Funding from the east - Asian VCs looking at Indian startups

Till recently, investors funding Indian startups were mostly from the US – read Sequoia and Tiger Global. Soon followed SoftBank from Japan, along with Tencent from Taiwan. Chinese VC firms such as Tencent and Yeahmobi, and highly valued companies like Didi Chuxing and Alibaba have already entered India. Cheetah Mobile and Baidu have also shown interest in the ecosystem here.

This does not come as a surprise – India’s population, growing internet penetration and urbanisation, and tech savvy youth make the country an obvious target. Add to this the recently relaxed norms on FDI; with 100 percent foreign investment allowed in marketplaces, more investment is expected to flow into e-commerce despite the lull in sales for market leaders Flipkart and Snapdeal.

Now, it looks like the list of Asian investors keen on their desi neighbour is increasing. Believing that India follows China in the case of tech and mobile startups, most of their investments have gone into these categories, with Didi’s investment in Ola, SoftBank and Alibaba putting money in Snapdeal, and Tencent’s funding of Hike and Practo being among the prominent cases.

Then came the newer ones [see infographic]. Although these investors are generally stage agnostic, Tokyo-based Cyber Agent Ventures has said that it will invest $500,000 to $1million in pre-series A and series A rounds in India. Another Tokyo-based firm, Incubate fund, has partnered with Jaarvis Accelerator in India to invest up to $300,000 in 10-15 companies.

Quadria Capital, a healthcare-focused PE fund based out of Singapore, has raised over $ 1.4 billion to invest in the healthcare sector in South and Southeast Asia. In June 2016, they launched Rs 65 crore ($10 million) healthcare-focused venture capital fund HealthQuad for India.

To China or not to China?

Curiously, many Asian investors have kept away from China, Beenext, Idein Ventures, and Rebright Partners among them. GREE Ventures, which has invested in more than 30 startups in Japan and South East Asia (excepting China) has to its credit Singapore’s mobile chat app Pie, which became Google’s first acquisition in Asia. They are investing in India from their second fund of $37 million.

On the other hand, Temasek Holdings, which has funded Snapdeal and Paytm in India, also happens to be an investor in Alibaba (which has funded the same two unicorns). To their credit, Mediatek has invested in the ten-year-old Chinese m-commerce platform Maimaibao, which boasts of 110 million monthly visitors and $75 million in funding, and focuses on tier 3 and tier 4 towns.

India Vs Rest of the World

If the US and China led the startup story so far, India is the one writing the sequel. Tech innovations back India for further growth, despite few startups becoming profitable so far. With the Chinese economy slowing down and Indian GDP growing like never before, it looks like India is the next big love of Asian investors.

Graphics by Aditya Ranade