freshdesk’s early days, Netherlands was a key market for them (got a lot of inbound signups from there). But in most cases, unless it’s an enterprise company (e.g Carbon Clean Solutions or Greendeck), companies bypass Europe completely (even though it’s about 1/5th of the US market and 5-10x the Indian market in most cases). One can argue that maybe for venture backed startups from India, US revenue contributes more towards their valuation as opposed to going after Europe. Or maybe because Europe is a culmination of multiple markets with their own issues (not homogeneous, language issues)? I am not too sure. But then that doesn’t seem to stop European companies to look at their local markets. Also for those that haven’t seen this yet, check out Ben Evan’s presentation on the great unbundling with a focus on the Europe/UK data points. I was pleasantly surprised. I have seen multiple cases of Indian companies flipping to become a US based entity, and then looking at Europe once their US operations are established.  

No serious talent exchange between the 2 regions:

There are examples of large companies having technology centres, the best example of which is Tesco’s R&D centre. However most of the other companies still have more or less a back office or a business process centre (more ops less tech). Within emerging companies, there’s OakNorth (roughly 400 folks in India). 

Some of the reasons (after conversations with folks in the UK) seem to be:

  • Time zone difference creates a problem, especially when there’s a better alternative available in Poland, Eastern Europe and Russia. 

  • There have been cases of quality issues while working with Indian engineers

  • Domain specialisation in certain areas is lacking. 

My hunch is that there hasn’t been enough evangelism around Indian talent in Europe, as well as not many VP Engg, CTO, decision makers having an India connection (as opposed to the US, where most tech companies have atleast 1 C-suite person from India). 

I think every Indian should seriously consider Europe (and UK specifically) incase they want to work in the western world and are looking for an alternative to the H1-B lottery. They’re openly inviting folks to come to the UK and build their career there, and I think there’s similar programs by Germany, Nordics and others.

Image credit: Anirudh Koul