Tencent looks for early-stage startup bets, likely to invest $5-15M

Tencent Holdings, the world’s fifth-largest Internet company and the operator of the WeChat messaging platform, is actively scouring for early-stage bets in India, as the social media giant looks to transport its hugely successful strategy from China.
 
The Shenzhen-headquartered company has held preliminary discussions with two startups - social networking platform ShareChat and consumer lending venture Kissht - according to people with knowledge of the talks. There is no certainty that the talks will indeed translate into investments.
 
Tencent’s new focus on relatively young ventures marks a diversification of its strategy in India. Till date, the company, which had a market capitalisation of $496.25 billion as of Wednesday, has primarily made latestage investments in India in companies such as Flipkart, Ola and Practo. 
 
ShareChat, which counts smartphone maker Xiaomi and Chinese venture capital firm ShunWei Capital as investors, was founded in 2015. Kissht, founded a year later, counts Fosun RZ Capital as an investor.
 
Diversification Move
It is unclear if Tencent will invest from its balance sheet or route the funds through one of its subsidiaries, a list that includes Tencent Industry Win-Win Fund, Tencent Public Space and Tencent Industry Collaboration Fund. Emails sent to Tencent, Kissht and ShareChat did not elicit any response till the time of going to press.
“Tencent could invest between $5 million and $15 million across segments including, gaming, content, social media and consumer lending,” one of the people cited above said on condition of anonymity.
 
The company has a strong investment record in all these segments, having backed Ubisoft in the gaming space and German online bank N26 last month.
 
Tencent will continue to place large strategic bets on mature Indian ventures as it looks to pick up significant minority stakes in market leaders, people familiar with the company’s plans told ET.
 
“It’s more of a diversification of (Tencent’s) investment strategy. They have done that very well, particularly in China, and are looking to repeat that in India,” one of them said.
 
Of Tencent’s 70 disclosed investments in 2017, 36% were in early stage ventures and 23% towards late-stage ventures, show data sourced from Crunchbase. Seed-stage funding made up about 3% of the known funding total. Tencent, its Chinese rival Alibaba Group, and Japan’s SoftBank Group Corp have become increasingly aggressive in India the past 12 months, picking up stakes in some of the country’s most richly valued companies and driving up valuations to stratospheric levels in the process.
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