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Checks on Chinese investments likely to keep Indian start-ups on tenterhooks

Posted on 18 June, 2020


The Indian government has earlier announced that foreign direct investments (FDI) from countries that share a land border with India would go through only after its approval. This will specifically impact consumer internet and tech-enabled businesses significantly and across stages, says Pankaj Raina, Managing Director, Research and Investments, Zephyr Peacock India.

Raina added that existing investee companies may not be able to raise internal rounds from Chinese investors, which could create cash-flow issues.

 

Click here to read the full article on ‘Business Line’

Below is an excerpt from the post which first appeared on Business Line on 18 June 2020:

 

The gruesome India-China border clash along the Line of Actual Control (LAC) delivered a body blow to the already strangled equations between the two countries.

Not long ago, the Indian government had also announced that foreign direct investments (FDI) from countries that shared a land border with India would go through only after its approval. These factors could affect the Indian start-up ecosystem, which has been receiving Chinese investments, said investors.

It will specifically impact consumer internet and tech-enabled businesses significantly and across stages, said Pankaj Raina, Managing Director, Research and Investments, Zephyr Peacock India, a firm that provides growth capital and management support to small and mid-sized enterprises in the country. He added that existing investee companies may not be able to raise internal rounds from Chinese investors, which could create cash-flow issues.

There are nearly 118 Indian start-ups — companies that received funding when they were less than 10 years old — that have a total of $5.6 billion un-exited Chinese investments, as per data from Venture Intelligence, a firm that tracks private companies’ investments, financials and valuations. But with the scrutiny in place now, experts estimate that the amount of time to raise further capital from Chinese investors will get extended.

 

Click here to read the full article on ‘Business Line’

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Zephyr Management is a global emerging markets investment manager, specializing in the creation and management of highly focused private equity funds

Since its inception in 1994, Zephyr has sponsored 22 investment funds in both public and private securities markets representing approximately $1.2 billion in combined commitments and assets under management

Emerging Markets Focus

The firm has initiated several private equity funds investing in several African countries, South Korea, Mexico, India, and Sri Lanka since its founding. Zephyr's funds serve medium size enterprises that are often ignored by larger private equity players. Zephyr funds provide growth capital to established companies with proven business models and sustainable competitive advantages.

Investment activities are currently focused on India, Sri Lanka and Africa.

Zephyr Peacock India

Zephyr Peacock India provides equity financing for fast growing, small to medium sized companies led by strong entrepreneurs and management teams.

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Emerald Sri Lanka Fund

Emerald Fund provides equity financing for fast growing, small to medium sized (SME) Sri Lankan companies led by strong entrepreneurs & management teams.

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Zephyr Acorn provides equity

Zephyr Acorn provides equity financing and business support to innovative early-stage companies in East Africa.

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Active Portfolio Support

The firm's special expertise lies in bringing global best practices to medium-sized growing companies by assisting them in conceptualizing sustainable business strategy, management development, compensation, ESG, expansion outside of their home country, capital structure and positioning for stock exchange listing or trade sale.