While there has undoubtedly been some impact, deals - small and large - have not stopped.
After the government banned Chinese investments in April, it was expected to deal a blow to many Indian startups who have raised small and large funding rounds from conglomerates such as Alibaba and Tencent and venture capital firms such as Shunwei Capital, CDH and others.
While there has undoubtedly been some impact, deals - small and large - have not stopped. Some investors who earlier used to invest infrequently are not much more regular while some investors who had gone slow after frenetic dealmaking, are returning.
While none of these investors have technically ‘replaced’ Chinese capital, their presence has ensured that startups still have plenty of sources of money, and don’t feel a cash crunch. Outside of the traditional venture funds such as Sequoia, Accel and Lightspeed, which have had India teams for a while, these are the investors who have been active this year.
Falcon Edge Capital- Falcon Edge, an investor in ride-hailing firm Ola, two-wheeler rental startup Bounce and classifieds portal Quikr over the years, is now investing from a $300 million India-dedicated fund. The fund, Alpha Wave Incubation is backed by Abu Dhabi’s ADQ - a state-owned company having stakes in its non-oil assets.
In the last few months AWI has backed, or is in talks to back ed-tech firms Classplus, CampK12, Cuemath, online retail firm EnAmel and Hippo Video, Verloop.io, Entropik Tech, SenseHawk. AWI largely writes cheques between $5-10 million
Steadview Capital- Similar to Falcon Edge, hedge fund Steadview has been ramping up its India presence over the past year, even hiring an investor locally. It has been an active growth stage investor during the pandemic, deploying money in software firms Freshworks, Observe,ai, food delivery unicorn Zomato and beauty products retailer Nykaa. Steadview can lead rounds between $50-100 million
Sovereign wealth funds - Temasek and GIC, both sovereign wealth funds based in Singapore, have been more active in recent times. These funds generally invest in startups very selectively. Temasek is investing in Zomato and online grocer BigBasket, besides backing fitness startup Cure.fit just before the pandemic. GIC invested in payments firm Razorpay recently, and is actively scouting for more deals, according to people aware of the matter. Both investors generally lead $100 million rounds and upwards.
Naspers - Prosus Ventures, the international investment arm spun off from South African media conglomerate Naspers has also been actively scouting for deals in the last few months. It has funded ed-tech firm Eruditus, and is in talks to back online pharmacy PharmEasy, according to an Economic Times report.An investor in food delivery firm Swiggy, ed-tech firm Byju’s and others, It is also looking to lead internal rounds in some companies. Naspers is seen as one of the more long term investors, and can wait longer than the typical 7 years for an exit, and can lead large rounds.