China's tech crackdown is India's gain, says venture investor

BENGALURU • China's crackdown on its technology industry means global investors seeking emerging markets exposure will turn to India, said Mr Sumant Mandal, a managing partner at US venture investor March Capital Partners.

He said investors are putting more weight on "government risk" as they assess Chinese technology firms. Indian start-ups in areas like Internet and cloud software offer strong growth prospects but without a similar risk profile, added Mr Mandal, a co-founder of the California-based firm.

Chinese regulators are reining in unruly Internet companies in a campaign that spans everything from gaming to "money worship", raising questions about their growth and earnings prospects.

While India's Internet industry is trailing far behind that of China in size, it recently produced new billion-dollar start-ups and initial public offerings (IPOs) at an intensifying pace.

"China's market is of a size and scale that's unmatched," Mr Mandal said. "But the risk-reward structure around China has changed", and investors from the United States, Europe, Asia and the Middle East are now looking to balance their portfolios by re-routing investments to its neighbour, he said in a video interview.

March Capital has a long track record of backing Indian start-ups and it plans to increase such investments, he added.

The coronavirus pandemic has changed consumer behaviour in India, a boon for companies handling e-commerce and digital transactions. The firm has over US$1 billion (S$1.35 billion) in assets under management, including a US$450 million fund that closed early this year.

Last month, March Capital had two exits in India that represented nearly US$6 billion in combined deal value: Online payments service BillDesk was acquired for US$4.7 billion, just days after CarTrade Tech had its IPO.

Mr Mandal leads March's investments in areas such as blockchain, network infrastructure and software as a service (SaaS). More than two dozen India-born SaaS start-ups have moved to the US to successfully win global customers and garner hundreds of millions of dollars in revenue, he said.

"Now there's more of a belief system around India," he added. "The size of start-ups like Flipkart, Byju's and BillDesk changes everything."

BLOOMBERG