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Chinese startups, investors looking at India

Siva Sankar
Updated: Aug 25,2018 8:34 AM     China Daily

India is now an important startup destination, and even small and medium-sized Chinese enterprises, venture capital firms and angel investors are eyeing it, and seeking local insights, experts said at an entrepreneurship forum in Beijing on Aug 21.

The event, which focused on topics like what kind of Chinese startup ideas can succeed in India, was organized by Google-backed Startup Grind, the world’s largest startup community that educates and connects 1.5 million entrepreneurs in more than 365 cities in 115 countries.

Chinese investors and startups with relevant products and services should consider expanding into India, said Kunal Shah, a serial entrepreneur best known as founder of the Freecharge app, which was bought for $400 million in 2015.

The time has come for founding cross-border startups that can serve the two gigantic markets of China and India, said Prateek Sharma, who oversees Sequoia Capital’s early stage investments in firms in the consumer internet and educational technology sectors.

While mass-sharing apps are popular, there are cultural nuances behind why food delivery and livestreaming apps have not taken off in India as they have in China. Voice-driven searches and “how-to” content are likely to see bright prospects in India, experts said.

They highlighted the lessons that can be drawn from both the failure of WeChat, which commands nearly 1 billion users in China, to outcompete messaging and content apps such as WhatsApp and Hike in the Indian market, and the early success of the Alibaba-backed UC internet browser.

Chinese entities can make the most of the ongoing digitalization drive in India that is creating digital IDs for more than 1 billion people, thereby spawning tremendous opportunities for online services. Also, the plummeting cost of access to 4G mobile data is a big game-changer, Sharma said.

Indian startup founders are evolving into broad-minded thinkers with can-do spirit, and are picky about investors. They are open to partnering with Chinese investors, who tend to back quality ventures but drive hard bargains for startup stakes, Shah said.

Chinese investors’ expertise in ensuring the startups they fund are productive is highly valued in India, more so because young Indian entrepreneurs are not “dam-builders but river-detectors” and travel a lot to learn from startup ecosystems in markets like China, he said. “I hire 15 interns in China just to understand the local nuances.”

Chinese startups can teach a thing or two to their Indian counterparts about being data or fact-driven, and in process and knowledge management, Sharma said.

Prakhar, an informal investor scout in China for Indian startups, said Chinese investors are no longer fixated on funding startups in the ASEAN region, Europe and North America, but are serious about investing in India.

Hanson Hu, an associate at Morningside Venture Capital, which has invested in successful Indian startup, said: “We haven’t experienced any troubles like slow bureaucracy. The going so far has been smooth and promising. It’s fun to work with Indian startup founders.”

Shah said: “Entrepreneurship isn’t about hiring a co-working space, networking and having chilled beer. It’s about being opportunistic and understanding consumer behavior. It’s about using technology to enable the motivation to do something. In this respect, Chinese investors can share their phenomenal experiences with Indian startups.”