India last year tightened control on investments coming from China into the local firms/start-ups in the wake of border tensions. The tide, perhaps, is turning after more than a year-and-a-half, as some homegrown firms have now raised (or in the process of raising) funds from Chinese conglomerate Tencent.
The latest startup to join the list is Bengaluru-based hyperlocal social media platform Lokal that has raised $12 million from Tencent, TechCrunch reported on Thursday.
“Existing investors 3one4 Capital, Y Combinator, and India Quotient have also participated in the startup’s Series A (funding),” the report quoted the source as saying.
Tencent and Lokal did not respond to the report.
Founded by Jani Pasha and Vipul Chaudhary in June 2018, Lokal serves news to vernacular audiences based on their location, with separate language offerings across states in the country.
The Lokal app is “trusted by over 8 million Indians, with local updates, local jobs, local classifieds and local businesses in your own language,” reads a description on Play Store.
Two year ago, Lokal raised $3 million funding from a group of investors.
According to the report, “India’s Pocket FM was in advanced talks to raise a round from Tencent and others”.
Tencent has reportedly infused over $2 billion in Indian startups since 2016, including a reported figure of over $200 million in homegrown social media platform ShareChat earlier this year, which ShareChat never disclosed.
The Indian tech startups started to shun Chinese investment in 2020 as desi corporates and wealthy individuals, along with investors from other countries, came onboard to fund the homegrown firms.
In the first half of 2021, investors pumped in at least $11 billion into the Indian tech start-ups in over 600 deals, which is growing at an exponential rate.
The US-based investment firm Tiger Global is currently leading when it comes to investing top dollars, overtaking another US-based venture capital firm Sequoia Capital as the top investor in the burgeoning Indian start-up/unicorn ecosystem.
In 2019, Chinese investors poured $3.9 billion into India, up from $2 billion in 2018. This investment scenario took a turnaround from May last year amid face-offs and skirmishes between Indian and Chinese troops at locations along the Line of Actual Control (LAC) in eastern Ladakh.
As a result, investment from China in Indian companies fell to $263 million across 15 deals in the first half of 2020. Sensing the atmosphere, homegrown tech start-ups started to look elsewhere for investments, and their calls have been answered.
Media reports then claimed that nearly 150 investment proposals from China worth more than $2 billion were stuck in the pipeline.