The UK-India tech corridor has always been vibrant. Undeniably, over the past 2-3 years, the connection between the two technology and innovation ecosystems has grown considerably, given the backing from the highest levels of government with formal commitments to help tech entrepreneurs from both countries. The focus in relation to improving ties between the tech entrepreneurial networks in UK and India has been, in general, on knowledge transfer, staff secondments, and cross-border mentoring associations.
Despite the increased support and stress on collaboration, and the steady improvement in India’s ‘Ease of Doing Business’ rankings, most UK-based startups (including those developing cutting-edge technologies) consider entering the Indian market and setting operations here as an extremely expensive (and intimidating) exercise.
The challenges to effective cross-border collaboration are wide-ranging: from regulatory and legal issues to the protection of IP and finding the right mentors and partners, the prospect of navigating the Indian regulatory regime and startup ecosystem without trusted insight and expertise is daunting.
Any tech-based startup looking to enter India would want its mentor-partners to have “skin in the game” – against this backdrop, the launch of the first cross-border investment fund focused on opening India’s markets for UK’s world-class tech startups is a game-changer, both for startups looking to enter the world’s fastest growing largest economy, and for the entrepreneurial ecosystem in India looking at exploring collaborative partnerships with cutting-edge tech startups from the UK.
Earlier this month, Ascension Ventures, a London-based early-stage venture capital firm, announced a joint venture with Unicorn India Ventures (UIV) to launch the first cross-border and evergreen UK-India Enterprise Investment Scheme (EIS) Fund. Named the Unicorn Ascension EIS Fund (UAF), it aims to leverage the EIS tax relief wrapper to enable investments into UK-based technology start-ups that are looking to expand into the Indian market.
An Enterprise Investment Scheme or EIS is a tax relief scheme offered by the UK Government through which investors can avail income tax relief for their investments into small UK-based companies. The Unicorn Ascension EIS Fund aims to leverage this scheme’s benefits and Ascension’s track record and expertise in order to manage downside risks, while these companies exploring entry into the Indian market.
The Fund aims to raise up to £5 million annually (INR 45 crore), and make investments at the pre-series A Stage across 6-8 UK-based startups (every year) building products and services relevant to the Indian market.
According to Bhaskar Majumdar, a Partner at Unicorn Ascension EIS Fund, the Fund, even though sector-agnostic, will focus on revenue-generating startups with new digitisation models in transportation, fintech, and clean energy. The startups that will receive investments can expect to be supported by local businesses in both countries.
“The fund presents a double benefit, where the EIS tax reliefs afforded to UK investors can significantly reduce their capital at risk, whilst the India angle offers a unique exposure to one of the largest and fastest growing economies in the world,” said Jean de Fougerolles, partner of the new UAF Fund and Founder of Ascension Ventures. Setting a goal to make 6-8 deals annually, the UAF intends to co-invest approximately one-third of the investment amount, with the remaining supplemented by angel investors and other VCs. Applications will open soon and first capital deployments are expected to be made from September.
UAF eventually aims to become the Fund of choice for the expansion efforts of pre-series A tech UK-based startups in India, the Partners said.
Within the UK-India corridor, the Fund will help unlock significant synergies between high-tech products and services that emerge from the UK and the multiple opportunities underlining the digital revolution underway in India. Importantly, a strong portfolio of companies will be built based on their ability to expand in India.
Definitely a pioneering move and a win-win for both countries and their respective innovation ecosystems! The startups not only attract investments but, more importantly, experienced and well-regarded partners who can help them successfully navigate through the complex Indian ecosystem.
source https://www.indiaoutbound.org/uk-india-tech-corridor-gets-its-first-dedicated-investment-fund/
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