If there were any fears that the rising protectionism targeted against India's neighbours would inhibit the flow of Chinese investments into domestic startups, they are belied by the growing belief in the change of guard on the investment front.
Investors from the Middle Kingdom are being aggressively courted by Indian entrepreneurs, and their backers, as they search for long-term pools of private capital to back their growth as well as prop them up to survive the ongoing funding winter.
Experts foresee Hong Kong and Beijing firms taking the lead as investors in the domestic startup ecosystem in the coming year, supplanting Silicon Valley and New York-based firms that have traditionally backed some of India's largest internfirms including Flipkart. "We need it. We are okay for capital up to series A, maybe B. Which is why all these guys are looking out for cash," said Siddharth Talwar, partner at venture capital firm Lightbox. "Right now, bad companies are shutting down. Tomorrow, good companies could also shut down. Not because they are bad, but because there is no capital available." In terms of transaction volume and value, Chinese investors continue to trail US risk capital deals. But the 'Look East' strategy is only expected to intensify, with many expecting it to be de rigueur even beyond the next 12 months.
"I think the Chinese are planting some beachheads," said Avnish Bajaj, managing director, Matrix Partners India. "India is a very unique market. Because it is English-speaking, the Americans and the Chinese are fighting over it. But the entrepreneurs are not in it to sell. And the Americans have been slow in this situation, which is why the Japanese and the Chinese have been able to move faster. The Japanese are also slow, but they are looking at it strategically."
