Creating an India-UK corridor to nurture tech collaborations
An investment expert goes into some of what drives her cross-border fund which aims to help scale up early-stage UK-based technology businesses into India.
The significance and impact of technology in our personal and professional lives cannot be discounted. Economies around the world are increasingly depending on the growth in their digital assets. Furthermore, technology has also gained increased significance in our personal lives. Consumer products, home appliances, phones, even jewelry items among others are witnessing technological disruptions. This has led to significant amount of capital being invested into building businesses that develop and disseminate these technologies .
As pointed out by the Venture Pulse report, released by KPMG for Q2 2018, the Venture Capital sector saw investments worth $70 billion in Q2 2018. This followed investments of well over $50 billion in Q1 2018. Furthermore, in 2017, investments in the Venture Capital sector hit an annual record of $155 billion.
Given this backdrop, governments around the world are also realising the importance of technologies for their respective economies. Various countries are forging partnerships to collaborate on different aspects of technology. Partnerships in these areas now is expected to not only aid economic growth in the participating countries but will also help develop deeper relationships as these “tech bonds” become more significant in the future. One of the most active tech partnerships today is the UK-India Tech Partnership which was jointly announced by the Prime Ministers of both the countries in April 2018.
The aim of the partnership is to “identify and pair businesses, venture capital, universities and others to provide access routes to markets for British and Indian entrepreneurs and small and medium enterprises” as per a statement by the UK government at the time. Post this announcement, activity in this corridor has significantly increased. Several delegations with public sector officials and private sector stakeholders have travelled between both countries to form partnerships for large number of projects. For e.g. the latest delegation from the UK to India was led by the Lord Mayor of the City of London. As part of this delegation, 11 representatives from UK-based fintech firms met top government officials and senior industry leaders in India.
On the back of this partnership, several cross-border funds and advisory firms have also started to emerge. One such Fund, called the Unicorn Ascension Fund (UAF), has been formed on the back of a collaboration between a UK based VC company called Ascension Ventures and an India based VC company called Unicorn India Ventures. The Fund aims to invest in UK-based technology businesses that build technologies which are relevant for the Indian market. The idea behind the Fund’s thesis is simple; unlock the synergies between UK’s innovation and the rapidly digitizing Indian economy. As the Chair of the Investment Committee of this Fund, I am quite excited to work closely with and look to help UK-based entrepreneurs launch and scale in the Indian market.
Since we announced this Fund in summer 2018, we have interacted with several UK-based technology businesses who are looking at India as their next growth market. Most of these businesses have shown traction in the UK or European markets and are now ready to scale overseas. The reasons that these entrepreneurs are excited about India are several and are dependent on the sectors they operate in. However, a common theme does emerge behind their motivations. For most of them, India is one of the fastest growing and open economies in the world. Following significant reforms related to technology and formalisation of the economy, the country has emerged as a significant scale up market for digital businesses.
For instance, the Digital India initiative was launched by the government to digitally empower the society. Several sub-initiatives under the banner of Digital India have achieved varying degrees of success since their launch. Another successful initiative for formalisation of the economy has been the implementation of the Aadhaar card, which is now the world’s largest biometric identification scheme. The implementation of Aadhaar has led to the creation of digital identities for more than 1.2 billion people in India. Other factors such as the increasing penetration of smartphones and the exponential increase in the use of data among others are leading to a significant increase in the adoption of digital products and services in India.
Club this with the UK’s innovation prowess and you have a winning combination. The country boasts of a world leading education system along with robust digital infrastructure. Some of the most innovative technologies have come out of the UK in the past. This world class talent that resides in the country attracts capital from across the world. The UK has produced 60 companies valued at more than $1 billion since 1990, as per recent reports. Out of these, 40 have achieved successful exits for investors including the recent listings for Farfetch and Funding Circle.
Through the structure that we have set up for UAF, Ascension Ventures, which is one of the partners in the Fund, afford UAF access to potential quality dealflow from across the UK. On the other hand, Unicorn India Ventures help offer infrastructure, access to the right stakeholders and other support to our potential investee companies when they potentially land in India. The entrepreneurs that we have interacted with have been very excited about this potential support that UAF can provide, in addition to potential investment in their company.
In conclusion, while the collaboration between UK and India on the technology front is recent and was formalised by the two Prime Ministers in April 2018, a lot of positive activity can already be seen in this corridor. I am positive that in the coming years, this collaboration will unlock synergies that will result in significant benefits for both the economies.
Nina Amin is Chair of the Investment Committee of the Unicorn Ascension Fund.
*Capital At Risk. Tax treatment of shares is dependent on individual circumstances. This article has been approved as a financial promotion by Larpent Newton & Co. Ltd, FRN 141275. Ascension Unicorn LLP (FRN: 810829) is an Appointed Representative of Larpent Newton & Co Ltd.