Israeli deep-tech startups find themselves ‘hot’ in India

In 2018, when Flipkart, the leader of $32 billion Indian e-commerce market, wanted to deliver critical insights about the product inventory to its sellers, it looked towards Israel for solutions. In a major buyout, Flipkart, which is now a subsidiary of Walmart, acquired Israeli retail intelligence platform, Upstream Commerce. The acquisition is touted to be vital for maintaining narrowing edge over Flipkart’s rival, Amazon India, which is growing aggressively. Within just six months, Flipkart doubled its presence in Israel by setting up an R&D base to scout for additional acquisitions in the country. More recently, Zee Entertainment Industries Ltd partnered with 14-odd Israeli companies to develop the user experience of its online-streaming platform, Zee5. The Indian digital entertainment sector is fiercely competitive with players like Prime Video, Netflix and ALTbalaji. It underscores the potential value that Israeli technologies can bring for Indian corporates and startups.

Startups and corporations alike

It’s also not just startups who are tapping the Israeli innovation ecosystem. Large Indian corporations also have not been shy to ink a plethora of deals and collaborations with Israeli startups, especially over the last five years. This includes – Reliance, Infosys, Tata Consultancy Services, Tech Mahindra, L&T, and Apollo Hospitals. While Reliance and Infosys have signed strategic partnerships and invested in multiple Israeli companies, TCS and Tech Mahindra have set up entire R&D centers in Israel. Apollo Group, which is the largest chain of specialty hospitals in India, have also signed strategic agreements with Glucome and Zebra Medical Vision for diabetes and tuberculosis detection, respectively. Interestingly, the ensemble of agreements transcends conventional sectors such as cybersecurity and defense.

An apparent match

One can soon realize that Indian and Israeli innovation ecosystem are complementary to each other. Primarily serving a domestic market of 1.3 billion population, most valuable Indian startups chiefly consists of B2C service providers and aggregators in sectors such as e-commerce, food delivery, mobile wallet, ride-sharing, etc. The rise of such companies is primarily fueled by the explosive growth of consumption abilities of the middle class and the deep penetration of mobile internet. On the other hand, Israel has been home to pioneering B2B deep-tech and product companies. It is easy to see how some of the Israeli companies are bringing innovative solutions to challenges that some of the rapidly scaling startups face in India.

Partnerships across multiple domains

“Indian clients have the appetite for solutions with the best value propositions making it easier for Israeli startups to make a point” – says Ariel Assaraf, co-founder of a log-data analytics platform, Coralogix. With their proprietary machine learning algorithm,  Coralogix has helped prominent Indian companies such as Hotstar and Postman to reduce their cost of software data analysis by over 50 percent. With over 1000 clients worldwide, Coralogix is looking to provide services to other leading Indian players in e-commerce and online travel domains. “Indians are very humble and ask great questions, making working together with them a pleasurable experience” Assaraf added.

A similar opinion has been echoed by Omer Paz, COO of Paykey, a fin-tech startup which enables banks and other financial institutions integrate their online services over social media and messaging applications. “We find a lot of Indian companies have the innate drive to innovate and partner with other innovating companies to be able to stay relevant in the ever-changing ecosystem,” says Paz. India was one of the first focus countries in Asia for Paykey, which can be attributed to a  robust financial services industry and the recent surge in the adoption of mobile payments and digital wallets. Using Paykey’s platform, PhonePe, a leading mobile payments app is now allowing users to access PhonePe’s services from all third-party apps. Such integration is allowing millennial users to seamlessly send and receive payments without switching between multiple apps. “We are actively involved to explore partnerships with other leading players in Indian fin-tech space. Our platform can be integrated within 8-12 weeks and it allows our clients to connect with consumers at a deeper level,” Paz added.

Demand is likely to move upward

“We can see a clear need and supply of solutions to satisfy the need,” says Saket Agarwal, Managing Partner of Onnivation, a Mumbai-based accelerator program. We have put in place a model where we invest in the India business of Israeli deep tech-companies and help them scale in India by putting the local team, working capital and driving the sales in India.

We have around 15 companies in our portfolio in the areas of media, e-commerce, fin-tech, data science, Advertising and Marketing technology, cloud and DevOps, Agarwal added. Israeli companies are focused on using technology to solve pressing challenges, with a vision for global markets right from their inception. Hence it makes it easy to expand to India without any country-specific adaptations. Onnivation is now in the process of setting up the first India Israel focused fund where it will be investing in deep tech Israeli companies and help them scale in India.