Weekly Musings – Big start-up updates for the week to December 08, 2023

11 Dec 2023 , 09:23 AM

Compared to the previous week, the current week saw flows into start-ups that were marginally better, although the number of deals were lower at 18 deals. For the week to December 08, 2023, the start-up funding at $85 million was higher than the previous week at $62 million. In fact, when compared to the average of the last 5 weeks, the start-up funding in the latest week was only slightly lower by 7.6%, as can be seen from the table below. Here is the story of start-up fund raising over the last 6 weeks in numbers.

Funding Week	Start-up funding raised
Week ending November 03, 2023	$133 million
Week ending November 10, 2023	$159 million
Week ending November 17, 2023	$44 million
Week ending November 24, 2023	$61 million
Week ending December 01, 2023	$62 million
Average of previous 5 weeks	$92 million
Week ending December 08, 2023	$85 million

The start-up funding for the latest week ended December 08, 2023 was higher on a week-on-week basis but marginally lower than the average of the last 5 weeks. In fact, the current week marks the fifth consecutive week when the overall start-up funding has been under $100 million in a week. The latest week funding flows were led by Sarvam AI, The Sleep Company, Biryani by Kilo, Digivriddhi Neobank; among others; across a total of 18 deals. Let us now move to the actual break-up of the start-up funding in the latest week.

Week was dominated by the Sarvam AI funding at $41 million

Undoubtedly, the biggest start-up funding deal of the week was the funding secured by Sarvam AI at $41 million. In fact, this single deal alone accounted for 44.6% of the total start-up funding across the 18 deals in the current week. Sarvam AI, an artificial intelligence company, secured funding of $41 million in a Series A funding round led by Lightspeed Ventures. Others who also participated in this funding round included Peak XV Partners (formerly Sequoia Capital) and Khosla Ventures. 

The start-up, Sarvam AI, will use the fresh funds raised to build a full stack of Generative AI (Gen-AI) ranging from research led innovations in custom AI model training to an enterprise grade platform for authoring and deployment. The generative AI landscape in India is expected to grow from $1.1 billion in 2023 to $17 billion in the year 2030, an implied compounded average growth rate (CAGR) of 48% over next 7 years. Generative AI has the potential to help businesses grow their business stack geometrically over the years.

Sleep Company raises $22 million in Series C funding round

Another major deal during the week was The Sleep Company raising $22 million (Rs184 crore) during the week. The funding was a Series C round funding with participation from Premji Finvest (the family office of Wipro founder) and Fireside Ventures. The Sleep Company is an Omnichannel leader in the sleep and seating technology business. The company will largely use the funds to expand its offline presence and also expand its points of sale geographically. It will also be used by the company to widen its product basket and offer more granular and customized solutions to their customers.

The company had raised around Rs174  crore in November 2022 so this is the second round of funding sought by the company in just about 12 months. The company will also used part of the latest monies raised to buyback employee stock options to provide them with liquidity at this juncture. The Sleep Company already has a total of 60 stores across 20 cities in India and plans to expand its footprint to 100 stories across 30 cities pan India by 2025. The sales outcomes are also omnichannel with 50% of its revenues coming from offline platforms and the balance 50% from online platforms. The company is planning to achieve positive EBITDA by FY25. Net profits will only come after that.

Biryani by Kilo raises $9 million in funding via CCPS

Biryani by Kilo, the specialized food delivery company, has raised $9 million from Alpha Wave Ventures and Vevek Ventures, among others.  Against this funding round, the company will issue 18,086 Series C Cumulative Convertible Preference Shares (CCPS) at an issue price of Rs39,800 per share. Alpha Ventures becomes the predominant outside shareholder of Biryani by Kilo at 35.06%. This takes the total funding by the company till date to $50 million across a number of rounds.

Biryani by Kilo (BBK) is a cloud kitchen start-up as it uses a network of cloud kitchens to deliver delicious biryanis at the doorstep. In this funding round, apart from Alpha Wave Ventures and Vevek Ventures; other participants included DSP HMK Holdings, IVY Cap Ventures, InCred Wealth and Clear Bridge Ventures. The company will use the funds to expand its pan India presence as well as to invest in getting quality manpower as well as to invest in the technology stack of the company.

Neobank Digivriddhi bags $6 million funding to empower dairy farmers

The Neobank, Digivriddhi, is a Bengaluru based Fintech start-up that offers dairy farmers and micro entrepreneurs access to institutional credit. At the same time, it has also created a platform to simplify the digital payments across the dairy industry value chain. The company, Digivriddhi, will use the fresh funds to expand its presence across Karnataka, Telangana, Andhra Pradesh, Madhya Pradesh, and Maharashtra. The current round of funding of $6 million was led by Omidyar Networks with participation by existing investors like Omnivore and InfoEdge Ventures. Part of the capital will also be used by the company for tech innovation. The company had last raised $3.1 million in the year 2021.

Navadhan secures $5 million funding from Prime Venture Partners

Navadhan has secured $5 million in funding to fulfil the financing needs of the underbanked and the unbanked households and small businesses. While Prime Venture Partners led the funding round, there was participation from Gemba Capital and Varanium NexGen Fintech Fund. It will also use the funds to fortify its technology platform ACEN and scale up its distribution and delivery model. This is a pre-Series A round of funding. Navadhan is largely rural focused in its market strategy and wants to tap people and businesses at the apparent bottom of the pyramid for growth.

Beauty platform, Airblack, raises $4 million from Dell Foundation

Airblack has raised pre Series-B round of funding from the Michael and Susan Dell Foundation. In addition, the existing investors like Elevation Capital and Info Edge Ventures also participated. Airblack plans to use the fresh funds to fund the working capital needs of its beauty learning business and its corporate expenses. Airblack is an online make up and beauty learning platform. Other participants in the funding round included Blume Ventures and the family office of the NIIT founders.

Scimplifi gets $3.6 million from 3one4 Capital and BEENEXT

Scimplifi gas secured funding of $3.6 million from 3one4 Capital and from BEENEXT to streamline the procurement of specialty chemicals in India. Scimplifi will use these funds to expand its technology stack, expand its team and also to shore up its manufacturing capabilities. It is planning a shift to 60% export oriented model and will expand operations to nearly 20 countries and four specific categories of specialty chemicals. Scimplifi is a B2B (business to business) procurement and production platform. It will also use the funds to enhance its presence in emerging chemistries. 

Finally, in a side note, one of India’s largest fintech start-ups, Paytm has seen a sudden drop in value after it opted to discontinue its small ticket loan business, which was the bread and butter business. Paytm does not originate loans but it just syndicates loans from financiers. In a related case, another reputed start-up (Byju’s) is facing insolvency notice from the BCCI for non-payment of dues committed to it.