Startup Street: Sequoia On Poor Governance, Rapido’s Funding, Unicorn Lull And More
Here’s what went on at Startup Street in April.
This month on Startup Street, the word is frugality.
April saw no new unicorns being minted, a sign underscoring the muted market for large funding. Prominent startups such as Meesho and Unacademy laid off around 150 and 600 employees, respectively.
According to KPMG, venture capital investment in India “slowed somewhat” in the first quarter of 2022, relative to the record totals seen in the second half of 2021. “The rapid maturation of key sectors in India, combined with the significant number of market entrants, is starting to drive M&A activity as competition for market share heats up.”
It cited the instance of ShareChat’s Moj acquiring short video app MX Takatak in a $700-million (Rs 5,340 crore) deal. “Sectors like edtech and food delivery will likely also see consolidation.”
Besides, Rapido’s newfound synergies and Iron Pillar’s unicorn forecast caught the deal street’s attention. And Sequoia India responded to various allegations of malpractice at portfolio startups.
Here’s what went on...
Desi TikTok Rival Zooms
VerSe Innovation Pvt., the operator of TikTok rival Josh and local language content platform DailyHunt, raised $805 million (Rs 6,100 crore), taking its valuation to $5 billion (Rs 38,800 crore). That’s slightly higher than Paytm’s market cap as on April 29.
With this, the company has raised nearly Rs 11,500 crore ($1.5 billion) in the past year from investors including Google, Microsoft and Qatar Investment Authority.
“This investment comes when we’re on a path to expand our offerings, monetisation models, deliver superlative Web 3.0 experiences for the globe and create an IPO-scale business,” Founder Virendra Gupta and Co-Founder Umang Bedi jointly said in a statement.
VerSe claims to serve one out of every two internet users in the country across its three apps—Josh, DailyHunt and PublicVibe (hyperlocal video app).
Umang Bedi (L) and Virendra Gupta (R).
(Source: VerSe Innovation's press release)
Rapido Back In The Limelight
Rapido, a bike taxi platform, has raised $180 million (Rs 1,370 crore) in a Series D funding, led by Swiggy. TVS Motor Co. also participated in the round.
The startup, among the ‘soonicorns’, has raised $130 million (around Rs 1,000 crore) in the last seven years. The latest funding took its valuation to $830 million (Rs 6,330 crore).
“With both TVS and Swiggy, our relationship is beyond capital,” Aravind Sanka, co-founder at the Bengaluru-based company, told BloombergQuint. “Swiggy’s partnership will also provide additional earnings for both Swiggy’s delivery executives and Rapido’s captains. With TVS, we aim to bring together our strengths in mobility and seamless technology platform where our partnership will focus both on two-wheeler and three-wheeler vehicles in the EV segments and expand our electric bikes fleet.”
Rapido founders. Aravind Sanka (C). (Source: Rapido)
The capital, Sanka said, will be used across the three prime categories comprising bike taxi, auto and delivery.
The delivery or third-party logistics business, which Rapido forayed into three years ago, is “more of a matter of utilisation than anything else at this point”. “Since all our third-party logistics drivers have enrolled in bike taxis, it helps our bike taxi captains earn more income on a daily basis.”
Separately, insurtech startup Turtlemint has raised $120 million (Rs 916 crore) in a Series E funding.
The company has reached a “slightly less than unicorn valuation”, Co-Founder Dhirendra Mahyavanshi told Bloomberg.
According to India Insurtech Association and Boston Consulting Group, insurtech funding in the country propelled from around $290 million (Rs 2,210 crore) in 2020 to $900 million (Rs 6,870 crore) in 2021.
“The funding levels of last year indicate sustained investor interest and we will see more insurtechs creating real business value. Enablers such as IndiaStack, Ayushman Bharat, Insurance Information Bureau and the RBI's regulatory sandbox have provided a strong platform for innovation across the insurance value chain,” it said in a report.
India has churned out three unicorns in this segment—Acko, Digit Insurance and PolicyBazaar.
Iron Pillar Bullish On Tech Companies
The lull in April around unicorns wouldn’t be too long-lived, according to venture capital fund Iron Pillar.
According to the investor of Servify and FreshToHome, India’s unicorn count is set to nearly double to 250 in the next three years from the odd-130 now.
The pace of creation of unicorns also is accelerating.
Sequoia On Fraud Allegations At Portfolio Startups
Sequoia India, in a blog post, has responded to various allegations of malpractice at as many as three startups it backs—Trell, Zillingo and BharatPe.
While the investor did not name any company, it said it was “deeply disturbed” to learn that some of its portfolio founders have been under investigation for potential fraudulent practices or poor governance.
That came as Zilingo suspended its CEO Ankiti Bose, BharatPe severing ties with Co-Founder Ashneer Grover, and alleged related-party transactions by Trell.
“It is easy to think of this issue as ascribed to poor due diligence. But let’s remember that when investments are made at seed or early stage there is hardly a business to diligence. Even later stage investors can face negative surprises, post investment, if there is willful fraud and intent,” Sequoia said.
It said it would take steps such as governance trainings for founders and senior management, implementation of whistleblower policies, more independent board representation, asking for more disclosures and more rigorous adoption of internal audits and controls to prevent such situations.
Other Major Deals And Developments
Crypto unicorn CoinDCX is raising $135 million (Rs 1,030 crore) from venture capital funds, led by Pantera Capital and Steadview Capital Management at a $2.2-billion (Rs 16,700 crore) valuation.
Eyewear brand Lenskart has secured $100 million (Rs 760 crore) in a new round from Alpha Wave Ventures. This could possibly be its last funding round before it heads for the markets.
Zomato’s Deepinder Goyal joins Urban Company board as independent director.
Edtech startup Newton School raises $25 million (Rs 190 crore) in a Series B funding, led by Steadview Capital.
TripMoney, MakeMyTrip’s fintech arm, buys majority stake in India’s leading online Foreign Exchange services provider, BookMyForex.
Anarock acquires flexible workspaces platform myHQ.
Beams Fintech Fund announces first close for its maiden fund at Rs 270 crore.
Phool.co, which claims to be India’s first biomaterial startup and fragrance-focused wellness brand, raised $8 million (Rs 61 crore) in a Series A funding from Sixth Sense Ventures and existing investors such as actor Alia Bhatt and IAN fund.
WazirX, Buidlers Tribe, and Atal Incubation Centre partner to set up a Blockchain Park in Goa for Web3 startups.
Live video and audio calling platform Dyte has raised $11.6 million (Rs 88.5 crore) in its seed round from Unbound, Sequoia Capital India’s Surge and Nexus Venture Partners.
Rebel Foods acquires a majority stake in luxury chocolate brand, SMOOR at a valuation greater than $50 million (Rs 381 crore), in line with its goal of announcing $150 million (Rs 1,140 crore) over the coming years. The startup wants to consolidate its position as the “Thrasio of Food”.
Bengaluru-based chronic disease management startup Phable raised a Series B funding of Rs 187 crore.
Medikabazaar raises $65 million (around Rs 500 crore) in funding led by Lighthouse India Fund.
Software testing startup Last9 raises $11 million (around Rs 84 crore) from Sequoia, others.
Pine Labs invests in India payments colutions company Mosambee.
TV actor and cricket presenter Gaurav Kapur invests in Flatheads, a D2C online casual sneakers brand.
Travel software platform Itilite raises $29 million (around Rs 221 crore) in Series C round
Recur Club, a subscription based financing platform, raises $30 million (around Rs 229 crore).
Restaurant management startup UrbanPiper raises $24 million (around Rs 183 crore) in Series B.
Flipkart has acquired D2C software-as-a-service platform ANS Commerce for an undisclosed sum.
Edu-fintech startup Financepeer raises $31 million (Rs 236 crore) in a Series B funding
Cricket NFT platform Rario raises $120 million (Rs 916 crore) from Dream 11’S VC arm
ITC Ltd. participates in $17 million (Rs 130 crore) fundraise by Mylo, a babycare wellness brand.
Beauty startup Believe raises $55 million (Rs 420 crore) in Series C led by Venturi Partners, IIFL AMC.
GenieMode raises $28 million (Rs 213 crore) from Tiger Glocal, others.
Ayu Health raises $27 million (Rs 211 crore) led by Nandan Nilekani’s Fundamentum.
(Source: official media releases)