There were several important developments in the startup space during the week, which include Paytm plans a mega Diwali IPO, Tata Digital buys a majority stake in BigBasket, Zeta turns unicorn, government battles social media giants on IT rules and Amazon acquires MGM studio as Bezos set to retire. Here are the startup stories that hit headlines this week:
Paytm to list around Diwali; company aims for valuation of over $25 bn
Paytm, India's leading digital payments provider, is aiming to list around Diwali, sources informed CNBC-TV18. The DRHP filing will be done in June-July and the company is aiming for a valuation of over $25 billion, they said.
The startup will be backed by some of the largest investors such as Berkshire Hathaway, Soft Bank, Ant Group.
The issuance will include secondary sale by Paytm's investors on pro-rata basis. Post board approval, Paytm investors will need to approve IPO-related aspects.
Paytm is likely to split its stock as part of the IPO process. The board of its parent group, One97 Communications, will formally approve the listing valuated around $25-30 billion this Friday. Post-approval by the board, the IPO would be the largest in the country, surpassing Coal India's Rs 15,000 crore offering.
The lead managers of the IPO include Morgan Stanely, Citigroup, JPMorgan Chase, with Morgan Stanely being the leading contender. The procedure for listing is expected to begin in July.
As of April 2021, Paytm is the most valued startup in the country, worth $16 billion. The payments provider achieved over 1.4 billion transactions in March (transactions including payments via wallet, UPI, cards, and net banking services). It is one of the largest enablers of digital payments in the country, with over 20 million merchants preferring Paytm over its competitors.
In an exclusive interview with CNBC-TV18, its founder Vijay Shekhar Sharma had said pandemic is one of the biggest drivers for digital payments.
Paytm expects to break-even by the end of 2021, he had said then.
"We as a company will reach breakeven by the end of this financial year or this calendar year, which is 2021 and once we have reached the breakeven point we will quickly see the opportunities," Sharma had said.
Tata Digital acquires majority stake in BigBasket
Tata Digital, a 100 percent subsidiary of Tata Sons, today announced that it has acquired a majority stake in e-grocery player BigBasket’s B2B arm Supermarket Grocery Supplies Private Limited.
Last month the Competition Commission of India approved Tata Digital's offer of acquiring up to 64.3 percent in BigBasket’s B2B arm supermarket grocery supplies, which in turn will take sole control over the company’s B2C business.
While the price of the deal has not been officially announced, CNBC-TV18 has reported that the acquisition is valued at around Rs 9,500 crore and will buy out Alibaba’s stake in BigBasket.
PharmEasy parent API Holdings targets $1-1.2 billion IPO, picks Morgan Stanley and Kotak as advisors: Report
API Holdings Ltd, the parent of India’s largest online pharmacy chain Pharmeasy, is looking to shake up India’s booming e-pharmacy market and launch a blockbuster initial public offering (IPO) in FY22 to raise up to $1.2 billion, Moneycontrol reported.
The healthcare firm, which recently acquired smaller rival Medlife, and is backed by marque investors like Prosus Ventures (previously Naspers Ventures), TPG Growth and Temasek, has picked two i-banks for now and is targeting a valuation of around $4 billion for the proposed India listing, the report said.
Pharmeasy has shortlisted investment banks Morgan Stanley and Kotak Mahindra Capital as advisors earlier this week. More i-banks may come on board at a later stage, it said quoting sources.
A second person said the company is targeting an additional private round of fund-raising in the coming months to beef up valuations and will facilitate a partial exit for the firm’s investors.
Prosus, TPG and Temasek hold around 30 percent stake in Pharmeasy. Other investors include CDPQ, LGT Rightrocks, Eight Roads and Think Investments.
The company is likely to file the DRHP(draft red herring prospectus) with Sebi in August or September post the additional round of fund raising. The IPO could be launched between January and March 2022, as per the report.
Eruditus eyes $2.5 billion valuation: Reports
Online education firm Eruditus is in discussions to raise funds valuing it at $2.5 billion, as per Moneycontrol. Eruditus is in preliminary talks to raise $200 million from new and existing investors at a valuation of $2.5 billion. The firm also held preliminary conversations with SoftBank, Tiger Global and DST Global, among others, but a term sheet has not been issued yet.
If the deal goes through, it could make Eruditus India’s second most valuable online education firm after Byju’s.
Tata eyes fitness startup Curefit to build digital muscle: Report
Tata Group is reportedly in talks to acquire health and fitness startup Curefit, recently rebranded as cult.fit. The group is also planning to bring on board Curefit founder Mukesh Bansal with a leadership role in Tata’s digital business, as per reports.
Cure.fit which offers gyms and a bouquet of services, will sit well with Tata Group's plan for a bigger digital play and its ambitious super app.The proposed super-app will pit Tata against digital business conglomerates like Reliance Industries, Amazon and Walmart-owned Flipkart.
Unicorn Alert: Zeta raises $250 mn from SoftBank Vision Fund; valued at $1.45 bn
Banking technology startup Zeta has raised $250 million in its Series D round led by SoftBank's Vision Fund II. Zeta’s existing investor Sodexo also participated in the round. The deal valued Zeta at $1.45 billion making it the 14th Indian startup to turn unicorn this year.
upGrad acquires edtech firm Impartus
Edtech platform upGrad has acquired video-learning solutions provider Impartus for Rs 150 crore. The startup will be rebranded as upGrad Campus as it is now a 100 percent subsidiary of upGrad.
With this acquisition, upGrad will now be able to get access to at least 280 educational institutions in India.
Stride Ventures launches 2nd debt fund for startups
Investment firm Strides Ventures has announced a debt fund for Indian startups. The target corpus of Stride Ventures’ Fund II is Rs1,875 crore. The firm will continue investing in early to late-stage startups with ticket size from the new fund expected to go up to Rs 70 crore, Strides Ventures said in a statement.
The new fund will have a commitment period of four years within which Strides Ventures expects to recycle Rs 3,000 crore total debt funding in startups. The investment firm is looking at the first close of Fund II within the next three months i.e. August.
The firm has funded more than 20 companies from Stride Ventures India Fund I which includes start-ups like Pocket Aces, Miko, Sugar Cosmetics Home Lane, Zetwerk etc, the statement said. In its 2nd funding, Stride Ventures will look to invest primarily in business-to-business, commerce and software-as-a-services consumer, healthtech, fintech, agritech and a few more sectors.
WhatsApp Vs govt: Messaging app sues Centre, latter calls it ‘Act of Defiance’
WhatsApp is suing the Indian government over a ‘traceability’ clause in the new Intermediary Rules, which were notified in February this year. In response, the government has called WhatsApp’s act as a one of defiance and wants them to comply.
WhatsApp has said that the new social media rules are unconstitutional and filed the case in Delhi High Court on May 25. WhatsApp has argued that the new provision for tracing messages can be seen as an invasion of privacy and the company said that the government had exceeded its legal powers by actioning rules that would require it break its 'end-to-end encryption' on text messages. The messaging giant is seeking the court to block the new IT rules and prevent criminal liability to its employees for non-compliance.
In response to the legal route taken by the company, Ministry of Electronics and Information Technology (MeITY) has called WhatsApp’s refusal to comply with the new IT rules as a “clear act of defiance.” Further, it has said that the right to privacy will come with reasonable restrictions, adding that social media companies will only have to give the originator of a message in select cases and based on an order from a competent court.
The Centre also questioned WhatsApp’s own commitment to user privacy pointing out that the company plans to share the data of all its users with its parent company, Facebook, for marketing and advertising purposes.
Facebook, Google & WhatsApp complies with new IT rules; Twitter still remain defiant: Govt Sources
Facebook, WhatsApp and Google have complied with the new IT rules which came into effect on May 25. Government sources say Facebook, Whatsapp, Google and LinkedIn have shared details of Grievance Officer, Chief Compliance Officer and Nodal Officer with Ministry of Electronics and Information Technology (MEITy), as per the new rules.
However, Twitter still remains non-compliant with the new social media rules.
Government sources say the microblogging site has not yet sent the details of the Chief Compliance Officer to the Ministry.
A PIL has also been filed in the Delhi High Court against Twitter. The petition has sought a direction to Twitter to appoint a resident grievance officer without further delay. It has also sought a direction to the Centre to ensure that the IT rules are complied with.
Under the new guidelines, social media intermediaries have to appoint a resident grievance officer, a chief compliance officer and a nodal contact person.
Oyo looking to borrow $600 mn to refinance debt
Oyo is seeking to borrow $600 million using a syndicated offshore loan to refinance all its existing debt, Reuters report. For the SoftBank backed firm, the deal signals that a restructuring is working.
Oyo has adopted a revenue-sharing model and stopped guaranteeing minimum payments to hoteliers, an initiative that ballooned fixed costs and undercut incentives to maintain service standards. The amount of cash Oyo burns is expected to shrink over the next 18 months and it should have enough to last two to three years, according to credit rating analyst Moody’s.
Using debt instead of equity also means that Oyo can avoid extra scrutiny on how far its peak $10 billion valuation has fallen, reports Reuters.
Tech billionaire Mark Cuban backs Polygon
American billionaire investor Mark Cuban has added Indian blockchain tech platform Polygon to his portfolio. A serial startup investor, Cuban is the owner of NBA’s Dallas Mavericks and one of the main investors on the reality TV show, ‘Shark Tank’.
According to reports, Cuban is integrating Polygon crypto into Lazy.com, a portfolio company that allows people to easily display non-fungible tokens (NFTs). Polygon has gained in popularity, of late, as the Layer II technology to Ethereum has found increasing use cases in gaming and non-fungible tokens.
Formerly called Matic Network, Polygon was founded in 2017 by Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun, with Serbia's Mihalio Bjelic later coming on board as the co-founder. Polygon's native token Matic has crossed a market cap of over $14 Billion and is among the top 20 crypto coins globally.
Zerodha to buyback ESOP from staff
Online stock trading platform Zerodha plans ESOP buyback at a valuation of $2 billion this year, says founder Nimith Kamath in a tweet. As per report, Zerodha’s board has passed a special resolution approving a remuneration of up to Rs 100 crore per annum each to Nikhil Kamath and Seema Patil.
The board has also approved a resolution to invest upto Rs 1500 crore from surplus funds of the company in other businesses.
This is the second ESOP buyback Zerodha will conduct, after it bought back shares worth Rs 60-65 crore in November last year.
FUNDING THIS WEEK
> FarEye, an end-to-end, global delivery management platform, has raised a $100 million Series E round led by TCV and Dragoneer Investment Group. Existing investors Eight Roads Ventures, Fundamentum and Honeywell also participated in the round. The funds will be used to empower brands to provide Amazon Prime-like delivery experiences and redefining how products are delivered across diverse logistics networks
>Digital sports platform FanCode has raised $50 million from parent Dream Sports’ investment arm, Dream Sports Investments. FanCode will use the new funding to drive its growth plans, with an aim to garner a user base of more than 100 million by July next year.
>Microblooging platform and homegown rival to Twitter, Koo has raised $30 million in Series B funding, led by Tiger Global and other new investors IIFL and Mirae Assets. Existing investors Accel Partners, Kalaari Capital, Blume Ventures and Dream Incubator also took part in the round. The fresh round of funding will be used to strengthen engineering, product and community efforts across all Indian languages at Koo.
> Matrimonial startup Betterhalf.ai has raised $3 million in Pre-Series A funding from venture capital firms including S2 Capital and Quiet Capital with participation from angel investors Kunal Shah and Samvit Ramadurgam. The new funding will be used to boost user engagement on the app, add monetisation features, and increase product discovery across organic channels.
>Bengaluru-based EdTech startup, Tekie, has raised $1.5 million in seed funding co-led by Silicon Valley-based GSV Ventures and Multiply Ventures. Better Capital has also participated in the round. Tekie plans to focus on expanding their product offerings and explore new revenue models.
>Personal & homecare solution platform Clensta which is backed by IIT Delhi, receive ₹50 million as funding from N+1 Capital. The fund will be utilised for scaling up upcoming products for homecare category, Clensta said in a statement.
>Gurugram-based FarMart, a mobile-based agritech platform has raised $2.4 million in pre-series A round led by Omidyar Network India and Avaana Capital. Existing investors Indian Angel Network and LetsVenture also participated in this round. As per company’s statement, FarMart will use the funding to focus on product development, user base expansion, and to scale its market linkage capabilities.
>AI startup, Rezo.ai, that automates customer support, has raised funds from Modulor Capital, for product development and entering new markets. The amount raised has however not been disclosed by the company. Dexter Angel Network, AI startup Veda Labs and prominent angel investors—including Delhivery co-founder Bhavesh Manglani and Fusion Microfinance founder Devesh Sachdev—also participated in the funding round.
>Cuvette Tech has raised $180,000 in a seed round of funding.led by Titan Capital; Varun Alagh, Co-founder and CEO Mamaearth; Harish Daiya, Co-founder Lumenci; and other angel investors. Cuvette Tech said it will use the funds to build its core team and develop the product.
>Data collaboration startup Atlan has raised $16 million in a Series A round led by venture capital and private equity firm, Insight Partners. Existing investors Sequoia Capital India’s Surge and Waterbridge Ventures also participated in the round. Several angel investors including Bob Muglia, former CEO of Snowflake, Bob Moore and Jake Stein, founders of Stitch, Auren Hoffman, founder of Safegraph and Liveramp, and Akshay Kothari, COO of Notion, also participated in the round.
>Bits Pilani & IIM-A grads launch $1 M fund to invest in student startups. In a push to young entrepreneurs, graduates of two premier institutes, IIM Ahmedabad, and BITS Pilani have launched a $1 million Venture Capital fund ‘gradCapital’ to support startups founded by college students.
>Bengaluru-based gradCapital will invest in 100 startups in the next three years. As per the official statement, they will invest $25,000 in each of the 20 startups they select over the next year. It has now opened the application process for its first cohort of start-ups.
Valuation mismatch puts PhonePe-Indus OS deal in legal trouble
Digital payments company PhonePe's plans to acquire Indus OS, a domestic smartphone operating system, has run into legal problems, as one of the latter's investors is upset about the valuation cut.
The PhonePe-Indus OS deal is likely to be valued at $60 million, as per sources, but investor Affle Global, which owns 23 percent stake in Indus OS, has claimed it values the company at $90 million.
This has led Affle Global to take legal action against the founders of Indus OS, while PhonePe has filed a lawsuit against the marketing tech company in a Singapore court for blocking the deal.
"Affle Global Pte Ltd (AGPL) is a long-term investor in OSlabs Pte Ltd (registered entity of Indus OS) and our investment of over $20 million values OSlabs at over $90 million," the investor said in a statement.
"We believe that Walmart-owned PhonePe and founders of OSlabs are acting in collusion to prejudice our existing shareholder/investor rights based on unfair practices. We believe that PhonePe must strictly uphold highest level of governance standards, respect fair valuation of OSlabs investments of existing shareholders and undertake fair processes in full compliance with the existing shareholders agreement, the constitution and Companies Act of Singapore. AGPL has no inclination to support the low-balled USD60 mn valuation-based PhonePe transactions for OSlabs. We value our investment based on over USD90 mn valuation of OSlabs and we are confident that OSlabs would unlock greater growth in the near future," Affle added.
The company highlighted that there are multiple legal proceedings ongoing with respect to upholding governance standards and compliance with existing shareholders agreement and the two preliminary orders received to-date are related to governance aspects including - upholding Right of First Refusal as per the existing Shareholders Agreement and full compliance and adherence to provisions of Singapore Companies Act in terms of governance related to voting at shareholders resolutions/meetings.
In a statement, PhonePe said: "These litigations are temporary hurdles and will not deter our commitment for completing the acquisition of the company. As you know the matter is sub-judice and we hope that the Hon’ble court would uphold our position and protect the interest of Indus OS. We have made a commitment to Indus OS' founders and board members that we will honour the agreed terms."
Indus CEO Rakesh Deshmukh did not respond to queries.
Sources told CNBC-TV 18 that PhonePe has bought out 30 percent stake in Indus OS from other investors and is looking to take a majority stake as part of the deal.
PhonePe's interest in Indus OS comes from the distribution play, since Indus OS has 100 MN + users and over 4 lakh apps on its own app marketplace called App Bazaar. Indus OS has partnered with 12 mobile brands in India, and powers Samsung’s default app store - Galaxy Store.
Walmart-owned PhonePe is among the leaders in the digital payments space in the country and has around 290 million registered users at present.
Bellatrix Aerospace successfully tests its Made-in-India Hall Thruster
Spacetech startup Bellatrix Aerospace successfully tested its made-in India Hall Thruster. The electric propulsion system is ideal for micro-satellites weighing 50-500 kg and can be scaled up for heavier satellites, the company said. Tests were carried out at Bellatrix spacelab at SID-IISc. The company said, it is working towards flying this thruster on a satellite mission in the coming months. The firms expects it will open the space transportation company’s gateway to the commercial market by the end of this year. Bellatrix dded that this thruster also forms a critical technology for the space taxi that it is developing
BigBasket & Id Fresh Food partner to launch ‘Id Fresho’
Online grocery company BigBasket has partnered with D Fresh Food to launch a co-branded product portfolio- iD Fresho. Through this new venture, the brands plan to launch a wide variety of ready-to-cook fresh food products.
The partnership will also allow BigBasket customers easy access to iD’s ready-to-cook foods like Idly Dosa batter and ready-to-cook parotas. Meanwhile, iD Fresh Food will be expanding its D2C market through using BigBasket's customer base. The products will be available in all Tier 1 cities and some select cities in South India in the first phase.
Lithium Urban buys out SmartCommute
Electric vehicles fleet operator Lithium Urban Technologies has acquired SmartCommute, an end-to-end employee transport services platform. The acquisition value however has not been disclosed by the company. With the acquisition of SmartCommute, Lithium Urban will become a full-stack transportation solutions provider, the company said in a statement.
SmartCommute's client portfolio comprise of Capgemini, L&T Infotech, KPIT and TCS, among others.
GLOBAL TECHNOLOGY & STARTUP NEWS
Amazon boss Jeff Bezos to renounce CEO position on July 5
Amazon founder Jeff Bezos will officially step down from his role as chief executive on July 5, after a nearly three-decade run leading the internet giant. He will hand over the helm to Andy Jassy who currently runs Amazon Web Services. Bezos will however remain involved in major decisions at the company as executive chairman.
“The timing is "sentimental” as July 5 is the date Amazon was incorporated in 1994,” Bezos Amazon’s annual shareholder meeting, which was held virtually on Wednesday. Bezos is likely to dedicate more time toward initiatives like the Bezos Earth Fund, his Blue Origin spaceship company, The Washington Post and the Amazon Day 1 Fund.
Just before stepping down, Bezos has sealed Amazon’s blockbuster deal to buy MGM studio at $8.45 billion.
Amazon to buy MGM studio for $8.45 billion
Amazon.com has agreed to buy MGM, the Hollywood studio behind James Bond, “Legally Blonde” and “Shark Tank,” for $8.45 billion. The takeover is Amazon’s second biggest acquisition after it bought grocer Whole Foods for nearly $14 billion in 2017. Buying a studio with a massive portfolio like MGM gives Amazon a way to fast-track growth for its video-streaming offerings.
The deal is the latest in the media industry that’s aimed at boosting streaming services to compete against Netflix and Disney+. AT&T and Discovery announced on May 17 that they would combine media companies, creating a powerhouse that includes HGTV, CNN, Food Network and HBO.
Amazon has also acquired streaming rights to sports in the U.S. and abroad as it sees live content as a huge potential driver for its service.
Google nears settlement of French antitrust case: WSJ report
Google is close to settling an antitrust investigation in France over allegations of abusing its power in online advertising, the Wall Street Journal reported. Google will likely pay a fine and institute operational changes.
The French Competition Authority has said that Google’s tool to help websites and apps sell ads gave Google’s online ad auction system an advantage over rival exchanges. Google has offered to settle the matter by removing obstacles that it puts up against competitors, the newspaper reported.
The settlement could be among the first resolutions in a wave of new investigations or lawsuits targeting Google’s ads business, which generated $147 billion in revenue last year, more than any other internet company in the world.
PayPal to allow users to withdraw cryptocurrency to third party wallets
PayPal is allowing its users to withdraw cryptocurrency to third party wallets.
The company made the announcement on May 26. The news was earlier reported by Coindesk, citing comments from Jose Fernandez da Ponte, who leads PayPal’s blockchain, crypto, and digital currencies business unit.
This comes as Bitcoin’s price in India on Wednesday climbed back above $40, for the first time this week, as recent volatility in the cryptocurrency market showed few signs of dampening down.
The San Jose, California-based company, which opened its platform to digital currencies last October, at present does not let users move cryptocurrency holdings off its platform. Last year, PayPal said that U.S. account holders will be able to buy, sell, and hold cryptocurrencies in their PayPal wallets. PayPal planned to expand the service to its peer-to-peer payment app Venmo and some other countries in the first half of 2021.
Xiaomi no longer on the US blacklist
Chinese technology company Xiaomi said that U.S. has removed it from the blacklist of companies, following order by a Columbia District court. The court’s final order removed the company's designation as a Communist Chinese Military Company and lifted all restrictions on US persons buying or holding its stock, Reuters reported.
"The company reiterates that it is an open, transparent, publicly-traded, independently operated and managed corporation," Xiaomi Chairman Lei Jun said in the statement.
The move comes days after Joe Biden administration had announced that the administration would be removing Xiaomi from the Department of Defense blacklist, reversing a move by former president Donald Trump.
First Published: IST