Weekly Musings – Big start-up updates for the week to October 06, 2023

9 Oct 2023 , 01:08 PM

Compared to the previous week, the current had a more subdued start-up outcome. The last 4 weeks have seen a lot of gyrations in start-up funding. The numbers are as follows for start-up funding.

Week ending September 08, 2023	$257 million
Week ending September 15, 2023	$413 million
Week ending September 22, 2023	$91 million
Week ending September 29, 2023	$194 million
Average of previous 4 weeks	$239 million
Week ending October 06, 2023	$119 million

The start-up funding for the latest week ended October 06, 2023 is less than half of the average of the previous 4 weeks. However, a quick look at the start-up funding numbers would tell you that the numbers have been fairly volatile. Let us not move to the actually break-up of the start-up funding in the latest week.

Start-up funding tapers to $119 million across 11 deals

For the week ended October 06, 2023 the start-ups saw fund raising of $119 million across 11 deals, as compared to $194 million raised in the previous week across 34 deals. While the total fund raising has come down, there is a lot more of big-ticket funding happening this week, as we shall see later. As a sector, it was ecommerce plays that dominated the week, with Bizongo and Mensa among the major fund raisers during the week. Here is a quick rundown on the major deals in the start-up space during the week ended October 06, 2023.

1. In the biggest deal of the week, Bizongo raised $50 million in Series-E funding round led by Shroder Adveq. Participation in the funding round also came from IFC, Chiratae Ventures and B Capital. Bizongo is a B2B vendor management platform and it plans to use these funds for greater focus on the procurement of raw materials for the steel sector. Ironically, the start-up also laid about 10% of its employees just a day after the fund raising. It could be a signal that the start-up wants to move quickly towards profits.

    

2. In another major funding this week, Mensa Brands raised $40 million in funding from Evolution-X by way of debt funding. These funds would be largely used to invest in the brands. The funding came from big names like Accel Partners, Prosus, Tiger Global and Stride Ventures. The debt is a mix of pure debt with a convertible option. The company has recently entered the Emirates market and plans to invest in global expansion too.

    

3. In another significant funding deal, Bolt.Earth; the charging infrastructure provider has raised a sum of $20 million from Prime Venture Partners, ITIGO Funds and others. The fresh funds will be used by Bolt.Earth to expand its charging network as well as for product enhancement and manpower addition. This funding gives an enterprise valuation of $20 million to the start-up. Bolt.Earth is also looking to expand its footprint beyond India to boost global demand for EVs in Asia, Europe, and Latin America. 

    

4. In an interesting new deal, DPDZero has bagged funding with the purpose of reducing loan delinquencies for lenders. The fresh capital of $3.25 million would be used to enhance product distribution, expedite product development and to expand more specialists in the team. It does a root cause analysis (RCA) and aims to fix the root cause of delinquencies with the intelligent use of technology. The start-up’s existing business partners include Tata Capital, KreditBee, Cashe, Lazypay and Snapmint. Most of these companies are perfect use cases, as they also struggle to handle delinquencies in the lending business. The funding has come by way of seed funding led by Blume Ventures and India Quotient.

    

5. Clearfeed has bagged $2.7 million in funding, which will be used for its enterprise AI powered conversational support platform. The seed funding for Clearfeed was led by Peak XV with participation from 8VC and other angel investors. The conversational support platform offered by Clearfeed leverages artificial intelligence (AI) and deep learning to integrate with enterprise tools. It also integrates with Microsoft Teams for handling customer and employee requests. The fresh funds will power the next stage of growth at the company with focus on product development.

    

6. The most recent deal this week pertains to the $2.5 million funding for Pep Bags from India Quotient. Pep Bags is positioned as the next Amazon of content and digital services. Other investors like the founders of CRED and the founders of Meesho also participated in their individual capacity in the funding round. Pep actually helps uses to book live sessions and avail 1:1 consultations online, purchase videos, PDFs, and audio through a single platform. This will simplify content creation and curation, which is the more important part of the story, especially with the deluge of content today. 

Let us also look at a deal which is yet to fructify but is expected to happen in the very near future. Sharechat, the start-up outfit backed by Google, is planning to raise $50 million funding, albeit but at much lower valuations. In fact, the funding round is expected to happen at around 55% of its previous valuation rounds. Its valuation has been marked down from $6 billion to around $2.5 billion. This will be on top of the $1.43 billion which the start-up has already raised till date. Sharechat is a short video platform and is extremely popular, although it is facing a lot of competition. Overall, it has bene a relatively subdued week in terms of the number and spread of deals that raised start-up funding in the week to October 06, 2023. However, deals were concentrated on the larger side.

Big start-up strategies in the week to October 06, 2023

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

• Proxy shareholder advisory firm, In Govern, has sought anti-trust probe by the CCI into Flipkart and Amazon. This issue was raised after Flipkart recruited a former CCI member, giving clear signals of a possible quid pro quo. This raises questions about the impartiality of the probe conducted by CCI into these companies in the past.

   

• After Tesla, it is the turn of VinFast of Vietnam to commit $200 million of investments in India to set up an EV manufacturing facility. It will be a completely knocked down (CKD) assembly unit with the capacity to assemble up to 50,000 cars per year in the first phase. Indian EV market is growing rapidly, but the penetration of EVs is less than 1% today. 

   

• After raising funds from KKR and the Qatar Investment Authority, Reliance Retail has now raised funds from the Abu Dhabi Investment Authority (ADIA) also. The infusion of Rs4,966 crore into Reliance Retail Ventures recent wakes, has happened at an overall valuation of $100 billion for the retail business of Reliance group.

   

• Disney is currently in talks with the Adani group and the Sun TV group for the sale of its India digital and OTT business. Some of its big properties in India include the sports rights and the OTT Disney Hotstar business. It had originally held talks with Reliance group, but that has apparently now worked out.

   

• Zerodha and Premji Finvest may be looking at buying a stake in Nainital Bank. Apart from them, even Multiples (floated by Renuka Ramnath) has been eyeing Nainital Bank. The bank is currently owned 98% by Bank of Baroda, and BOB wants to sell a significant stake to the tune of 40% to 50% in Nainital Bank. 

   

• Amidst a delay in the IPO, OYO Rooms is looking to raise around $660 million by way of interim funding and it is in touch Apollo Global Investments for the same. This pertains to the repayment of the loan taken in 2021, which the company wants renewed with maturity of 2027. The IPO is stuck on some regulatory issues.

   

• Dunzo, which is in the midst of a financial crisis, is planning to raise $35 million, but at a substantial drop in valuations to $200 million. Incidentally, Reliance Retail holds 26% in Dunzo and they may also approach Google for the funding. The last funding rounding was at an enterprise valuation of $800 million; nearly 4 times the current likely value.

   

• In search of a larger customer base, Meesho plans to also onboard non-GST registered customers on its platform. The latest GST Council Meet had announced that small businesses with turnover of less than Rs40 lakhs can register with ecommerce platform even without a GST registration; which is normally mandatory for the rest.

One final word. There is still a lot of smart and patient capital in the sidelines. By even the most conservative estimates, venture capitalists and PE funds are sitting on loose cash of $60 billion and waiting for the right investment opportunities. Clearly, there is no dearth of funds if the start-up has the right narrative.