Indo-Canadian startup roundtable: Founders, VCs, accelerators discuss cross-border collaboration

Last week, top entrepreneurs and venture capitalists from India and Canada came together at a roundtable to discuss and deliberate on potential business and collaboration opportunities between the two nations.

Organised by the Schulich School of Business of York University (Canada's leading B-school) and Invest India (the National Investment Promotion and Facilitation Agency of the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry), the virtual session featured prominent entrepreneurs, investors, angels, representatives of startup accelerators, incubators, government agencies, and other long-term ecosystem builders from both the countries.

The session was a part of the 'Together 2021' initiative, which seeks to bridge the two innovation ecosystems – Toronto and India – fuel cross-border collaboration, enable Canadian digital businesses to set up shop in India and VCs to fund local homegrown startups, and ease the entry of Indian entrepreneurs in the tech hub of Toronto.

The roundtable was co-hosted by Brice Scheschuk, Founder, WIND Mobile, and Managing Partner, Globalive Capital, and Nikhil Kamath, Co-founder and CIO, Zerodha, and Co-founder, True Beacon.

In 2020, $6.2 billion in venture capital money was poured into Canadian startups

Increased government participation

Brice kicked off the discussions by throwing light on the robust growth of Toronto's digital ecosystem between 2010 and 2020, so much so that Canada's most valued company today is a startup ($200-billion Shopify) that went past a traditional bank.

In the last decade, Toronto is said to have become a "significant tech city" in North America and "created a tonne of spectacular jobs".

Brice elaborated,

Before 2010, we were an innovation wasteland. We had a chronic brain drain to Silicon Valley for two decades. But in the last decade, green shoots have formed. It started with venture capital allocation on the back of a partnership between the Canadian government and the private sector that created a $1.2 billion fund. It allowed the ecosystem to grow. Techstars [Toronto] has led to monstrous growth in accelerators, incubators, and research labs across Canada."

"Corporate investment is still low, and we can improve on that. But now, better opportunity creation and faster visa processing have led to proper mobilisation of tech talent. Our mission is to create more entrepreneurs in the world," he added.

Interestingly, the Indian government has also ramped up focus on AI startups, with initiatives like RAISE 2020 and others. Last October, the government conducted India's biggest AI Solution Challenge and identified a bunch of startups across sectors.

Talking about the increased participation of the government in the startup ecosystem, Shradha Sharma, Founder and CEO of YourStory Media, said:

"Most VC money in India has come from the US and China in the past. But since 2016, the government has been leaning into the ecosystem. It has created a Startup India Action Plan and a 'Fund of Funds' with a total corpus of Rs 10,000 crore. In addition to that, SIDBI has allocated a few thousand crores for deployment in MSMEs. So, there's a lot of rupee capital flowing in now. Even Indian funds like Blume Ventures, Kalaari, Chiratae Ventures, and others have been able to raise new funds on the back of government participation."

"We are hoping to see something more significant in the next financial year. The startup narrative has to move away from Silicon Valley and focus on different geographies and ecosystems. Canada will be a strong market for Indian entrepreneurs to collaborate," she added.

Radical Ventures Co-Founder Benji Sucher believes that "scaling AI startups is a big opportunity in Canada" given the rapid evolution of its AI and deeptech ecosystem.

"In 2017, Canada established a National AI Strategy and was the first country in the world to recognise the importance of AI. Since then, several AI research labs (of tech companies like Facebook, Uber, OpenAI, and others) have come up in Toronto, and that has facilitated the growth of the ecosystem," he stated.

Since 2016, the Indian government has been allocating funds for startups

Global VCs look for 'liquidation events'

Indian founders reckon that global VCs look for "liquidation events" in every geography to determine the potential of an ecosystem. India got its biggest such event in 2018, when Flipkart, the poster child of the startup ecosystem, got acquired by Walmart.

That multibillion-dollar transaction not only changed the prevalent perception about Indian startups, but also opened the floodgates for capital inflows.

"Earlier the narrative was that investors don't get exits in India. Flipkart changed that in 2018, and that created a snowball effect in the way VCs look at the Indian opportunity," said Amit Gupta, Founder, Yulu Bike (also ex-co-founder and president, InMobi).

That one event led to a surge in the valuations of Indian startups, many of those turning unicorns in quick time and looking at IPOs in the next few years.

Amit further explained,

"Earlier, we had a lot of B2B companies that started selling products in the US, UK, and Canada markets. These companies, including InMobi, will likely list abroad. But after Flipkart, there's been a rise in B2C startups in India for India. We will see these companies going public in India over the next three to four years, and create big bang liquidation events on the Indian stock markets."

"The government too is relaxing the norms for companies to go public. We really need to make things simpler for companies to go public. And thanks to platforms like Zerodha, one can buy stocks with the click of a button," he added.

Talent hires and startup mafias

Canada believes that it can help Indian startups set up satellite offices in Toronto, hire quality talent within the country, and expedite their global expansion, with innovation in startup immigration and relocation policies over the next decade.

Sunil Sharma, Managing Director, Techstars Toronto, said

"We have seen some good outcomes of the Startup Visa programme that lets founders get permanent residency in Canada and earn investment from a VC group or angel. It has helped Canada retain talent. Also, Toronto is a cosmopolitan and multi-ethnic city that appeals to immigrants. Hence, the potential for growth is high."

Policies like this allow startups to create a "micro MNC" in countries with large populations, lots of consumers, and high sales growth opportunities.

Indo-Canadian startup leaders also drew parallels between both countries in terms of single startups creating cohorts of potential founders (or mafias).

Ankit Nagori, Co-founder, Curefit, said, "The Flipkart mafia is an ecosystem in itself. Tens of companies have come out of it – PhonePe, Udaan, Curefit, Groww, Jumbotail, many others. That is the beauty of one success in an ecosystem. One exit created so much wealth and opportunity for entrepreneurs to start up again, get money reinvested into the ecosystem, and create liquidity for early investors."

In Canada too, the "Shopify mafia" is slowly taking shape, Brice revealed, adding, "Shopify has the largest market cap in Canada. It is not a full-blown mafia yet, but it can happen. We're already starting to see the founder-investor replication trend."

Summing up the conversation, Radical Ventures' Benji noted, "I think the Indo-Canadian ecosystems are going to grow like crazy, and we have to be ready for such crossovers. We are still a little early but there has been progress on both sides."