The rising influence of Chinese investors in Indian startup ecosystem

Last month, cab aggregator startup Ola Cabs raised around $50 million from Sailing Capital, a private equity fund initiated by Shanghai International Group, along with the Chinese state-backed investment fund China Eurasian Economic Corporation Fund.

Among other major deals, India’s food-tech unicorns Zomato and Swiggy raised funds from Chinese investors. Zomato raised more than $200 million in January 2018 from a firm led by Alibaba group.

A few months later, Swiggy raised around $210 million from a group of investors which also saw participation from Meituan-Dianping, a Chinese online food delivery-to-ticketing services platform.

Paytm group’s ecommerce arm, Paytm Mall, has raised $445 million in February led by Softbank along with Alibaba. An existing Chinese investor in Paytm Mall also invested $45 million in the round.

The Chinese investors started making their presence felt in India majorly in 2015. Snapdeal had raised $500 million from Alibaba in February 2015.

In the same year, Ola cabs raised $500 million from a group of investors. Didi Chuxing, Chinese ride-sharing, artificial intelligence and autonomous technology conglomerate, also participated in the round.

However, it was Alibaba, which signed the biggest cheque of 2015 among Chinese investors when the group along with its financial services arm, ANT Financials, invested more than $800 million in One97 Communications, the holding company of Paytm group in two tranches.

In the following years, other Chinese investors also followed the suite. Tencent Technology, Fosun and even smartphone maker Xiaomi made investments in Indian startups.

Tencent Holdings participated in a $ 1.4 billion round of funding in Flipkart along with Microsoft and eBay in April 2017.  Tencent Holdings also invested around $175 million in messaging app Hike, along with Foxconn Technology. Its other bets include healthcare startup Practo, Ed-tech startup Byju’s among others.

Chinese listed pharmaceutical company, Fosun Pharma also made an investment of $30 million in the ecommerce logistics startup Delhivery, while Xiomi has so far invested in digital lending startup Zest Money, social networking platform ShareChat and entertainment chat app Samosa.

In all, Chinese investors have done more than 30 deals in Indian startups since 2015. Most of these deals were growth-stage deals and seven out of 12 unicorns in India are backed by at least one Chinese investor.