Google in funding talks with Meesho; Indians double down on crypto

By Daisy On Oct 22, 2021

Google, which has already invested in six Indian startups this year, is now in talks with social commerce platform Meesho for a $50-75 million infusion.

Also in this letter:

Indian investors double down as Bitcoin surges again
Nykaa IPO next week
Google to slash Play Store commission to 15% from Jan

Google in talks to back social commerce startup Meesho

Vidit Aatrey (left) and Sanjeev Barnwal, cofounders, Meesho

Google is in talks to pump $50-$75 million into social commerce startup Meesho, sources told us.

Details: The investment is part of Meesho’s recent financing round and values the Bengaluru-based firm at $4.9 billion. Meesho had raised $570 million from US-based asset manager Fidelity and Eduardo Saverin’s B Capital in September. Google’s investment will take the round size to over $600 million.

Google’s latest investment will take Meesho’s total financing to over $900 million so far this year, including $300 million that it raised from SoftBank Vision Fund II in April.

Taking on ecommerce biggies: Meesho is expected to use the fresh capital to become a consumer-facing ecommerce entity that can compete effectively against dominant players Amazon India and Walmart-owned Flipkart.

Google’s India bets: The internet search giant is already an investor in Indian startups including hyperlocal delivery player Dunzo and InMobi’s lock screen platform Glance. Its video sharing platform YouTube acquired video social commerce startup Simsim in July.

Other deals news

■ FarMart, a software-as-a-service-led food supply platform, has raised $10 million in a funding round led by Matrix Partners India. Innoven Capital and existing investors Omidyar Network India, Avaana Capital and 500 Startups also participated in the fundraising, which was a mix of primary and secondary transactions. The round provided an exit to early investors Indian Angel Network and LetsVenture.

■ Regulatory technology startup IDfy has bagged Rs 86 crore in its Series D round of funding led by TransUnion and Blume Ventures. The Mumbai-based startup plans to use the funds to strengthen its product offerings and expand its business and operations.

■ Edtech startup Questt said it has landed $6.75 million in funding in a round led by Celesta Capital and Premji Invest. Existing investor Chiratae Ventures increased its shareholding in the Series A round, while other existing investors including AET Fund, MarsShot Ventures, Titan Capital, and First Cheque remain invested in the company.

■ Sourcewiz, a software-as-a-service (SaaS) platform that digitalises operations for exporters, has raised $3 million in a seed funding round led by Blume Ventures and Alpha Wave Incubation.

Indians double down on crypto as Bitcoin clears $66,000

Top Indian crypto exchanges have seen trading volumes increase by more than 100% over the past few days as the value of the digital currency soared to a new all-time high of $67,016 on Wednesday, topping the $64,895 it hit on April 14.

Bitcoin was trading at more than $66,000 on Thursday, buoyed by the decision of US regulators to allow exchange traded funds (ETF) based on Bitcoin futures. The global crypto market also touched $2.6 trillion for the first time ever.

Also Read: Crypto ETFs explained

Investors scramble: This has prompted crypto investors in India to increase their holdings, anticipating further gains, industry executives said. This is a marked difference in investor behaviour compared to previous cryptocurrency booms. When Bitcoin rallied in August, Indian investors had booked profits.

What this means: Industry trackers said Indian investors’ response to the latest rally points to a maturing market, with many also choosing alternative coins as Bitcoin prices surged.

Crypto exchanges based in Mumbai are at the head of the rally. WazirX saw a 167% jump in trading volume while CoinDCX saw a 200-300% increase.
Delhi-based BuyUCoin clocked a 130% increase.
Bengaluru’s Coinswitch Kuber has seen a 100% jump since Wednesday.

Since Wednesday, Bitcoin worth almost $13.8 million has been traded on WazirX, while at Coinswitch Kuber trades totted up to $25 million.

Rising from the dead: Shivam Thakral, CEO of BuyUcoin, said, “We have seen inactive users creating fresh portfolios around Bitcoin and other top-10 crypto assets. We have also seen a considerable increase in crypto-SIP purchases.”

The risk of not investing: Vikram Rangala, director at crypto exchange ZebPay, said that investors have gone from talking about the risks of investing in crypto to the risk of not investing in it. “A lot of people are reaching out and are interested in investing because they think the market will still go up,” Sachin Jain, cofounder of Amesten Capital, said.

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Nykaa to launch IPO on Oct 28, seek $7.4 billion valuation

Nykaa founder Falguni Nayar

Nykaa will launch its initial public offering next on October 28, sources with direct knowledge of the development told us.

The details: One of the sources said the anchor book of up to Rs 2,340 crore would open on Wednesday and that the public issue would close on Monday, November 1.

The company is seeking a valuation of around $7.4 billion for the IPO, another source said, adding that the price band would be decided by next week.

The Rs 5,200-crore IPO includes a primary issuance of up to Rs 630 crore. The rest will be raised through an offer for sale (OFS), in which existing shareholders will sell up to 43.11 million shares, according to Nykaa’s draft IPO red herring prospectus.

Investors likely to dilute their stakes include TPG, Light House India Fund, JM Financial, Yogesh Agencies, Sunil Kant Munjal, Harindarpal Singh Banga, Narotam Sekhsaria, and Mala Gaonkar, the draft prospectus said.

Founder Falguni Nayar, her husband Sanjay and their two children hold more than 53% in FSN E-Commerce Ventures, the parent firm of Nykaa. The family will continue to own a majority stake even after the IPO, we had reported earlier.

Financials: Nykaa is among the few profitable e-tailers in India. It reported a net profit of Rs 61.96 crore in FY21, from a net loss of Rs 16.34 crore in FY20. Revenue also grew 38% to Rs 2,453 crore in FY21.

IPO momentum: If all goes to plan, Nykaa will be the second Indian startup to go public this year after Zomato, which drew huge interest for its trailblazing IPO in July. Others in line to list on the stock exchanges this year are Paytm, PolicyBazaar and Mobikwik.

We reported yesterday that Zomato’s successful listing has opened a window of possibility for risk investors, who are keen to pump more money into India’s top startups that are eyeing IPOs in the next two to three years.

“Now the path to IPO is sort of visible. Say, if I invest in the number one company of a category, with minimal risk I will be able to exit with considerable upside through an IPO over the next two-three years. That’s the lure for global investors,” said Anand Lunia, founding partner at India Quotient.

Large global banks are also wooing unicorn founders for their IPO mandates, said an investor whose portfolio includes a soon-to-IPO startup and a handful that have raised several rounds this year.

Under pressure, Google to slash Play Store commission to 15% from Jan

Google will slash the commission for in-app purchases on its Play Store to 15% from January. The move comes days after the Alliance of Digital India Foundation (ADIF), which represents a host of Indian startups and app developers, filed a petition before the country’s antitrust regulator seeking interim relief against Google’s new Play Store policy.

Backing down: “To help support the specific needs of developers offering subscriptions, starting on January 1, 2022, we’re decreasing the service fee for all subscriptions on Google Play from 30% to 15%, starting from day one,” said Sameer Samat, vice president of product management for Google Play.

The tech giant also said that it is reducing its service fee to 10% in the media experience programme in categories such as ebooks and on-demand music streaming services, for which customers pay a monthly subscription.

Indian internet entrepreneurs have been up in arms against both Google and Apple over the steep commissions they charge on in-app purchases and their refusal to allow modes of payment other than their own.

Facebook faces ire of its own Oversight Board

Facebook’s Oversight Board on Thursday said the social networking giant isn’t being clear with the people who use its platforms and users are consistently left guessing about why the company removed their content.

The board made these remarks while publishing its first quarterly transparency reports.

What did the report say? Facebook has not been fully forthcoming with the board on its ‘cross-check’ system, which the company uses to review content decisions relating to high-profile users, it said.

The report covers the fourth quarter of 2020, as well as the first and second quarters of 2021. The board got a total of eight cases from India, Facebook’s biggest market.

Meanwhile, renaming Facebook Inc. is unlikely to enable the tech giant to distance itself from regulatory and public scrutiny around the potential harms caused by its social media apps, marketing and branding, according to experts.

Facebook—the company—is planning to change its name next week to reflect its focus on building the metaverse, The Verge reported, citing a source.

“Legislators and politicians are sufficiently smart to not be fooled by a rebranding,” said James Cordwell, an internet analyst at Atlantic Equities.

Facing the heat: Facebook is battling intense scrutiny after whistleblower Frances Haugen, a former employee, leaked thousands of internal documents that showed it contributed to increased polarisation online when it made changes to its content algorithm, failed to take steps to reduce vaccine hesitancy, and was aware that popular social media app Instagram harmed the mental health of teenage girls.

Rebel Foods ties up with Foodpanda for expansion into SE Asia

Rebel Foods cofounders Kallol Banerjee (left) and Jaydeep Barman

Rebel Foods, the newest member of India’s startup unicorn club, will expand the footprint of its brands Faasos, Behrouz Biryani and Lunchbox to markets across Southeast Asia in partnership with Foodpanda.

A subsidiary of Delivery Hero, a food delivery company in Europe, Foodpanda operates in more than 400 cities across 12 markets in Asia.

The goal of the two companies, which have been in partnership since December 2019, is to launch more than 10 online food brands in over 2,000 outlets across the region. The partnership is based on a brands-as-a-service (BaaS) model which allows Foodpanda’s restaurant partners to plug-and-play Rebel Foods brands and earn additional revenue.

In the first phase of the partnership, Rebel Foods introduced four brands across six markets—Singapore, Malaysia, Bangladesh, Thailand, Hong Kong and the Philippines through the Foodpanda network.

Digital-first F&B: “This Foodpanda-Rebel Foods partnership introduces a new digital-first F&B format in Asia. Foodpanda is always seeking new, innovative ways to change the way F&B businesses operate in a hyper-digitalised economy. We want to push our ecosystem further into the future,” said Pedram Assadi, COO, Foodpanda. “Most importantly, these virtual brands will give our restaurant partners, especially SMEs, new opportunities to earn additional revenue.”

Cloud kitchens on cloud 9: The cloud kitchen sector in India has seen heightened deal activity in recent months. Wow! Momo Foods recently raised around $17 million and has IPO ambitions, while Curefoods, founded by Ankit Nagori, raised $13 million from Iron Pillar in August to acquire and launch internet-first brands.

Room to grow: India’s online food industry is still nascent, and the market remains severely underpenetrated when compared to the US and China, RedSeer Consulting said in a report on August 30.

It said the penetration of online food services in India is set to double by 2025, clocking a gross merchandise value (GMV) of nearly $13 billion. GMV is the total value of goods sold over a given period of time before deduction of fees or expenses.