China’s crackdown on its technology industry means global investors seeking exposure to emerging markets will focus their attention on India, said Sumant Mandal, managing partner of U.S. venture capitalist March Capital Partners.
Investors are putting more weight on “government risk” when evaluating Chinese technology companies, Mandal said in a video interview. Indian startups in areas such as the Internet and cloud software offer solid growth prospects but without a similar risk profile, said Mandal, co-founder of the Santa Monica-based firm.
Chinese regulators are monitoring unruly Internet companies in a campaign that ranges from gambling to the “cult of money,” raising questions about their growth and profit prospects. While India’s Internet industry is lagging far behind China’s size, it has recently produced $ 1 billion new businesses and initial public offerings at an intensified pace.
“The Chinese market has unmatched size and scale,” Mandal said. “But the structure of the risk reward around China has changed,” and investors in the United States, Europe, Asia and the Middle East are now looking to balance their portfolios by redirecting investments to their neighbor, he said.
March Capital has a long track record of supporting Indian startups and plans to increase those investments, he said. Coronavirus has changed consumer behavior in India, an advantage for companies that manage e-commerce and digital transactions.
The company has more than $ 1 billion in assets under management, including a $ 450 million fund that closed earlier this year. Last month, March had two outings in India representing nearly $ 6 billion in combined value: BillDesk online payment service was acquired for $ 4.7 billion, just days after CarTrade Tech Ltd. make your IPO.
Mandal leads March’s investments in areas such as blockchain, network infrastructure and software as a service or SaaS. More than two dozen Indian-born SaaS companies have moved to the United States to successfully win global customers and earn hundreds of millions of dollars in revenue, he said.
“There is now more of a belief system in India,” he said. “The size of startups like Flipkart, Byju’s and BillDesk changes everything.”