Most of that VC is not being invested into innovative ideas, products or business models, but local versions of foreign companies than can't operate in China for diverse reasons, ranging from privacy to foreign ownership restrictions. The value created will be mostly limited to the Chinese market.
This is exactly the same in India as well. We have Ola Cabs here which is an Uber clone and it is a billion dollar company. Likewise, we have flipkart which is an amazon clone and is another multibillion dollar company. We have plenty of clones doing phenomenally well.
The question is this. Why would you ( or should you? ) try and innovate when there are clearly billion dollar problems waiting to be solved (cloned?) right in-front of your eyes in broad daylight. And yes, the impact will be mostly be limited to India but India is a huge market.
Meh... it would be hard to compare in practice, given how VCs tend to chase trends in general, funding lots and lots of copycats in the hope that they will fund the last successful player in the field. Or maybe I'm just bitter about the state of fundraising in the valley. ;)
VC in emerging markets (I come from one, and work with several) tend to be a bit different than that. cost of capital and uncertainty is much higher, so VC funds have to take a lot less risk, only betting in existing and proven business models. That's why you almost never see a really innovative startup from EMs, risk of an EM + risk of a new business model is just too high for most VCs.
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Most of that VC is not being invested into innovative ideas, products or business models, but local versions of foreign companies than can't operate in China for diverse reasons, ranging from privacy to foreign ownership restrictions. The value created will be mostly limited to the Chinese market.
This is exactly the same in India as well. We have Ola Cabs here which is an Uber clone and it is a billion dollar company. Likewise, we have flipkart which is an amazon clone and is another multibillion dollar company. We have plenty of clones doing phenomenally well.
The question is this. Why would you ( or should you? ) try and innovate when there are clearly billion dollar problems waiting to be solved (cloned?) right in-front of your eyes in broad daylight. And yes, the impact will be mostly be limited to India but India is a huge market.
Meh... it would be hard to compare in practice, given how VCs tend to chase trends in general, funding lots and lots of copycats in the hope that they will fund the last successful player in the field. Or maybe I'm just bitter about the state of fundraising in the valley. ;)
VC in emerging markets (I come from one, and work with several) tend to be a bit different than that. cost of capital and uncertainty is much higher, so VC funds have to take a lot less risk, only betting in existing and proven business models. That's why you almost never see a really innovative startup from EMs, risk of an EM + risk of a new business model is just too high for most VCs.