 "What's stopping Chinese investors from funding more Indian start-ups?")
"Bureaucracy rocks!" That was the first lesson Tuck Lye Koh, founding partner and CEO of China’s venture capital firm Shunwei, learned about India.
An Indian entrepreneur taught him that when Koh first came to India scouting for investment opportunities a year ago. "His (the entrepreneur’s) answer to most of the problems in his venture that needed to be ironed out was a plethora of 'contacts' he has in the government. He told me about a lot of things around how to grow his venture. Some of them will attract regulatory permission. And he said 'no problem, I will get it done.'"
For an investor bringing in huge sums of money in the Indian start-up scene, several other concerns precede the issue of bureaucracy.
Hon Yin Lee, managing director, Asia Pacific TMT investment banking group at Citi feels that many Indian start-ups are "highly overvalued" and have bloated cost structures. But, at the same time, consolidation is a difficult process here. Lee is, nevertheless, optimistic that as India’s start-up ecosystem matures, there may be a similar shift towards solving local problems.
Then there’s also the problem of too many players in the same space. "Competition in China is fierce but also pragmatic. Consolidation is common between two big rivals. In India, there can be several players in the same space, but the merger is usually not an option a founder considers," he says.
Internet in India is slow, we all know that. But the bigger concern for these investors is that only about one-third of the population has access to the Internet. While there are several big e-commerce start-ups in India, the addressable audience is limited because of low internet penetration.
This is an excerpt from Tech in Asia. You can read the full article here