BANGALORE -- A venture fund co-run by Lei Jun, founder of China's Xiaomi, has turned its attention to India's internet, betting that demand for content in local languages such as Telugu and Tamil will soar as rural communities are increasingly connected to the web.

Shunwei Capital, which backed Chinese unicorns such as video app developer ByteDance, streaming service iQiyi and electric-car maker NIO, raised $1.21 billion late last year to invest in the South Asian nation, especially in startups offering local-language content. The firm is led by Lei and Tuck Lye Koh, formerly with Singapore government wealth fund GIC Private.

Shunwei's interest in Indian companies offering content in regional languages began even before the recent fundraising. Its portfolio now includes stakes in health information app myUpchar, social media platform ShareChat, video-sharing service Clip App, self-publishing platform Pratilipi, knowledge-sharing app Vokal and streaming radio service Kuku FM.

"The Chinese understand the value of unique content and serving a large, untapped market," Vokal founder Aprameya Radhakrishna told the Nikkei Asian Review. "We are in the early days of the internet as far as vernacular [content] is concerned."

Since 2016, Chinese investors have participated in more than $850 million worth of funding rounds by 14 Indian startups offering local-language content, Indian venture data service Tracxn says. By comparison, Tracxn tracked just 17 other local-language startups that raised funds without Chinese involvement.

"The focus of startups in India has been on the 45 million upper- and middle-class Indians with English as their primary language," said Vijay Anand, founder of Indian accelerator The Startup Centre. "Domestic capital is far too risk averse. China has created billion-dollar companies by catering to the indigenous Chinese market and, by that, they [Chinese investors] might understand this market's potential far better."

"Chinese capital also has a lot more tolerance and patience," he said. "So they will invest in projects which take a long time to yield returns."

Local-language apps are seen as having the most potential with the majority of Indians who live outside the country's biggest cities. Analysts view the shortage of such content as an important factor in the slow rural adoption of the internet. The Telecom Regulatory Authority says 82.1% of urban denizens are internet users compared with just 19.48% of rural residents.

The growth of local-language apps is poised to upend this market math. Consultancy Deloitte last year projected that Indians accessing only local-language services will outnumber the country's English-language users 5-to-2 by 2021. Rival KPMG identified the southern languages of Tamil, Kannada and Telugu as top drivers of this new wave of app use.

"We think the mobile internet market in India is very similar to what it is in China in many aspects, [though] a few years behind," Shunwei's Koh told Nikkei. "[So] it is a good opportunity to leverage what we have experienced and learned in China to discover the next big thing for India. Vernacular content will win user traffic."

Rajat Garg, the founder of myUpchar, realized the potential of tapping local-language users when he switched the display text of Shimply, his previous e-commerce service, to Hindi from English. Transactions soared 50%. Now he provides content in 13 Indian languages with myUpchar.

For Chinese investors, the growth in local-language users offers a way to expand the reach of digital advertising.

"We believe that in a large economy like India, online marketing will eventually become a huge market, and that whoever wins traffic on the internet will get a big slice of that cake," Koh said.

Xiaomi founder Lei Jun

"Chinese companies usually focus on scale first," Pratilipi founder Ranjeet Pratap Singh told a local tech news service.

ByteDance and Xiaomi also have invested in Indian local-language apps, as have rival phone maker Oppo Electronics and Tencent Holdings.

Xiaomi, which won the highest share of India's smartphone market last year, invested alongside Shunwei in ShareChat's two fundraising rounds last year. The rounds brought in $18.2 million and $100 million, respectively. Xiaomi also joined a $7 million fundraising round for chat platform Samosa Labs and reportedly backs transport information app Where is My Train.

ByteDance, which first achieved success with its Jinri Toutiao service using artificial intelligence to provide a customized mix of Chinese news and opinion articles, has put $25 million into Dailyhunt, a startup that does the same for content in 14 Indian languages.

China's most valuable unicorn has counted on India as a key growth driver. Though the company has faced regulatory headwinds -- with a court order at least temporarily forcing local app stores to stop offering its flagship short-video service TikTok earlier this month -- a ByteDance official told local media afterward that it would invest $1 billion in the country over the next three years.

ByteDance debuted Helo as a rival to ShareChat last year and has attracted more than 50 million monthly active users. "We launched Helo in India, [but] we want the product to be scalable across different countries," a company official said.

Tencent, China's most valuable listed company, last year joined a $50 million funding round for Dailyhunt rival NewsDog, which also claims to have about 50 million users and offers content in nine local languages as well as English. Oppo, on the other hand, in 2018 joined a funding round worth 370 million rupees ($5.36 million at current rates) for Hindi-language lifestyle site POPxo.

But Shunwei is not limiting its focus to local-language content apps in India. The fund has invested in several consumer lending businesses as well as restaurant review and food delivery service Zomato. Koh said it is looking for opportunities in social e-commerce.

"We are interested in high frequency use cases demanded by the mass market," he said.