Alibaba’s four-member investment team in India has been mandated to currently manage only the existing portfolio.

Alibaba to hold off on fresh investments as it reviews India strategy
Atom Investment Tuesday, August 27, 2019 - 08:51
Written by  S. Mahadevan

Chinese investor Alibaba appears to have taken to decision to put its investments in Indian startups on hold, though there is no official confirmation of this move. The report on this development says this could be a ‘pause’ rather than a ‘stop’. Alibaba is already heavily invested in the country with startups like Zomato and Paytm. The report adds that there is no indication yet that the Chinese giant wants to liquidate its existing investments. These sources claim Alibaba’s India team has been advised not to go about looking for investment opportunities in India and to stick to servicing the existing ones.

If at all, the company may take a step back, review its current investments and make some course corrections. There is even a suggestion that like a number of other investors including SoftBank of Japan, Alibaba may choose to scale down the ticket sizes and go for early stage investments.

One issue not clear from this report is what stand the Chinese investor will take if the companies where it has existing investments are looking for additional funds. The prime example could be that of Zomato, which is keen to raise around $500 million to meet its heavy cash burn to the tune of around $30 million. Paytm too, would want to add to its coffers. Will Alibaba also pick up part of the tab or allow Zomato and Paytm to look elsewhere? There are already some terms imposed on Zomato by Alibaba during the last round of investment. This is that Zomato will come into what is called the Alibaba Ecosystem, which means Zomato cannot compete in any manner with another Alibaba Ecosystem company like Paytm.

These reports are coming in at a time when another Chinese investor and Alibaba’s rival back home, Tencent is quite bullish on its investment plans for India. Interestingly, one of the major startups Tencent has invested in India is Swiggy, Zomato’s rival in the online food order delivery business.

If you are looking for other investors with aggressive intent in the Indian startup ecosystem, Amazon is one such. The ecommerce company is trying to further fortify its position here by making strategic investments that have some rub-off on its core ecommerce business. Some of the startups Amazon has bet its dollars include Capital Float TaneTag and Acko, the last named an insurance startup.




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