For these Indian “unicorns”, the United Arab Emirates is the place where deals are made

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The India Pavilion is where startup owners come together to discuss – and close – potential deals.
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Dubai: For Indian startups, the United Arab Emirates and the Gulf are the hot spots for expansion – and for raising new money, if possible. This is the scenario that two of the Indian unicorns plan to follow.

“The UAE and the Gulf have a lot of capital and – now – they are definitely investing in India,” said Sujeet Kumar, co-founder of Udaan, a Bengaluru-based company that is an online platform for them. Indian retailers and stores ‘kirana’. “Instead of selling to the consumer, we sell to retailers – products are listed by manufacturers who sell directly to stores, restaurants and offices.”

Udaan has its own supply chain and its own buyer credit facilities. “We have a platform called Udaan Capital through which we give them working capital funding,” Kumar said.

Anchored in India – for now

Udaan, which is considering an IPO, “will focus on India for the next 2-3 years as there is a lot of room to grow there,” Kumar said. “We didn’t think beyond India; our investments will mainly be used to strengthen infrastructure and automate more warehouses. Much of it will be technological investments.

Udaan currently manages 10 million square feet of warehouse space and may need 100 million square feet within the next 7-8 years. This is “expand or perish” for Udaan as competition intensifies in space. E-commerce giants such as Amazon, Walmart, and Reliance dominate the business-to-customer segment and are constantly on the lookout for new avenues for growth.

“Yet in B2B e-commerce, we have over 70-80% market share,” Kumar said.

Sujeet Kumar, co-founder of Udaan

Sujeet Kumar from Udaan: “We didn’t think beyond India; our investments will go mainly to strengthening the infrastructure and automating more warehouses … ”
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Serial entrepreneur

Kumar founded Udaan in 2016 with Vaibhav Gupta and Amod Malviya, both former senior executives at e-merchant Flipkart. Prior to Udaan, Kumar was COO at Flipkart where he built supply chain and logistics. “We were the founders of the startup ecosystem [with Flipkart]because in 2007 there was nothing in India and from there we reached a place where India produced 35-40 unicorns this year alone, ”Kumar said.

Kumar is also an investor in Tanglin Venture Partners, a Singapore-based venture capital fund, also backed by Flipkart CEO Kalyan Krishnamurthy. There are plans to open an office in Dubai.

Flow of funds

Meanwhile, asset management company True Beacon allows foreigners and non-resident Indians (NRIs) to invest in India. “Until now they have been channeling their money through Singapore or Mauritius and entering India via feeder funds – we are trying to eliminate that and bring them (funds) directly into the country,” said Nikhil Kamath, co- founder of True Beacon.

GIFT (Gujarat International Finance Tec-City) City is an attractive proposition for investors looking to enter the Indian market. “It’s a more tax efficient jurisdiction where you don’t need things like PAN cards – the Indian government is trying to attract capital directly,” Kamath said. “In Dubai, we hope to attract a new type of clientele who would like to take advantage of it. “

Nikhil Kamath, co-founder and CIO of Zerodha and True Beacon

Nikhil Kamath, co-founder and CIO of Zerodha and True Beacon: “Think of us as a mutual fund for high net worth individuals – we run long / short funds, which are permanently hedged …”
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Like a mutual fund

“Think of us as a very high net worth mutual fund – we run long / short funds, which are always hedged,” Kamath said. “We have no management fees, whereas our comparable companies have about 2%. Instead, we have a 10 percent carry over and that makes it very customer-aligned. “

Commercial agreements

Last month India’s Commerce Minister Piyush Goyal said a Comprehensive Economic Partnership Agreement with the United Arab Emirates would be finalized before the end of 2021. A potential agreement could result in investments in various sectors, including infrastructure and logistics.

Kamath, who was part of talks related to an India-UAE-Israel trade corridor, said the agreements will ultimately boost trade and investment. “They (trade agreements) are a long-standing thing, people start talking about it and then drafting them,” he said. “It’s definitely a step in the right direction”

Started young

Kamath, one of India’s youngest billionaires, is the co-founder of Zerodha, the country’s largest trading brokerage. He started trading at 17 after dropping out of school, founded Zerodha with his brother Nithin Kamath in 2010. Zerodha has over 7.5 million clients, making it the largest brokerage in the country.

Kamath also founded the “Rainmatter” venture capital fund, which invests in fintech companies that promote financial inclusion. In 2019, True Beacon was co-founded by Kamath and Richard Pattle, who previously worked as an assistant to Prince Charles.

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