This story took me by surprise. Only a few days ago I had reviewed Fintech in India and missed Paytm.

The news:

“Paytm parent One97 raising $635M from Alibaba Group, SAIF; valued just over $2B”

VC Circle (which tracks startups in India) has the details.

On my strict definition, Paytm is not yet a Unicorn because it is not realized value. However this is still big news about a venture that is not on most people’s radar.

I see 3 reasons why Paytm is so valuable:

• Chindia. For all the talk of China vs India, it is China + India that is the practical story for entrepreneurs. China is India’s top trading partner (not America). For Alibaba, winning in India is a top priority as local e-commerce ventures move from describing themselves as the Amazon of India to the Alibaba of India. According to VC Circle:

“Alibaba, which draws its strength from its B2B as well as B2C e-com properties in China, has a presence in India through its local channel of its B2B property in the mother brand. The Indian site, however, is a bit player in the fast growing marketplace now dominated by B2C ventures Flipkart, Snapdeal and Amazon.”

• Intersection of ecommerce and payments, particularly cross border payments. This is the same story behind the success of Adyen. The ability to do payments with low friction is key to ecommerce success.

• Mobile is changing ecommerce and payments. This is the story behind Klarna. This is where a mobile wallet shows it’s value.

This is a huge win for SAIF Partners, a Hong Kong based fund that invests in China and India.

This shows that mobile wallets are for real. In the West, mobile wallets have been a solution looking for a problem. In the Rest, mobile wallets is an example of technology leapfrog when the basics we take for granted are not available (i.e necessity is the mother of invention). Historically we thought of innovation moving from the West to the Rest. In the leapfrog model, this reverses and we see innovation moving from the Rest to the West. That is a historic shift.

On Friday, the Fintech City Tour goes to the other half of Chindia, to China. Stay tuned.