Weekly Musings – Big start-up updates for the week to July 28, 2023

31 Jul 2023 , 06:32 PM

The week to July 28, 2023 was a once again a relatively tepid week for start-ups with funding sharply lower week on week at $42 million across 16 deals compared to $111 million of funding in the previous week across 19 deals. While the funding is sharply lower on week-on-week basis, even the average deal sizes are sharply down in the current week. Start-up funding has started off in a relatively tepid fashion 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 July 28, 2023.

Start-up funding falls to $42 million on lower deal values

For the week ended July 28, 2023 the start-ups saw fund raising of $42 million across a total of 16 deals on the street. That represents a 62% fall from the week prior to that, which saw start-up funding of $111 million across 19 deals. In the current week, the number of deals were fairly high indicating that the per capita deal financing amount was much lower. We now turn to some of the major funding deals of the week.

In one of the biggest funding deals of the week, Wiom, the telecom start-up has bagged funding to the tune of Rs140 crore ($17 million) in Series-A funding from RTP Global. In addition, YourNest, Omidyar Network, Blume and Alteria Capital also participated in this round of funding. Wiom will use the funds to expand its India footprint and also invest in quality manpower as well as delivery infrastructure. Wiom provides economical yet easy and uninterrupted internet access to lower and middle income families. In another major funding round, Ethereal Machines bagged $7.3 million in funding to help enterprises automate machinery. Ethereal Machines manufactures computer numerical control (CNC) machines. The company will use these funds to set up factories on pan-India basis. The idea is to simplify the use of machines. Another major round of funding in the week was raised by Kapture CX. It has raised $4 million in funding to offer AI powered consumer experience to enterprise customers. The start-up is currently offering AI enabled CRM software to client companies across industries. 

In other deals, FincFriends, the NBFC arm of Rupee Redee has also raised $3.5 million in start-up funding this week. FincFriends is a fintech company which offers typical NBFC services of lending in a pure digital first manner. It will deploy the funds into scaling up its products and to launch new offerings. The start-up has already raised $11.2 million in funding till date and is planning to become a key player in the $1.3 trillion global fintech opportunity. It is not just technology and digital but even food is attracting a lot of risk money. Kerala Banana Chips has bagged $3.5 million in funding from NABVENTURES. It is one of the few organized players in the banana chips business, which is largely an unorganized cottage industry in Kerala. While it does have an offline retail presence, most of its sales happen through the online channels, including its own website. The company already has a presence in the US, UAE, Australia, Qatar, Nepal Singapore, and Mauritius. It will use the funds to expand to more countries with a strong expat population.

There were also a handful of small sized fundings during the week. For instance, Axilor Ventures has invested $1.25 million in fintech start-up, LeRemitt. It will use these funds to simplify cross border transaction for the MSMEs. The very intent of LeRemitt is to streamline and simplify the cross border money transfers for medium, small, and micro enterprises (MSME), by making it economical and simple. The funds will be invested in hiring manpower, expanding globally and for product development. Finally, the Vinculum group got an undisclosed sum from Delhivery as the first tranche of its Series-C funding. Vinculum offers omnichannel SAAS (software as a service) software for ecommerce brands.

Big start-up strategies this week?

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

• Jio Blackrock, the joint venture between Jio Financials and world leader, Blackrock, have readied a $300 million war chest to capture a big share of the asset management business in India. There will be equal contributions from Jio and Blackrock. The idea is to offer unbiased and low-cost financial advice and implement via passive funds.

   

• Pantomath, the merchant banking outfit, has acquired 75% stake in AI based deal making platform, fundgini.com. The target company is a global platform for investors, start-up founders, fund seekers and other stakeholders. It also offers a personalized AI bot for social media integration to refine and fine tune the choices.

   

• Razorpay, a major fintech player, has just launched MoneySaver to simplify international bank transfers for Indian exporters. The exporters can pick a country of their choice and receive payments via local transfers via Razorpay. With the full launch, this international suite is expected to contribute about 20% of its payment related revenues.

   

• Marico will acquire a majority stake in D2C nutrition brand, Plix, for Rs369 crore. It has already acquired 32.75% stake in Plix and will acquire the balance 25.25% stake by May 2025. This will enable Marico to expand and broaden its total addressable market in the nutrition segment and also to ramp up its presence in the high growth wellness space.

   

• Tesla has put its India manufacturing plans on full throttle. It is meeting the commerce minister and then there are more meetings lined up for its battery plant in India. However, the government has clarified that there will not be any special concessions for Tesla, although all the existing concessions would be made available to Tesla also.

   

• Even as Netflix has put a bar on password sharing for its OTT accounts, another major player in India Disney Hotstar has also decided to follow suit. Even premium users will only be allowed to log in from 4 devices only. Disney Hotstar also plans to sharply restrict access on the premium plans and also on the regular plans proportionately.

   

• In a major deal, Wal Mart, which holds a majority stake in Flipkart, has decided to pay $1.4 billion to Tiger Global to buy out their residual stake in Flipkart. The deal values Flipkart at $38 billion compared to a valuation of $35 billion in the last secondary sale. Tiger Global made a 200% gain on its overall investment in Flipkart.

   

When we talk of start-ups today, celebrities are not too far behind. Bollywood top actress, Kriti Sanon, has partnered with mCaffeine to launch a D2C skincare brand called Hyphen. PEP Technologies, the parent of mCaffeine will invest Rs30 crore in the venture and will be the majority stake holder. Hyphen has launched 3 skincare products and plans to reach out to as many as 18,000 pin codes across India. 

Start-up story of the week – Byju’s starts to put its house in order

The last few months have not been too great for Byju’s. It has delayed filing its results once again and this time around the MCA has taken it seriously. Byju’s defaulted on a foreign currency loan and later saw a slew of senior nominee directors leave the company board. To add insult to injury, even their statutory auditors resigned due to the delay in the finalization of accounts. The sum total of all these events means that Byju’s valuation has been written down by most of its major investors; anywhere ranging between 40% and 60%.

However, things appear to be changing for the better as Byju’s is starting to put its house I order. Here are two things that appear to be putting them on the right track.

• The long standing foreign loan issue appears to be moving towards a resolution. It has reached a tentative agreement with its lenders to restructure its $1.2 billion foreign currency loan. One of the main points from Byju’s has been that the lenders will not demand accelerated payments. This will address the biggest problem for Byju’s. This will help them to temporary overcome the cash flow and debt crisis at Byju’s.

   

• In another key move, Byju’s has taken up a serious cost cutting exercise. We are not talking about the random and aggressive sackings of employees. That has brought more negative goodwill than cost savings for Byju’s. Now they are planning to vacate high-cost offices to save costs, which is a step in the right direction. Byju’s currently has 3 offices in Bengaluru located at Kalyani Tech Park, Prestige Tech Park and at IBC Knowledge Park, Bannerghatta. Byju’s has fully vacated the 5.58 lakh SFT property in Kalyani Tech Park as well as 2 floors of Prestige Tech Park office. This is expected to save Byju’s nearly Rs3 crore in monthly rent outflow.

Clearly, tough times call for tough measures. The good news is that Byju’s has finally admitted there is a problem and are working towards it. That is a good place to start with.