Ecosystem Weekly | 11th Sep’22

The total reported funding this week stood at ~$132 Mn across 39 deals, a decline of around 33.6% from $199 Mn in the previous week. The highlights were Tata 1mg (ePharmacy platform) becoming a unicorn by raising $40 Mn at $1.25 Bn valuation, Akshaykalpa Organics (Organic dairy) raising $15Mn, GroMo (tier 2 / 3 towns focused fintech) raising $11 Mn in Series A round.

If you notice, all three of them are in different categories of ecommerce – pharmacy, groceries and financial products. In this newsletter let us understand the buzzword ‘ONDC’ which is supposed to transform ecommerce as we know it today.

Branded as ‘UPI for ecommerce’, ONDC stands for Open Network for Digital Commerce. ONDC is an open network and not a centralized platform. Amazon & Flipkart, the current e-commerce giants are centralized platforms, which means the seller and the buyer both have to be on Amazon app/platform to do a transaction, the rules for which are dictated by the platform.

On the other hand, ONDC aims to make ecommerce platform agnostic through a network of interconnected buyer-side apps and seller-side apps. E.g. Tata 1mg, Akshayakalpa Organics and GroMo may be onboarded as seller apps on ONDC network. Similarly, there is PayTM which has already been onboarded as a buyer-side app on the network. So, you and I, as PayTM app users, would be able to buy medicines from Tata 1 mg, dairy products from Akshayakalpa, and register for a GroMo loan, within the PayTM app itself.

Similarly, there can be multiple user-entry points (buyer side apps), like PayTM to the ONDC network. Nine banks have already bought stakes in ONDC, incorporated as a Not for profit company, to integrate their customers. Google and Payment aggregators can be another customer entry point to the network.

On the other hand, seller apps on the network would keep on adding new products and categories. This would be supplemented and catered through onboarding of logistic delivery partners on the network. More transactions lead to more deliveries leading to more business for them.

It appears it’s a win-win situation for everyone and the duopoly of existing giants Amazon and flipkart is bound to be broken in near future! Maybe, it’s not that simple.

Two strategic challenges arise. Is it so seamless to bring users from one app and sell them products on another? Second, what if Amazon & Flipkart themselves are on the network, as this news suggests? Would their dominance not translate on the new ONDC network as well?

In order to think about the first question, let me draw a physical world analogy, to emphasize on the sticking power of closed integrations.

Most likely, while shopping in a big city mall, you would have been approached by a young sales executive, selling great credit card offers, and on all occasions you would have excused yourself. Because you were in the mall to entertain yourself with a movie and a treat and not buy a financial product.

Somewhat similar consumer behavior is likely to play out in ‘digital malls’ of the future (interconnected buyer seller apps on ONDC). In my opinion, It is less likely for a person buying medicines on his preferred e-pharmacy app to explore and buy an insurance policy or shoes in the same session.

Closed integration – right from customer acquisition funnel, in-app buying experience, seamless payment integration, fast delivery, refunds and robust customer-care processes – has a lot of moving pieces, all of them have to be conquered.

ONDC is likely to open up new opportunities for all stakeholders. How they would evolve would be interesting to watch.

Startup Funding Summary

Tata 1mg, a Gurgaon-based e-pharmacy platform, has raised $40 Mn in a funding from Tata Digital, MPOF Mauritius Ltd, HBM Healthcare and KWE Beteiligung – Read More

iBus Group, a Bangalore-based telecom infrastructure and technology company, has raised $16 Mn in a funding from Nomura and global financial services group – Read More

Akshayakalpa Organic, a Bangalore-based dairy enterprise, has raised $15 Mn in Series B funding from British International Investment, Rainmatter Foundation and Venture Dairy – Read More

GroMo, a Gurgaon-based fintech startup, has raised $11 Mn in Series A funding from SIG Venture Capital, Y-Combinator, Das Capital, Goodwater Capital, Beyond Next Ventures, Soma Capital, Ace & Company, Hauz Khas Ventures, Kunal Shah, Niraj Singh, Ramakant Sharma, Alok Mittal, Utsav Somani, Ashish Sharma, Abhishek Goyal and Nitin Gupta – Read More

ZippMat, a Bangalore-based SCaaS platform, has raised $10 Mn in a funding from Matrix Partners India, Zephyr Peacock, HDFC bank and TradeCred – Read More

M&A Snippets

Navi Mumbai-based conglomerate company Reliance Industries has acquired US-based solar software startup SenseHawk for $32 Mn – Read More

Mumbai-based building materials supplier Aris Infra has acquired Bangalore-based real estate solution provider Unitern Advisors for an undisclosed amount – Read More

Chennai-based payment gateway firm IppoPay has acquired Chennai-based risk management startup Tutelar for an undisclosed amount – Read More