Start-ups will likely feel the pinch the most, as Chinese investors are seen not only as alternatives to US-based funds, but also bring additional value as strategic investors, he said.
PE/VC investors operating in India have expressed concerns over the modification in FDI norms, which brings all investments from China under government scrutiny. They said this would seriously impact inflows.
VCs and global PEs say many of them raise money directly or indirectly from Chinese investors for a portion of their funds. They also raise money from fund of funds (global funds that pool funds and provide finance
to other PE funds), which in turn are financed, among others, by Chinese investors, many of whom are based in Hong Kong and Singapore.
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