Tencent’s investment saga with Indian startups
At a time when China’s home market is slowing down in venture capital investments, Tencent Holdings is looking to increase its investment in Indian tech companies. Tencent is a Chinese internet giant known for its WeChat messenger app.
An Indian venture capitalist who works closely with Chinese investors including Tencent, on the condition of anonymity said, “The startup funding party is slowing down in China, with investment, valuations and number of deals falling in the last six months. With that, Tencent and other Chinese investors are looking to India, which is closest in terms of market size and similarity.”
Tencent has previously invested in seven companies such as Flipkart, Byju’s and Hike Messenger between 2014 to February 2018. It has also made fresh investment in digital banking services provider Niyo in 2019. According to multiple media reports, Tencent is in talks to invest in MX player, ShareChat, and Policybazaar and PhonePe. Tencent is looking to invest $30 million more in music streaming app Ganna.com. Last year in February, it invested around $115 million in Ganna.com.
Since then, it closed five fresh deals, including Dream11 and Swiggy which are some of the fastest growing startups in India. Furthermore, the company has steadily increased its focus on India with ongoing conversations with at least half a dozen more firms.
“Indian venture ecosystem offers the promise of higher growth,” says Ashish Sharma
Ashish Sharma, CEO of InnoVen Capital India, venture debt firm said, “The China venture market has been on a dream run for 5-7 years, but has seen a slowdown this year, and I hear it is difficult to find high growth opportunities. While the Indian venture ecosystem is a tenth of China’s, it offers the promise of higher growth.” Further, he added, “We are seeing increased interest in India with many investors making exploratory visits investors can leverage China’s learnings and bet on select business models that could be replicated in India.”
Investment in China’s domestic startups has gone down
According to the reports, Preqin, a market research firm mentioned that Chinese technology startups witnessed the slowest quarter in the last three years, with 713 VC deals in the three months ended December, down 25% from last year. Furthermore, according to the last week’s report, China’s deal-making activity for startups was almost half in the last six months ended in June, as compared to previous year. The amount invested in domestic startups during the first half of 2019 has fallen to 54% to $23.2 billion.