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Xiaomi’s founder is betting on India as the happy hunting ground for technology unicorns

Venture capital firm Shunwei Capital sees attractive early-stage investment opportunities in Indian mobile app start-ups, and is confident their rapidly developing technologies will overcome the country’s network bottleneck

PUBLISHED : Thursday, 14 December, 2017, 7:42am
UPDATED : Thursday, 14 December, 2017, 7:52pm

Shunwei Capital, the venture capital firm cofounded by Xiaomi founder Lei Jun, expects the development of the Indian mobile internet sector to closely mirror that of China, making the subcontinent’s mobile app start-ups highly attractive for early-stage investments.

Tuck Lye Koh, chief executive and founding partner, expects the next batch of unicorns – or venture-backed private companies valued at US$1 billion or above – to emerge out of the Indian mobile internet sector, as the nation migrates to low-cost smartphones from feature phones.

Over the past 12 months, Shunwei Capital has invested in eight Indian mobile app start-ups, including ShareChat, mobile video app Clip, mobile gaming Mech Mocha, and e-books and self-publishing platform Pratilipi.

Shunwei Capital scouts for early-stage investments and provides financing up to series B, typically of around US$10 million each.

We believe our investment experience in China gives us the advantage in our investment decisions in India
Tuck Lye Koh, chief executive and founding partner, Shunwei Capital

“If we pick our investment carefully, some of these start-ups could grow into the next unicorns of Asia. We believe our investment experience in China gives us the advantage in our investment decisions in India,” said Koh.

Shunwei Capital’s interest in the Indian mobile sector has come despite the country’s mobile infrastructure still facing connectivity bottlenecks.

A recent mobile speed test survey by Ookla, which conducts tests on internet performance, found India ranked a lowly 109th globally in mobile download speed, at 8.8 megabits per second. This compares with top ranking Norway, at 62.66 Mbps, and with China, which is ranked 31st at 31.22 Mbps.

“Indian start-ups have technologies in place to enable them to serve mobile users in rural areas, who are also more sensitive to data costs,” Koh added.

“A number of mobile start-ups offer services that enable users to download a video clip or an article for the user’s consumption later when they are offline. These applications will help address the infrastructure bottleneck in India.”

Shunwei Capital manages three US dollar funds worth US$1.7 billion. Its most recent US dollar fund started investing in 2015 and has focused on Chinese mobile and internet technology companies and most recently also invested in Indian in start-ups. The firm manages five funds in total, two of which are in renminbi with over 2 billion yuan under management.

Koh believes the top 10 to 20 most-downloaded mobile apps in China should serve as references to start-ups looking to succeed in India.

In China, the most popular apps include mobile-payment apps, navigation apps, search engines, news readers, and music streaming services.

Lei Jun, Shunwei Capital’s chairman, who also founded Xiaomi, told the Indian press recently that the Chinese electronics and mobile giant together with Shunwei Capital would invest US$1 billion in 100 start-ups in India over the next five years.

Koh said Shunwei Capital’s investment strategy is to work with top-tier Indian venture capital firms, which have more local industry knowledge than foreign players.

In China, Shunwei Capital is active in minority investment deals across mobile internet, e-commerce, online education, and others.