Why are Indian startups struggling due to the India-China dispute?

Chinese companies were a large source of capital for Indian startups, have disappeared. Now our ecosystem is seeing a slow deal in cash flow as they were active earlier.

While Indian startups are struggling with the effects of the coronavirus epidemic. On the other hand, Indian startups are facing conflict due to the India-China dispute.

As we know, the conflict in Ladakh continues along the border and 20 Indian soldiers have been killed. As a result of this ongoing conflict, it is also affecting the other occupation of both nations.

On one hand, while India has banned Chinese products or apps, on the other hand, China has stopped investing in India. As a result, Indian startups are facing conflicts as most of the Indian startups have been funded by Chinese companies, but now they are facing problems.

China’s Investment in Indian Companies

It is estimated that the Chinese companies have invested in 18 companies plus 30 unicorn technology companies in India with a valuation of $1 billion. The list includes popular food delivery apps, a taxi aggregator, a hotel chain, and more.

But due to confrontation between the two countries, they stop investing in Indian companies. Chinese companies were a large source of capital for Indian startups, have disappeared. Now our ecosystem is seeing a slow deal in cash flow as they were active earlier.

India has already banned more than 200 Chinese apps including TicketLock, PUBG, etc.
Research shows that the firm TrackXN shows that 35 Chinese companies and 85 venture capital and private equity firms have invested more than $ 4 billion in Indian start-ups including Paytm, Snapdeal, Swiggy.

India also refused to sign the Beijing Multi-Billion Belt Road initiative. The country has reluctantly signed up for the Virtual Corridor Gateway House. More pain is felt by companies that have already raised money from companies such as Bali, Naidu, Tenant.

Strategic investors from other parts of the world will return after COVID-19, even if the Chinese have arrived. India still is the largest market for companies.

During this epidemic, India attracted nearly $20 billion in foreign capital from Silicon Valley companies such as Google and Facebook, AIDA, KKR, and Generic Atlantic.

India has to build domestic capital to meet the needs of Indian start-ups. Private companies are dependent on global wealth, with Indian companies accounting for only 5% of their wealth.

Experts say that instead of diverting existing investments, the government will focus on keeping telecoms like Huawei at bay during India’s 5G trials. India can build its assets in more than 30 countries without any investment investors.

Related: What Awaits the Indian Startup Culture in 2020 and Beyond: Trends and Predictions