The ongoing spat between India and China could delay fresh funding into Zomato by Alibaba-backed Ant Financial.

In January, the Indian food-tech platform had announced a deal with Ant to receive about $150 million. According to top sources, Zomato is yet to receive $100 million of that. “The investment proposal is yet to be cleared by the Indian government. With the ongoing anti-China sentiments, the clearance could get delayed,” said a source.

Following escalated border tensions, India has banned 59 Chinese apps. “There are concerns over any fresh money flowing from China,” said a government official.

A report by the Financial Times said the $3-billion Indian food delivery start-up has been cut off from its biggest Chinese investor in the first major example of how Delhi’s new foreign investment laws could hit funding. In April, the Centre had changed the FDI rules. Now, all the seven bordering countries require its approval for FDI, which shuts down the automatic route for China.

While Zomato did not comment on a query sent by BusinessLine , sources at the company said it is not aware of any delays and remains confident that the funds will come through.

Data from venture capital industry tracker Traxcn suggest Zomato is the eighth most-funded portal in India. Ant Financial isn’t the only Chinese investor in the company — Shunwei Capital, too, has a significant investment in it.

Zomato’s Indian angel investors include Alok Tripathi, Sharad Malik, Bharati Balakrishnan, Neeraj Arora and Vivek Khare, and its institutional investors include Temasek, Saturn Shine, Delivery Hero, Blume Ventures, Pacific Horizon and Matrix Partners India, among others.

Traxcn’s data reveal that Zomato’s rival Swiggy also has its share of Chinese investors — Morningside Venture Capital, Tencent and Hillhouse Capital Group.

Adding to the woes

The Ant Financial investment could be crucial for Zomato, which has been hit hard by the pandemic. It laid off 13 per cent of its workforce in May. Pre-pandemic, too, it had faced various issues such as a face-off with the restaurant industry over deep discounting, higher commissions and data masking.

According to think tank Gateway House’s March report, Chinese tech investors have put an estimated $4 billion into Indian start-ups. As of March-end, 18 of India’s 30 unicorns were Chinese-funded.

“China quietly has created a significant place for itself in India in the last five years in the technology domain.

“Unable to persuade India to sign on to its Belt and Road Initiative (BRI), China has entered the Indian market through venture investments in start-ups and penetrated the online ecosystem with its popular smartphones and their applications,” said the report.

Other start-up deals

According to industry experts, Zomato could be just the first one to take a hit.

Several other start-ups — such as Paytm, Byju, BigBasket and Lenskart — are also heavily dependent on funding from Chinese investors.

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