How China is Helping Indian Startups

The Indian startup ecosystem and Chinese startup ecosystem are two of the most rapidly growing startup ecosystems in the world. So, it is only logical that the two join their forces every now and then to do something amazing.

According to a recent report by research firm Tracxn, from 2016 till now, Chinese companies have invested a whopping $2.37 billion in Indian companies. The firm has also highlighted that much of this investment has come from Chinese companies such as Alibaba, CTrip and Tencent into large Indian internet startups such as Paytm, MakeMyTrip and Flipkart, and a majority of these deals have been strategic in nature.

However, over the period of last twelve months, there has been a gradual shift in the nature of the deals from Chinese venture capital firms. From being just strategic in nature, we’re now seeing more 100 per cent financial, returns-focussed investments happening between the two startup ecosystem.


According to experts, this big change has been promoted by the slowing Chinese economy and decreasing investment opportunities in there. In addition to this, what little investment options are still available in China are relatively more expensive than what is available in India.

The Indian startup ecosystem is witnessing an increasing interest from Chinese investors as the latter hopes to replicate the same success stories in India that they have witnessed in their home country. According to experts, they have witnessed a substantial growth in communication between Indian entrepreneurs and Chinese investors at cross-border networking events scouting opportunities and exchanging notes. In fact, the last couple of years have seen, more and more Chinese delegations visiting India more frequently looking for opportunities with Indian startups that carry the same promise of successes that they have already witnessed in China.

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Experts observing the global startup ecosystem believe, that the Indian startup ecosystem is almost at the same junction as the Chinese startup ecosystem was ten years ago, hence the former has a lot learn from the latter. Indian entrepreneurs can leverage the experience of their Chinese counterparts in sectors where they’re already ahead and know what works and what doesn’t.

In fact, the two countries have a lot of similarities between them, including the population situation, cultural similarities, income levels and consumer spending behaviour. Hence, the Chinese market is a better market for India to look up to than the numero uno United States market.

One of the biggest lesson that the Indian entrepreneurs can learn from China is on handling scale. Some companies in China have more than 25 million daily active users. Considering the fact that India has the second largest population in the world, it is only logical that the Indian entrepreneurs learn from the largest population on earth on how they handle consumer demands and the various problems they have faced and how they have overcome them.

However, some Chinese venture capital firms are being a little prudent and cautious because of their limited understanding of the India market. According to experts, they face a real challenge in identifying good Indian startups and figuring out a fair deal since most startups are overfunded here.

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