There has been a race between the US and Chinese pure-play and strategic investors to put capital into Indian startups. While US-based investors dominated local startup funding until 2017, last year Chinese VCs and corporations had outnumbered the Americans.
In 2018, the combined investment by Chinese investors was nearly ten times as compared to 2016
According to data collated by research and analytics platform Tracxn, China’s VC investment into Indian startup ecosystem has jumped from $668 million in 2016 to $5.6 billion in 2018, signaling more than nine hundred percent growth in the three-year span.
This figure stood at close to $3 billion in 2017 and in the current calendar year, half a billion worth of investments have already been realised.
Among the top Chinese investors were Alibaba, Shunwei Capital, Fosun, Tencent and Xiaomi, which wrote larger cheques last year compared to 2017. The data also showed that sectors such as consumer goods, foodtech, logistics, retail, artificial intelligence, Internet of Things and fin-tech attracted maximum investments.
Industry experts are looking at this development with optimism. On the one hand, Chinese capital does not require any major privacy or security treatment while on the other, both countries are looking for avenues to boost bilateral trades. They are committed to not allow any geopolitical disturbance get in the way of doing business, as was evident by the Chinese government stance during India’s recent escalation with Pakistan.
Experts also point out that Chinese VCs not only bring in required financial strength to cash-hungry Indian startups in high growth phase but also their global reach and technical know-how is welcome here.
According to a report by KPMG, In China, corporate VC is growing rapidly. A large number of companies now have VC arms and they are actively looking for disruptive technologies within their country and outside.
In the first Startup India Investment Seminar held in Beijing last year, twelve Indian startups participated out of which four secured funding to the tune of $15 million.
Besides, several Chinese VCs, including the Alibaba Group, have fellowship programmes where they provide entrepreneurs from developing countries like India with the right skills for their businesses.
Recently, four Indian startups — Zefo, Healthy Buddha, NowFloats and Grozip – were among the 38 Asian firms which completed the fourth edition of the Alibaba e-Founders fellowship programme.
However sounding a note of caution an industry expert opinionated, “Indian entrepreneurs will benefit from large capital flowing in from China, but we should avoid opening sensitive areas like homeland security and defence to foreign funds”.
The development was reported by BusisessLine.