India Payments Research

Paytm is not just the most valuable Indian fintech firm: At US$16 billion, the digital payments company boasts the highest valuation of any Indian startup. It has long been considered a standout on the Indian fintech scene and counts Softbank and Ant Financial as its primary backers. Together, those two heavyweight investors own 60% of Paytm. In a recent interview with The Financial Times, Paytm founder Vijay Shekhar said, "We see ourselves on a healthy path."

Chinese investment in India has flourished over the past decade, reaching a $8 billion as of December 11, 2019, as compared to $200 million a decade earlier in 2009. A significant amount of that investment is coming from China’s two tech giants, Alibaba and Tencent, which have been aggressively investing in Indian start-ups. Many of these start-ups have crossed the $1 billion valuation threshold to become unicorns.

Alibaba and Ant Financial have invested resources in five unicorns out of the six companies they’ve invested in, while Tencent has done the same for seven out of twelve startups they’ve funded. This would mean that Alibaba and Tencent have invested in approximately half of the 31 unicorns in India, according to a report from Iron Pillar. A six-fold increase of Chinese investment in India was recorded between 2013 and 2014, coinciding with the strategic restructuring of Alipay to Ant Financial. Experts believe that a majority of Chinese capital in India come from Alibaba and Tencent, or its subsidiaries.

2019 was the year of the aspirational super app - aspirational because no platform has come anywhere near the dominance of China's WeChat. WeChat never branded itself as a super app. It simply became one thanks to a timely arrival, its appeal to Chinese users and lack of serious competition.

Rebranding a successful tech startup as a potential super app is a good way to keep the funding gravy train flowing. What could be more enticing to investors? Just ask the Southeast Asian ride-hailing giants Grab and Gojek. But China is a unique market, where users are happy to sacrifice choice for convenience and a frictionless experience. Elsewhere, notably India, users prefer different apps for different functions.

India fintech sensation Paytm plans to reduce its losses by 1/3 to $400 million annually, according to The Times of India. Softbank and Alibaba-backed Paytm is India's most valuable tech startup with a $10 billion valuation, but has been burning cash at a torrid clip for years, like many of its peers across the region. In the 2019 fiscal year, Paytm lost a whopping $600 million, up 300% over the same period a year earlier.