t by the Kauffman Foundation analyzed its venture-capital portfolio and concluded that 62 out of 100 funds failed to exceed the returns offered by the public market.

Most venture-capital firms don’t head abroad with the sole aim of searching for copycats, however a lot of their investments end up that way.

Introducing Clone Models to new Markets

After all, backing tested concepts mitigates the risks in new businesses and means organizations are probably going to grow quickly, because the original company has worked out all the bends. Often the originator of the business does not have the expertise to enter new developing markets so fast, so copycats can get there first.

They can likewise gain an edge by tailoring organizations to local habits. Flipkart, an e-commerce website in India founded by two former Amazon employees, had raised funds from Tiger Global, a New York-based hedge fund that has some expertise in this sort of investing, and Accel Partners, a venture-capital firm. Honestly, the idea worked because around then individuals scarcely used credit cards in India and to make it mainstream they needed to present something like cash on delivery.

There are diverse approaches to play the copycat game. Rocket Internet, started by the Samwer brothersÂAlexander, Marc and OliverÂin Germany, is a cloning factory that copies American and European organizations, hiring entrepreneurs to run them and exporting these new companies to emerging markets as fast as possible so they are the first entrants. More traditional venture capitalists are setting up offices and specifically backing local entrepreneurs. American venture capitalists often like to acquire a local partner to give more reliable mentorship to these entrepreneurs and give exhortation on the best way to navigate the domestic market.

How long can they ignore the competition?

Copycats can without much of a stretch lose share when the original company enters the local market. Snapdeal and Flipkart, once the Amazon of India, got “pummeled” when Amazon entered the market. With innovation, you have a global benefit, but with copycat innovation you have geographical limits.

ItÂll not be long before emerging markets spawn their own innovations that can be trotted out on a global scale. That would be closer to the spirit of venture capital, which is supposed to ferret out and fund new ideas, not imitations.

(Views are personal. The writer is Gurgaon-based Digital Marketer and an aspiring entrepreneur. https://www.linkedin.com/in/gauravsangwani/)