Alibaba hints at change in Indian investment strategy as it pushes smaller deals via BAce Capital

Alibaba has been in the Indian market for a while and has had enough learning. Despite making bold bets on Paytm and Snapdeal, it’s far from dominating sizeable share in e-commerce space. Its recent bet on Paytm Mall appears to have also turned south.

Following disappointment with large bets, the Chinese behemoth is revamping strategy to win the world’s most fledgling e-commerce market. The new approach could see the group focusing on early-stage deals and vertical e-commerce investments.

Instead Alibaba and its affiliates, Jack Ma wants BAce Capital to lead such deals. For the uninitiated, founded by Benny Chen, BAce Capital is a newly constituted VC firm that invests in India and Southeast Asia based on Chinese experiences. Ben was MD with Ant Financials India and led strategic alliance for Alibaba in India and SEA.

Alibaba is one of the anchor limited partners (LPs) in BAce Capital’s $100 million maiden fund. Besides Chen, Kshitij Karundia is also a managing partner at BAce Capital. He also served Alibaba as senior director and his role considered to be an instrumental in backing Paytm, Paytm Mall, BigBasket, XpressBees, Lazada, and Tokopedia.

Given the deep experience of the team in identifying opportunities in the region, Alibaba has backed BAce Capital. The VC firm also had executed a couple of deals in India including $8 million Healofy. According to a Mint report, Alibaba established a separate team because it felt an urge of an independent team to drive small deals.

Such deals could range from $250K to $15 million across series A and B.

By backing the video intelligence platform Vidooly with $2 million, Alibaba already had expressed its desire for the smaller round. The strong interest of Alibaba in backing early-stage companies via BAce Capital has come at a time when Sequoia's accelerator programme - Surge is expected to change the early stage investing in India.

While media reports suggest that Alibaba may shift complete focus from late-stage deals, we don't think so. If it identifies a big opportunity, it won’t mind backing it. With the changing strategy of Alibaba, it would be exciting to observe how it fares up for the Chinese payment to e-commerce juggernaut.