In January last year, a group of Indian venture capitalists flew down to the Bay Area for what was a routine trip. At a closed-door dinner in Palo Alto, one Indian venture capital (VC) investor got chatting with “Captain” Tao Li. If you haven’t heard of him, Li is the man behind China’s fastest unicorn APUS Group. Legend has it that APUS Group’s valuation hit $1 billion within four months of Li starting the company. Some bit of this legend is true. APUS Group was founded in June 2014. It entered The Wall Street Journal’s Billion Dollar Startup club in August 2015. That was quick. Anyhow, back in Palo Alto, the two got talking.
“He had this very ‘I know best’ kind of attitude,” says a New Delhi-based VC, on condition of anonymity, in exchange for candour. “India has a lot of promise. A lot of potential. Hotels are there, but not as nice as [in] China,” Li told this person. He continued, “You have such smart founders, but why are they reinventing the wheel? Why can’t they just copy what’s worked in China?”
You would expect a casual conversation like this to not mean a thing. Not for Tao Li. In February 2016, APUS Group announced a $44 million India-specific fund, to invest in early-stage startups. It is another matter that sixteen months in, not a lot has happened. APUS Group’s only investment till date is an acquisition it made in March, that of Jaipur-based startup Skift.
Captain Li is not the only game in town. In the last couple of years, excited by the nascent and developing tech ecosystem in India, a lot of Chinese funds have come visiting. Some with curiosity. Others with intent. According to Tracxn data, 37 Chinese investors put their money into Indian startups since 2015, with 62 funding rounds till date. In a way, it is surprising that they don’t get talked about that much.
2017: The year of the dragon
|Year||Number of Deals||Total Round Amount ($ millions)|
* – Year to date (as of 19 Sep)
“Most Chinese ‘pure’ or ‘China-only focused’ funds are not serious about India,” says Kunal Walia of Khetal Advisors. The firm advises companies in fundraising and also does other transaction advisory services. “They only make educational trips every now and then. It’s mostly ‘corporate VCs’ who are interested in India. I don’t think pure Chinese domestic funds are.