Weekly Musings – Big start-up updates for the week to September 15, 2023

18 Sep 2023 , 08:39 AM

The previous week to September 08 2023 was relatively robust with about $257 million raised across 18 deals. However, the picture is still better for the week to September 15, 2023 with start-up fund raising of $413 million in the week across 21 deals. It also shows improvement in the deal ticket sizes during the week, but the enthusiasm on deal street was led by companies like the Fintech SAAS start-up, Perfios, which raised $229 billion from Kedaara Capital, which happened to be the biggest deal of the week. The week marked a growth of 61% in start-up fund raising compared to the previous week.

Start-up funding surges to $413 million across 21 deals in the week

For the week ended September 15, 2023 the start-ups saw fund raising of $413 million across 21 deals. Periods led the way accounting for over half the fund raising during the week, but there were other significant fund raisers too. Here is a quick rundown on the major deals in the start-up space during the week ended September 15, 2023.

1. In the biggest deal of the week, SAAS Fintech start-up, Perfios, has raised $229 million through a mix of primary and secondary sale. This round comes after 19 months, when the start-up had raised $70 million at a valuation of $400 million. Perfios is a credit decisioning and analytics start-up in the B2B and B2C segments. The entire funding will be down by Kedaara Capital and Perfios will use these funds to bankroll its expansion plans in North America and Europe.

    

2. In another major funding this week, Pixis, a start-up in the MarTech space, has raised $85 million to fund its artificial intelligence (AI) powered product suite. The funding was led by Touring Capital with participation from Grupo Carso, General Atlantic, Celesta Capital and Chiratae ventures. The start-up was founded in 2017 and it is a codeless AI infrastructure provider for the marketing sector and currently works with more than 200 big names in the field. 

    

3. In another significant deal, Agritech start-up, Leads Connect, has bagged $62.50 million in funding from BL Agro, an FMCG player. Leads Connect will use the funds to scale up its tech stack and scale up its research in deeptech and in the AI / ML space. In turn, BL Agro will also get synergies of expanding its portfolio in India. Leads Connect is a full stack Agritech platform that offers data analysis and modelling, farm advisory and farm value chain solutions to the users. These funds will be infused over a span of 3 years.

    

4. In another case of digital fund raising, SAAS start-up, Kale Logistics, has raised $30 million. These funds will help Kale Logistics to digitize and automate cargo operations. This will use technology to reduce the complexity of cargo movement at airports and seaports by using integrated platforms and ERP solutions for its stakeholders. This is a Series B funding round and the entire funding comes from Creaegis Advisors LLP, a private equity fund.

    

5. As part of the $6 million funding round, intimate hygiene brand, Pee Safe, has secured funding to expand its retail presence. The funding round was led by Natco Pharma and Rainmatter (a Zerodha group company). The brand offers products like menstrual cup, toilet seat sanitizer and intimate wash. Its products are already available across more than 15,000 outlets in 70 cities and its products are also exported to over 15 countries globally. 

    

6. In another interesting funding round, Port has secured an undisclosed funding round from Catamaran, the PE fund floated by the Narayana Murthy family office. It was a seed funding round but the amount of funding was not disclosed. Port was founded by Aniruddh Balasubramanian and Abhinav N to offer a messaging app that users ports instead of phone numbers to connect users. The funds will be used by Port to expand its team and to launch a beta version of its app, which his currently in the alpha testing phase. The public version of the app is likely to go live in November 2023.

    

7. Blue collar staffing platform, SmartStaff, has raised around $4.3 million of funding from the Persol group. This follows another Series A round funding of $6.2 million in June this year. SmartStaff will use the funds to expand its business footprint and expand both vertically and horizontally. Person has been looking at India as one of its key market focus areas.

    

8. HotelYaari has bagged $2.2 million of funding in a seed funding round from Alios Ventures. HotelYaari will use these funds to offer fractional ownership in holiday homes. HotelYaari will use the funds to scale up its platform and  hire more staff to cater to the growing demand. The fractional ownership market in India is expected to touch $9 billion by 2025, so there is a lot of market potential to tap.

    

9. Finally, WOGOM has bagged funding of $1.9 million from family offices and some industry houses. The funds will be used by WOGOM to bridge gaps in the consumer electronics supply chain in remote areas. WOGOM connects retailers in remove areas with distributors for sourcing consumer electronics, mobile phones, and wearable devices. The funds will be used by WOGOM for market expansion, retail financing and for investing in the technology stack.

In addition, there were smaller deals tool. The moral of the story is that PEs are beginning to draw out their cheque books where there is a clear cut plan available. That is good news.

Big start-up strategies in the week to September 15, 2023

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

• For Reliance Retail, it seems to be fund raising time. First Qatar Investment Authority infused $1 billion for a 0.99% stake in Reliance Retail, valuing the business at $100 billion. Then KKR infused Rs2,070 crore at similar valuations. Now big sovereign funds like GIC of Singapore, ADIA of Abu Dhabi and PIF of Saudi Arabia are planning to infuse $1.5 billion into Reliance Retail.

   

• Disney has inked a content deal with self-publishing platform, Pratilipi. For Disney, it becomes a steady source of quality content. Pratilipi is already backed by big names like Omidyar Networks and Tencent and has raised funds of $80 million so far. It is a multi-series content deal which will allow Disney to develop multiple new fiction television shows adapted from stories published on Pratilipi. 

   

• In what could be a big move, early indications rare that Tesla may source components worth $1.9 billion from India this year. Last year, they had already sourced components worth $1 billion from India. Tesla is also in talks with the Indian government to set up a manufacturing plant in India. This is likely to spur investments in the auto components sector in India.

   

• Listed logistics company, Delhivery Ltd, has launched location intelligence solutions. The service called, LocateOne, will operate through APIs and offer a range of features to enhance the accuracy of the address. This is a follow-up to the delivery management solution, DispatchOne launched by Delhivery earlier this year. 

   

• In an interesting move on cooperation, Mercedes Benz has decided to open its EV charging infrastructure to other car brands too. It is part of its strategy to accelerate the adoption of EVs in India. Mercedes Benz has 140 charging points across India. It remains to be seen, how other EV infra owners react to this offer.

   

• As the streaming war intensifies in India, Netflix has signed a content deal with Yash Raj Films to collaborate to create films and also series. The partnership is part of the efforts made by Netflix to get a greater share of the crowded Indian OTT market. It already competes with the likes of Jio Cinemas, Amazon Prime and Disney Star and this kind of a content arrangement offers a unique edge to Netflix.

   

• Dixon Technologies, one of the biggest suppliers to Xiaomi, will set up a manufacturing unit in Delhi to boost localization. Dixon plans to invest close to Rs400 crore for setting up this facility. The facility will be spread across 3 lakh SFT and will exclusively manufacture Xiaomi phones to begin with.

   

• Finally, in an interesting move, PE firm Florintree has bought a significant stake in Videonetics. Now, Videonetics is a video analytics platform that offers an artificial intelligence (AI) based video management platform. This can be used in areas like video analytics, traffic management and facial recognition.

Overall, it was an extremely strong week for start-up funding during the week. The September quarter promises to be more fruitful compared to the June 2023 quarter, at least if you go by the way momentum is building up in the start-up funding space.