Helen Wong, partner at Shanghai-based Qiming Venture Partners has met over 50 startups in India in a span of one year, but invested in just one. Qiming is one of the many Chinese VC funds looking to be a part of the India growth story.
According to a 2019 survey by Hurun Research Institute, Shanghai-based Qiming Venture Partners has sizeable positions in 19 unicorns and nine potential unicorns.
Meeting Indian entrepreneurs, she said, reminded her of China back in 2005. She found Indian founders to be passionate, young and ready to go the extra mile. Qiming Ventures has held meetings with companies dealing in content, e-commerce, fintech, logistics and education sector in India.
Wong met Avanish Tiwary in New Delhi and talked at length about Indian technology ecosystem vis-à-vis China.
The Passage: As a Chinese investor, what are the markers of India’s growth?
Helen Wong: I think the market only started to get interesting by the end of 2016 when Jio lowered the prices and UPI began to spread its wings, which made the internet market bigger in India. All these made possible for Indian companies to build different models on top of internet like payment, fintech etc. The few Indian VCs I spoke to think the monetisation will take a long time. My concern is, if we are not too early.
If you look at Southeast Asia, the GDP per capita on an average is higher than India’s. But, is it easy there? No. There is no market as easy as China. Both markets are interesting to be honest. In India, everybody talks about how it might be early because you monetise the first 100 million and then other million is not yet monetiseable and it will take some more time. In Southeast Asia, you have to deal with fragmentation. Here, you have to deal with different languages and religions. Over there, you have different government. Then you have different local conglomerates who want to push their own payment solutions to you.
The Passage: How do you identify these startups?
Helen Wong: Finding deals is not an issue. When we first started coming to India, we visited a lot of Shunwei’s portfolio companies. We want to leverage the network they have in India. They have a lot of data on Indian consumers, so that helps us understand what Indians want and are consuming.
We feel that the deal flow is pretty strong for Indian companies. Indian companies like to look for alternative source of capital. A lot of companies come to China as well for fund raising. Another good source of deal flow is getting to know the local VCs. Some of our partners have good relationship with VCs working here.
The Passage: How often do you come to India?
Helen Wong: I have been coming here for the last one year. I made three trips last year, two to Bangalore and one to Delhi. It’s quite exciting. As the US and Chinese internet markets’ growth have matured, India is at a very fast growth phase. So far, we have made investment in one company, Pratilipi. We have also invested in a company that focuses on India but has a Chinese team, ClubFactory.
The Passage: How will Qiming’s investment be different from other VC funds?
Helen Wong: The value we bring and the experience we have has a lot of weightage in terms of how different we can be. We have seen the evolution of internet in China.
In the beginning, there was a lot of copy-cat models in China. We have a few portfolios who are the Quora of China, Youtube of China. Then we saw tremendous growth in China and when the PC internet evolved to mobile internet, we have been part of that.
Now we have come to India and I think there are a few copied models from China. I am hoping the next wave will be when India model will be copied by other countries.
The Passage: Do you have any specific sector in mind?
Helen Wong: We are really open-minded. We are focused on consumer internet for a very long time. In general it has worked well for us in China in areas like content, social networking, ecommerce apart from some of the vertical applications like online education, fintech, etc. Qiming has made good bets in other sub-sectors as well. We are pretty open-minded.
The Passage: What would you say about the Indian work culture? You have something called 9-9-6. We don’t have that concept in India.
Helen Wong: It’s hard to say. Chinese people are unique. We like to finish our work ahead of the deadline and we really don’t mind working late night. Even entrepreneurs who are really successful and are billionaires don’t mind working on a Sunday. But, I see Indian entrepreneurs are very ambitious and aggressive. Maybe the work ethic will just change over time.
If you look at the evolution of China venture capital market, I think people really started to embrace the whole startup culture when Baidu went public and made people millionaires and billionaires. In India, you have Flipkart, but a lot of other companies and people haven’t really tasted success. It might take some time.
The Passage: What are the challenges you see in India?
Helen Wong: The biggest challenge is the competition. It is a very young ecosystem and Indians don’t have the benefit of what Chinese had—no outside competition. Here, you are competing with the global players. In China, we had local Google and Twitter. But in India, Google and Facebook are really strong. It’s good that the market is open. But can they create something that’s very Indian and local which global companies can’t just replicate? I think that is a challenge.
If you can be replicated, then big companies can crush you. Even when Indian companies are copying US or China model, they have to be innovative. In China, though there were a lot of copycats of US models, there was a lot of innovation on the product level.
The Passage: Is regulation an issue in India?
Helen Wong: Some amount of regulation is always good. It creates a level playing field for everyone and it allows putting content on internet. I think over-regulation can kill an industry. When we look at entering a nation, we always consider the regulation environment. However, we also bear in mind that it’s always evolving. Overall, we look at big picture, such as, is the government pro-business, is the government open to nurturing startup eco-system etc. I think in the case of India, the answer is yes. You just have to look at how big Facebook, Amazon and Google are here.
The Passage: How many Indian companies do you plan to invest this year?
Helen Wong: We don’t have any specific target. I also look at Southeast Asia, so we are still learning about the India market. If we find something interesting, we will invest. But we don’t have to invest here, if we are not convinced.
The Passage: Would you take big risks or would you play safe initially, in terms of investment size?
Helen Wong: We are quite flexible. In China, we have made investments as small as USD 3 million to as big as USD 20 million. Ideally, I would like to make smaller bets. But sometimes we see something interesting and at a later stage if we make too small a bet, you don’t have ownership. We need to have some flexibility.
The Passage: Is your investment in Pratilipi one of your big bets in India?
Helen Wong: It’s not big in terms of amount, although it’s a substantial investment. We like content space where user-generated content is the key. We thought they had a very sticky platform.
On one side, you have a lot of content creators and, on the other side, you have a lot of users who would like to consume the content. We found Pratilipi interesting as they had grown with little marketing. I really like the team and the CEO, Ranjit. He is very down to earth and very passionate about what he is doing. We also like the fact that they are going after vernacular languages, which is the next phase of growth in India.
The Passage: With China market getting stagnant, is India the safety valve for VCs?
Helen Wong: I don’t think it’s a safety valve. I think, as the market matures in China, there are fewer big opportunities. But, we can still find certain niche market to monetise. A lot of eyes are on India, especially the global players’. Even Netflix is big here. Can it be as big as everybody think it is? There is still question mark on that.
The Passage: How do you see the P2P segment in India?
Helen Wong: I think there are a lot of players with NBFC relationships with others. While a few have NBFC licenses themselves, some have equity to make loans. It’s interesting to contracts because, in China, P2P grew very fast due to lack of regulations and then government turned them down. But in India, it seems like regulations was already in place when the tech came out, which is good and bad. You have a guideline of how you can go so you know what you can do so you can plan that way. On the other hand, it limits startups as it leaves them with fewer opportunities to make it big.