How a wave of Chinese money is powering Indian start-ups

China last year poured US$2.5 billion into firms in India, which is a healthy breeding ground for up-and-coming tech outfits

Active cooperation between these investors and entrepreneurs holds a multitude of benefits for both sides, according to industry pundits

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Chinese venture capitalists are injecting funds into a variety of cash-hungry Indian businesses. Photo: Shutterstock

Published: 9:00am, 29 Jul 2019Updated: 9:20am, 29 Jul 2019

Chinese President Xi Jinping and Indian Prime Minister Narendra Modi look set for another informal summit in October, and a key item on the agenda will be the flow of money between their nations.

Indian start-ups have become a major target for deep-pocketed Chinese investors, who have been looking to emulate their United States counterparts such as Tiger Global and Sequoia Capital that dominate the sector.

On top of this, a slowdown in start-up deals in China has nudged the country’s investors to look beyond their borders, and India’s affordable labour market and strong economic growth provide a healthy breeding ground for young tech outfits.

Led by heavyweights such as Shunwei Capital, Fosun International, Tencent Holdings, Xiaomi and Alibaba Group Holding – which owns the South China Morning Post – Chinese venture capitalists have been injecting funds into a variety of cash-hungry Indian businesses.

For many of these start-ups, the knowledge and technology of Chinese investors act as the backbone of their business

Ntasha B, Venture Gurukool

Beneficiaries have included advertising firm Media.net, e-commerce operator Snapdeal, digital payment provider Paytm, online travel firm MakeMyTrip, messaging platform Hike, health tech start-up Practo and news aggregator Dailyhunt.

“For many of these start-ups, the knowledge and technology of Chinese investors act as the backbone of their business, along with the operational expertise of Indians in the domestic market,” said Ntasha B, co-founder of Venture Gurukool, a mentoring platform for start-ups which works closely with Indian diplomatic missions in China.

Chinese President Xi Jinping and Indian Prime Minister Narendra Modi are set to meet again in October. Photo: Xinhua

She added that Chinese investors usually had a hands-on approach and were a bit inflexible, unlike their American counterparts, who gave some elbow room in hiring local teams.