Weekly Musings – Big start-up updates for the week to November 24, 2023

27 Nov 2023 , 08:53 AM

Compared to the previous week, the current week saw flows into start-ups that were slightly higher, although the number of deals were the same. For the week to November 24, 2023, the start-up funding at $61 million was 38.6% higher than the previous week at $44 million. In fact, when compared to the average of the last 5 weeks, the start-up funding in the latest week was lower by a full 70.7%, 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 October 20, 2023	$237 million
Week ending October 27, 2023	$466 million
Week ending November 03, 2023	$133 million
Week ending November 10, 2023	$159 million
Week ending November 17, 2023	$44 million
Average of previous 5 weeks	$208 million
Week ending November 24, 2023	$61 million

The start-up funding for the latest week ended November 24, 2023 was higher on a week-on-week basis but sharply lower than the average of the last 5 weeks. That could be because the week to October 27, 2023 was largely skewed by the mega funding deal of Ola Electric. The latest week funding flows were led by Zappfresh, Scapia, Kiwi, Herby Angels, and Baaz; among others; across a total of 10 deals. Let us now move to the actually break-up of the start-up funding in the latest week.

Week was dominated by the Scapia funding at $23 million

The week to November 24, 2023 was largely dominated by the Scapia funding; but there was not really much you could witness in a week when the total fund raising by start-ups itself was just about $61 million. To begin with, Scapia had all the right credentials. It is a fintech company, which means it was a start-up space that is already attracting the bulk of start-up funding in India. Also, Scapia was founded by Anil Goteti, a former senior executive of Flipkart, which was later bought out by Wal-Mart at a whopping valuation of $16 billion. The funding by Scapia accounted for 38% of the total start-up funding this week.

During the week, Scapia raised $23 million (Rs191 crore) in equity funding, which takes it total funding till date to $32 million. Scapia, floated by Anil Goteti is a travel based fintech start-up based out of Bengaluru. The $23 million funding was raised as part of its Series-A funding. The funding round was led by Elevation Capital and 3STATE Ventures, the fund floated by Binny Bansal. In addition, the existing investors like Matrix Partners and Tanglin Venture Partners also participated in the funding round. It may be recollected that Scapia had launched its co-branded credit card with Federal Bank about 5 months back. The company plans to deploy the fresh funds into marketing efforts and for building the customer base as well as to fine tune its technology stack. 

Fintech start-up “Kiwi” raises $13 million

The other big round of funding during the week was Kiwi raising $13 million (Rs108 crore) during the week. Kiwi is a recent digital fintech start-up which operates in the area of UPI-compliant credit cards. This is currently restricted to RuPay cards, where the RBI currently permits UPI transactions. That is not yet allowed on Visa and Mastercard in India. For its credit card management solutions business, Kiwi secured start-up funding in the form of Series-A round of funding from a consortium led by Omidyar Network India. Kiwi had already raised $6 million in May 2023.

Kiwi has popularized the credit cards with UPI facility by issuing and managing digital RuPay cards that are UPI compatible. Like your bank account, you can give payment instructions to your RuPay credit card using the UPI interface. UPI has seen phenomenal growth in India since its introduction about 8 years back and has become the single largest mover of money by volume of transactions. In October 2023 alone, UPI recorded 1,141 crore transactions with transaction value of Rs17.2 trillion. Kiwi will use the funds to expand the business, stitch more B2B partnerships and for enhancing the tech stack. Apart from Omidyar Networks, existing investors like Nexus Venture Partners and Stellaris Venture Partners also participated in this round of funding.

Baaz and Purple Style Labs raise $8 million each

Let us start with the EV start-up, Baaz, which focuses its energies on electrical bikes. Baaz Bikes is based out of Delhi-NCR and it has just raised $8 million (Rs67 crore) as part of its Series A funding. The funding round was led by BIG Capital of Singapore and will use the funds to bolster its E-scooter offerings to gig workers. Apart from BIG Capital, other participants in this round of funding include Rakuten Capital and Kalaari Capital. Baaz Bikes provides the gig workers (delivery executives) access to its low speed e-bikes and batter swapping stations on a subscription model. While currently, it is focused only in South Delhi, it plans to use the funds to expand to the entire Delhi / NCR region. Its focus is purely on low-speed e-bikes for last mile delivery and the subscription model also turns out economical for users.

The other $8 million (Rs67 crore) funding in this week was by Purple Style Labs. Purple Style Labs was founded in the year 2015 and its focus is on retailing high-end designer brands. It was a Series D funding for the luxury fashion house and the funds came from family offices. The participants in the funding round include Pidilite family office, Harish Shah family office, and Hira Group family office, among others. With the latest round of funding, Purple Style Labs is now being valued at over $350 million. The company plans to go public in the stock markets by the year 2026. 

Other key funding deals in the week to November 24, 2023

For the week ended November 24, 2023 other start-ups also saw smaller levels of funding. Here are three such cases of funding in the week.

1. During the week, Zappfresh, the online meat brand has raised $3.6 million (Rs30 crore) for inorganic acquisitions and expansion of its current business stack. The funding round was raised from AH Ventures, HT Media, Unity SFB, and Heifer Impact. Zappfresh is known to delivery meat products in 90 minutes flat, depending on unique choices of the customers. Apart from organic and inorganic growth, the funds will also be used to upgrade infrastructure across the northern and southern pockets of India.

    

2. Herby Angels, the baby care D2C brand, has raised $2.5 million (Rs21 crore) to ramp up its product offerings. The company manufactures nutraceutical and pharmaceutical products for babies. Herby Angels already has offline presence across 13 states and around 1,300 retail outlets. By FY24, the plan is to reach 18 states and 2,000 retail outlets. It will use the funds to scale up distribution, product portfolio, R&D and to also upgrade its technology stack.

    

3. In a much smaller round of funding, VAMA has bagged $1.5 million (Rs12.50 crore) in funding from Wave Maker Partners. VAMA specializes in virtual astrology services and offering online temple services. Vama offers a comprehensive hub that comprises of e-Puja, e-Darshan, and astrology services for devotees across India. It is more like a top-up to its seed funding round already raised. Fresh capital will be used to onboard more talent boost product development and to develop the tech stack.

Finally, in a side note, the markets have not taken too kindly to Warren Buffett exiting Paytm at a loss. With the recent credit tightening norms, things could just about get tougher for Paytm. The next few quarters could be challenging for Paytm.