Weekly Musings – Big start-up updates for the week to October 13, 2023

16 Oct 2023 , 09:30 AM

Compared to the previous week, the current week had a more aggressive start-up outcome. The previous 5 weeks had 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
Week ending October 06, 2023	$119 million
Average of previous 5 weeks	$215 million
Week ending October 13, 2023	$288 million

The start-up funding for the latest week ended October 13, 2023 is 33.95% higher than the average funding of the previous 5 weeks. However, a quick look at the start-up funding numbers would tell you that the numbers have been fairly volatile. Let us now move to the actually break-up of the start-up funding in the latest week.

Start-up funding surges to $288 million across 24 deals

For the week ended October 13, 2023 the start-ups saw fund raising of $288 million across a total of 24 deals, as compared to $119 million raised in the previous week across 11 deals. The total fund raising this week was 33.95% higher than the average of the previous week, which displays a positive trend. As a sector, it was Fintech plays that dominated with more than 70% of the fund raising in the week coming from fintech plays. Zolve and Insurance.Dekho were among the major fund raisers for the latest week. Here is a quick rundown on the major deals in the start-up space during the week ended October 13, 2023.

1. In the biggest deal of the week, Neobank Zolve raised $100 million through debt to offer credit products to migrants in the US. The funding will be used to expand its funding footprint among Indian migrants in the US. Zolve is a cross-border Neobanking start-up that offers Indians in the US an FDIC-backed bank account and credit right after landing on the shores of the US. The funding has come from the US based impact investor, Community Investment Management (CIM). Zolve also plans to expand these services to UK, Australia, and Canada.

    

2. Insurance.Dekho may soon get unicorn status (valuation of $1 billion) after it closes its latest funding round worth $60 million. Mitsubishi UFJ, BNP Paribas Cardiff, Beams Fintech and others participated in this round of funding. This funding comes just 7 months after the start-up had raised $150 million via Series-A fund raising. This latest Series-B funding will be a mix of equity and debt. It will look to expand its InsureTech footprint with these additional funding funnels. 

    

3. Meanwhile, another InsureTech start-up (Onsurity) has also secured $24 million of funding from IFC and Nexus Partners. Onsurity is an employee healthcare benefits provider and administrator. Onsurity plans to use the funds to create tech based claiming solutions as well as use it to expand its tech stack to draw more clients into the fold. The start-up was founded only in 2020 and has served over 1 million people till date. IT caters to over 5,000 companies currently 

    

4. Krutrim SI Designs, promoted by Bhavish Agarwal of Ola fame, has also bagged $24 million in debt funding from Matrix Partners. Krutrim SI designs is an artificial intelligence (AI) based start-up and it will use the funds to expand its tech stack and offer a wider gamut of AI based solutions. The company will be raising this debt through the issue of debentures to the lenders.

    

5. Oro Money, which provides digital gold loans to customers, has raised $12.5 million in funding from Singularity and Three State Capital. This funding will be against the issue of preference shares to the investors. Oro Money actually acts as a syndication platform and brings borrowers and lenders together through an agnostic platform. The company will use these funds to expand its footprint forward on the client side and backward on the institutional side also.

    

6. SuperOps.ai has raised a sum of 12.4 million from Lee Fixel’s Addition and from March Capital. SuperOps.ai is a unified platform that simplifies the IT management process and workflow on a single platform. It will use the fresh funds to enhance its AI capabilities. This is a Series-B funding in which Matrix Partners also participated. 

    

7. Age Care Labs, an elder care platform, has raised $11 million from Nikhil Kamath’s Rainmatter Capital and Gruhas. Age Care Labs will use the fund infusion to expand its presence and to leverage technology to offer better old age care. The start-up already has a presence across 120 towns in North India and plans to expand its presence very aggressively over the next few months. The latest funding was through a Series-B round. Other investors also participated in their individual capacity. 

    

8. The parent of popular handbag brand, Lavie, has raised $9 million to bankroll its offline expansion. The parent, Bagzone, will use the funds to boost its manufacturing capabilities by putting up a 1.50 lakh SFT factory. This is their first institutional funding round since the company was founded in 2010. The funding came from First Bridge India Growth Fund. 

    

9. In another round of funding, Jiraaf has raised $8.7 million in funding from Accel and Harmony Partners. In addition, some of the angel investors also participated in the round. The start-up will use the fresh funds to build its teams across tech, investments, and customer care. The basic purpose of the platform is to help investors to diversify their fixed income investments. In next 2 years, it plans to enable Rs10,000 crore of investments through its platform across more than 3 lakh users.

    

10. There was also a slew of smaller funding deals in the week. Imagimake Bags, secured Rs20 crore ($2.4 million) from Pidilite Ventures to scale up production in innovative toys. It will use the funds to expand its production capacity and also launch a new range of products for its customers. In another round of fund, Deeptech start-up, Proxgy got funding to make blue collar jobs safer. The $2 million pre- Series-A Funding came from Lets Ventures. Proxgy offers IOT (internet of things) solutions to companies across sectors like oil & gas, mining, manufacturing, warehousing, logistics etc.

     

11. There were some more interesting rounds of funding during the week. Ecommerce start-up, Meolaa has bagged $2 million in funding from Turbostart to offer sustainable products. Meolaa will use the funds to expand the team and to invest in the platform. Meolaa offers more than 1.25 lakh sustainable products on its platform from over 1,500 brands. Finally, AuditCue has raised seed funding of $1.5 million in a round led by Kalaari Capital. The funds will be used to make auditing more efficient for business. AuditCue is a Chennai based SAAS start-up, has been in stealth mode for some time now.

The latest week to October 13, 2023 has been fairly robust in terms of start-up funding with a number of medium and large funding being put through this week.

Big start-up strategies in the week to October 13, 2023

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

• In a significant deal, Westbridge Capital has acquired a stake in Meesho through a secondary transaction. Meesho claims to have turned profitable as of July 2023. While the stake was sold by Venture Highway, it still continues to hold a significant stake in Meesho, even after the sale deal. 

   

• Festive sales are normally great times for ecommerce sites but this time has been especially good. The first 4 days of the festive season saw ecommerce platform reporting record Gross Merchandise Value (GMV) of Rs29,000 crore. This is nearly 6 times higher than normal days.

   

• Zomato has diversified into the logistics space by offering Xtreme for merchant deliveries. It is a quick parcel delivery service purely for merchants. This service will compete with Swiggy Genie and Dunzo which offer similar services. It amplifies the entire delivery process from end to end.

   

• The recently listed Zaggle Prepaid has won a $20 million order from Visa for branded forex cards. This will be executed over 5 years. Zaggle has delivered more than 5 crore prepaid customers in the last few years.         This was filed with the exchange, being a listed company on the NSE and the BSE.

   

• Superstar, Kareena Kapoor, has partnered with Sugar Cosmetics to launch beauty brand, Quench Botanics. Kareena has joined as the co-owner and will apparently also be the brand ambassador for the company. Quench is a Korean skincare brand. It will be an omnichannel approach and will focus on Gen-Z and on millennials. 

   

• With Groww overtaking Zerodha in terms of number of active clients, there is a new competitor in town in the form of CRED, which also plans to buy out Kuvera to be able to take on Zerodha in the broking business. The acquisition deal is likely to be finalized in the next few weeks and is a key component of this strategy.

   

• NoBroker has launched CallZen.AI to provide contact centre intelligence to businesses. CallZenl.AI is a conversational AI platform which offers transcription service. CallZen.AI provides services like lead generation, fraud detection and business process management. It will also offer a 14-day trial option.

   

• Ranjan Pai of the Manipal Group is likely to invest $300 million into Aakash, the learning portal that was acquired by Byju’s. He will invest nearly $170 million in the first tranche. This will be used to repay the debt taken by Aakash from David Kempner. Ranjan Pai is also an investor in FirstCry, Bluestone and PharmEasy.

   

• With the deals with Sun TV, Adani and Reliance not going through, Disney is in talks with Blackstone to sell its stake in the India business. Disney is already feeling the heat of Jio Cinemas entering the fray. Disney plans to sell its sports rights business in India as well as its robust OTT business under the Disney Hotstar banner.

   

• Finally, PayU backed by Prosus, may be looking to file for a $500 million (Rs4,200 crore) IPO in the Indian market by February next year. Pay is expecting a listing valuation of anywhere between $5 billion to $7 billion. 

One final word. There is still a lot of smart and patient capital in the sidelines; to the tune of $60 billion to $80 billion waiting quietly in the sidelines. The wait is for the right investment opportunity at the right price. Clearly, there is no dearth of funds if the start-up has the right narrative. It is just about getting the meting point.