Weekly Musings – Big start-up updates for the week to December 15, 2023

18 Dec 2023 , 09:44 AM

Contrary to the previous weeks, the current week raised a whopping $527 million in start-up funding during the week. The funding round was largely led by Udaan, which cornered around 60% of the funding this week. The number of deals were only marginally higher at 21 deals in the week. For the week to December 15, 2023, the start-up funding at $527 million was substantially higher than the previous week at $85 million. In fact, when compared to the average of the last 5 weeks, the start-up funding in the latest week was a whopping 543%, higher 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 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
Week ending December 08, 2023	$85 million
Average of previous 5 weeks	$82 million
Week ending December 15, 2023	$527 million

The start-up funding for the latest week ended December 15, 2023 was substantially higher on a week-on-week basis as well as compared to the average of the last 5 weeks. In fact, the current week marks a break after the start-up funding stayed under $100 million for four weeks in a row. The latest week funding flows were led by Udaan, Vegrow, Ather, Aye, Snitch, and others; across a total of 21 deals. Let us now move to the actual break-up of the start-up funding in the latest week.

Udaan dominates the week with $340 million funding

It was the deal of the week as Udaan bagged funding of $340 million during the week and accounted for more than 60% of the overall funding for the week. The Series E round funding was a mix of fresh equity investment and conversion of existing debt into equity. The market signals are that the valuation of Udaan after this funding round could scale close to $2 billion. The funding round of $340 million was raised from UK based M&G Prudential with participation from Lightspeed Venture Partners and DST Global.

Udaan is a B2B ecommerce player which largely caters to ecommerce at a corporate and institutional level. This funding round comes just a few months after the company had embarked on a major round of restructuring. The company will be using the fresh funds raised for expanding its team, building on the technology stack and for expanding its operations across a much wider institutional and corporate audience.

Agritech start-up, Vegrow, raises $46 million

This was the week of big deals after a fairly long break. Another major deal was the Agritech startup, Vegrow, raising $46 million during the week. The fund raising was led by the Government Investment Corporation (GIC) of Singapore with participation from its existing investors like Prosus Ventures, Matrix Partners India, Elevation Capital, and Lightspeed Ventures Partners. This was part of the Series C round of funding by the company. Agritech start-ups have been on the radar of many large private equity investors for the potential that they have in making a big difference to the Indian agricultural and food space.

Bengaluru based Vegrow, will use the fresh funds raised to expand its India foot print as well as to expand its global reach in a big way. Vegrow is just about 3 years old and it offers a range of technology driven solutions such as crop advisory, grading, packing logistics and sales to farmers. This would enable the farmers to cope with the supply chain challenges. The company had raised $25 million in July last year.

Aye Finance raises $37 million to bolster its lending book

Aye Finance has raised Rs301 crore or approximately $37 million to expand its lending book in an aggressive manner. The funding round was led by UK-based British International Investments with participation from Waterfield Fund of Funds and A91 Partners. Aye Finance was founded in the year 2014 by Sanjay Sharma and Vikram Jetley. It offers affordable business loans to micro-enterprises in India. Aye Finance uses a cluster based credit assessment system, combined with AI algorithms to reduces its risk in lending.

Aye Finance will use the fresh funds to expand its lending book and fund more such micro enterprises. The company is also looking to open another 80 branches across India in the year 2024 to expand its point of sales and its presence for servicing loans. The lender current has about 395 branches across India and plans to touch 475 branches by the end of 2024. Most of the fresh funds will go towards expanding its asset book aggressively.

Exponent Energy bags $26.4 million for EV ecosystem 

The EV charging start-up, Exponent Energy, has raised $26.4 million in a round of funding led by Eight Roads Ventures. The round of funding also saw participation from TDK Ventures, Lightspeed Your Nest VC, 3One4 Capital, AdvantEdge VC and the family office of Pawan Munjal. The Bengaluru based Exponent Energy provides rapid 15-minute charging for electrical vehicles (EVs) through the latest Series-B round of funding. Eight Roads Ventures is backed by global financial giant, Fidelity. 

Ather Energy to raise $16.8 million from Hero MotoCorp

Ather Energy, which is already owned by Hero MotoCorp will raise another $16.8 million from Hero MotoCorp in exchange for a 3% stake. This values Ather Energy in the range of $550 million to $600 million. This further raises the stake of Hero MotoCorp in Ather Energy to 39.7%. Ather Energy has been among the key players in the EV space in India and has been among the top names in the Indian market. It will be using the funds to expand its business reach and also to invest in the tech stack. The company is still making losses. The previous funding round had been through a rights issue in which Hero MotoCorp and Government Investment Corporation (GIC) of Singapore had participated. 

Fashion brand, Snitch, raises $13.2 million to focus on online narrative

Snitch is a Bengaluru based men’s fashion brand which largely leverages the omni-channel model to push sales. The fresh capital of $13.2 million or Rs110 crore will be used to scale up talent, expand the manpower pool, building the technology stack and to build a strong offline retail strategy. Snitch already has turnover of Rs100 crore and its digital presence is marked by its over 2 million app downloads. The funding round of $13.2 million was led by SWC Global and IVY Cap Ventures. Snitch is a direct to consumer (D2C) men’s fashion brand and has been relying largely on the online sales model. Now it also plans to complement the online model with a strong offline model too.

Sportswear start-up, Agilitas, raises $12 million from Nexus Partners

Agilitas, the sportswear start-up, has raised $12 million or Rs100 crore from Nexus Partners. The funds will be used by the company to accelerate its growth plans and to boost its end-to-end capabilities from research to manufacturing to retail, which is the last mile. Agilitas is focused on the fast-growing sportswear market in India and the founders are former Puma executives, so they also have the right credentials for the job. The start-up had already raised $52 million earlier this year. Sports and leisure wear within the apparel segment is the big growth areas as Indians turn more health conscious in the last few years.

Nat Habit raises $10.2 million to boost skincare offerings

Nat Habit, the skincare brand, which was founded in 2019, has raised $10.2 million as part of its Series B Funding. The funding round was led by Bertelsmann India Investments with participation from Fireside Ventures, Amazon India Fund, Mirabilis Investment Trust and Sharrp Ventures. Nat Habit is a direct to consumer (D2C) beauty and wellness care brand. Nat Habit plans to use the fresh capital infusion for research & development, diversification of its portfolio and for brand building as well as hiring quality talent to its rolls. Part of the fresh funds raised will also be used towards provide an exit to early stage backers of the brand. Nat Habit is largely an omni-channel player in the health and wellness care space.

More deals in the week

Apart from these big deals of over $10 million, there were also smaller deals of significance. During the week, the D2C (direct to consumer) hair extension start-up, HairOriginals, raised $2.75 million to ramp up its partner salon network. HairOriginals will deploy the fresh funds to grow its India franchise with new advanced experience centres across 25 top cities in India. It currently caters to customers through its experience centres located at 12 cities including Gurugram, Mumbai, Bengaluru, and Chennai. The funding came from a mix of private equity player and select family offices. 

In another key deal, SimYog has raised $2.4 million to help hardware developers test electronic components. It will use the fresh capital for product and for its go-to-market strategy. SimYog provides design and sign-off tools for automotive electronics. It will use the funds to expand its presence across semiconductor manufacturers, OEMs, and sub-system suppliers. The funding round was led by Mela Ventures and 1Crowd with participation from IdeaSpring. SimYog was incubated at the Indian Institute of Science (IISc) in Bengaluru.

Last word on the start-up week

After several weeks of rather dull and tepid start-up fund raising, the current week has been robust, largely led by Udaan. However, there have been several other significant contributors too. Surprisingly, at a time when the start-up scene is picking up in India, marquee investors Omidyar Networks plans to exit India fully by end of 2024. While Omidyar has not given any reasons for the same, it must be remembered that Omidyar has backed several marquee start-ups in India like 1MG, Bounce, Indifi, DealShare, HealthKart, and Pratilipi. It remains to be seen, how this impacts the future plans of other PE players active in the Indian start-up ecosystem.