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STARTUP DIGEST: Here're top stories of the week

STARTUP DIGEST: Here're top stories of the week

STARTUP DIGEST: Here're top stories of the week
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By Shruti Malhotra  Mar 26, 2021 11:13:33 PM IST (Published)

There were many important updates in the startup space during the week, which include SoftBank-backed WeWork signed deal with Bow Capital for SPAC listing; Think Elevation Capital, an entity launched by Elevation Capital’s Ravi Adusumalli and Think Investments’ Shashin Shah filed for a $225 million IPO with the SEC and market regulator SEBI eased listing rules for startups. Here’s all that made news in the startup universe this week.

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WeWork agrees to go public through a SPAC deal with Bow Capital
Softbank-backed co-working firm WeWork has agreed to go public through a merger with blank-check firm BowX Acquisition Corp in a deal that values the office-sharing startup at $9 billion including debt, CNBC reported.
The company disclosed to prospective investors it had lost about $3.2 billion last year as part of a pitch for a stock market listing by merging with a special purpose acquisition company (SPAC), sources told Reuters earlier this week.
The office-sharing startup’s plans for its high-profile initial public offering imploded in October 2019 due to investor concerns over the office-sharing startup’s business model and its founder Adam Neumann’s management style.
The company is also raising $1.3 billion in capital, including $800 million in private investment from Insight Partners, funds managed by Starwood Capital, Fidelity Management and others.
The Wall Street Journal first reported on the deal.
A SPAC is a shell firm that uses proceeds from an IPO to buy a private firm.
WeWork was valued at nearly $47 billion in 2019 but saw its valuation plummet to roughly $8 billion after SoftBank was forced to extend a life-saving financing lifeline to WeWork. BowX Acquisition raised $420 million in its IPO in August last year.
Indian tech listings-focused SPAC files for IPO in US
In what is likely to boost a flurry of Indian tech listings in the United States, two leading Indian venture capitalists have come together to launch a special purpose acquisition company (SPAC).
Think Elevation Capital, a newly formed entity, launched by Elevation Capital’s Ravi Adusumalli and Think Investments’ Shashin Shah, has filed for a $225 million IPO with the SEC, as per filings from March 19.
The SPAC also has leading members from the Indian startup ecosystem on its board, including the likes of Paytm's Vijay Shekhar Sharma, former WhatsApp global business head Neeraj Arora, former SoftBank executive Kabir Misra, and Dream11 founder Harsh Jain.
While Adusumalli and Shah will be co-CEOs, Tom Glaser will be the Chief Financial Officer, and Vivek Mathur, the chief operating officer.
They will be supported by the Think Investments and Elevation Capital global investment teams, the filing said. “Think Elevation Capital Growth Opportunities is a newly incorporated blank check company incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to as our initial business combination,” the company said in the filing.
“Our primary focus will be on the Indian technology ecosystem. The Indian technology sector is a large and growing market that we believe will provide attractive target opportunities for us. We believe our management’s, board of directors’ and sponsor’s experience and track record of investing in Indian technology companies make us very well placed to take advantage of this opportunity," the filing says.
Think Investments and Elevation Capital have combined private investments of $1.3 billion across 104 companies as of December 31, 2020. Of these companies, nine have become unicorns. Adusumalli is one of the leading VCs of the Indian startup world, with Elevation Capital (known as Saif Partners earlier) backing the likes of Paytm, Swiggy, FirstCry, MakeMyTrip, Unacademy and several leading international companies in the country. Think Investments is based in San Francisco, USA, with local presence in Mumbai, India and Singapore. Since completing its first investment in 2013, Think Investment’s portfolio in India reflects nearly $1 billion of investments as of February 28, 2021, including early-stage investments in Dream11, PharmEasy and Chaayos; growth capital investments in the National Stock Exchange of India Ltd and Experian PLC; and public investments in Bajaj Finance Ltd., Laurus Labs Limited and Radico Khaitan Ltd.
Sebi eases listing rules for startups
Markets regulator Sebi has relaxed listing rules for startups, revamped delisting rules, and eased norms for re-classification of a promoter as a public shareholder. In its meeting, Sebi's board has approved measures for reporting of sustainability issues by companies and taken steps to strengthen corporate governance practices and disclosure requirements by listed firms.
In addition, the board amended norms pertaining to alternative investment funds (AIFs) and made it mandatory for portfolio managers to obtain prior approval of the regulator for change in control, Sebi said in a statement.
To make the Innovators Growth Platform (IGP) more accessible to companies in view of the evolving start-up ecosystem, Sebi decided relax various norms, including reducing holding period for pre-issue capital and allowing discretionary allotment to eligible investors in order to boost listing of such firms.
Other proposals approved include easing delisting requirements and relaxation in guidelines for migrating to main board. Sebi has decided to reduce the period of holding of 25 per cent of pre-issue capital of the issuer company by eligible investors to one year from the current requirement of two years.
The regulator cleared proposals to provide a definition of 'start-up' as specified by the government. It also removed the list of restricted activities or sectors from the definition of venture capital undertaking to provide flexibility to venture capital funds registered under Category I Alternative Investment Funds (AIFs) in making investments.
IvyCap exits Purplle with 22x gains; Sequoia joins cap table
Online beauty platform – Purplle has closed a $45 million deal from Verlinvest, Blume Ventures, JSW Ventures and new investor Sequoia Capital India as early backer IvyCap Ventures made a partial exit at 22x returns. Sequoia Capital India has joined the cap table as the startup aims to deliver 8-10X growth in the next 4-5 years, a statement read. IvyCap Ventures that has been instrumental in fuelling Purplle’s expansion, invested Rs 15 crore in Purplle for a 30 percent stake in 2015. It sold a part of its shares in this round for Rs 330 crore, when Sequoia and Verlinvest invested $45 million in Purplle, valuing Purplle at Rs 2,200 crore (about $300 million), it said in a statement.
Zetwerk buys back $8.3 million ESOPs
Digital B2B marketplace for large manufacturing - Zetwerk Manufacturing said that it has bought back ESOPs worth $8.3 million (Rs 60.92 crore) from employees and investors. The exercise was completed in three rounds and has helped create substantial wealth for a large part of the workforce and provided exits to early investors, the company said. Zetwerk employs about 400 people currently. The share buyback follows a $120 million in Series D funding round in February, led by Greenoaks Capital and Lightspeed with participation from Sequoia Capital India and Kae Capital. The company has so far raised about $200 million.
Moglix valuation to triple to $1 billion, Falcon Edge to invest - Report
Industrial goods marketplace Moglix is in talks to raise $70-100 million in a round of funding which will triple its valuation to a billion dollars- making it India’s latest unicorn, Moneycontrol reported.
London-based hedge fund Falcon Edge Capital, an investor in multiple Indian unicorns such as Dailyhunt, Dream11 and Ola is in talks to lead the round, by investing about $40-50 million, while existing backers including Accel, Sequoia Capital, Tiger Global Management will contribute the rest, the report said.
Ratan Tata and Jungle Ventures are also early investors in the company. A spokesperson for Moglix declined to comment while Falcon Edge did not respond to emails seeking comment.
Moglix was valued at about $250-300 million in its last round in July 2019, when it raised $60 million led by Tiger Global- at a time when Tiger had gone on a B2B and software deal-making spree, the report added.
In funding news this week
- Sports technology company Dream Sports, the owner of fantasy sports platform Dream11, has closed $400 million funding led by TCV, D1 Capital Partners and Falcon Edge. The round saw participation from existing investors - Tiger Global, ChrysCapital, TPG Growth, Steadview Capital and Footpath Ventures. This is TCV’s first investment in India, an investor in Netflix, Airbnb, Sportradar and Peloton.
- Location-based social network- Public App launched by news aggregator Inshorts, has secured Rs 300 crore in funding from A91 Partners with participation from existing investors. Public had raised Rs 260 crore in funding led by Lee Fixel's Addition, along with SIG and Tanglin Venture Partners six months ago.
- Fintech lending platform, KreditBee’s holding entity, Finnov has raised an additional $70 million in a follow-on Series C round from TPG-backed NewQuest Capital Partners and Motilal Oswal Private Equity. The conclusion of this round has led to an exit of most of the early-stage investors including Chinese investors, Xiaomi and Shunwei Capital. The holding entity had very recently raised $75 Million from marque investors Premji Invest, Mirae Asset Ventures, Alpine Capital and Arkam Ventures.
- Social e-commerce and online grocery platform, CityMall has raised $11 million in a Series A funding round. While Accel Partners has led the funding for this round, Elevation Capital who led the $3 Million seed round in June 2020, continues to back CityMall; WaterBridge Ventures participated in the round too.
- Fintech startup Velocity, has raised a total of $10.3M in seed funding led by Valar Ventures, a US-based VC firm backed by Peter Thiel. This marks Valar Venture’s first investment in an Indian startup. Other investors who participated in Velocity’s seed rounds include founding investors Mato Peric and Tom Stafford (DST Global) as well as Presight Capital, Utsav Somani’s iSeed, Oliver Jung (LAO Holdings), Robert Frohwein (Kabbage), Dhruv Arora (Syfe) and Erik Podzuweit & Florian Prucker (Scalable Capital).
- SMB digitisation startup FloBiz has raised $10 Mn in a Series A round led by Elevation Capital with participation from existing investors Greenoaks Capital and Beenext.
- Biotechnology startup Zaara Biotech has bagged an investment of $10 million from UAE-based TCN International Commerce LLC, the Mint reported. Zaara, which focuses on research in energy and food crisis using micro algae, has received the funding for its project AlgaeSeaweed Technology under the brand B-lite Cookies.
- Career-focused education startup, Masai School has raised $5 million in a Series A funding round led by Omidyar Network India joined by existing investors Unitus Ventures, India Quotient and AngelList India.
- ReshaMandi, an agritech startup digitizing India’s silk supply chain has raised $1.7 million in seed funding. The round was led by Omnivore and Strive Ventures with participation from Axilor Ventures and Supply Chain Labs (Lumis).
- Sales and marketing automation platform for small and medium businesses - NeoDove, has raised $1.5 million in a seed round led by early-stage investor India Quotient. The round also saw participation from angel investors, including Sumit Agarwal, founder, Vyapar, and Ankit Garg, founder, WakeFit.
- Edtech platform SkilloVilla has raised $300K in a seed round of funding from Titan Capital and other investors. The funding saw participation from prominent industry leaders like Haresh Chawla, Partner at True North, Miten Sampat of CRED, Aakrit Vaish, Co-founder and CEO of Haptik and Varun Alagh, Co-founder and CE of Mamaearth.
- Farm-to-home A2 milk startup, Native Milk has raised an undisclosed amount of capital in a Pre-Series A funding round led by Rukam Capital and DSG Consumer Partners.
- Anar, a business community platform for almost 70 million businesses in India, has raised an undisclosed amount of funding led by Titan Capital.
Khatabook acquires Biz Analyst to strengthen tech offerings for MSMEs
Fintech start-up, Khatabook has announced the acquisition of Biz Analyst, a leading SaaS business management application, in a deal worth $10 million as a mix of cash and equity. With this acquisition, Khatabook aims to leapfrog into the next phase of growth and offer its customer base of over 10 million monthly active merchants an opportunity to scale up their businesses by utilizing premium value-added services.
Creating a closer integration with their upstream supply chains -- distributors, wholesalers, traders, and suppliers -- Khatabook users can now seamlessly avail additional features to improve their efficiency through business analytics, sales force automation and digital invoicing.
Launched in late 2016, Biz Analyst currently has over 80,000 paid users and now as a part of Khatabook, aims to double the user base in 2021 and create bigger opportunities for the network of its 1000+ channel partners.
Swiggy to cover vaccination for over 2 lakh delivery partners
Food delivery platform Swiggy said it will cover vaccination cost for its entire fleet of over 2 lakh delivery partners in over 500 cities.
The company will also cover the loss of pay for the period the delivery partner spends in getting both the doses, it said. The company said that in the first tranche of the programme, 5,500 delivery partners, aged 45 and above will be eligible.
Rapido- Zypp Electric join hands for EV Bike Taxis
Bike taxi platform Rapido has partnered with Zypp Electric for electric bike taxis for Rapido’s users.
With this deal, Rapido is aiming to reduce its carbon footprint and encourage the use of environment-friendly vehicles, the company said.
Rapido will be onboarding 100 + riders and electric two-wheelers from Zypp as part of its Captain fleet. The service will be a pilot run for three months starting from March 2021 and will be tested for its demand and veracity in the Delhi-NCR area. Rapido is looking to on-board more such EV partners to further expand this business model across its Tier I market in the country, it said.
Urban Company and MyStartupEquity open source an ESOP framework
Urban Company, a tech-enabled home services marketplace has today open-sourced a specially crafted ESOP policy for the startup ecosystem in collaboration with MyStartupEquity, a cap table and ESOP management product by LetsVenture. Urban Company, in collaboration with MyStartupEquity has developed the open-source ESOP framework, which is available free of cost and can be accessed by one and all.
With ESOP implementation generally being a tedious process, Urban Company and MyStartupEquity aim to provide a proper guide through this open source framework to help startups as well as private companies better structure terms and conditions and roll out ESOPs with the ingrained intention of sharing ownership with employees that eventually leads to wealth creation.
Urban Company worked with MyStartupEquity to make the open-source ESOP framework freely available. This framework can be used and modified by companies or startups while building their ESOP policy. This framework is a legally vetted document and the cornerstone of the policy is having simple vesting terms, a reasonable exercise price on options and a generous exercise period. The framework also comes with easy to use templates for grant and exercise letters.
Abu Dhabi funds invest $150 million in messaging app Telegram
Abu Dhabi state fund Mubadala Investment Co and Abu Dhabi Catalyst Partners, part-owned by Mubadala, said on Tuesday they had invested a combined $150 million in messaging app Telegram.
Mubadala invested $75 million in five-year, pre-initial public offering (IPO) bonds of Telegram, while Abu Dhabi Catalyst Partners invested a further $75 million, Reuters reported.
“Telegram’s user base has reached a critical mass that places it amongst global tech giants,” Mubadala executive Faris Sohail Faris al-Mazrui said in a statement. “Telegram is well-positioned for an inflection point that will transform it into a leading global technology company”, Reuters reported.
Elon Musk says Tesla vehicles can now be bought using Bitcoin
Tesla Inc chief Elon Musk said that the company’s electric vehicles can now be bought using bitcoin and the option will be available outside the United States later this year.
"You can now buy a Tesla with bitcoin," he tweeted here on Wednesday, adding that bitcoin paid to Tesla will not be converted into conventional currency.
The electric-car maker had last month said it bought $1.5 billion of bitcoin and would soon accept it as a form of payment for cars, sending the price of the world’s most popular cryptocurrency soaring.
Musk, who has been promoting cryptocurrencies through his Twitter account, had last month criticized conventional cash, saying when it “has negative real interest, only a fool wouldn’t look elsewhere.”
He had said that the difference with cash made it “adventurous enough” for the S&P 500 company to hold the cryptocurrency, Reuters reported.
Amazon hires former executive Adam Selipsky to run AWS
Amazon.com Inc appointed Salesforce.com Inc executive Adam Selipsky to lead its high-margin cloud computing unit, Amazon Web Services. The move comes as AWS’ current lead Andy Jassy is vacating the role to become the chief executive officer of Amazon, after Jeff Bezos announced his exit in February.
AWS, a key part of Amazon’s growth strategy, has raked in record profits for the world’s largest online retailer, and counts scores of startups, big corporations and many government agencies among its clients, Reuters reported. Seattle-based Amazon said Selipsky, one of the first VPs hired in AWS in 2005 who ran the cloud computing division's sales, marketing, and support for 11 years, will return to AWS on May 17.
Selipsky became the CEO of Salesforce.com Inc’s Tableau Software unit in 2016, and under his leadership the value of the division quadrupled in just a few years, Amazon said.
ByteDance acquires gaming studio Moonton at around $4 billion valuation: Report
ByteDance’s video games unit Nuverse has agreed to acquire Shanghai-based gaming studio Moonton Technology, as it seeks to further expand into the video games business, the company said. The deal values the gaming studio at around $4 billion, Reuters reported.
The acquisition of the video games studio come as ByteDance, the owner of TikTok and the similar Chinese short video platform Douyin, has made sizeable inroads into the video games business, putting it in direct competition with China’s Tencent. “Through cross-team collaboration and drawing on lessons and insights from its own rapid growth, Moonton provides the strategic support needed to accelerate Nuverse’s global gaming offerings,” ByteDance said in a statement, declining to comment on the size of the acquisition.
Moonton Technology, founded by an ex-Tencent employee, is most famous in Southeast Asia for its multiplayer online battle arena (MOBA) game Mobile Legends. Tencent, China’s biggest video games and social media company, made a bidding for Moonton but the offer was matched by ByteDance last week, two sources familiar with the situation told Reuters.
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