Expanding to the GCC as an Indian Startup With Open Bonnet and Pasiv Financial

In the August edition of our Expanding to the GCC as an Indian Startup webinar series, we asked the Founder of Open Bonnet and Founder & CEO of Pasiv Financial several questions on tech expansion into the GCC and how other Indian startups can follow

Gaurav Sharma, Founder, Open Bonnet will share how he has built and expanded an automotive aftermarket marketplace in the GCC

Vinay Gokaldas, Founder and CEO of Pasiv Financial will discuss scaling a fintech startup in the GCC and dealing with financial regulators

Here are some the key takeaways from the discussion.

While the UAE/GCC tech ecosystem is still nascent, there is a lot of positive momentum

Founders should be aware of the market differences in the region

The UAE is the gateway to the MENA, and it provides a platform for regional and global expansion
There are regulatory complexities, customer profiles vary across the GCC, and operating costs in the UAE are much higher than in India
The GCC is fragmented – banking, logistics, and operations are not seamless

Founders should be aware of their customer profiles and expand overseas only at the right time

Indian startups should validate their product in India first before expanding to the GCC

For Indian founders who have realized that their customers have a global identity, the UAE enables them to reach consumers with a global orientation
Indian diaspora consumers in the UAE are very different from consumers in India since the diaspora is exposed to global products and service levels and have higher expectations
Startups should expand to the UAE and GCC after they have created a viable product with traction in India – this experience expanding in India will make UAE expansion easier
The UAE government is very supportive of technology development even though the MENA, as a whole, trails behind the development of India’s tech ecosystem

Fintech companies come under a high level of regulatory scrutiny

Fintech startups should realize that the timeline for setup is long

There is incredible scrutiny on the company, investors, and compliance with KYC and AML
Founding a fintech in the UAE in a highly regulated space is time consuming, and the process to get started is not always straight forward
Financial regulators often want innovative fintechs to start in regulatory sandboxes

VCs seek targets with proven traction

Regional investors have an increasing interest in Indian opportunities

VCs and investors are looking for expansion potential and market traction
Regional VCs are very interested in Indian opportunities - some even have offices in India - and startups should start by reaching out to VCs that have shown an India interest
Regional VCs are hesitant to invest at the early stage without market traction – they are even more risk averse at earlier stages than VCs in other regions
Family Offices typically have a higher risk appetite for early-stage investment

Under the current market conditions, it is not easy to raise funding

Startups should look at this as an opportunity to pivot

The funding environment is pretty bad, but it is not necessarily a bad thing since poorly run startups go out of business with the best surviving the shakeout
When markets are in a downturn, startups need to have an eye on strategically positioning themselves favorably for the next growth cycle
The UAE economy has proven resilient, and there is still a lot focus on the tech sector

The UAE government is very proactive in supporting the tech sector

The UAE offers significant support for startups including accelerators, licensing policies, etc.
The UAE is very agile in adopting and regulating new technologies, and governments are also interested in forming strategic partnerships with startups

The region generally lags behind the UAE in terms of infrastructure

Expansion across the region is not seamless with little overlap

The rest of the GCC has a long way to go in rivaling the UAE’s technology and startup ecosystem - despite Saudi Arabia and Egypt making great strides over the past few years
The MENA technology and startup ecosystem is still nascent, and it is not as developed as more advanced ecosystems such as India
There are regional nuances – in terms of demographics, government approaches, population structure etc. - which lead to significant variability in the maturity of MENA technology and startup ecosystems
India and the UAE have a strong trade and investment relationship while India’s relationship with other GCC countries is still evolving

Emerging tech provides great opportunity for UAE to leverage from India

Money transfer and EV technology can provide quick wins

Instant money transfer systems like UPI can be easily implemented in the UAE and MENA since nothing of the sort exists
There is a lot of development in electric vehicle battery technologies, smart manufacturing, and hydrogen in India which the GCC can learn from

UAE is too big to fail and KSA is too big to be ignored

It will be difficult to overcome the lead UAE has over the rest of the region

It will be difficult for other GCC and MENA countries to catch up with the UAE’s technology infrastructure and ecosystem anytime soon
The UAE is too big to fail - by the time Saudi Arabia catches up, the UAE will have furthered its lead
There will not be direct competition between the UAE and Saudi Arabia - both can coexist

Wes Schwalje, Chief Operating Officer

Wes cofounded Tahseen Consulting, one of the Arab Region’s fastest growing public sector strategy and government relations firms that bridges management consulting, public affairs, and international development. Schwalje has led and been a part of the delivery team on more than 100 client engagements in the Middle East and North Africa to address the region’s most challenging development and business issues involving key areas of policy, strategy, and the implementation of change.

Expanding to the GCC as an Indian Startup With Open Bonnet and Pasiv Financial