SUMMARY
Alibaba has launched a $100 Mn VC fund called BAce Capital
Alibaba through BAce Capital is making smaller bets in India
BAce Capital has already invested in Healofy
After facing a laggard growth in its ecommerce bets in India, Alibaba is realigning its investment strategy in India. The Jack Ma-led company will now make more vertical ecommerce investments and will make smaller early-stage investments in the country, according to a media report.
The potential shift in Alibaba’s strategy comes on the back of disappointing bets in Snapdeal and Paytm Mall. With Flipkart and Amazon holding the top place in the Indian ecommerce sector, these deals did not reap the rich rewards that Alibaba hoped for.
Paytm Mall, in January this year, made significant changes to its top and mid-level management teams aiming to strengthen its daily operations, marketing and verticals. Total visits to Paytm Mall dropped to 5.6 Mn in March this year, from 45 Mn in October last year.
On the other hand, Alibaba has also seen success on some of its investments in India. Its early bet on Paytm, helped Paytm become one of India’s biggest valuable startups. Some of the other key investments by Alibaba were in Zomato and BigBasket.
“In China as well as other countries, Alibaba has a three-pronged investment strategy of ecommerce, payments and logistics. Now, if ecommerce, the biggest of those, stumbles, it will look for different bets,” a person aware of Alibaba’s plans told Livemint.
Alongside Ant Financial, Alibaba has also launched a $100 Mn venture capital fund called BAce Capital for which it has also onboarded a separate team.
BAce Capital has already made its first investment of $8 Mn in a Bengaluru-based pregnancy and parenting platform, Healofy. Apart from this, BAce Capital made another ‘smaller deal’ in Noida-based Vidooly in February, investing $2 Mn in the video analytics and marketing platform.
Having dealt a sufficient blow in horizontal ecommerce in India, Alibaba is now also looking at vertical ecommerce. Last year in October Alibaba was eyeing to invest around $150 Mn in baby products retailer FirstCry.
Horizontal ecommerce players deal in multiple kinds of products while vertical ecommerce players sell a very specific product or address a niche.
“The horizontal ecommerce boat has sailed because Flipkart and Amazon have too much capital and a huge customer base. While Alibaba is still bullish on India, it will look for more vertical e-commerce firms to invest in, which will provide support to its existing business,” the report quoted a person aware of the matter.
