In the Chindia TMT Conference, Dialog 2018, a panel of Venture Capitalists sat together to discuss the investment synergies between India and China. The panel included Tej Kapoor, MD, Fosun RZ Capital India; Tarun Davda, MD, Matrix Partners; Karan Mohla, Managing Partner, IDG India; Vaibhav Agarwal, Managing Partner, Lightspeed Ventures; and was moderated by Li Jian, Founder, and CEO, ZDream VC.
Talking about the industries that attracted potential investments, the panelists agreed that the major verticals with huge potential, especially with a batch of over 300 million newly tech-enabled consumers, were fintech, logistics, content, social shopping, insurance, omnichannel retail models, digital platforms, marketplaces etc. Tarun Davda also said that more than the product it’s the entrepreneur whose potential decides the scope of investment.
Sharing the investors’ perspective on secondary exits and IPOs, it was ascertained that the lack of both the events, contrary to popular belief, lied in structural hindrances, like profitability clause for IPOs, more than factors lying in the control of the company. Davda believes that there is a lack of scale along with the availability of huge buyers rather than a lack of exits.
Vaibhav Agarwal further added how even when the companies do have a scale, the discipline required to function as a public company, and the desire to take huge risks like expanding internationally makes investors and the company choose secondary exits over IPOs.
As China is closer to the Indian startup economy than the US, the collaboration between Chinese and India investors brings forth an opportunity for both to gain useful insights from each other’s expertise in their respective turfs. However, all panelists agreed on there is a scope for more.
Davda explained how the Chinese businessmen target the Indian market but, Indian investors do not have access to Chinese entrepreneurs. He believes that this can be one of the major segment a cross-border VC firm should work on.
With an example, Mohla further elaborated the fact that Chinese entrepreneurs have large visions for India.
Comparing the investors from two countries, Davda quipped how both looked for the same thing but Chinese investors are more aggressive and as per Tej Kapoor, faster as well. Other differences lie in the Point of View and scaling of the investors and companies respectively, while Chinese also face the problem in understanding distribution in India.
While all the panelists expressed their enthusiasm over the idea of investing in a Chinese company, their views regarding the composition of employees (country-wise) differed.
When asked about their favourite non-portfolio companies that they would want to invest in the votes seemed to be divided between Swiggy and Jio with fifty percent chance each. Ola and Oyo were also mentioned in passing. This showed how the investors were impressed by the way startups executed their activities rather than the nature of the product itself.
Overall, while the future of cross-border investment synergies between India and China look brighter, we can assess from the conversation how there are still major gaps to be covered.
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