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Why Indian startups are looking at Estonia, Korea, Chile, Dubai


ADVANTAGES OVERSEAS
Monthly stipend | Grants | Help in getting residency

KOREA
70% of startups that participated in K-Startup challenge in 2016 set up offices in Korea, 80% employed Korean staff, 3% companies granted patents in Korea

CHILE
6% of startups at Startup Chile programme from India
32% of all foreign startups remained in-country to continue operations

ESTONIA
41 startups raised $100 million in 2016
16 Indian companies have applied to Startup Committee for visas this year

When Avijit Sarkar was planning to set up a fintech startup last year, he wanted to do it in the US so that he'd have access to a larger market. But, he soon realised that the incorporation expenses were high, and getting a visa could be difficult.

He came across Estonia's startup programme and decided to apply on a whim. He didn't have to visit the tiny northern European country, but had a virtual address within weeks. "I got my VAT (value added tax) number in 15 minutes . The ease of doing business is a big draw. Being incorporated in Estonia means we can hire foreign talent easily," says Sarkar, founder of CapOne Research, which has applied to the EU for funding and has bagged in-principle approval.

Being headquartered in Estonia gives Sarkar access to the member states of the EU. And the county where Skype was founded is no stranger to startups with 13 incubators and accelerators and a robust VC and angel investor network.

While Singapore, UK and US were traditional hubs for Indian entrepreneurs, startup founders are now looking towards Estonia, South Korea, Dubai, Saudi Arabia, Qatar, Israel, Chile, Spain and Ireland. Smaller startups often relocate as these countries offer government funding, minimal rent, zero taxes and easy access to neighbouring markets.

Late in 2015, Hyderabad-based CloudBoost signed up for Startup Chile, an eight-month startup accelerator programme, in the South American nation. Apart from a monthly stipend, the 72 startups in the programme were provided mentorship, access to businesses in Chile, and help in gaining Chilean residency.
"We established one sales person there and managed to bag Spanish telecom provider Telefonica in Chile as a client. Chile is Latin America's strongest economy and there are companies with a lot of money there," says Nawas Dhandala, founder of CloudBoost.

Since India is home to more than 5,000 startups and is known for its technology talent, quite a few countries are easing the way for startups to relocate with visas and offers of funding. Estonia launched a startup visa programme in January and has received applications from 16 Indian companies.

Among the first companies to move from India to Estonia was Velmenni, which develops high speed LiFi technology. The company started in New Delhi in 2012 and moved to Estonia in 2014, after attending the Buildit Accelerator programme. Deepank Solanki, founder and CEO, says he's been able to sign up more clients in Germany due to his Estonian link.

CHALLENGES TO FACE

Language, finding talent and breaking into the market can be challenges. Estonia, for instance, has a population of 13 lakh — India's technology workforce alone is double the size. Chile's startup scene in tiny compared to India and talent is hard to come by. CloudBoost's Dhandala says they had to convert software to Spanish before pitching to a customer.

Despite the challenges, founders say the experience of working in a new country has its advantages. Dhandala also signed up with Startup Denmark, which handholds foreign entrepreneurs who want to open office there. He holds a Danish residency permit and plans to use his base there to enter the European market.

Entrepreneurs must have a clear idea of what they want to achieve in the new country, says Sathvik Muralidhar, founder of Preksh, a Bengaluru-based startup that was selected for the Korean Startup Challenge. Preksh works on AR/VR solutions for retail, and wanted to get a feel of the Japanese and Korean tech innovations, which are far ahead of India in the space. "Before applying for the startup challenge, I spend time studying the Korean and Japanese markets. They are advanced markets in terms of internet penetration and consumer awareness about AR/VR. We knew there would be more enthusiasm from customers and would get a good sense of how technology is moving," says Muralidhar. The Korean government also provided some funding. "We worked with the top retailers there and their feedback helped us improve the product. We got a real feel of how the technology will be adopted by big retail clients," says Muralidhar.

FOSTERING INNOVATION

Most of these countries are hoping to draw entrepreneurs who will inspire their own citizens to start their own businesses and innovate.
"In Korea, most startups are associated with conglomerates like Samsung or sell to conglomerates early on. The Korean government wants to cultivate the entrepreneurial mindset among young people so that they will build the next generation of innovative companies for Korea," says Muralidhar.

The fact that India is home to 45% of the world's R&D centres outside the US makes these governments believe in Indian innovation. "The Indian startup ecosystem has seen explosive growth over the last three years. The South Korean government is looking to India for help to grow its startup ecosystem," says Caleb Kyung Hwan Lee, executive director at National IT Industry Promotion Agency, South Korea. He says Korea's hardware strength will complement India's software strength.

Another favourite destination for Indian entrepreneurs is Dubai, where it is not only easy to hire Indian talent but it is also a gateway to Europe and US. "Startups in Dubai get Rs 60 lakh angel funding from the government in the early stages, which is unlikely to happen in India," says Vineet Budki, founder of Guiddoo, a travel company. Budki has been working in the Dubai government-backed In5 accelerator in the tourism space.

When companies decide to move, they should know whether the market is big enough. "Unless that country can be a big market, it does not make sense. Or the funding should be large enough," says Muralidhar.

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