Chinese ecommerce giant Alibaba holds less than 3% stake in India-based Snapdeal and has no role in its operations or governance, the homegrown ecommerce platform Snapdeal’s cofounders Kunal Bahl and Rohit Bansal clarified in the exclusive interaction with Economic Times.
Alibaba had invested in Snapdeal’s $500 Mn round raised in 2015. Taiwanese electronics manufacturer Foxconn and Japanese telco major SoftBank had also participated in the round, along with existing investors Temasek, BlackRock, Myriad, and Premji Invest.
The statement coincides with rising anti-China sentiment which has not only affected the Chinese companies and brands operating in India but has also impacted homegrown companies which have a hint of Chinese investment.
That comes as a bigger problem for Indian startups as China is one of the most active investors in India. Unicorns ranging from ecommerce platform Snapdeal to digital payments platform Paytm to hospitality firm OYO, who have been setting India on the world map, owe their growth to Chinese investments they have received.
However, the current dynamics have portrayed such companies in an anti-national light. The recent example of this impact is the fantasy gaming startup Dream11 that won title sponsorship rights for IPL. This means that IPL 2020 will be rebranded as ‘Dream11 IPL’ and the company’s name will be displayed on umpire’s jerseys and various other branding material. Interestingly, Dream11 is the first Indian startup to have sponsored such a popular sporting event.
However, several have decided to look past this point and focus on Tencent’s investment in Dream11. Tencent Holdings had led the $100 Mn Series D round of Dream11 in 2018, reportedly leading to a minority stake in the company. Besides this, the company does not have any Chinese investors.
According to data and analytics firm GlobalData, Chinese Investment in Indian startups have grown by 12 times from $381 Mn in 2016 to $4.6 Bn in 2019. Overall, 17 Indian unicorns today have Chinese investors on their board. Here’s a table to showcase the lead Chinese investors on board of Indian unicorns.
Putting differences aside we cannot underestimate the role played by China in the Indian economy and the startup ecosystem. Besides this, there is no way for Indian companies to do away with the investment they have already raised.
However, it is also important to note that the recent rise of the national sentiment against China and Chinese companies was an aftermath of the Galwan Valley standoff in which 21 Armymen lost their lives. Soon after the government went ahead to ban 59 Chinese apps including TikTok, WeChat, CamScanner and others. This ban was followed by the ban of another 47 apps.
Commenting on the policy changes, Bahl said that both domestic and foreign companies are expected to abide by India’s comprehensive rules for the digital commerce sector, which is designed to provide a level playing field and promote long-term orderly growth. “The government is best placed to determine any violations and we are supportive of government decisions in this regard,” he was quoted as saying.