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From left: Vinutha Rallapalli, Gouri Shankar Sridhara, Paul Smith, LN Parimi, and Atal Malviya of Spark10, Ankit Samadariya, CEO of The Hive, Divya Jyothi, Ravi Warrier, and Swati Suramya of Spark10, Sasikanth Chemalamudi of The Hive, and Rohnak Naidu of Spark10. Photo credit: The Hive

From billionaire steel magnate Lakshmi Mittal to London cabbies, England teems with people from its former colony, India. They bagged nearly 60 percent of British work visas last year and comprise the UK’s biggest overseas-born population.

One of them is Atal Malviya, who got a computer science degree from Gwalior, near Delhi, and went to England for an MBA after working for SAP Labs and Oracle. He became an entrepreneur during his MBA program, and launched his big data text analysis startup Odimax right afterwards.

The 13-week accelerator program is the best form of diligence we can provide to our angel investors from the UK.

A couple of years ago, he exited and decided to pool in funds from like-minded people in the UK who wanted to engage with the tech startup scene back home in India. Spark10 was born.

Last year, it launched an accelerator in the Engineering Staff College of India in Hyderabad, which provides continuing education to engineers. Nine startups were in the first cohort. And now, a second cohort of five startups is in the new Spark10 accelerator launched during the weekend in Bangalore.

“The 13-week accelerator program is the best form of due diligence we can provide to angel investors who are pooling a fund for Indian startups,” the Spark10 founder and CEO tells me during the accelerator’s launch party on the rooftop of VR Bengaluru, a swanky new mall in the tech suburb of Whitefield on the periphery of the city. The entire top floor of this mall is a new co-working space called The Hive, which will house the Spark10 accelerator along with hundreds of others already using the space.

“It will be an open-ended fund and we’re hoping for US$25-30 million for a start,” continues Atal. “NRIs (non-resident Indians) abroad feel affectionate about India, so we came up with a framework like Spark10 to help them feel comfortable about investing in startups here.”

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Gouri Sridhara, one of the investors in Spark10, seconds that. “We’re interested in investing in India because we understand the culture, mentality, and talent,” he says.

“We’d love to see global products from India,” adds Gouri, who heads the procurement division for Deutsche Bank. He bumped into college friend L N Parimi, who is a founding investor in Spark10, in a London mall. They got talking about what they were doing, and it soon became apparent that Gouri could align his expertise in procuring software for a multinational company with helping talented Indian startups who produce the software.

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Mentors from the UK

Rooftop of VR Bengaluru which houses co-working space The Hive and Spark10 accelerator. Photo credit: The Hive

Apart from NRIs, Spark10 is bringing to India startup mentors based in the UK. This, too, happened in serendipitous circumstances.

Atal’s startup Odimax was incubated in Ignite, a leading accelerator in the UK. Ignite’s co-founder and CEO Paul Smith, who is also an entrepreneur-in-residence at Techstars London, became a friend and later a founding advisor in Spark10. Former Techstars MD John Bradfield is also supporting the program.

“Everyone in the world is looking to India for great things to come from it,” Paul tells me. “You have these incredibly gifted people coming out of your engineering colleges who go out into the world and make people think India has the potential. If I were an investor, I’d be looking at people who came out of India and who’re working on the west coast of America or in Europe and built tech companies. I’d be betting on some of that happening here.”

I play the devil’s advocate and point out fundamental differences in the Indian market, with the frugal mindset of most consumers coupled with low purchasing power for the masses. The first lot of consumer internet startups and their investors are now discovering that their assumptions about the market, as well as their valuations, were over the top.

See: 25 failed startups in India in 2016 and what you can learn from them

Atal admits there was over-valuation and a frenzy of funding which has led to big shutdowns such as that of Stayzilla, India’s largest homestay network, last week. “We don’t want it, but it happens. It’s the normal process of maturing. People are getting smarter now.”

Spark10 provides US$15,000-30,000 as seed funding to its startups, with an option of participating in the next rounds. Atal points out that 20 percent of the funding for the startups in the first cohort in Hyderabad came from local angels. But for the second cohort launching now in Bangalore, 80 percent of the seed money has come from NRIs, suggesting they’re taking a long view on India, which is the world’s fastest growing large economy.

“India has challenges, but so do other places,” says Paul. “Look at the UK that’s about to leave one of the biggest markets in the world for the sake of I don’t what. It makes me cry. You’ve got America which has gone overnight from a place that was the world’s envy to a sort of dictatorship. So things can change overnight. You got to play the long game. As an investor, you should be betting on the next five years. You have a lot of talent here, over a billion people, and massive problems to solve. That’s an opportunity.”

Nevertheless, there’s a distinct shift in focus evident in Spark10’s selection of startups. While the first cohort in Hyderabad last year mostly comprised consumer internet plays, the second cohort in Bangalore has deep tech startups. “Looking to the talent that India produces and trends in AI/ML, that’s the thing to capture,” says Paul.

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The Bangalore cohort has two AI startups, one of them using artificial intelligence for market insights to advertisers, while the other has AI-based tech for genome data. An information security startup, a stock market analytics startup, and a startup capturing beauty trends for Indian women complete the current cohort. Spark10 says five out of the nine startups from the first cohort have raised follow-up funding averaging US$85,000.

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