Conversation with AECAL founders: Experiences from recent visit to India

Peter and Dominik (in the middle) with Gamezop founders

Peter and Dominik (in the middle) with Gamezop founders

  • What was the most visible change you observed in the overall ecosystem compared with your earlier visits?

We visited India in August 2015 last year. Six months later, when we visited India again in early January this year, things looked slightly promising. The FOMO(fear of missing out) phenomenon seemed to be fading since summer. The ecosystem also looked a little calm and not hectic. Investors also seem to look twice before investing. We met around 20 startup companies during our visit. The overall quality of startups was very impressive. Even at early stages, these startups have a good vision. These companies tend to focus on the market to try and find something that cater specific group.

  • ¬†What kind of Indian entrepreneur you guys like and why?

We like somebody with a lot of passion in what he is doing,obviously. Apart from this good education also matters. We ideally like someone who went to study in west and worked in west for 2-3 years in banking, consulting or startup environment. After the west experience , this person looks back and sees opportunities in India. This ambitious bullish kind of person is definitely the one we admire.

We find it impressive and appealing seeing entrepreneurs who diligently work hard to climb up the social ladder. We prefer experience in the west because the entrepreneurs with some sort of  working experience in west seem to have have good business ethics. Also, Indian MBAs seem to have not bench-marked itself. Many times, it sounds inflated boast of education which is not the case with the ones who were educated in west.

  • Which were the most exciting companies you came across during this tour? What was special about them?

Among the companies we met, we definitely liked Shieldsquare (one of our portfolio companies) founders. It’s nice to see how they manage to produce the product in India and are able to sell in west. We absolutely love their way of execution.We also kind of liked Bounty’s founder. This person seemed to have an incredible entrepreneurship drive.

  • Where do you see Indian ecosystem different from the west and why?

We are big fans Indian ecosystem.There is definitely a big difference.When you look at west, its about finding the last or very tiny efficiency within a value chain. On the contrary, India i about really about big changes. There are big ideas of leapfrogging brick and mortar retail.The market size in west is also very limited and as well. India, on the other hand has got big market sizes and there are startups which are truly changing people’s lives.

  • What is the single most difference you observe between Indian and German entrepreneurs or Europe in general?

We have answered the important bits of this answer in the answer to previous question already. While both Indian and German entrepreneurs go for the fashionable part of entrepreneurship, Indian entrepreneurs also focus on changing or disrupting the people’s lives.

  • Why investors in Europe should be excited about India for the next 25 years?

We are definitely excited about India and that’s the reason we started AECAL to evangelize and show investors about the goldmine. We often say that while BRIC(Brazil,Russia, India and China) has fallen, only I(India) is standing. The best part is the startup ecosystem is working in bottom-up in India. Despite of any support from the Government, the ecosystem in India is growing at a fast rate.The Indian Government need to do a lot of things to unleash the potential. As per our opinion, they need to do two things at the earliest – tear down FDI(Foreign Direct Investments) and import-export hurdles and they need to build a very clear infrastructure.

  • What do you think lacks in Indian startups?

We would say its lack of or little focus on branding and pricing early on. Indian startups underestimate the power of branding.Also, in the mad hurry of acquiring customers, they seem to compromise heavily on pricing to offer crazy discounts. We believe that if you don’t have patience as an entrepreneur, there is definitely a problem, While Indian startups need to work on their strategic thinking, they also seem to be short-sighted. They need to focus on building a sustainable business.

You see, communication of everything should not be only about discounting .It dilutes the brand value and is also not good for the ecosystem in the long run. Money is moving is extremely fast. The markets survive because of balance between interest rates and risk. The emerging markets won’t be attractive, if interest rates soar really high. Thus, we press on the fact startups need to be more reasonable and sustainable in their approach. It’s stupid to blindly burn money. Without unit economics, businesses won’t survive unless they are too big to fail. In Silicon Valley, Down Rounds are happening. This phenomenon might be repeated in India as well.