On April 26th, it was an honor for AECAL to be a part of the panel at NDA (Nishith Desai Associates)’s panel on “Investment Opportunities for European Businesses in India”. NDA is a research based Indian law firm with offices globally. The panel comprised of H.E.M Selva Naik, Counsel General of India in Munich ; Anil Chaturvedi, Managing Director of Hinduja Bank in Switzerland and Dominik Gyllensvard, Founder and Managing Partner of AECAL.
The panel discussed on topics ranging from how the investment opportunities in India are better than before with the new initiatives like Make in India to risks and challenges India offers as a market. The panel agreed upon that India does come with a lot of risks and challenges, but still its a favorable market because of the opportunity it offers.
Here are some excerpts from the panel part were our founding partner, Dominik spoke about the challenges and opportunities India offers as a investment destination.
E-Commerce to play a big role in India startup scene
Nobody knows who will win the end battle. Amazon has invested a lot of money in India and has been around for 3 years with 50+ logistics centers. It is clear that eCommerce and digital are going to play a big role in Indian startup ecosystem. If you look at Indian retail, it is extremely unorganized. Only 8% of the total retail in India is organized. In US its opposite.
Indian startups need to work on Pricing and Branding
Investment at early stage is more about team. AECAL mostly invests in founders who have studied and worked in the west and then decide to come back to India. We tend to look at really simple business models. These founders are usually very well educated and extremely data driven. What we have found lacking a little bit is pricing and branding. That’s where we work towards coaching them. We have often seen them pricing their products too cheap or discounting. We hope to see a development in pricing soon. When we talk about branding, its mainly about moving people’s emotions by storytelling via your brand. And it’s extremely crucial if you run a consumer facing business like selling lingerie.
Lack of unorganized retail to open up multiple opportunities
If you see the story of a man 5 years ago who used to buy rice from a vendor and then sells to the consumer. Because of the middleman the vendor and consumer both used to suffer. Now imagine if this person had a smartphone, he will know the market rate for rice and will not be fooled. Digital will play a major role in organizing these kind of markets and take out the middle man. A report says that by 2016, there will be 500 million smartphone users in India which is equal to the entire population of India.
India – a market of high chances and high risks
India indeed has a lot of risks when it comes to taxes and regulations. The regulations and tax structure in India is very complicated. But if you look at Indian market, the opportunities are huge. For example, lingerie market alone is about 250 million approximately.
AECAL’s investment philosophy
While AECAL’s focus remains eCommerce, we have made opportunistic investments in other sectors as well. An eCommerce company which controls the whole value chain is our ideal potential investee company. You can say our portfolio companies are producers and not retailers.
You can watch the below video for insights from the entire panel on “Investment Opportunities for European Businesses in India”