Innovify Q&A - how does Indian entrepreneurialism compare to Europe?

Maulik Sailor is founder of Innovify, a London-based technology incubator which helps companies bring products to market quickly and cost-efficiently. The company also has a strong presence in India from its offices in Ahmedabad, and Sailor claims that India and Europe could have a lot to learn from each other when it comes to nurturing successful tech talent.

Why set up Innovify in London, as opposed to anywhere else in Europe?

I think that outside Silicon Valley, London is probably the best location to do a startup in Europe, mainly because of the ecosystem, the government policies and everything. There are many accelerators and incubators available. And there are a lot of VCs and seed investors looking for the next big thing here. However London is still very different from the US: investors are still very conservative; not as risk-taking. And London is one of the most expensive places to live, so the cost of doing a startup is very high. The cost of failure is also too high.

Does London lend itself to a particular sector within tech?

Because the cost of investment is high, what you will see is that ideas like Facebook would never get off the ground in the U.K. In the early days Facebook was all just a time-wasting machine, with no revenue, and it would have been very unlikely for a British investor to put money into it. For those companies, you do need a lot of investment before you can start scaling, setting up a business model.

A lot of people who would have brilliant ideas are not able to get them off the ground, because they have limited investment, and investors are not willing to invest early-stage. This may change but it takes time, and costs a lot of money.

I think the European attitude towards debt and risk aversion is becoming more like the U.S. – especially the U.K. – in terms of equity investments, startup loans et al. The only problem in the U.K. is around liquidation. In the U.K., if you liquidate your company, then as a person there are a lot of personal issues: I might not be able to get a mortgage, a car, even a mobile phone contract. So it’s very risky, and I would not be looking to take it on myself. In the U.S., of course, it’s completely different. There’s not that personal impact if you liquidate your company.

What are your goals with Innovify?

We want to create an ecosystem around startups so they can learn the whole process of ‘fail fast, learn quickly’, which is what is needed for startups to succeed. We came off with a model where we could speak with very early-stage startups, help them develop their products well. And as part of the process you fail a lot of times. So make that cost of failure manageable, so you’re not scared of failing. If you lose that fear you’ll learn really fast, and make a product that’s based on education from the market and users.

We wondered how many products we could realistically do in a year, so in our first we did one startup, then the second we did another six. This year, our third, we’re looking to do 12 startups, so as we’re getting more confident we’re making our model more efficient. In the next ten years, we set a goal of doing 100 startups. But a lot of big corporates want to develop products like a startup too, so we changed our angle and made our target 100 products, as opposed to companies. Now we are launching our formal fund, where not only will we help you develop your product but we will give you funds to do it properly.

Are there good ties between Indian and European startups today?

It’s changing massively. If you asked me this question two years ago, but even since then a lot of things have changed. The Indian economy is growing very quickly again – it’s predicted to overtake China soon – and the new government is very startup-friendly, so policies announced are very good for investors. A lot of VC funds are present in India – IDG, Accel Partners and others – because they know the ecosystem is growing really fast. (Bangalore-based E-Commerce outfit) Flipkart has just passed the $1 billion valuation mark, which is very unlikely for an Indian startup.

Indian startups are now expanding into Europe, taking over other companies. This is all new. And if you’re a digital company you’re selling to the entire world, so working with a cross-ecosystem with London, for example, there is huge opportunity. Our plan is not only to take U.K. startups to India, and let them access this growing market, but also let Indian startups enter the western world and focus on hybrid business models that target high-end, not just low-end, custom.

What do you find are Indian entrepreneurs’ biggest strengths and weaknesses?

In India entrepreneurs are at a disadvantage from the very beginning because if you raise investment from seed or VC, the investors are quite aggressive. In the U.K. policies are generally slightly in favour of the company founder, whereas in India it’s the other way round. If you’re looking to make a startup in India, you’re already taking a huge risk personally. So entrepreneurs tend to be more confident, bigger risk-takers, and as a result, they are willing to go to extreme lengths to make their startups work.

You will see a lot of tech startups in the south; non-tech startups in the west. In the north there is tech but based a lot around e-commerce, and the east these days is generally not too startup-friendly. Karnataka is still a hotbed of IT services. But when you think of startup deals, they’re spreading a lot more across India. Mumbai has always been up there, and Pune. Delhi is now one of the hottest ecosystems for tech startups. In Ahmedabad, where we are based, the tech ecosystem is just growing up, so we are a very early mover. Ahmedabad is in Gujarat, which is very industrialized, and the community is very entrepreneurial. It is just coming into that mood of looking for startups.

What are the biggest drawbacks you see in business models in India?

I wouldn’t necessarily call this a drawback, but Indian startups are generally very, very focused on the Indian ecosystem. Which is limited, because they’re not looking at the U.S., Europe and other markets. But it’s not too bad either, because the Indian market itself is very big – 1.2 billion, 60% of them aged 20-35. It’s much bigger than western Europe, so if you can get it right the opportunity is huge. But it’s also very risky, and they are not looking at the western market, which could help them a lot. But similar could be said of London, which is so developed as a market that many people don’t even look at emerging markets. People make iPhone apps and don’t realize that barely any Indians own an iPhone.