Money from Chinese tech firms is deciding India’s next unicorn, say venture capitalists
The backing of a Chinese tech giant often enables an Indian start-up to put rivals out of business, say delegates at the Asia Private Equity Forum
Capital from Chinese technology firms is deciding the winners in India’s tech start-up market, according to venture capitalists.
Indian companies chosen by tech giants such as Tencent Holdings and Alibaba Group Holding have received vast amounts of capital, enabling them to put rivals out of business by building their own ecosystem and developing new products.
Chinese investors have been using this “winner-takes-all” strategy in India for the past few years, having seen it pay off for late stage start-ups in China and the US, said Karthik Reddy, co-founder and managing director of Mumbai-based Blume Ventures.
For example Ola, India’s equivalent of Uber, with the backing by Tencent and SoftBank was able to shut down its rival TaxiForSure – part of Blume Ventures’ portfolio – in 2016, a year after it bought the competitor for US$200 million.
“Nobody can contend with that capital,” said Reddy, at the Asia Private Equity Forum on Wednesday.
In the last 18 months, Chinese companies have poured around US$2.37 billion into Indian start-ups, according to data research firm Tracxn.