Since it was launched in 2011, Entrepreneurial Spark has grown to become the world’s largest free business accelerator programme. When the organisation opens its base in London in February 2017, it will have swelled to encompass 13 incubation centres – or ‘hatcheries’ – spread throughout the UK.
By the start of this year, a total of 660 businesses had been supported by the scheme, with 88% of them still trading. Between them, they’ve raised £45m of investment, have combined revenues of £85m and employ just over 1,800 people.
While the expansion from its heartland in Scotland to locations south of the Border has grabbed all of the headlines, founder Jim Duffy and his team have been very quietly mounting an international expansion too. In June 2015, the scheme took its first tentative steps into India.
So far, the organisation has hatcheries in the city of Gandhinagar in the state of Gujarat and in the city of Greater Noida on the outskirts of New Delhi, with plans for a third site that could open later this year. Options include the city of Bangalore, which Duffy describes as a hotbed for start-ups, or a location in the north of the country.
The expansion into India has been conducted in partnership with Viridian Ventures, the investment arm of the eponymous New Delhi-based property group. “Viridian looked around the world for an accelerator programme that they could bring to India,” explains Duffy.
“PWC, which was one of Viridian’s advisors in Singapore, suggested that they should speak to us, because PWC had been involved with Entrepreneurial Spark in Scotland. So our partnership with Viridian in India is similar to our partnership with Royal Bank of Scotland (RBS) Group and its RBS and NatWest brands in the UK.
“We’re taking things slow and refining the model in India to make sure that we get it right. We use a slightly different model in India – whereas we take 80 companies or ‘chiclets’ at a time in the UK on courses that last for up to 18 months, in India we’re taking 10 to 15 companies during each in-take.
“Our model is very different to anything that the Indians have experienced. In India, business is very hierarchical – you don’t question your boss. So when me or one of the advisors is sitting down with an Indian entrepreneur and questioning them about their idea then it’s very alien to them.
“So we’re testing to see how far we can push it. Some of the companies just don’t like it because they’re being questioned on their leadership and they’re being questioned on their emotional intelligence.
“The way Indian entrepreneurs are at the moment, they all think that if they come up with a tech or ecommerce idea then it’s immediately going to have a valuation of $3m,” Duffy adds. “So we have to explain to them that those ideas are pie-in-the-sky.
“You can build a business in the Indian market for Indian investors and Indian consumers – there are 1.2 billion of them and at least a couple of hundred million with access to wifi, so that’s four-times the UK population – or you can build a business with a view to getting early traction in India but then growing it in other countries.”
Duffy points to the example of Flipkart, the online shopping portal, which has been compared to American giant Amazon. “All of the Indian entrepreneurs that we speak to want to build the next Flipkart,” he laughs.
Starting a business in India also involves much more formal non-disclosure agreements (NDAs) than in the UK, highlighting another way in which Entrepreneurial Spark has had to tailor its operations to suit the local market. The scale of the operation in India is also a key difference.
“We currently have nine hatcheries in the UK and we’ll have 13 by next spring,” says Duffy. “I’m based in Glasgow, which is only an hour from Ayrshire, an hour from Edinburgh, or a two-and-a-half hour drive to Leeds, and I can jump on a plane and be in London in, say, an hour.
“So if something goes wrong in one of the hatcheries then I can get there quickly. In India, the hatcheries are 400 miles away from each other – so that’s a day’s travel.”
Other differences between the hatcheries in the UK and India include the number of male entrepreneurs on the sub-continent. While the gender split is about 50-50 in the UK, in India around 80% of the entrepreneurs are male. “There’s also a difference in the type of businesses that people want to start in India,” adds Duffy. “There’s a big emphasis on technology businesses and so the entrepreneurs are heavily geared towards securing investment. In the UK, it’s a much wider spread.”
One of the big similarities between the two cultures is the number of grass-roots entrepreneurs who want their businesses to have a social as well as an economic impact. Duffy says Viridian was attracted to working with Entrepreneurial Spark because the organisation is structured as a social enterprise and has always placed a heavy emphasis on the social impact of its chiclets.
Duffy and his team – who have been approached about opening hatcheries in other countries too – have also been learning lessons about the business culture in India, which will help any of his British chiclets that want to trade with the sub-continent. “If you want to do business in India then you need the right partner on the ground,” he says. “If you don’t have the right partner to work with in India then you’re just going to get tied-up in knots and get lost in all of the red tape. The bureaucracy is phenomenal.
“But, as a nation, they are naturally entrepreneurial. They have no welfare state so they have to create their own jobs. You still see the chai wallahs on the streets selling tea. As a country, over the next ten years, if they get the structures right then they could be a powerhouse. They have the appetite for it, so just watch them go.”