In recent years, the Indian startup ecosystem has evolved like never before. The matured startup market in India has taken off really well and come into its own—driven by some important factors such as massive funding, evolving technology and a flourishing domestic market. Indian Prime Minister Narendra Modi aims to cultivate homegrown talent and so he recently announced Startup India, a series of proposals intended to make it easier to launch, fund and sell new technology firms.
Chinese Yuan entering India
Foreign investor interest in India, particularly Chinese, can be attributed to various factors but the biggest one is consumer growth backed by the mobile revolution. There are a lot of Chinese technology entrepreneurs and investors who are looking forward to invest in the Indian start-up market especially in areas like education, Internet of Things (IoT), mobile gaming, healthcare and financial technology. The Chinese investor interest is a blessing in disguise as the funding from the West has reduced considerably. This is the first time, other than a few names like Alibaba and Baidu, that investors from China have shown their interest to invest in India’s startup ecosystem. The year 2016 began with Ctrip, China’s online travel company buying a stake in travel portal MakeMyTrip. Baidu, China’s largest search engine, also was in talks with prominent Indian e-commerce start-ups, including Zomato, BookMyShow and BigBasket, for big investments.
From the Chinese investors’ perspective, it’s not that easy to come out of the comfort zone of their domestic market and take the first step towards investing in uncharted areas in India, so the existence of platforms like Onionfans plays a significant role in bridging the gap between the two countries. This will, in turn, help the Chinese to understand the Indian market better so that they can make well informed decisions and choose to invest judiciously.
Jianbiao Xiang– The man with a grand journey
Jianbiao Xiang, the Founder of Incapital, stated in an exclusive interview to Onionfans, that the pattern of most Indian start-ups is somewhat similar to that of Chinese start-ups. Incapital focuses on early-stage firms and has a total corpus of 800 million yuan (Rs.819 crore). He said, “We have invested in a total of 61 projects.So far, we focus mainly on IT enterprises.”
According to him, two significant factors that made him pay more attention towards India are:
- The CEOs of Microsoft and Google both chose India to safely invest their money.
- Indian Prime Minister Mr. Narendra Modi’s visit to Silicon Valley where he promoted his “Digital India” campaign and hoped for Silicon Valley to put more digital infrastructure in India.
Jianbiao Xiang further opined that it is profitable to invest in Indian markets now, given their independent nature (the juxtaposition of over 1.3 billion people as well as 300 million smart phone users) unlike its Southeast Asian counterparts which are an extension of the Chinese market.
Many foreign investors are eyeing India’s phenomenal consumer growth which is backed by the mobile revolution and the rapid explosion of the web. India’s promise of immense growth opportunities has made it a big attraction for venture capitalists.
Knowing the two markets
Jianbiao Xiang recently chose to invest in Onionfans, his main aim being to bridge the cultural gap between India and China after he noticed that there were very few domestic entrepreneurs who dared to visit India for business. It is not only money that Chinese investors are offering; after observing the market trends in India, Mr. Xiang rightfully commented, “Apart from the money, we will provide them Chinese experience. Unlike the West, we are not looking at fancy technologies, they are not useful for the common people in India and China.”
A successful entrepreneur himself, Mr. Xiang is very technology driven but also believes in the power of the human touch – what’s the use of technology if the budding entrepreneur is not a visionary, not methodical, and not a true professional? From an investor’s point of view, he is a no nonsense person who strongly feel that a perfect entrepreneur “must be such a talent who is worth our investment.”
Though China agreeably has more serious investing bubbles, yet India remains the preferred destination for investors, thanks to its low labour costs and the strong technical ability of the workforce. This notwithstanding, the Chinese can relate to Indian markets given some similarities that exist between the two. Thus, it’s a win-win situation for both the markets.
When asked about what is the basic difference between the Indian startup ecosystems when compared to that of China, Mr. Xiang stated that there is a big gap in India’s entire infrastructure when compared to China. To start with, the foundation is backward. E-commerce is now undoubtedly more popular in India, but the whole logistics distribution is not available, the same case with the supply chain. The whole industrial system is less perfect than that of China. However, India has some advantages too:
- The biggest strength of India is its pool of technical talent.
- Given that English is one of the native languages, Indians do not face any barriers when communicating with the western world. China relatively lags behind in this aspect. There are many Internet start-ups in China but they can only access the Chinese market, HUAWEI being a rare example. However, what India should learn from China is the whole atmosphere of entrepreneurship. After all, it is only through constant learning and unlearning and knowledge sharing that the two countries will complement each other more.
His take on the two markets is, “There are some similarities between the Indian and Chinese market.
As an independent market, it has to meet local requirements, solve the issues which happen during the whole process of social development. I think, according to the conditions of Indian market, it can absorb and draw lessons from Silicon Valley and China. As Chinese investors, what we value most is, whether it is possible to adopt the Chinese model in India or not. For instance, in China we have Pay Treasure, Jing Dong, Mushroom Street, and so on, is it possible or not to adopt this pattern in India? I think my experience in China can also play an active role in India”.
Mr. Xiang’s observation about the Silicon Valley/ American model compared to the Indo-Chinese model is notable, he says that while the former concentrates on making the future better, the latter believes in making the present worthwhile. A lot of it depends on the social infrastructure as well.
The Preferred Business Model
According to Mr. Xiang, an ideal business model is one that has scope for technology commercialization. Moreover, technology and data should be taken as the core business as investors prefer it that way. He said, “Business model is something that is derived. We prefer commercial projects that have technical threshold, or maybe commercial technology projects.” Mr.Xiang further said, “We have various models like 51 Credit Card. Recently I read a story which was about Americans in Silicon Valley who copied the model of 51 Credit Card. 51 Credit Card has the meaning of internationalization. There are now 36 million credit card users, the transaction lending amount up to $700 million per month, day income around 5 to 6 million Yuan by the scale, the company now has a valuation of $1billion.”
The influx of Chinese investors in India has made the country a preferred destination for many companies across the globe. Now, it would be interesting to see if this would further encourage investors from various other parts of the world as well so as to maintain the startup boom that is taking the entire world by storm.