Chinese VCs Are Eyeing India

With venture capitalists in India being more circumspect with their investments and demanding better scrutiny of valuations and justification of capital utilization, a group of Chinese startups seem to have entered the field, which gives hope to Indian entrepreneurs.

A group popularly known as BAT which is Baidu, Alabama Group and Tenecent Holdings, has set their eye on the Indian market and perhaps will replace the Indian VCs. India, being the world’s third largest market in smart phones, offers huge potential to entrepreneurs and investors alike.

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“India is the last big frontier for the global mobile Internet,” said Vikram Vaidyanathan, managing director at Matrix Partners India. “BAT as global heavyweights will definitely play a role in shaping this ecosystem. Given their investment track record and deep sector expertise, I think many Indian startups would welcome their participation.”

Between January to September 2015, Venture Capitalists have invested a record of Rs.26, 000 crore. However there has been a significant drop from July to September, from 43 transactions to just 30, thereby demonstrating the VCs reluctance in investing in Indian startups.

 Amongst the 3 investors, Alibaba is the biggest. “(Alibaba Group) has invested close to $1 billion (in Indian startups), which is the largest from China, they have the sharpest focus among the three.” According to founder and Chief Operating Officer, or Paytm, Vijay Shekhar Sharma. Each of the three investors in the BAT group, are expected to invest in industries close to their heart and specialization area, which would be commerce and wallets for Alibaba, for Baidu, mobile consumer and ecommerce, and social and mobile consumer for Tencent.

Ecommerce may not be their only interest. Speculation is rife that travel, real estate and education could also attract the BAT group. Mayank Khanduja, from SAIF Parnters, opines, “I don’t see them limiting themselves to ecommerce as other sectors also present large markets.They are prolific venture investors in China… I don’t think they’ll adopt one dominant strategy for India.”