Several Indian startups are setting their sights on the Gulf markets, on the back of the region’s burgeoning middle class and high disposable incomes. From beauty and fashion to mobility and home services, these startups see immense growth potential by catering to premium consumer segments.
For instance, Nykaa, the beauty and fashion e-commerce firm, recently announced plans to widen its omnichannel presence in the Gulf Cooperation Council (GCC). During the company’s Q4 analysts call, founder and CEO Falguni Nayar stated that Nysaa, their e-commerce website launched in the UAE in October 2022, could generate revenue and profit much faster than in other markets. Nykaa opened its first international brick-and-mortar store in Dubai in March.
Nayar cited the region’s affinity for beauty, high per capita consumption, potential for rapid growth, and consumer profile as clear opportunities. The company’s board approved a $2.5 million investment in Nysaa in February and plans to invest an additional $1.9 million.
Meanwhile, Gurgaon-based all-electric ride-hailing startup BluSmart is gearing up to enter Dubai. It plans to launch a pilot programme with a fleet of 100 Audi E-Tron SUVs to compete with the likes of Careem, Hala, and Uber.
Companies already active in the region are also starting to see the segment grow in scale and serve as profitability drivers. Online fresh fish and meat seller, FreshToHome, has experienced significant success in Dubai. It generates approximately 13% of its revenue from the Emirate. Currently, the Middle Eastern region accounts for around 15% of the company’s annualized revenue of around $130 million.
Home services marketplace, Urban Company, which expanded to the UAE five years ago, expects this vertical to become profitable soon. Dosa batter-maker iD Fresh’s operations in the region that span the UAE, Saudi Arabia, Oman, Bahrain, and Qatar, account for 20% of the firm’s revenue generation.
Analysts point to the large Indian diaspora, the rapidly growing middle-class population, and high per-capita incomes as major drivers. These markets are conducive to “premiumization” as consumers have greater spending power and appetite for premium offerings across categories.
A large Indian diaspora results in high demand pool for native or domestic products. Given that geographically the market isn’t too far off, internal people can be transferred to set up operations and stabilize it for the first 12-36 months. Moreover, these markets are abundant in local Indian talent pool,” said Rishav Jain managing director at consulting firm Alvarez & Marsal.
“The large Indian diaspora means the cultural learning curves are similar to India. This eases market entry. A lot of the work that needs to be done in terms of awareness, is already done through the proximity in terms of culture,” said Maanav Sagar, partner at Bharat Founders Fund, an early-stage venture capital firm.
According to data gathered by Tracxn, at least 200 Indian startups are currently operational in GCC countries. At least 10 have set up a secondary headquarters or head offices there. The region’s Sovereign Wealth Funds (SWF) have also shown increased interest in Indian startups. Avanse, an online lending platform offering educational loans was the latest to attract a $120 million Series D funding round in March led by Mubadala an Emirati state-owned holding company that acts as one of the sovereign wealth funds of the Emirate of Abu Dhabi.