Happy Thursday!

India’s top startups that count Chinese investors among their largest backers are likely to find more hiccups in raising capital amid anti-China sentiment in the country. The military standoff in Ladakh, the worst in over four decades, may dry up fresh funding. Its impact, according to experts, will be more profound for early and growth-stage startups compared to late-stage bets.

ETtech Top 5: India-China standoff to hit startups, Saudi's Jio bet, localisation push & more
Funding squeeze

Chinese investors—both strategic and financial—pumped $3.9 billion into Indian startup ecosystem in 2019, up from $2 billion in 2018. In the process, they have emerged as the biggest backers of the country’s fast-growing digital economy, supplanting the United States. Investors from the Middle Kingdom are on the cap tables of 18 startup unicorns—ventures that are valued at $1 billion or more—of the 30 that have emerged from India so far. These include the likes of Paytm, Zomato, Udaan and BigBasket. Some prominent risk capital investors are now asking their respective portfolios to diversify their cap tables.

ETtech Top 5: India-China standoff to hit startups, Saudi's Jio bet, localisation push & more
Why it matters

The worry is that the country’s startup ecosystem, which continues to be dependent on large swathes of foreign funding given the ongoing absence of homegrown pools of capital, will face significant near-to-medium term cash constraints if investors from the world’s second-largest economy walk away. Read more.

ETtech Top 5: India-China standoff to hit startups, Saudi's Jio bet, localisation push & more
Make in India push

Indian e-commerce marketplaces have accelerated their efforts to localise private label products and run campaigns to promote domestically manufactured goods. Both Amazon and Flipkart have been running campaigns to promote local brands and small manufacturers over the past couple of weeks just as #BoycottChina began picking up steam.

Will it work?

China still remains the biggest sourcing hub for fast-moving categories such as smartphones and electronics. Executives at all the leading online marketplaces say they haven’t yet seen any dip in sales of made-in-China products. India’s largest smartphone maker, Xiaomi, sold out laptops it launched in India on Wednesday. ET had earlier this month reported that sales of Chinese goods online remain strong as the tight-fisted consumers do not have too many options currently. Read more.

This investment values Jio Platforms at an equity value of Rs 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore.
This investment values Jio Platforms at an equity value of Rs 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore.

Saudi’s Jio bet

Saudi Arabia sovereign wealth fund, The Public Investment Fund, will buy a 2.32% equity stake in Jio Platforms for Rs 11,367 crore, valuing the holding company of India’s largest telecom operator at Rs 4.91 lakh crore. With this investment, Jio Platforms has raised Rs 1,15,693.95 crore from ten investors within a span of two months.

ETtech Top 5: India-China standoff to hit startups, Saudi's Jio bet, localisation push & more
This investment is in line with PIF’s strategy and mandate of investing in sectors and companies that generate long-term commercial returns to drive Saudi Arabia’s economic transformation as part of Vision 2030 objectives. Read more.

ETtech Top 5: India-China standoff to hit startups, Saudi's Jio bet, localisation push & more
Advertisement break

Chinese smartphone and electronic brands in India are likely to tone down or change advertising and marketing pitches. Bollywood star Aamir Khan endorses Vivo while Ranbir Kapoor is the face of Oppo that has also appointed Katrina Kaif as ‘brand friend’ for its Reno series. Ranveer Singh is the face of Xiaomi’s Redmi brand. Salman Khan and Shraddha Kapoor endorse Realme. Cricketer Virat Kohli is the face of iQoo, the latest smartphone brand from BBK Electronics that also owns Vivo, Oppo, OnePlus and Realme.

What next?

Some Chinese brands that ET spoke with said they will start using #madeinIndia in all their consumer communication starting this week in both mainstream and social media, highlighting how much they are investing and their plans to bring all component manufacturers to India, in a bid to establish that they are Chinese only by birth. Vivo, for instance, will announce later this week that it is 100% made in India including components, and will promote this in all its campaigns. Read more.

ETtech Top 5: India-China standoff to hit startups, Saudi's Jio bet, localisation push & more
Udaan co-founder joins Unacademy’s board

Sujeet Kumar, co-founder of business-to-business marketplace Udaan, will be joining edtech platform Unacademy’s board of directors. Kumar, who is already an investor in the online tests preparation company, will be advising on operational growth and business strategies.

Bengaluru-based Unacademy caters to over 30 competitive exam categories including UPSC, banks, SSC, Railways, and IIT JEE among others. The company, founded in 2015 as a YouTube channel by Gaurav Munjal, Roman Saini, and Hemesh Singh, has so far raised around $198 million from the likes of General Atlantic, Facebook, Sequoia India, and SAIF Partners. Read more.

(Illustrations and graphics by Rahul Awasthi)





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