Weekly Musings – Big start-up updates for the week to March 29, 2024

31 Mar 2024 , 09:59 AM

START UP STORY OF THE WEEK

The start-up funding story continued its momentum in the latest week to March 29, 2024, with the fund raising at $243 Million in the week. This is higher than the previous week and also higher than the average of the last 5 weeks. There were several big ticket deals in the week, with Avanse alone accounting for half of the total fund raising this week. The $300 Million fund raising by Meesho is not included as it is yet to be fully concluded. IN 9 out of the last 10 weeks, the start-ups raised more than $100 Million per week.  In the 5 weeks prior to the current week, the start-up collections were to the tune of $205 Million, $226 Million, $150 Million, $381 Million, and $ 110 Million. In the latest week to March 29, 2024, start-ups raised $243 Million across 17 start-up deals, with Avanse accounting for 50%.

NUMBER OF DEALS AND FUND RAISING

The number of deals in the latest week stood at 17 deals; compared with 14, deals, 18 deals, 17 deals, 27 deals, and 15 deals in the 5 weeks prior to that. That is indicative of a slew of big-ticket deals in the vicinity of over $15-20 Million on an average. Compared to the average of the last 5 weeks, the start-up funding in the latest week was 13.55% higher. On a week-on-week (WOW) basis the start-up collections were 18.54% higher. Fintech and EnterpriseTech dominated fund raising. Here is the 6-week start up story of India Inc.

Funding Week	Start-up funding raised
Week ending February 23, 2024	$110 Million
Week ending March 01, 2024	$381 Million
Week ending March 08, 2024	$150 Million
Week ending March 15, 2024	$226 Million
Week ending March 22, 2024	$205 Million
Average of previous 5 weeks	$214 Million
Week ending March 29, 2024	$243 Million

The start-up funding for the latest week ended March 29, 2024 was higher on week-on-week basis and also higher than the average of the previous five weeks. Seed stage start-up funding in the current week saw a fall of 84% in the week. While Fintech dominated in terms of deal values, it was EnterpriseTech that dominated in terms of number of deals. Blume Ventures emerged as the most active investor in start-ups in the latest week.

AVANSE FINANCIAL RAISES $120 MILLION FROM MUBADALA FUND

In a deal that accounted for half of the fund raising in the week, Avanse Financial raised $120 Million (₹1,000 Crore) from Mubadala Fund of Abu Dhabi. Avendus PE Fund also participated in the funding round. Avanse will use the fresh fund to strengthen its position in the education financing segment, largely with emphasis on creating unique customer experiences. It may be recollected that Avanse had also raised ₹800 Crore from Kedaara Capital in early 2023. Avanse currently has AUM of ₹12,147 Crore and it is purely into lending for education purposes. Avanse provides education financing for students and educational institutions in India; with its loan packages catering to students wanting to studying in India and abroad.

MEESHO LOOKS TO RAISE $300 MILLION FROM TIGER GLOBAL AND SOFTBANK

Meesho plans to raise $300 Million (₹2,500 Crore) in a deal that is yet to be finalized. Obviously this mega funding is not included in the current weekly report, but is just being reported for completeness sake. That is because the deal is yet to be finalized. At the current fund raising level, the valuation of Meesho would be pegged at $3.9 Billion, which is nearly 20% lower than its indicative valuation when it raised funds in 2021. The participant in the current round will have Tiger Global for the first time. The fundraising program will also see participation from existing and new investors. It will be one of the biggest funding rounds in recent times.

SHARECHAT RAISES $49 MILLION DEBT TO CHART A PROFITABILITY PATH

ShareChat has just raised $49 Million (₹408 Crore) from a slew of investors including Harbour Vest, Moore Strategic, Alkeon Capital, and Tencent. With aggressive cost cutting in recent months, the company has been able to cut down on its cash burn substantially and reduce its losses.  The entire funding of $49 Million will be raised through the issue of convertible debentures from the above investors. This funding should help the company get back into profitability in next 12 to 15 months.  The conversion of the debt into equity will happen in the next funding round.

BLUESTONE GETS $16.5 MILLION FROM INNOVEN CAPITAL AND OTHERS

The fund raising by Bluestone to the tune of $16.5 Million (₹138 Crore) is likely to be concluded shortly. Out of the $16.5 Million of funding, nearly $12 Million will come from InnoVen Capital. Bluestone plans to utilise the fresh capital raised for its business operations and to bankroll its expansion plans. Bluestone is an omnichannel jewellery startup. The fund raising from InnoVen will be by way of debt, while the other investors will bring in equity participation to Bluestone. The startup intends to utilise the fresh funds for its business operations and for its expansion plans. Bluestone had recently raised $9 Million from Trifecta Capital in debt funding. Bluestone is also eyeing an IPO of ₹2,000 Crore, but is yet to firm up on the timing of the IPO. Bluestone was founded by Gaurav Singh Kushwaha and Vidya Nataraj in the year 2011 and offers more than 8,000 designs across rings, pendants, earrings, and other products.

AYE FINANCE RAISES $16.5 MILLION FROM GERMAN IMPACT INVESTOR

Aye Finance has just raised $16.5 Million (₹138 Crore) from German Impact Investor, to enhance the company’s capacity to offer vital financial assistance to underserved MSMEs (Medium, small, micro enterprises) across India. Incidentally, this round comes just after Aye Finance had raised ₹310 Crore as p[art of its Series-F funding round from BII. The company currently offers affordable business loans to microenterprises in the country, which are largely unbanked. The entire fund raising of ₹138 Crore comes by way of debt from Invest in Visions, a German impact investment outfit. The funds will used for on-lending to these small businesses, enabling them to grow and scale up their operations. As part of its risk management strategy, Aye Finance uses cluster-based credit assessment along with AI algorithms to assess risk in the absence of traditional business documents.

KREDITBEE RAISES ADDITIONAL $9.4 MILLION IN SERIES-D ROUND

Fintech company, KreditBee has raised $9.4 Million (₹78 Crore) in a round led by Premji Finvest with participation in the funding round from Mitsubishi UFJ Financial Group, Motilal Oswal Alternates, and NewQuest Capital Partners. That concludes the Series-D funding of KreditBee to the tune of $209 Million and values the start-up at around $700 Million. Last year, KreditBee had raised $100 Million from Advent International as the first tranche of Series-D funding round. KreditBee is a leading LendingTech company based out of Bengaluru. KreditBee was founded in the year 2016 and it primarily serves credit and other personal finance requirements through its NBFC arm (KrazyBee Services Private Ltd). Average loan ticket sizes are small at around ₹50,000.

BAMBREW GETS $7 MILLION FROM BLUME VENTURES

Bambrew, a sustainable packaging startup, has just raised $7 Million (₹60 Crore) in a funding round led by Blume Ventures. Other investors who participated in the funding round included Blue Ashva Capital, Mumbai Angels, Indus Capital, Capital-A etc. The funds will be used by Bambrew to expand into primary packaging for FMCG and food and beverages product categories. The company will also invest funds into its R&D and technology stack to offer a better experience to its clients. Bambrew offers green packaging solutions which are alternatives to single use plastics and degradable. The funding was raised through a combination of equity and debt. Bambrew has marquee clients like Amazon, Nykaa, My Glam, Bata, Snitch, and Mahindra, among others.

ADONMO, THE ADTECH STARTUP, RAISES $6.99 MILLION

ADONMO , the AdTech start-up backed by Zomato, has just raised $6.99 Million (₹58 Crore) from a slew of investors. The funds will be used to bankroll its expansion plans. The company has already passed a special resolution to issue 36 equity and 4,156 CCPS (cumulative convertible preference shares) to the investors. While Dr Ravindranath Kancherla, and Pruthvi Nath Kancherla infused ₹16.6 Crore, other participants included Qatar Insurance Company and ZNL Growth. This is part of their Series-B1 funding round. The startup will use the fresh capital raised here for business expansion and for working capital funding. Zomato holds a 19.8% stake in ADONMO. India’s Out-of-Home (OOH) advertising market is rapidly expanding; and ADONMO is looking to focus on this digital niche.

SUPERK BAGS $6 MILLION TO OPEN WALK-IN RETAIL STORES IN SMALL TOWNS

SuperK has got $6 Million (₹50 Crore) funding which will be used by the company for tech development, hiring, and scaling the platform to connect digital native brands with SuperK customers. SuperK is also a data intelligence company which maintains a full track of customer behaviour by collecting granular data at every purchase. The funding round was led by Blume Ventures with participation from Silver Needle Ventures, Veltis Capital, Atrium Angels and others. SuperK was founded only in 2020. It will use the funds to take the concept of self service stores to smaller towns to enhance the retail experience.

MOBIKWIK RAISES $6 MILLION IN DEBT FUNDING FROM BLACKSOIL

MobiKwik, the payment ap that is planning to hit the IOP market soon, has just raised $6 Million (₹50 Crore) by way od debt from Blacksoil. MobiKwik will allot 800 NCDs (non-convertible debentures) at the rate of 15% interest per annum to Blacksoil. It may be recollected that as per the revised DRHP filed by MobiKwik with SEBI, it is planning to raise ₹700 Crore through a fresh issue of shares. It has allocated a total of 800 NCDs against this loan to Blacksoil in two tranches. MobiKwik was originally supposed to raise ₹1,900 Crore through the IPO in 2021, but cancelled the IPO after the Paytm IPO fiasco. Subsequently, it slashed the IPO size by 63% to ₹700 Crore. It is one of the few fintech startup to be profitable in the first six months of FY24. MobiKwik is 15 years old and offers a digital banking platform with a suite of financial products for consumers and merchants.

SYDELABS GETS $2.50 MILLION FUNDING TO SAFEGUARD AI ADOPTION BY ENTERPRISES

SydeLabs raised $2.50 Million (₹21 Crore) in a funding round led by RTP Global with participation from Picus Capital and a few angel investors. SydeLabs is building a suite of solutions which helps detect and prevent vulnerabilities in AI tools. It beta version is already out and it is launching an improved version later this month. This is a seed funding round for SydeLabs. The start-up will use the funds for product development and for R&D.

Where does the SydeLabs solutions fit in? Artificial Intelligence (AI) systems are very different from traditional systems and hence traditional cybersecurity measures are not enough to  tackle AI security. AI-based tech needs different guardrails beyond traditional cybersecurity, as the nature of functions and hence the nature of risk is very different. That is the niche that the company operates in.

SMALLER DEALS FOR THE WEEK ENDED MARCH 29, 2024

There were also 3 smaller deals for the week in the start-up funding space.

1. Aeria has bagged $1.80 Million funding from Kalaari Capital to digitize commercial real estate management. Proptech offering, Aeria, uses cutting-edge technology and artificial intelligence (AI) to offer comprehensive solutions, integrated with multiple technologies, to create engaging digital experience. The tenant dashboard is quite popular. This is a pre-seed funding round and will be deployed for business expansion across Southeast Asia and the Middle East.
2. Woodsmen Mountain Whiskey gets $1.50 Million funding from Fin First group and Anthill Ventures. Woodsmen is an alco-beverage start-up. Nikhil Vora of Sixth Sense Ventures also participated in the round. The startup will utilise the fresh capital to expand its market and give a boost to its marketing efforts.
3. Finally, cold chain start-up, Just Deliveries has got $1 Million to offer cold chain solutions to frozen foods brands and to restaurants. It will sue the funds to deepen its logistics networks across Bengaluru, Mumbai, Pune, NCR, and launch operations in Hyderabad. The Indian supply chain management industry is estimated to have crossed $3.4 Billion in 2023 and likely to double by 2030.

Overall, the funding scene remained robust in this week too.