ESTA nominees for Midas Touch & Startup of the Year; Meesho to raise $550-600M

By Daisy On Sep 24, 2021

Hi there, it’s Samidha. Today’s the big day we’ve all been gearing up for here at ETtech, as The Economic Times Startup Awards (ETSA) 2021 elite jury meets to pick the winners across nine categories. The jury meeting is a closed-door affair which is highly charged up with intense deliberations. The jury comes fully prepared every year having dived into the dossier sent to them, armed with questions and observations.

This would be the second year in a row that the jury will meet virtually. No wonder everything is a little less tense compared to last year, when we were new to doing virtual events.

Once the jury votes and picks the winners after multiple rounds of discussions, the editorial team will work through the weekend to bring to you 360-degree coverage of the winners on Monday morning across print and digital.

Here are the nominees for the two most prestigious awards — Midas Touch for the best investor and Startup of the Year. What a stellar set of contenders we have once again, best of luck to all of them.

Check them out here and come back on Monday to find out who the winners are.

Now onto some big scoops.

Meesho, DealShare and the in-demand social commerce sector

Meesho cofounders Sanjeev Barnwal (left) and Vidit Aatrey

Social commerce startup Meesho is finalising a $550-600 million financing round that’s likely to be led by Fidelity, two sources told us.

Facebook cofounder Eduardo Saverin’s B Capital, and existing backers SoftBank, Prosus Ventures and others will also participate in the funding round, which will more than double the company’s valuation to $5 billion.

“While Fidelity is expected to plough in more than $100 million, B Capital and other new investors will cough up $50-100 million each…,” a person familiar with the talks said, adding, “There could be an official announcement on this soon.”

Meesho was valued at $2.1 billion in April when it raised $300 million from SoftBank Vision Fund.

Rival scouting deals: Meanwhile, DealShare — another social commerce startup that specialises in groceries and essentials — is also looking to raise funds. Sources told us the company has held talks with private equity funds such as TPG Growth and is likely to raise $150-200 million at a valuation of $1.8-2 billion.

Social commerce booming: Meesho, the dominant player in India’s growing social commerce space, lets small businesses sell products using WhatsApp and Facebook.

Walmart-owned Flipkart has also entered this category with Shopsy, which currently accounts for under 10% of its overall gross merchandise value (GMV). It offers around 150 million products across fashion, beauty, mobile phones and home, but not groceries.

Foreign ecommerce ventures such as Singapore’s Shopee are also planning to enter India, while US-based social shopping site Poshmark is already here.

Yes, but: India’s low-end, unbranded ecommerce market where Meesho operates is hard to crack. The company’s current burn rate — what it spends to acquire users — is $20-25 million a month, a source said.

ETtech Done Deals

■ Medikabazaar, a business-to-business healthtech platform, said it has raised $75 million in a Series C funding round led by Creaegis, along with CDC Group, the UK’s development finance institution, making it the highest fundraising in the B2B healthcare space. The company said it will use the funds to strengthen its digital capabilities, deepen the supply ecosystem and technology driven distribution channels, and bolster capacity.

■ Fittr, a community-based health and online fitness marketplace, has raised $11.5 million in a Series A funding led by Dream Sports’ corporate venture fund Dream Capital and Elysian Park Ventures, the private investment arm of the LA Dodgers Ownership Group. Existing investor Sequoia India’s Surge also participated in the funding round. It will use the capital to step up growth and expansion into new markets, including North America, the UK and Singapore.

■ Conversational messaging startup Gupshup has acquired New Jersey-based business messaging solutions provider Dotgo in a majority stock deal. Dotgo will strengthen Gupshup’s conversational messaging platform, which helps businesses and developers build customer experiences. The acquisition comes at a time when Gupshup is planning a potential initial public offering (IPO) in the US next July.

■ Karbon Card, a fintech startup offering corporate cards, has raised $12 million in a funding round that also included US-based fintech unicorn Ramp, Rainfall Ventures, Roka Works, and Y Combinator among other global investors. The capital will be used to step-up product development and operations, and to double its staff strength to 60 over the next six months.

■ Kalpathi AGS Group-owned Veranda Learning Solutions on Thursday announced that it has acquired edtech company Edureka for Rs 245 crore. Edureka is a live instructor-led online solutions provider for the IT industry and this 100% acquisition marks Veranda Learning Solutions’ second buyout since December 2020.

Tweet of the day

EXCLUSIVE: Paytm founder Sharma gets new stock options ahead of IPO

Vijay Shekhar Sharma, Paytm’s founder, is getting a significant amount of new stock options in its parent firm One97 Communications, which will increase his stake in the company by 2-3%, sources told us. The news comes ahead of One97’s $2.2-billion IPO.

Paytm recently increased its employee stock options pool from 24,094,280 to 61,094,280 equity options at a face value of Re 1 each. Almost half of the new stock options have been allocated to Sharma, a source said, adding that these are performance-linked and based on Paytm achieving certain milestones.

“This is also a way of the management rewarding Sharma for scaling Paytm to this point (IPO) as a leading payments firm,” another person close to the company said.

Reward: Sharma’s windfall is not an anomaly. Many top-tier founders have been granted such stock options before their IPOs so they can reap the benefits of taking the company public. We reported on September 10 that the founders of Tata-owned BigBasket were also granted new management stock options to ‘retain, attract and motivate’ talent.

Sharma, who holds around 15% in One97 Communications, is planning to sell a part of his holding through an offer for sale (OFS) in the upcoming IPO. The new stock options will increase his holding even after he sells a part of his stake. Investors such as Ant Group, Alibaba, SoftBank and Elevation Capital are also expected to sell parts of their stake in the IPO.

Employees cash in: Over the past few months, many current and former Paytm executives have converted their stock options into shares, hoping for big gains from the IPO. In August, the company granted new stock options to 166 former and current employees, which were then converted into shares, regulatory filings showed.

Yesterday we reported, citing a regulatory filing, that about 20 more employees have converted their stock options into a total of 5,45,735 shares.

Mega IPO: Paytm filed its draft IPO paper in July, seeking to raise Rs 16,600 crore ($2.2 billion). The offering will comprise a fresh issue worth Rs 8,300 crore and an OFS of the same size. It could also see a pre-IPO funding round of up to Rs 2,000 crore. If this happens, it will adjust the size of the fresh issue accordingly, the company said in its filing.

Google files petition against CCI over leaked probe report

Google has filed a writ petition in the Delhi High Court against the Competition Commission of India (CCI) over the leaking of a confidential report by its director general (DG) on an ongoing investigation by CCI into its Android agreements.

Google said it has not yet received or reviewed the 750-page report, which the Times of India and Reuters had cited on September 18 to state that the CCI had found evidence that Google was abusing its dominant position.

The DG’s report does not reflect the final decision of the CCI.

What Google said: The company said this breach of confidence impaired its ability to defend itself and harmed it and its partners.

“We are deeply concerned that the Director General’s Report, which contains our confidential information in an ongoing case, was leaked to the media while in the CCI’s custody. Protecting confidential information is fundamental to any governmental investigation, and we are pursuing our legal right to seek redress and prevent any further unlawful disclosures,” a Google spokesperson said.

The investigation: The probe in question was launched in April 2019, when the CCI said in an order that Google appeared to have misused its dominant position in India by discouraging phone manufacturers from choosing alternative versions of Android, which runs 98% of smartphones in India.

According to reports, the probe found Google India guilty of stifling competition and innovation to the detriment of the market and consumers to maintain its dominance in search, music (through YouTube), browsers (Chrome), app libraries (Play Store) and other key services.

Not the only one: Google is subject to two other investigations by the CCI.

Banks say they will comply with new rules for recurring payments by October 1

Three of India’s largest private lenders — HDFC Bank, ICICI Bank and Axis Bank –- said they will comply with the RBI’s new rules for recurring payments ahead of the October 1 deadline.

India’s payments ecosystem, online merchants and consumers are anticipating large-scale disruption in recurring payments through debit and credit cards owing to the central bank’s new rules.

What the rules say: The RBI’s new rules say that banks can only process auto-debit transactions if they send a pre-debit notification to customers at least 24 hours before the payment is due.

The new rules also say that for auto-transactions above Rs 5,000, customers will need to authenticate the payment manually with a one-time password (OTP).

According to sources, banks are working with payment aggregators Razorpay and BillDesk to integrate with a common e-mandate platform that will ensure compliance.

Quote: ”We will be going live in the next 2-3 days, complying with RBI guidelines,” said Sanjeev Moghe, head of cards and payments at Axis Bank.

Earlier this year, several banks had said they would be unable to comply with this rule in time, following which the central bank postponed its implementation in March. It said non-compliant banks that continued to process such transactions after September would face strict action.

UK clarified it has no concerns with CoWin, says RS Sharma

The UK has clarified that it has no concerns with India’s Covid-19 vaccination certificate issuing portal CoWin, RS Sharma, Chairman of the Empowered Group on Vaccine Administration told us.

Sharma, who is also the CEO of the National Health Authority, said there have been two meetings with the UK authorities this month and there are “no issues” with respect to CoWIN.

Quote: “The British side has never shown any concern about the Cowin certification process to the best of my knowledge, and they have also clarified the same,” said Sharma, adding that there was no written communication from the UK anywhere stating that they would not accept certificates issued through CoWin.

Earlier in the day, Alex Ellis, British High Commissioner to India said on Twitter that he had excellent “technical discussions” with RS Sharma and the National Health Authority.