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The Chinese Can Solve Startup India’s Inability to Monetize

Capital dumping rumours aside, a little guidance and lots of investor funding from the Chinese can help Indian startups, especially the digital media ones, finally break that ‘highest of all glass ceilings’.

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Xiaomi is looking to build its own content app not unlike UC Web and is currently scouting for digital content providers in India to form strategic partnerships with. Xiaomi has a reported 12.5 billion dollars in revenue for 2015. It’s not just this Chinese consumer electronics company that is contemplating a play into digital media and into the hearts of Indians. Another Chinese company, the APUS Group (founded in 2014), a mobile services developer dedicated to enhancing mobile user experience, is also looking at increasing its Indian targeted content services – APUS has already invested in an Indian digital content site, iamWire.

And why not. The Indian digital content industry is set for disruption with growth expected to reach 200 billion rupees by 2020. We have inexpensive smartphones; broadband infrastructure for 2G, 3G and 4G under continuous improvement, and we have great content from the likes of Culture Machine and ScoopWhoop attracting over a billion viewers and readers a month.

India is promising and Indian digital media companies are doing some great things. But only a few of them are getting the recognition or funding they deserve. Sure, investor interest is increasing in promising ways. For example, in 2016, there were only 16 funding rounds for content based media companies in India. In the first four months of 2017, 10 startups working with content have raised funding.

There are some heart-warming success stories of fund raising. Saavn has raised a total of 110 million dollars. Then YuppTV, an Internet-based live streaming platform has 50 million dollars from KKR backed Emerald Media; Amagi Medi, a media technology company has raised 35 million dollars from Emerald Media and the DailyHunt has received 25 million dollars from ByteDance.

While these are all commendable accomplishments it’s but a drop in the bucket compared to what Chinese digital content startups have accomplished. New York Times says a photo and video app developer of China called Meitu could be worth over 5 billion dollars when it goes to IPO and it only launched operations in 2014.

As Amit Li, the founder of ZDream Ventures, a startup accelerator and fund focusing on Indian and Chinese startup ecosystems said, “when we first came here, we realized that India had lots of potential but that there was a disconnect in the ecosystem, there was a lack of resources and guidance to show these startups how to scale and grow.” ZDreams is at present on a mission summarized in four words, “Indian Startups + Chinese Jugaad”. The Indo-Sino accelerator has regular events in Delhi and Beijing to connect entrepreneurs and investors of the two countries for the expressed purpose of exposing Indian startups to the best Chinese practices that has led to mega successful stories like Meitu, WeChat, TaoBao, Alibaba and the rest of the great Chinese warriors.

One of the biggest if not the biggest lesson Indian digital content media companies will learn is how on earth to monetize after giving away their content for free in the early stages of forming a user base. Nitin Sharma of Lightbox Ventures says making online payments swift and simple is key to this. “News and video content apps like Toutiao have already crossed a billion daily views a month and are monetizing their content. The online payment methods are convenient and fast thanks to the robust digital payment environment WeChat Pay and Alipay have set up. That’s something India will have to improve on. Digital media startups in India will have to find similar fast methods of payment. Nobody is going to spend five minutes to pay for an article that only takes three minutes to read.”

The other form of support the Indian digital content startups need is more investment. And Chinese investors seem to have it by the tonne. An Indian investor of an early stage venture firm said, “There are only a few Indian startups that have gotten more than 10 million dollars in funding. Compare that with some of these Chinese media startups that get half a billion dollars straight off the bat. It’s expensive to create great content backed by advanced analytics for targeted consumer reach and it’s definitely expensive to generate 200 million users of traffic a month. So I think the investors should be a bit more empathetic to what these Indian media startups are going through.”

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