Capital flows change course as firms seek growth avenues

The winter is slowly giving way to a new spring in the Chinese venture capital sector, or so it seems to my friend Ajith Kumar who owns a mid-sized information technology firm in the southern Indian state of Bengaluru.

His optimism was not wide of the mark. Thanks to trade restrictions, it has been a sort of winter for the sector in China with the deal pipeline no longer that well-oiled as in the past. But all of that seems to be changing now as venture capital firms from China are increasingly veering toward markets in Asia to unlock the next wave of unicorns, especially in markets like India, Bangladesh, the Philippines and Sri Lanka.

Early last month a group of investors led by Wang Qiang, co-founder of ZhenFund, a Chinese venture capital firm which has backed tech unicorns like Xiaomi, visited India to explore potential business opportunities. ZhenFund, which is one of the most prominent early-stage investment institutions has backed about 600 startups so far, including firms like Mia, VIPKID, RED, Meicai and Zhaogang in China.