Global venture capital funds flock to India as China’s appeal dims: Report

India is receiving investment from venture capital firms from around the world, suggesting a breakout moment for the country’s startups, Nikkei Asia reported on Sunday. It based the report on data from Tracxn, a startup tracker. Nikkei credited the development to loss in China’s sheen, which is proving beneficial for India.

The Nikkei report said that 211 funds made debut investments in India this year, 64 more than last year. Andreessen Horowitz, TCV, Vitruvian Partners and GSV Ventures are among then, the report further said.

Kleiner Perkins, the Silicon Valley fund that quit India in 2014, is back in the fray, it added.

Citing the overall data from Tracxn, Nikkei Asia said that 597 venture capital firms have made 2,284 deals so far this year.

Talking about the situation in China, the report said that Beijing’s regulatory crackdown on its tech sector has dented its appeal as the first-choice investment destination for global venture capital in Asia.

According to Bloomberg, the campaign that started with Jack Ma’s twin giants – Ant Group and Alibaba Group Holding – last November soon spread to more companies like Tencent Holdings and Didi Global, as Beijing stepped up oversight on everything from antitrust to data security and wealth distribution. The crackdown triggered a sell-off that, at its most extreme, erased $1.5 trillion from Chinese stocks, which experienced wild swings with every new government probe, rule and warning, said Bloomberg.

India, meanwhile, is shining due to its buoyant public markets and the rapid adoption of online services in the aftermath of the Covid-19 pandemic, said Nikkei Asia.

It quoted Singapore-based venture capital firm investor Armaan Kapoor as saying that there is a lot more liquidity sloshing around the ecosystem and some of it has been redirected from China to India.

According to business analytics platform CB Insights, venture capital inflow in India was at an all-time high of $19.5 billion in the first nine months of the year (January to September). It further said that the July-September quarter accounted for half the corpus, with $9.9 billion raised across 519 deals.

In comparison, venture investments in China in the July-September period were $25.5 billion, CB Insights said.

At the inaugural edition of HT NxT, business leaders from a wide range of fields argued that while the availability of easy capital has often been cited as a primary reason for the boom in the startup ecosystem, it was the focus on innovation that helped script the success story.

The event was held from September 9 to September 23.

In January, industry association Nasscom and strategy consultancy Zinnov said in a report that India may have 100 new unicorns by 2025. Of late, the growth has been phenomenal.