Weekly Musings – Big start-up updates for the week to September 29, 2023

3 Oct 2023 , 10:22 AM

The earlier two weeks ending on September 08 and September 15, 2023 were very robust. These two weeks had seen start-up fund raising of $257 million and $413 million respectively. In contrast the start-up funding in the previous week to September 22, 2023 fell sharply to just $91 million across 15 deals. In comparison, the latest week to September 29, 2023 has seen start-funding more than doubling over the previous week at $194 million. However, this was spread across 34 deals indicating a wider spread but sharply lower per-capita funding of start-ups. But the macro picture still paints a fairly tepid picture. For instance, for the quarter to first 9 months of calendar year 2023, the start up fund raising stood at $7 billion. That is nearly a third of the fund raising in the corresponding periods in calendar 2022 and calendar 2021.

Start-up funding more than doubles to $194 million across 34 deals

For the week ended September 29, 2023 the start-ups saw fund raising of $194 million across 34 deals, which was more than double of the previous week. As a sector, it was fintech that dominated the week, but the bigger takeaway was that nearly 17 deals were actually seed funding deals. Here is a quick rundown on the major deals in the start-up space during the week ended September 29, 2023.

1. In the biggest deal of the week, Bright Money raised $62 million of which $50 million was raised as debt from Encina Lender Finance and $12 million as equity from Alpha Wave, Humming Bird and Peak XV. Bright Money focuses on the personal liabilities settlement like consumer loans and credit cards. The will use these funds to help customers out of a debt trap.

    

2. In another major funding this week, Third wave Coffee has bagged funding of $35 million from Creaegis and Westbridge as part of the Series-C funding round. The start-up will use these funds to invest in the technology stack and in product innovation. It has a network of 100 coffee shops across the country and plans to use the funds to ensure a better café experience for the customers.

    

3. In a similar significant deal, Doceree, a SAAS startup focused on healthcare start-ups has also bagged $35 million funding from Creaegis, Eight Road Ventures and F-Prime Capital. Doceree will use the funds to accelerate product development, enhance technology stack and scale up the global expansion plans. SAAs services or software as a service, has been catching up in a big way across the Indian start-up ecosystem. 

    

4. In another case of digital fund raising, the direct to consumer or D2C brand, Pilgrim, has secured $20 million in funding to enhance its online presence. Pilgrim sells personal care products like face care, hair care as well as body and bath products. The funds will be used for R&D and for brand building, apart from boost its offline presence. It has 5 million customers and claims to add about 500,000 customers each month. The funding round came from Vertex Ventures (an arm of Temasek of Singapore). Other family offices also participated in this round.

    

5. In mid ticket funding, Castler raised $5.5million, Quick Smart Wash Bags raised $5.15 million and Legistify raised $4 million. Castler raised $5.5 million from Info Edge, IIFL Fintech Fund and Flipkart Ventures to build a global escrow platform. It has already onboarded 500 businesses with monthly transaction volumes of Rs5,000 crore. Castler will launch full stack solutions for liquidation  Quick smart Wash Bags raised $5.15 million to offer laundry services to the healthcare and the hospitality industry. It will use the funds to enhance its capacity by over 50%. The funding was done by Elan Corporation of Japan. Legistify has raised $4 million  to simplify legal ops for enterprises. The funding came from existing investors like IndiaMart, Titan VCF and GSF.

    

6. Finally, there were a slew of start-ups that raised funding in the range of $2 million to $3 million. Here is a quick summary. Raptee has raised $3 million funding from Bluehill Capital to launch premium EV motorcycle in India. It is based on high voltage drive train technology. It will use the funds to expand capacity. In another deal, B2B SAAS start-up, Data Sutram, bagged $3 million funding from Bharat Fund and Indiainfoline to provide location based insights to banks. abCoffee raised $2 million from Tanglin Ventures to expand the number of its coffee outlets. A similar funding of $2 million was also bagged by Quirious Bit Bags from Lumikai to develop casual mobile games. 

Of course, there were other deals too. Fairdeal raised $2 million from Gemba Capital and GrowX Ventures to expand its distribution service offerings to D2C brands. In addition, Clinikally also raised $2.6 million from Y Combinator and Tribe Capital for its dermatology platform. It is a derma tech start-up that brings patients and doctors under a single platform for all their skin related ailments. It has surely been a robust week in terms of the number and spread of deals that raised start-up funding in the week to September 29, 2023.

Big start-up strategies in the week to September 29, 2023

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

• Saregama, one of India’s music pioneers, has acquired 52% stake in Pocket Aces at a valuation of $40 million. This stake entails an investment of Rs174 crore by Saregama. Over the next 18 months, Saregama will take its stake in Pocket Aces to 92.61%. Pocket Aces is one of India’s leading digital entertainment companies.

   

• HP has partnered with Google to manufacture the Chromebook in India. HP is one of the world leaders in the manufacture of hardware like PCs, laptops, and printers. It will start the manufacture of Chromebook at its Chennai facility from October 2023. This will be manufactured under the government product linked incentive (PLI) scheme. 

   

• Startups like Paytm, Phone Pe and Zerodha have written to TRAI calling for tighter implementation of net neutrality. They have objected to the idea of putting internet services through the same regulatory framework as the telecom companies. This largely pertains to the plan by telecom companies to impose user fees for the use of app.

   

• ApplyHigh may still be an upcoming name in the field of technology, but it is making waves in big data. It is a Gen AI suite that aims to enhance the productivity of founders and creators by 10X. The idea is to enable these founders and creators of ideas to expand their business geometrically with the effective use of artificial intelligence (AI). ApplyHigh offers the AI stack on a SAAS platform to enhance productivity for business.

One final word. There is good news if you look at the funds waiting in the sidelines to invest in start-ups at an appropriate time. According to Siddharth Pai of 3one4 Capital, venture capitalists and PE funds are sitting on loose cash of $60 billion and waiting for the right investment opportunities to invest in the start-up ecosystem. This includes the India dedicated funds and the India focused funds. In short, there is really no dearth of capital. If the timing and the idea is right, it is very likely that the narrative will be funded.