Revealed: plans to build Middle East-India private investment corridor

According to a top investor driving the plans, Middle East-based investors are eager to look for new areas of investment and diversification in the wake of the shrinking dominance of the oil and natural gas sector.

“A lot of learning of doing business in India is also applicable in other emerging markets, especially in the Middle East, and therefore what are intending to do is to come up with a comprehensive investment and business development plan which will be a win-win for both the regions,” Anvita Varshney, managing director, AV Capital Partners and co-founder of the Dubai Angel Investors, told Arabian Business.

In an exclusive interview, Anvita said: “The plan is to step in to help the founders (of Indian start-ups and late stage ventures) explore the fit, localise the strategy, establish business relations and cross-border expansion, while they (founders) can fully focus on managing day-day operations.”

Anvita also revealed that the proposed consortium of investors could include Saudi, Egyptian, UAE and other Arabic nationals, besides members from the Indian expat community in the Middle East.

“Some Silicon Valley veterans who are also looking for some good tech IPs/companies from India that can be floated in the US, could also come on board for this proposed investment corridor initiative,” said Anvita, who also serves on boards of several companies including Taurus Wealth, a multifamily office with $4.5 billion in assets.

Anvita Varshney, managing director, AV Capital Partners and co-founder of the Dubai Angel Investors

Advantage India now

Anvita said India has a lot of advantages going for it now – large market size, established technology hub, cheaper operation costs, good talent, high volumes, and historic cultural relations with the Middle East.

“Earlier, a greater number of investors from the Middle East region used to invest in the US and Europe. Now they are looking at China and India. And India has given them some large exits which have built confidence in the ecosystem and this is not only restricted to high-value deals and unicorns but early-stage startups,” she said.

Anvita, who holds an MBA from INSEAD and worked with tech giants such as Google and Rocket Internet in the past, said the other aspects that have influenced the move on the corridor plan are economic growth, the maturity of markets on innovation index, and improving political relations between India and countries in the Middle East.

“India is poised to grow 7 percent year-on-year, with new-age companies’ growth expected to be far above average. With a fairly stable US dollar/rupee outlook, even adjusted for currency depreciation, returns (on India investments) are expected to be better.

She also pointed out that 5-10 years GO, the US was the innovation hub with clones of the likes of Uber being created around the world. “Now India is emerging as a leader in innovation in segments such as payments, AI and gaming.”

Political maturity and policy framework between India and the UAE are also improving to accommodate mutual interest, she said, adding that a recent example is Indian government’s recent decision to grant income tax exemption to the sovereign wealth fund of Abu Dhabi in specific sectors of investment.

Cross-border private investments to the tune of billions of dollars between the UAE and India are expected to be unveiled soon

Indian start-ups looking for funding

On the increasing trend of Indian start-ups interested in Middle East investors, Anvita said this was because investments from the region provide a lot more than just capital.

“Higher bang for the buck, access to Middle East markets that are growing, bridges to the western world and high margins are some of the added advantages,” she pointed out.

“Having been an entrepreneur myself with building OLX/Dubizzle in ME (exit to Naspers) and Lazada in SEA (exit to Alibaba), I have been on the other side and understand that capital is one part but entrepreneurs need strategic support, relationships, market know-how to be able to custom fit their strategy, pricing, and do the localization,” said Anvita, who was the COO of Naspers (now Prosus) for Middle East and Africa.

She said the investor community in the Gulf region has a global investment outlook and now want to tap Indian start-ups at an early stage – seed to series B.

“Besides, at the angel stage, the average ticket size per angel in India is much smaller than what you see in the Middle East. Here an angel might invest in the range of $100-$200,000 or more, so a start-up can suffice the round faster with fewer people in the cap table.”

India is poised to grow 7 percent year-on-year, Anvita said

She also said traditionally, Middle East investors preferred B2C companies but increasingly there is interest on the B2B side, especially the technologies that are transferable to businesses and government prioritised sectors such as health-tech, ed-tech, smart cities, cyber security, data/AI companies – where a strong tech product can be top-down rolled out touching many private and public entities.

“I have mediated some solid start-ups from India in AI, ed-tech, infrastructure, and health-tech to telecoms, government bodies, enterprises here, and with a good fit, it has resulted in large-scale projects and revenue potential,” she revealed.