BENGALURU: While early-stage investments continue to be competitive, Indian startups need more overseas growth-stage capital to build global businesses, Hans Tung, managing partner at GGV Capital, said. GGV Capital is a $6.2-billion global venture capital firm investing largely in the US and Asia.
These funds and Limited Partners (LPs) are closely watching some of India’s largest internet companies including Swiggy, Udaan and Zomato to showcase a path to profitability and economics, according to Tung, who has backed some of the most-valued startups in the US and China, including Airbnb, ByteDance, Slack, Alibaba and Xiaomi.
“Early-stage VC ecosystem in India is highly competitive …but India needs more late-stage money which is very critical to take these startups the distance towards a more measurable path to profitability that public markets investors look for,” Tung told ET.
One of the reasons Tung cited for scarce growth-stage capital was LPs, or backers of venture funds who invested in India in early 2014, not getting enough exits, leading them to question the depth of the market.
GGV recently invested in B2B marketplace Udaan and is likely to back Khatabook, an app for SMEs to record and track business transactions. “With GST, UPI and Jio penetration, the time is right to be in India,” he said.
GGV invests across multiple stages and has chosen to focus to B2B startups in India. “In China, B2B didn’t work, since there was manufacturing resources everywhere. But India is different, given where GDP per capita is…there is a lot more value in making the B2B part of the equation, compared to B2C,” he said. GGV will focus on investing in education, transportation, commerce, SaaS and fintech businesses across cheque sizes ranging from $2-20 million.
Interestingly, Tung, who has backed Chinese unicorns like ride-hailing firm Didi Chuxing and Alibaba, believes the number of Chinese companies that can go global are limited, compared to Indian companies who have a higher potential to tap a global audience.
“It is not so easy for Chinese companies to globalise. For instance, there is no company from China that is doing what Oyo is doing on a global basis. Also, Oyo’s scale up from India happened at a much faster pace than ByteDance or Xiaomi in China,” Tung said.