If India does Boycott China, its startups will lose more than just funding
The growing anti-China sentiment could cost Indian startups dearly.
The phenomenal growth of India’s much-celebrated tech startup ecosystem, which is now the third-largest in the world, could be stunted if Chinese funding into the country slows in the aftermath of the military escalations on the border this week, experts believe.
“Chinese investors have been making their presence stronger in the Indian startup ecosystem since (the) last few years, which also enabled these startups to scale up successfully,” said Aurojyoti Bose, lead analyst at GlobalData. Now such companies “are in a state of uncertainty for capital raising.”
Last year, Chinese investors put a whopping $3.9 billion (Rs29,729 crore) into Indian startups—nearly double the $2 billion in 2018. Over 90 Indian startups received Chinese funding in 2019.
Eighteen of the 30 Indian unicorns are backed by Chinese investors, a Gateway House report (pdf) noted, adding that “China is embedded in Indian society, the economy, and the technology ecosystem that influences it.”
“Every source of funding loss can be a problem to the broader startup ecosystem,” said Yugal Joshi, vice-president of Texas-based consultancy Everest Group. “The mature ones (startups) will do fine, but the early stage may struggle.”
Besides the money, Chinese investors like Alibaba and Tencent, bring to the table their experience of scaling businesses, which is a challenge for Indian entrepreneurs as the internet economy in the country is still nascent.
They “offer practical advice to scale business mostly having done that in the Chinese market,” Joshi said. “They are aggressive in their risk-taking and can push the firm to drive scale quickly.”
Indian hotels group Oyo is an example of how a Chinese-backer can push a company to scale fast. Oyo, backed by the China Lodging group, is among a handful of Indian tech startups that have ventured outside the country. The company has reportedly become the largest hotel chain in China with around 500,000 rooms in 337 cities. (It’s another story that the Covid-19 crisis has caused it to lose massive ground in recent months.)
So far, Chinese investors seem to be committed to their promises in India.
Chinese investors who are in it for the long-haul “should not be flustered by these events,” Ntasha Berry, co-founder of Venture Gurukool, which helps Indian startups reach out to Chinese investors, told MoneyControl. “We expect deal momentum to continue but in the immediate future, both investors and founders will adopt a cautious approach.”
But #BoycottChina, which has been trending on Indian social media for several days now, could play spoilsport.
Since the Ladakh face-off between the neighbouring countries killed 20 Indian soldiers, Twitterati has been calling to #BoycottChina and to throw #ChineseProductsInDustbin.
There have also been calls to shun Chinese phone makers like Xiaomi, Realme, Oppo, Vivo, and others. Ironically, these are the best-selling brands in the country and hold a majority of the market share in the world’s second-largest smartphone market.
PLEASE NOTE, “ Last year, Chinese investors put a whopping $3.9 billion (Rs29,729 crore) into Indian startups—nearly double the $2 billion in 2018.”
Now that is American money that made Chinese richer.
The writer has no idea that India gained their independence thru boycotting
Do not want Chinese funding. We will find a way to fund our start ups.
India does not need China.
this author and article was bought and sponsored by china
Walmart would be empty
India can fund its startups in a plethora of other ways.
A concerned American
Since so much of the media and politicians have been *bought and paid for* by China, I want to know - Is this author and/or Quartz publishing have China ties?
Good for India. We should do the same in the US
Self respect is bigger than any funding... #boycottchina
All these articles about how boycotting China will harm India are from Bengalees which has always been a co unist loving/China loving state. if the idea is good there can be other investors as well- Let Chinese take their money back
India became a country in 1947, the border was drawn by its former colonizers illegally, non of the Chinese Go-rnments, Qing Dynasty, Republic of China and PR China even recognized the borderline created by Limeys. Most of the current conflicts were created by British, the most evil nation on earth.
USA and UK should join India in the Boycott China. I would far rather give our business to India. Sent China back to the 1940’s.
Short term hurt = VERY long term benefits
Boycott China should be a global campaign. Thank you India for taking the initiative.
Let us boycott China. Ive been boycoting chinese product for few years now