The Chinese investors are aggressively making inroads in India in a big way, through the start-up route as well.
China has emerged as one of the fastest-growing sources of Foreign Direct Investment (FDI), including in the Indian start-up ecosystem where the Dragon is showing unusual interest. Beijing was the 17th largest investor in India in 2016, up from 28th in 2014 and 35th in 2011, according to India’s official ranking of FDI inflows.
In 2017, the Chinese invested an estimated $2,000 million (₹12,600 crore), compared $700 million (₹4480 crore) a year before, a jump of about three times in a single year. In the last three calendar years, the Chinese and Chinese-origin investors have poured in about $3.7 billion (₹23,600 crore) in Indian start-ups, according to data sourced from VCCEdge and Tracxn. Its major beneficiaries are around 25 start-ups, including Truebil, iXigo, PayTM FlipKart and MakeMyTrip.
And, unlike western investors, the Chinese are not the fly-by-night investors who make a quick buck and scoot after booking profit for the lock-in period. The Chinese investors are expected to stay in India for the long haul, an expert said.
“They are balance-sheet investors, not looking for exits,” Shubh Bansal, co-founder, Truebil, told BusinessLine .
Truebil, a Mumbai-based pre-owned car marketplace, got $3 million (₹19.13 crore) in follow-on Series A funding round from China’s leading Venture Capital Fund Shunwei Capital in 2017 by way of equity investment. “They understand India better than their western counterparts.”
Bansal said the Chinese investors are looking for “strategic investments” in India where a billion people are expected to be online soon. So, they are not much investing in e-commerce.
“The Chinese are patient investors. It took them four months of due diligence in our case.”
Another example is Indian social network Sharechat, which received $20 million (₹127 crore) funding in 2017. Sharechat, unlike YouTube which is an English-only network, is focussed on Indian languages to attract mass content, he said.
Opening startup ecosystem with the help of Chinese investors is turning out to be game-changer in terms of knowledge sharing, not just sourcing capital. Chinese entrepreneurs are ahead of their Indian counterparts and therefore, give Indian entrepreneurs an opportunity to leverage their experiences. Therefore, Indian founders, with big international dream are banking on Chinese investors for both learning and growth.
For Chinese investors, Indian start-ups present a range of scope. The familiar and already tested business models and finance-based association work well for the companies. A potentially slowing Chinese economy and paucity of investment opportunities in their own country also brings the investors to India – a country with a burgeoning start-up culture.