Alibaba Group Holding Ltd is reportedly reevaluating its investment strategy in India which could see the Jack Ma-led Chinese e-commerce giant make more vertical investments and smaller early-stage deals, three people aware of the matter told Mint. These deals would range from USD 250,000 to 15 million across Series A and Series B.
Alibaba is known for its early bet on India’s most valuable startup, Paytm. Its bets on BigBasket and Zomato have also done well.
Alibaba’s disappointments at some of its large e-commerce bets, such as Snapdeal and Paytm Mall, has led to this change in focus. Paytm Mall’s deep discounting strategy and an annual loss of Rs 1,787 crore made Alibaba realize that Paytm’s volumes would not make it a sustainable business, Economic Times reported earlier.
“In China as well as other countries, Alibaba has a three-pronged investment strategy of e-commerce, payments and logistics. Now, if e-commerce, the biggest of those, stumbles, it will look for different bets,"one source said.
“Alibaba truly believes that e-commerce can change the lives of millions of people. But after their experience in India, today if an e-commerce firm comes to them, they will be a lot more cautious to see how it will differentiate from every other existing game in town,” another source said.
Alibaba’s Indian investments are overseen by Raghav Bahl, who was appointed in August. The company has also launched a USD 100 million venture capital fund, BAce Capital, which is anchored by Ant Financial, the payments affiliate of Alibaba.
BAce has participated in a USD 8 million round in Healofy, a Bengaluru-based pregnancy and parenting platform for Indian mothers. Its interest in smaller deals is further proven by its USD 2 million investment in Noida-based Vidooly in February. Vidooly provides online video analytics and marketing software.
Alibaba’s strategy could also help it catch up with arch-rival Tencent, whose Indian investment portfolio has surged ahead with bets such as Flipkart, Ola, Swiggy and Byju’s.