Weekly Musings – Big start-up updates for the week to August 18, 2023

21 Aug 2023 , 06:33 AM

Both the deal value and the number of deals were sharply lower over the previous week. In the previous week to August 11, 2023, start-ups managed to collect $95 million across 17 deals. Overall, start-up funding has stayed fairly tepid in the September 2023 quarter and that appears to be a carry forward of the June quarter trend. Here is a quick rundown on the key start-up updates that defined the week to August 18, 2023.

Start-up funding at $4.4 million across 7 deals in the week

For the week ended August 18, 2023 the start-ups saw fund raised just $4.4 million across 7 deals, with most being small ticket deals. This is sharply lower than the $95 million raised in the previous across 17 deals, but very close to the $11 million raised in the week before that. Clearly, global investors are going easy on investing in the start-up ecosystem in India due to their own funding constraints. Here are some of the deals during the week to August 18, 2023. 

In a week when just about $4.4 million was raised by start-ups, the action is bound to be very limited. Contiinex, the speech AI start-up, raised funding to help businesses enhance the customer experience quotient. Contiinex raised $2 million (nearly half of the weekly fund raising)in pre-series A round founding. The funding came from YourNest and Refex Capital. Contiinex will use these funds raised to build its technology team and also to expand its presence in the US market. 

In another deal during the week, Vegapay also secured $1.1 million in a round led by Eximus Ventures, where angel investors from the board of the Murugappa group of Chennai also participated. Vegapay was founded in 2022 as a B2B digital lending and credit card management platform. It aims to liberate financial players and fintech players from the hassles technical barriers in lending programs. Most of the funds raised will go into technology innovation. Apart from these 2 start-ups, there was no other major fund raising done during the week to August 18, 2023. 

Big start-up strategies this week?

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

• Navi, floated by Sachin Bansal, is planning to launch NAVI UPI to mark its foray into digital payments domain. Already, names like CRED and Zomato have launched their own UPI offerings and Navi, while not disclosing too many details, is quite positive about the impact of the venture. 

   

• The Madras High Court has barred Google India from delisting apps of Indian start-ups. This judgement will be valid for start-ups that pay 4% of the gross revenues from downloads from the Google Play Store to Google. If this condition is met, then Google cannot technically delist apps from its play store.

   

• Titan will acquire another 28% in CaratLane, a customized designer and manufacturer of jewellery on a pan-India basis. This takes Titan’s stake in CaratLane to 98.28%, after it had earlier acquired over 71% in the year 2016. The deal values CaratLane at an enterprise valuation of $2 billion.

   

• Binny Bansal, one of the co-founders of Flipkart (which was sold to Wal-Mart) is planning another major ecommerce venture. The proposed venture will offer design, products, and manpower to Indian and global ecommerce outfits. Bansal is currently flush with cash having exited its residual holdings in Flipkart for around $1.50 billion.

   

• Zepto has partnered with Yulu to electrify its hyperlocal and last mile deliveries of goods. Yulu will provide Zepto with 20,000 next-generation electric scooters on a shared platform to cater to the hyperlocal needs of delivery. Both will promote the products of the partners via online and offline channels.

   

• Celebrities and start-ups cannot be too far from each other. In the latest deal, all-rounder Hardik Pandya will invest in a start-up to build expandable shoes. The start-up, Aretto, was founded in 2019 to make sustainable shoes for children at a growing age. The start-up will use the funds to invest in R&D and also to open its first retail store in Pune.

   

• As troubles mount at Dunzo and employees are being laid off, the company is in advanced talks to raise up to $100 million via Series-G funding. The talks are on with existing investors, Lightbox and Lightrock. Reliance Retail, an investor in Dunzo, is not participating in this round. It will be predominantly equity funding with a small portion of debt funding.

   

• There is likely to be a larger outlay for healthcare investments in India. HealthXCapital will merge with Jungle Ventures and the investments will be spread across India and Southeast Asia. HealthXCapital will being its investment expertise while Jungle Ventures brings in the funds. HealthXCapital already has invested in 10 health start-ups in India.

   

• Flipkart launches SPOYL to cater to the unique needs of the Gen-Z customers. That is not surprising considering that nearly 25% of the customers of Flipkart are from the Gen-Z category and the SPOYL platform is targeted at these users. Even the user interface (UI) for the SPOYL platform will be very different from the traditional UI. Flipkart subsidiary, Myntra, had also recently launched a unique UI to cater to Gen-Z customers.

   

• Keshav Reddy, the scion of the Hyderabad based GVK group, has launched an ID platform (Equal) in association with former Swiggy executive, Rajeev Ranjan. It is built in partnership with Indi Stack and Digi Locker and the beta program had attracted 1 million users. Equal will be a platform where Indians can share their ID with just one click.

   

• In a strategic deal, InMobi has acquired the US-based Quantcast Choice which will enable InMobi to enhance consent management for publishers. The idea here is to integrate Quantcast Choice’s CMP within the publisher SDK offerings of InMobi. It will enhance the privacy management platform for mobile app and web publishers.

It may not have been a busy week for fund raising, but it has been surely a good time for some strategic thinking among start-ups.

Touche – Skill based gaming apps stare at Rs45,000 crore GST liability

The gaming industry is not having its best of times, with the recent imposition of 28% peak GST on all gaming apps, including skill based games. That has become a bone of contention, but there is more to come. Now, the skill based gaming apps could be up against a tax demand of Rs45,000 crore in the form of retrospective GST, effective from July 2017, when GST was officially launched.

In the past, the skill based gaming apps paid GST of only 18%, while the chance based gaming apps paid peak rates. Now the CBDT has refused to differentiate between them due to the practical difficulties and all of them will be subjected to 28% GST. The only problem is that it will be retrospective from July 2017 on the sales amount, which could translate into Rs45,000 crore. Obviously, that is not a practical amount, but we have to wait and watch how the situation transpires and what this means for the skill based gaming apps.