Indian social commerce startup Meesho said on Tuesday that it had raised $50 million for further expansion. It is just the most recent example of increasing money flows between the new economies of China and India.
Meesho said that investors in this Series C round include private equity funds DST Partners, RPS Venture, Sequoia India, SAIF Partners, Venture Highway, and startup accelerator Y Combinator, as well as Chinese venture fund Shunwei Capital.
Chinese companies are copying successful internet business models in India - particularly in the fields of ecommerce and food delivery. China-India trade volume reached a record high of $84.5 billion last year, up 21% on the previous year according to data from the Chinese Ministry of Commerce.
Chinese investors see huge potential in India. No wonder. The country is expected to have about 491 million mobile telephone users by 2022. And according to data from the Ministry of Commerce (the last full year available), China invested a massive $1.06 billion in 2016. Not only is this six-times the volume in 2015, it was the biggest bump in investment from any country. Chinese investors are trying Chinese methods in India to win over this giant market.
Founded in 2015, Meesho helps merchants to market their products on social media. To date it has raised $65.2 million from various investors. Users can share products and payment URLs via Meesho’s app directly to their own social media app. It is aimed at big social media users in India. The country is WhatsApp’s biggest market with over 250 million monthly active users.
For Shunwei Capital, this investment is just another optimization of its portfolio in India. It recognises a similar character in Meesho that has already proved successful in China.
Shunwei was founded in 2011 by Xiaomi chief executive Lei Jun, and most of Shunwei’s investments in India are heavily focused on online platforms - just like Xiaomi itself. The fund has made a total of 20 investments this year. Eight of them are in Indian companies, up from five last year.
Other Chinese investors are looking for shortcuts to success by investing in Indian startups that have similar features to ones which have proved popular in the Chinese market.
Meesho is just one example. Its features resemble those of China’s popular social apps, and many Chinese companies are doing business via WeChat, Weibo and other social platforms.
E-COMMERCE COPYCATS
Other Chinese internet giants are also playing in this competitive field. Internet conglomerate Alibaba is close to Indian e-commerce and payment company Paytm. It injected $45 million into the business in its most recent fundraising in April, and is Paytm's biggest shareholder with around a third of the business. Paytm now copies Alibaba’s business and even their app user interfaces look similar.
Alibaba’s competitor Tencent has paired with Walmart to invest in Flipkart, another Indian e-commerce company. Walmart invested $16 billion in Flipkart in August, while Tencent led the previous financing round of $1.4 billion in April last year.
Food delivery has proved to be another successful Chinese model that investors are betting on in the Indian market as well. Last month, Alibaba affiliate Ant Financial invested $210 million in Indian food delivery startup Zomato, while Chinese food delivery giant Meituan invested in Zomato’s rival Swiggy in February with $100 million.
Today, Chinese investors are continuously looking for the next investment trend.
As the short video app market warms up in China, investors want to bring that heat to the Indian market too. Indian short video site 4Fun received over $1.4 million investment from two Chinese investors in June, while Shunwei Capital led a $1 million seed round for Indian short video app Clip last year. The styles of use in the two countries are different. Indian short video apps stream mostly standup comedy and dance, while those in China have already developed more features and topic. But different usage is not material and has not put off investors. They want to make the Chinese style work in the Indian market.
