Weekly Musings – Big start-up updates for the week to June 16, 2023

20 Jun 2023 , 09:56 AM

Some of the big star-up funding deals of the week included Lenskart, Indifi, Idea Forge, Home Land and Unnati. The start-up funding value in the week to June 16, 2023 was 44% higher compared to the previous week. The fund raises were spread across online retailing, drone start-ups and Agritech businesses.

Start-up funding bounces to $190 million in the week

For the week ended June 16, 2023 the start-ups saw fund raising of $190 million across a total of 21 deals on the street. That is 44% higher compared to the previous week, but then the previous was sharply lower so the base effect may have played a role. In a mega funding round, Piyush Bansal owned Lenskart bagged $100 million funding from ChrysCapital. Lenskart is hungry for cash and has raised nearly $850 million in the last on year itself. Lenskart will use the funds to spruce up its eyewear business. It has consistently tried to position eyewear as a lifestyle category. Meanwhile Indifi, the lending tech start-up, has bagged $35 million from ICICI Venture, British International, Omidyar Network etc. Indifi will use the funds to expand its presence, especially in the MSME sector.

Delhi may have banned hailing cabs and made life tough for them, but Mumbai appears to be more open. Recently, Mumbai based Everest Fleet bagged $20 million funding from Uber. The funding will allow Everest Fleet to upgrade its fleet from a pure CNG fleet to an EV plus CNG fleet. Everest Fleet targets 10,000 EVs in the fleet by 2026. In another significant deal, drone major, Idea Forge has raised Rs60 crore in a pre-IPO round. The IPO is expected to open later this month at a size of Rs650 crore. Investors in the pre-IPO round included Tata AIG General Insurance, Motilal Oswal and 360-one Asset Management. In another deal during the week, home interior solutions company, Home Lane, bagged Rs75 crore funding from existing investors. MS Dhoni is an investor in this start-up. These funds will help them accelerate growth and expansion plans. 

Then there were smaller rounds of funding too during the week. MyKare, the start-up that connects patients with hospitals, raised $2.01 million to invest more in the value chain. It will invest in manpower and customer experience. It has over 85,000 registered patients and tie-ups with over 200 hospitals. In another round, EV scooter start-up, Starya Mobility, bagged $2 million from Ah Ventures and Exedy Clutch India. The idea is to create better technology EV scooters that can climb gradients with an angle as steep as 21 degrees. Finally, online B2B marketplace, Yarn Bazaar also bagged $1.8 million funding to expand its operations. Yarn Bazaar is a one-stop shop for all yarn related requirements. Several family offices were also active in this funding round.

Here is a quick look at the other side; which is the PE fund raising activity. Tiger Global, which had targeted raising $6 billion for its latest fund would now have to be content with $2.7 billion. This would be the 16th Private Equity Fund from Tiger Global. Much of this cash is likely to be deployed into India. In another deal, Proparco has invested $35 million into Quadria Capital, a healthtech focussed PE outfit. Quadria has invested in India also and Medi Buddy of Bengaluru is one of its holdings. The moral of the story is that, even though the action may not be robust, there is still appetite for good start-up ideas.

Big start-up strategies this week?

Here is a quick take on some of the key start-up strategies evidenced last week.

• Home grown discount brokers like Zerodha, Upstox and Groww could have some serious competition. Now, CoinSwitch (a crypto trading platform) plans to launch a stock broking platform. Of course, it is yet to apply for a stock broker license and SEBI could ask them some hard questions considering their background in the crypto business.

   

• PhysicsWallah has the art of being in the news. It has just acquired 50% stake in Xylem in a $61 million deal. The idea is to use this acquisition to fund their foray into the Southern states of Tamil Nadu and Andhra Pradesh. Xylem has over 3 million students across South India. Till date, PhysicsWallah has largely been a phenomenon in the North.

   

• IRCTC may soon have competition from Adani group as it plans to get into the railway ticketing business. Adani has recently acquired railway ticketing start-up, Trainman, in a deal worth Rs80 crore. Adani One already offers flight and cab bookings and this will be a useful add-on. This is a lucrative channel for the Adani group to acquire customers.

   

• Sustainable farming practices is the next big thing and Unnati Agri has raised Rs28 crore for this very purpose. It will use the funds to focus on sustainable products. In the last 7 years, Agritech plays have raised more than $2 billion. Unnati is focused on the agri value chain and this will allow them to offer climate ready products.

   

• In another deal, Adda247 has acquired Veeksha to provide 3D based educational content. Adda247 is backed by Google. This will permit interactive learning modules in India. Veeksha essentially focuses on 3D simulations and AR / VR modules for mathematics and science to create a real-time classroom effect. Incidentally, Adda247 saw its net loss widen 10-fold in FY22.

   

• Indian news publishers can breathe easy as Google launches programs to support new Indian news publishers. It will cover a total of 9 languages and include Hindi, Kannada, Tamil, Marathi, Telugu, Bengali, Malayalam, Gujarati, and English. Incidentally, Google will offer training programs to help content providers improve digital offerings.

   

• Foxconn of Taiwan is now eyeing the EV segment in India, after making a splash in the iPhone manufacturing space in India. A recent delegation was in Taiwan trying to woo Foxconn to set up an EV facility in India. Foxconn has much bigger plans for India and plans to foray into robotics and digital health, apart from EVs. It will extensively leverage local partners in India to expand its global business.

Start-up story of the week – Can Indian Fintechs become $100 billion ventures

To be fair, that day may not be fair off, at least if you go by what Wal-Mart, the world’s largest retail, feels about the India potential. Wal-Mart owns two outstanding digital properties in India viz. Flipkart and Phone Pe. Now, in a recent public statement, Wal-Mart has stated that it expects these two companies to touch $100 billion businesses. They are expecting strong tailwinds in the form of a robustly growing market place to boost the valuation of these companies to above $100 billion. Both are decacorns already and as per the latest fund raising, Flipkart is valued at close to $35 billion. 

Wal-Mart has been quite vocal that it expects the Indian market to outgrow the Chinese market by the end of the current calendar year. That would give a lot of bargaining power to India in the global sweepstakes. That may not happen immediately, but that is surely something to hope for.

Finally, in an otherwise moderate week for start-up funding, Indian start-ups like Paytm, Nykaa, Delhivery and Zomato gained sharply from lower levels. Of course, they are still far from their IPO prices, but the bounce is encouraging for sure. One must await to see if higher levels invite P/E funds to dump holdings. That may not be a great sign.