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Hard Work or Harvard?

January 29, 2023
I wish you had a great Republic day celebration.
 
The English word ‘republic’ is derived from Latin – ‘res publica’, the public thing. This translates in the political domain into decision-making in the open, in full view of all. It follows that informed, vigilant, and articulate citizens are the foundations of an ideal republic. Universities, through good quality education, are expected to nurture such citizens.
 
In this edition, let us touch upon one of the forthcoming policy changes in higher education, which has been widely discussed in the past weeks.
 
Earlier this month, University Grants Commission (UGC), apex body regulating the universities in India, released the draft guidelines to allow foreign universities in India. Thus, we would have the likes of Harvard & Cambridge University to open their campuses in India.
 
First, it is important to acknowledge the sad reality that Indian universities, whether public or private, do not feature in the top global rankings. Second, we often create a false equivalence between the premium standalone technology or management institutes (IITs/IIMs) and the top ranking universities from abroad. Harvard university is much more than the Harvard business school. A world class university has high ranking departments, schools across disciplines.
 
This leads us to a set of fundamental questions –
1. What goes into making a world class university? 
2. Why would the best known universities of the world open their campuses in India? 
3. Why has India been unable to create public or private universities, which could become the default low-cost destinations for higher education in the world?
 
First, a world class university marries teaching with research. Unit economics for a full-fledged Ivy League university campus are not likely to work in India. Funding research is a long drawn process with no immediate return on investment. Most of the foreign universities receive state subsidies and grants as fees alone cannot support the research.
 
Moreover, in its guidelines UGC has allowed repatriation of profits made in India. Hence there exist no structural reason for long term investment in research. Most likely, a ‘center’ offering a couple of professional courses (such as MBA) might be replicable but not a campus offering research across various disciplines.
 
Second, there seems to be no economic or lifestyle incentive for top-notch exceptional faculties from abroad to shift their base to India unless their existing salaries are matched or exceeded.
 
Third, only a small segment of the Indian consumers can afford foreign education. Incentive to go abroad is partly cultural as well, to experience life and network beyond India. Would the price differential in Indian campuses be significant enough to forgo non-financial incentives? To flip the question – If IIM A opens a campus in another Indian city, e.g. IIM A Bhopal. Would people who can afford IIMA originally switch to IIMA Bhopal? The cultural vibe and ethics of the original university are hard to replicate elsewhere.
 
Fourth, it would be quite paradoxical of UGC which is pushing for standardization in entrance, assessments, and syllabi across public universities to create exceptions for campuses of foreign universities which thrive on their autonomy and diversity.
 
Data seems to suggest full-fledged foreign campuses of best known universities are hard to find, except for a couple of exceptions.In this C-BERT database of foreign campuses, we do not see names of the biggest brands – such as Stanford, Oxford, Princeton etc. You may find one off ‘centre’ or ‘school’ but not full campuses.
 
The third question – why are there no world-class Indian universities? – is more significant than foreign universities opening campuses in India. It would be in the national interest that the startup and investor community reflects on it. It appears we do have the intent and a community of financially capable entrepreneurs who can establish low-cost world class universities.
 
The most likely reason lies in the complex and bureaucratic regulatory system of higher education in India. On one hand it has deteriorated public universities beyond repair and not incentivised quality private universities to flourish on the other. 
 
It remains to be seen which universities finally arrive in India but let us strive to do ‘hard-work’ to create world class Indian Universities which would nurture our republic and become the next “Harvard’ for the world to look upto. 
 
Jai Hind!
Startup Funding Summary
Log9, Bengaluru-based nano-materials manufacturer and RnD startup, has raised $40 Mn in Series B funding from Amara Raja Batteries, PETRONAS Ventures, Incred Financial Services, Unity Small Finance Bank, Oxyzo Financial Services and Western Capital Advisors – Read More
Ecozen, Pune-based deep tech startup, has raised $25 Mn in Series C funding from Nuveen, Dare Ventures, India EXIM Bank, Caspian and Hivos-Triodos Fonds – Read More
FuelBuddy, New Delhi-based mobile energy distribution platform, has raised $20 Mn in a funding round from Jindal Power Limited, RJ Corp, and Nilesh Ved – Read More
Rigi, Bengaluru-based community management platform, has raised $12 Mn in Series A funding from Elevation Capital, Accel, Stellaris, Sequoia, Mahendra Singh Dhoni, Kunal Shah, Amit Agarwal, Chakradhar Gade, Sharan Hegde and other HNIs – Read More
Landeed, Bengaluru-based proptech startup, has raised $8 Mn in Seed funding from Draper Associates, Y Combinator and Bayhouse Capital – Read More
M&A Snippets
Bengaluru-based IT services firm Happiest Minds has acquired Madurai-based IT services company Sri Mookambika Infosolutions for $14 Mn – Read More
Pune-based gaming and entertainment firm JetSynthesys has acquired US-based media and entertainment company Fanory for an undisclosed amount – Read More
New Delhi-based online travel company Easy Trip Planners has acquired Hyderabad-based hotel booking platform cheQin for an undisclosed sum – Read More
Noida-based fintech company Pine Labs has acquired Bengaluru-based enterprise platform Saluto Wellness for an undisclosed sum – Read More

Competition Commission of India’s penalty on Google India

January 15, 2023
In this edition we would briefly discuss the widely reported news of Competition Commission of India (CCI) imposing penalties on alleged anti-competitive practices of Google India.
 
CCI was established after the enactment of Competition Act, 2002 which mandates CCI to promote and sustain an enabling competition culture through engagement and enforcement that would inspire businesses to be fair, competitive and innovative; enhance consumer welfare; and support economic growth.
 
In Oct 2022, on an appeal filed by three advocates in 2018 against Google India, CCI had passed two orders imposing penalties on Google. First order of Oct 20, with a fine of ~1337 Cr, relates to the anti-competitive practices with respect to Android (mobile operating system). Second order dated 25 Oct, with a fine of 937 Cr, alleges Google abusing its dominant position by way of its Play Store policies and asked Google to cease its “abusive” practices.
 
Google’s Android is the dominant operating system for smartphones in India with over 95% market share. As per the complaint to CCI, smartphone manufacturers (OEMs) have no choice but to agree to Google Mobile services (GMS) through which proprietary applications & services such as Google search, Google Chrome & Youtube come pre-installed on the device which cannot be removed. Such conduct was claimed to have hindered the development and market access of rival mobile applications or services.
 
In the second case, Google, through its control over the Play Store, is favouring Google Pay over other competing apps, to the disadvantage of other UPI apps and end users. In simple terms, apps have to necessarily enable their in-app purchases through Google Pay services only. This amounts to abuse of its dominant position by Google.
 
Google challenged both of these CCI orders in the appellate authority – The National Company Law Appellate Tribunal (NCLAT). NCLAT declined to provide interim relief to Google, following which Google has approached the Supreme Court which would listen to its plea on Monday 16 Jan 22.
 
Meanwhile through a comprehensive blog post, Google initiated its public communication exercise where it emphasised on the significant role Google and its products have played in ushering digital transformation in India.
 
“Over the last 15 years, through Android’s free open source software and suite of high quality apps, Google has helped device manufacturers make smartphones more affordable by a vast margin. Today, any user can get their hands on a fully functional smartphone at less than Rs. 6000 from numerous brands.”
 
Secondly, on impact of the CCI orders, Google has argued – “As we look beyond the estimated 700 million users who are already online, safety, affordability and expanded use cases for the next wave of users will be the pillars that will determine digital adoption. Unfortunately, the ordered remedies on Android strike blows to these very areas’’.
 
In other words, Google is making an argument against the CCI orders on increased security risks due to multiple unique android versions (called forks), lesser smartphone affordability due to increased software development costs, and higher user exclusion due to higher cost for app developers.
 
It is worth noting that, as brought about in this insightful piece, mobile broadband users through smartphones in India have plateaued. After a burst of rapid growth in the earlier half of last decade, it has become stagnant.
 
This leads to expanding the existing monetisation opportunities from the crowded top of the bracket 10 Mn indian internet users. E.g. in yet another news from last month, Google is set to launch Youtube Courses, a structured learning experience on Youtube, in direct competition to ed-tech apps. Thus, if Google apps are pre-bundled and configured in the device, it creates an unfair advantage for market access for others.
 
It would be interesting to see how the Supreme Court leans on this issue which would have bearing on the startup ecosystem.
Ecosystem Ventures This Week
Key Highlights – Events
We are happy to share that Mr. Abhishek Sanghvi, Mr. Abhijeet Bhandari (Partners, Ecosystem Ventures) and Mr. Shailesh Jain (VP, Ecosystem Ventures)  participated in the 17th Pravasi Bharatiya Sammelan and Global investor meet 2023, held in Indore.


Startup Funding Summary

Wakefit.co, Bengaluru-based furniture and fixture improvement brand, has raised $40 Mn in Series D funding from Investcorp, Sequoia Capital India, Verlinvest and SIG – Read More

LEAD, Mumbai-based edtech startup, has raised $20 Mn in series C funding from Stride Ventures, Alteria Capital, Standard Chartered Bank, HDFC Bank and ICICI Bank – Read More

Toddle, Bengaluru-based edtech startup, has raised $17 Mn in Series A funding from Sequoia Capital India, Tenacity Ventures, Trifecta Capital, Matrix Partners, Beenext and Better Capital – Read More

Park+, Gurugram-based car owners-focused app, has raised $17 Mn in Series C funding from Epiq Capital, Matrix Partners India and Sequoia Capital India – Read More

ApnaKlub, Bengaluru-based B2B wholesale firm, has raised $16 Mn in Series A funding round from TrueScale Capital and ICMG Partners – Read More

M&A Snippets

US-based private equity firm Carlyle has acquired Bengaluru-based beauty and personal care entity VLCC for $300 Mn – Read More

Bengaluru-based D2C brand aggregator Goat has acquired Bengaluru-based home and lifestyle brand Chumbak for an undisclosed amount – Read More

New Geo-spatial policy as an enabler for startups

January 8, 2023

In this edition we would briefly discuss the new geo spatial policy notified by the Government of India on 28 Dec 2022. The policy has been commended by the sector stakeholders and may usher innovation in Geo-spatial based products & services for India and the world.

The policy builds on the Feb 2021 document titled ‘Guidelines for acquiring and producing Geospatial Data and Geo-spatial Data services including Maps’. Through these guidelines GoI had defined Geo-Spatial data as any positional data with or without attribute data. E.g Positional data of any place is derived from latitude, longitude and the elevation of the place from a reference point. Attribute data is any data when associated with Positional Data gives additional meaning to it.

Historically, the most common representation of positional data has been through printed maps. For their strategic significance and perceived security risk, the production and dissemination of maps has been strictly controlled through the Survey of India, the apex organization tasked with maintaining the datasets related to Geo-spatial information.

Guidelines enable a new approach whereby – “there shall be no requirement for prior approval, security clearance, license or any other restrictions on the collection, generation, preparation, dissemination, storage, publication, updating and/or digitization of Geospatial Data and Maps within the territory of India. Individuals, companies, organizations, and Government agencies, shall be free to process the acquired Geospatial Data, build applications and develop solutions in relation to such data and use such data products, applications, solutions, etc by way of selling, distributing, sharing, swapping, disseminating, publishing, deprecating and destructing. Self-certification will be used to convey adherence to these guidelines.’

The guidelines proposed a ‘negative-list’, whereby sensitive attribute data would be put on a list, which would not be made available, unless under specific regulation, as part of Geo-spatial applications. Rest of the data is being made available to companies and individuals.

To decide as the final authority on what constitutes the negative list, the Feb 2021 guidelines envisaged formation of GDPDC Geospatial Data Promotion and Development Committee, which has now been announced in the policy document.

Furthermore the new policy outlines a vision and time-bound milestones to achieve the goals. E.g by 2025 the enabling legal framework that supports liberalization of Geospatial sector and democratization of data for enhanced commercialization with Value Added Services is expected to be put in place.

By 2030, High resolution topographical survey & mapping (5-10 cm for urban & rural areas and 50 cm-100 cm for forests & wastelands), High accuracy Digital Elevation Model (DEM) for the entire country (25 cm for plain, 1-3 meter for hilly and mountainous areas) is expected.

Similarly, by 2035, high resolution/accuracy Bathymetric (measurement of depth) Geospatial Data of inland waters and sea surface topography of shallow/deep seas – to support Blue Economy is expected.

It would be interesting to see how new startups emerge in the geo-spatial space following the liberalization of policy. One of our portfolio companies is creating value for many businesses through their location intelligence platform. You may explore more about them here.

Startup Funding Summary

KreditBee, Bengaluru-based fintech startup, has raised $100 Mn in Series D funding from Advent International and Avendus Capital – Read More

SarvaGram, Mumbai-based financial service provider, has raised $35 Mn in series C funding from Elevar Equity, Elevation Capital, Temasek and TVS Capital – Read More

VilCart, Bengaluru-based rural commerce startup, has raised $13 Mn in Series A funding round from Asia Impact, Nabventures Fund and Texterity – Read More

Jupiter, Mumbai-based fintech startup, has raised $12 Mn in a funding from Alteria Capital – Read More

Varthana, Bangaluru-based NBFC startup, has raised $7 Mn in a funding from MicroVest – Read More

M&A Snippets

Mumbai-based fintech startup InCred Capital has acquired Mumbai-based wealthtech startup Orowealth for an undisclosed amount – Read More

Noida-based travel and hospitality services provider RateGain will acquire California-based data exchange platform Adara for $16 Mn – Read More

Ghaziabad-based FMCG Company Dabur India has acquired Mumbai-based spices maker Badshah Masala for $71 Mn – Read More

Being resolute on resolutions!

January 1, 2023

It is quite refreshing and motivating to write to you on the morning of Sunday, 1 Jan 2023. It is likely that I am adding to a long list of good wishes, and promotion messages which have filled our social feeds and inboxes. Hence, I wish to keep this short.

Let me share one of the key learnings from past months which relates to the flavor of the day – New year resolutions!

We tend to make new-year resolutions personally. But more often than not the resolutions are indirectly dependent on external factors. E.g. in personal life, taking time out for yourself is contingent on the roles and responsibilities with respect to the immediate family.

Thus for resolutions to succeed, an enabling environment beyond personal determination might be required. In management lingo, we can think of resolutions as ‘change management’.

Change management is a painstakingly slow and often frustrating exercise. As you are aware we have three aspects to our business – deploying our prop capital in early stage startups, being investment bankers to do fund-raise for growth stage startups, and being founders’ trusted confidante through our strategic consulting initiatives.

Long term consulting invariably happens to positively influence the first two aspects related to fund-raise. But the key challenge in long term consulting with a startup is nothing but change management. Striving balance between the well-entrenched org culture and motivations of a talented team on one hand and the key financial/ operational metrics, if conquered soon, which may propel a startup in the next league, is not an easy task.

Making startup team members incrementally cognizant and mature about their daily/weekly /monthly ‘small resolutions’, in the form of processes and systems, and simultaneously keeping the big picture in our resolutions, is the way forward.

We call this a ‘growth oversight framework’ and I am pleased to share that from Jan 2023 we are implementing this framework for change management in our long-term consulting projects. If you are interested in driving change management in your organization, I would be more than happy to share the change management template with you.

My best wishes to you and your family for a prosperous year ahead. May 2023 be the year for resolute resolutions.

Ecosystem Ventures This Week

Key Highlights – Events

We are glad to share that, this week we celebrated “Zayeka 2k22”, an annual Food Fest organized by iLead Group (Parent Company of Ecosystem Ventures). It brings all of us to celebrate the togetherness of being part of one big family. It is a good fun activity through which everyone gets to interact with each other interdepartmentally and participate in various activities.

Startup Funding Summary

Money View, Bengaluru-based fintech startup, has raised $75 Mn in Series E funding from Apis Partners, Tiger Global, Winter Capital and Evolvence – Read More

Eduvanz, Mumbai-based fintech startup, has raised $13 Mn in a funding from Rethink Education, Sequoia Capital, Juvo Ventures and Unitus Ventures – Read More

Ecozen, Pune-based agritech startup, has raised $10 Mn in Series C funding from Nuveen Global Fund – Read More

Rebel Foods, Mumbai-based foodtech startup, has raised $7 Mn in Debt funding from existing investors – Read More

GearHead Motors, Hyderabad-based e-bike startup, has raised ~$1 Mn in Pre-Seed funding from Hemin Shah and Sudhakar Moparthy – Read More

M&A Snippets

Boston-based private equity firm Advent International will acquire Hyderabad-based pharmaceutical manufacturer Suven Pharmaceuticals for $763 Mn – Read More

Impact of recessionary fears in US on capital flows to India

December 25, 2022

Nearly all major US stock markets declined around 2% last week on the probable fears of an impending recession. The YTD index returns on NASDAQ and S&P 500 stand at -30% & -17% respectively. In this newsletter we would simplify the concept of recession and the likely impact of recession in the US has on capital flows in India or the world economy in general.

Stock market movements are a signal of how investors perceive the near term economic prospects. Latest inflation figures or a less business friendly comment from a minister may lead to stock market decline. But it is not a macroeconomic indicator to qualify a recession.

Expansion is the opposite of recession. During expansion the economy grows. Recessions are brief and episodic whereas expansion is the natural state of any economy. If we drill down, there is a concept of ‘Recession’ and ‘Technical recession’. Economy is said to be in a technical recession when it contracts consequently for two quarters. The indicator used for measuring the economy is the GDP. Thus, for example, if GDP had contracted by 4% and 3% in the first two quarters of FY23, then the economy is considered to be in a technical recession. The US economy has grown in Jul-Sep 22 quarter thus it would not be considered in technical recession.

But when we use the term recession, it becomes more subjective as different apex national agencies (which collect, analyse, publish official economic statistics) define recession differently. In the US, the National Bureau of Economic Research (NBER) defines recession as

“a significant decline in economic activity that is spread across the economy and lasts more than a few months.” “The committee’s view is that while each of the three criteria—depth, diffusion, and duration—needs to be met individually to some degree, extreme conditions revealed by one criterion may partially offset weaker indications from another,”

Thus, it is a subjective assessment based on their reading of objective figures. NBER would take into account not only GDP (de)growth but a host of other macroeconomic indicators and hasn’t declared that the US is in a recession as of now.

The present public discussions stem from the fact that a set of lawmakers and business leaders are unconvinced about the US Federal Reserve’s (central bank) continued stand of maintaining high interest rates to curb historically high inflation rate and bring down price levels. Thus, they would argue recession is being induced by the Fed’s actions.

Since, the US is the world’s dominant economic power, irrespective whether recession is declared or not, a slowdown in the US impacts the world economy at large, India being no exception. Hence, investment inflow is likely to reduce. Opening lines of RBI’s December monthly bulletin on state of the economy attest this –

‘The balance of risks is increasingly tilted towards a darkening global outlook and emerging market economies (EMEs) appear to be more vulnerable, even though incoming data suggest that global inflation may have peaked.’

As per the official RBI figures upto Oct 2022, there was net foreign investment outflow of $623 Mn in Sep 22 whereas a net inflow of $3.3 Bn in Oct 22. When compared YTD, net inflow for Apr-Oct 22 stood at $14.8 Bn, around 37% decline from Apr-Oct 21. If we look historically, the last major recession in the US, during the financial crisis of 2008, foreign investments to India declined by over 30% in 2008-09.

It would be interesting to follow the figures in coming months as macroeconomic conditions in the US become less ambiguous and we have a definitive answer on the duration and intensity of the economic slowdown.

Ecosystem Ventures This Week

Key Highlights – Events

‘Stay Hungry Stay Foolish’ team at ESV tried to ‘connect the dots’ while chatting with the insightful bestselling author – Rashmi Bansal (IIM A) who visited our office last week.

Startup Funding Summary

Bigbasket, Bengaluru-based online food and grocery store, has raised $200 Mn in a funding from Tata Digital – Read More

Tredence, Bengaluru-based online global data science and AI solutions company, has raised $175 Mn in Series B funding from Advent International – Read More

Aquaconnect, Chennai-based platform for aquaculture farmers, has raised $15 Mn in Series A funding from Lok Capital, Louis Dreyfus Company Ventures, Suneight Investment, Omnivore, Rebright Partners, Flourish Ventures, HATCH and Other HNIs – Read More

TruCap Finance, Mumbai-based financial service provider, has raised $13 Mn in a funding from Zeal Global Opportunities Fund – Read More

CollegeDekho, Gurugram-based edtech startup, has raised $9 Mn in Series B1 funding from Winter Capital Partners – Read More

M&A Snippets

Mumbai-based conglomerate company Reliance Industries will acquire Germany-based B2B wholesaler Metro Cash & Carry India for $344 Mn – Read More

Noida-based edtech firm PhysicsWallah has acquired Bengaluru-based edtech startup iNeuron Intelligence for $30 Mn – Read More

Gurugram-based logistics company Delhivery will acquire Pune-based logistics company Algorhythm Tech for $2 Mn – Read More

The implication of Paytm buying back its shares at a premium

December 18, 2022

In this edition we would explore one of the major news of the week, the buyback of shares by Paytm.

Paytm, best-known as a wallet & payments app over UPI platform, is one of the earliest fintech unicorns from India. Over the years the company has tried to venture into ecommerce, financial services & banking with limited success. Paytm’s pivotal moment occurred on 8 Nov 2016 when the government surprisingly announced ‘demonetisation’ of higher denomination currency notes. Within the next two weeks Paytm boasted of over 50 million app downloads, app availability in five new regional languages, and positioned itself as the torch bearer of enabling a cashless digital economy in India.

Paytm had last raised $1bn at a valuation of $16 bn in 2019. T Rowe Price, along with Discovery Capital and D1 Capital had put in about $400 million, while existing investors SoftBank and Ant Financial had put in $200 million and $400 million respectively.

In Nov 2021 Paytm had launched India’s largest IPO with an issue size of ₹18300 crores. The IPO price band was fixed at 2050-2180 per share. The stock has been one of the worst performers among recent large initial public offerings (IPOs) and has eroded 75% of investors’ wealth. In the last one year, shares have delivered a negative return of ~64% to its shareholders, while it has dropped 12% in the past six months and 16% in a month. The stock hit an all-time low of ₹439.60 on November 24, 2022, while it touched a record high of ₹1,961.05 on its listing day.

In addition, earlier this month, Reserve Bank of India (RBI) refused to grant payment aggregator license to Paytm’s subsidiary, Paytm Payments Services Limited (PPSL). The RBI has asked PPSL to re-submit its application. The central bank has also barred PPSL from onboarding new online merchants.

It is under this larger context the share buyback plan must be seen. Paytm has announced a buy back scheme worth ₹850 crore at ₹810 a piece, a premium of 50% as compared to the current market price of ~₹540 on the BSE. This would be enabled through the open market route via the stock exchange method and the process is expected to be completed in a maximum of six months.

Buybacks are seen as a way by the company to reward its shareholders. The repurchase of stocks from the shareholders would reduce the number of existing shares and push the price upward.

Though, market participants were unconvinced about the buyback method. Under the open market method, a company buys back shares through the market and therefore, shares can be purchased at any price up to the cap provided by the company. This is different from the tender route, wherein shareholders can tender their shares for buyback at the fixed price set by the company. Also, in the tender route 15 % of buy-back shares are reserved for retail investors whereas no such condition exists in the open market route.

Analysts are also divided on the objective of a loss making company like Paytm utilising its cash to repurchase the shares. Initial market response was tepid as on the day of the announcement share price dropped by ~2.6%.

Paytm stock performance post IPO highlights the differing set of challenges faced by startups in the open market as compared to the private venture capital world. Soundness of a company’s financials is bound to be scrutinized to a much greater degree in the open market, whereby managing investor sentiment becomes a difficult task.

Ecosystem Ventures This Week

Key Highlights – Events

We are happy to share that Mr. Abhishek Sanghvi (Partner, Ecosystem Ventures) has participated as an investor at the TiE Global Summit 2022 event, held in Hyderabad.

TiE Global – The Indus Entrepreneurs is the single largest non-profit organization in the world devoted to fostering entrepreneurship through networking and bringing VCs and startups together.

Startup Funding Summary

Virgio, Bengaluru-based fashion tech startup, has raised $37 Mn in Series A funding from Prosus Ventures, Accel and Alpha Wave – Read More

NeoGrowth, Mumbai-based fintech startup, has raised $36 Mn in a funding from FMO and other HNIs – Read More

myTVS, Chennai-based automobile aftermarket player, has raised $25 Mn in Series C funding from Exor fund – Read More

82°E, Mumbai-based self-care brand, has raised $8 Mn in Seed funding from DSG Consumer Partners, IDEO Ventures and other HNIs – Read More

SafeHouse Tech, New Delhi-based cybersecurity startup, has raised $6 Mn in Pre-Series A funding from Gonpo Tsering and other HNIs – Read More

M&A Snippets

US-based financial service provider TPG has acquired Pune-based financial service provider Poonawalla Housing Finance for $471 Mn – Read More

Mumbai-based pharma company JB Pharma has acquired Mumbai-based pharma company Glenmark Pharmaceuticals for $38 Mn- Read More

Mumbai-based food and beverage company Hindustan Foods has acquired Himachal Pradesh-based conglomerate company Reckitt Benckiser Health India for $19 Mn – Read More

Kolkata-based cement brand Dalmia Cement will acquire Istanbul-based construction company Clinker for an undisclosed amount – Read More

Kolkata-based machinery manufacturer Ramkrishna Forgings has acquired Delhi-based EV startup Tsuyo Manufacturing for an undisclosed amount – Read More

Have you chatted with ChatGPT yet?

December 11, 2022

We had closed the 15th Oct edition of this newsletter, where we were discussing AI, with the following lines –

“Hey Google, next Sunday, compose and send the partners’ message wishing everyone on account of Diwali, with a creative message which denotes prosperity and happiness, based on my aesthetic preferences.”

Pondering when the commands like above may become a reality, I take your leave.

It appears reality may arrive sooner than we might have expected because on 30th Nov, Open Ai, an AI research & deployment company, launched their AI Chat bot named ChatGPT for public use. The bot takes human inputs in the form of questions and statements to generate human-like text responses, The tool has already garnered over million users, who are simultaneously amazed, excited and feel threatened as social media, especially twitter, is abundant with screenshots of responses received by coders, writers, academics, who had put it to test.

Given the buzz, I tried to test it myself, with the wish I have posted above. After couple of input iterations, following was the response generated by chatGPT –

Dear Startup Community,

As we celebrate the festival of Diwali, the festival of lights, I wanted to take a moment to wish you all prosperity and happiness. May the light of this joyous occasion shine brightly on your businesses and ventures, bringing success and growth.

As members of the startup community, we are always striving to innovate and push the boundaries of what is possible. May this Diwali bring you new ideas and the determination to bring them to life. May it also bring you the support and collaboration of your fellow entrepreneurs, so that together we can create a brighter future.

Here’s to a Diwali filled with fireworks, sweets, and, most importantly, the spark of entrepreneurship. Happy Diwali!

Best regards, [Your Name]

I leave it to your judgment whether the above response passes the Turing test. Alan Turing, the famous computer scientist, in the 1940s had proposed a test for assessing AI. in simple terms, the Turing test is – Can a human judge conversing with a human and with a computer tell which is which? You may try ChatGPT yourself here.

The full form of ChatGPT is Chat – Generative Pre-trained Transformer. More accurately, it is an application based on a language model, being refined by OpenAI since its first launch in 2018. A language model is a software that prints out a sequence of words as output that are related to some words given as input with appropriate semantic relation.

ChatGPT is also a neural network. Simplistically, a neural network would be a large network of computers that can fine tune its output of words based on the feedback given to it during the stages of training. These networks have refined over time significantly. E.g. If we recall early computer generated translations, often the words were translated without context, often resulting in hilarious nonsense. This was overcome with a further refining technique called “Transformer”, through which a neural network can accurately “understand” the context of a sentence or a paragraph. This refined “comprehension” can be used for multiple purposes like answering a question, summarising a paragraph or an article.

One of the most talked about advantages or possibilities of ChatGPT is – whether it is the next big thing in internet search? Or in other words can it be an alternative to Google? The reason being we do not receive contextual answers when we search on Google. What we end up receiving is a list of often irrelevant links to pages which would not solve our pointed query. That is not to say Google does not have a language model of its own but ChatGPT is much more conversational.

The most significant limitations of ChatGPT have been clearly outlined at OpenAi page itself which everyone should read –

‘ChatGPT sometimes writes plausible-sounding but incorrect or nonsensical answers. Fixing this issue is challenging, as: (1) during RL training, there’s currently no source of truth; (2) training the model to be more cautious causes it to decline questions that it can answer correctly; and (3) supervised training misleads the model because the ideal answer depends on what the model knows, rather than what the human demonstrator knows.’

For all of its limitations, generative AI is here to stay. The key takeaway for startups is that applicability and usage of AI, might be dependent on easy to use human-centric conversational interfaces rather than robustness of the underlying complex models.

Ecosystem Ventures This Week

Key Highlights – Events

We are happy to share that Mr. Shailesh Jain (VP, Ecosystem Ventures) was a part of a panel discussion as a moderator at the PRARAMBH event, a Start-up summit 2022 where 10 shortlisted startups across India pitched to the panel, organized by AIC-Prestige, held in Indore.

Startup Funding Summary

Renee Cosmetics, Ahmedabad-based makeup brand, has raised $25 Mn in Series B funding from Evolvence India, Edelweiss Group, Equanimity and 9Unicorns – Read More

Vidyut, Bangalore-based EV financing startup, has raised $4 Mn in a funding from Force Ventures, Veda VC, Sujeet Kumar, Sahil Barua, Kunal Shah, Sriharsha Majety and Rajat Verma – Read More

Accacia, Gurgaon-based real estate platform, has raised $3 Mn in Seed funding from B Capital Group, Accel, Blume Ventures, Good Capital, Zerodha’s Rainmatter Fund, Loyal VC and other HNIs – Read More

AlgoBulls, Mumbai-based retail stock-trading platform, has raised $2 Mn in Pre-Series A funding from Venture Catalysts, DSP Group, Findoc Finvest, Nitin Shahi, LetsVenture, Dishant Milan Parikh, Yuvraj Thakker, Sharath Kumar and other HNIs – Read More

Mabel, Bangalore-based jewellery marketplace startup, has raised $2 Mn in Seed funding from Whiteboard Capital, Sauce VC and Incubate Fund – Read More

M&A Snippets

Gurgaon-based food and beverage company Biryani By Kilo has acquired Mumbai-based food and beverage startup Get-A-Whey for $2 Mn – Read More

Mumbai-based consumer goods company Hindustan Unilever will acquire Mumbai-based food nutrition company Nutritionalab for $9 Mn – Read More

What is a Digital Rupee?

December 4, 2022

On 1st Dec, RBI launched the first pilot of retail digital Rupee (e₹-R) in select cities with a closed user group of individuals and merchants. In this newsletter we would discuss the salient features of digital Rupee.

Digital Rupee or e₹ is a centrally backed digital currency (CBDC). In other words, it is just like cash (currency notes) but in digital form. e₹ would be in the form of a digital token that represents legal tender. e₹ would have the same denomination as paper currency and coins in circulation. This means for a balance of Rs 600 you would hold eR in one of the possible combinations. E.g. – 500*1+100*1, 100*6, 200*3, 500*1+50*2 …etc. The digital wallet of the participating banks (four as of now) would allow the user to choose the denominations. Just like cash, e₹ would not earn any interest and can be converted to other forms of money such as bank deposits. Digital Rupee will be distributed through banks and accessed through a digital wallet.

The most obvious question which arises is how is e₹ in practical terms any way different from the money sitting in our UPI digital wallets which we seamlessly transfer either to peers or transact with merchants?

The key difference for e₹ is its ‘settlement finality’. In simple words, if I give cash to enable a transaction with you, it is complete then and there itself. On the other hand, if money is moved through cheques/NEFT/UPI etc, the final settlement is done at the backend by the corresponding banks. Once, I have transferred digital Rupee to you, the transaction is settled just like cash.

There are a few advantages often quoted for CBDRs. First, it may lead to reduction in currency management costs as borne by the central bank. Printing, safekeeping, transporting, issuing currency notes is an operationally complex exercise fraught with safety risks. Digital currency eliminates a lot of steps as only a unique token is to be generated digitally.

Second, is the concept of ‘programmable money’. As of now a currency holder can use the cash in any way he wants. I can either buy medicines or a lottery ticket. On the other hand, digital rupee can be programmed to be used for a limited set of transactions. The argument made is of better targeting of government spending as per the intended purpose.

Third, from the liquidity risk point of view, e₹ would be safer from bank deposits as in case the bank goes bust, only the insured portion deposit amount is statutorily made available to the depositor but since e₹ are digital cash, they have no such risk.

Any advantage should be weighed against the potential of its misuse. It is still a long way for digital transactions to be as ubiquitous as cash transactions, since a substantial portion of the Indian population is still new to it.

The second likely risk is the security of digital transactions and loss of anonymity. Big business and Government inevitably emphasize on centralised systems for want of greater efficiency and control respectively. This is often achieved at the expense of sacrificing individual privacy and autonomy. The biggest advantage of physical cash is its anonymity, whereas any digital transaction is bound to leave a trail. If in long term, digital Rupee replaces physical cash, it leads to increased cybersecurity risk for users.

It would be interesting to see how any ecosystem of new functionalities emerge around the eR, a good opportunity for startups to make the most of it.

Ecosystem Ventures This Week

Key Highlights – Clients

We are delighted to share that we participated in the investment round of Logistics-focused SaaS-based startup “Intugine” that has raised $2.3 Mn (INR 19 Cr) in Pre-Series A funding led by Mela Ventures.

Please click here to read more about Intugine, a multi-modal visibility platform that helps the world’s largest enterprises to build resilience in their supply chains, which has helped 100+ Manufacturers, 3rd-Party Logistics, and E-Commerce companies in the past 4 years, including Flipkart, Xiaomi, Philips, Ultratech Cements, Arvind Fashion, Kuehne + Nagel, SpotOn Logistics.

Startup Funding Summary

KreditBee, Bengaluru-based fintech startup, has raised $80 Mn in Series D funding from MUFG Bank, Premji Invest, Motilal Oswal Alternates, NewQuest Capital and Mirae Asset Ventures – Read More

DeHaat, Patna-based agritech startup, has raised $60 Mn in Series E funding from Sofina Ventures, Temasek, Prosus Ventures, RTP Global India and Lightrock India – Read More

Prismforce, Mumbai-based vertical SaaS platform, has raised $14 Mn in Series A funding from Sequoia Capital India and other HNIs – Read More

MoooFarm, Gurugram-based agritech startup, has raised $13 Mn in Series A funding from Aavishkaar Capital, Accel Partners, Aditya Birla Ventures, Rockstart, Navus Ventures and Alteria Capital – Read More

Blox, Mumbai-based proptech startup, has raised $12 Mn in Series A funding from Kunal Shah and other HNIs – Read More

M&A Snippets

Bengaluru-based biosimilars manufacturing unit Biocon has acquired US-based pharmaceutical company Viatris’ global biosimilars business for $3 Bn – Read More

Hyderabad-based generic injectables maker Gland Pharma will acquire France-based pharma company Cenexi for $124 Mn – Read More

Bengaluru-based manufacturing services marketplace Zetwerk has acquired US-based manufacturing services company Unimacts for $39 Mn – Read More

Kolhapur-based FMCG enterprises Ghodawat Consumer has acquired Mumbai-based beverage startup Coolberg for an undisclosed amount – Read More

Bengaluru-based edtech startup Simplilearn has acquired US-based edtech company Fullstack Academy for an undisclosed amount – Read More

Can there be a Startup Constitution?

November 27, 2022

In 2015, the government of India declared 26 November as the Constitution Day. Since then it is being celebrated in schools, colleges, and government departments across the country. Before 2015, the day was known as the National Law Day. The historical reason being 26th Nov 1949 was the day when the constituent assembly had signed and adopted the Constitution. It came into effect two months later on 26 Jan 1950 which we all celebrate as the Republic Day.

Does it even matter for the startup & investor community to spend time thinking about the lofty idealism of a document which everyone seems to pay lip-service to but rarely put in practice?

Short answer to that question would be – tactically no,it is irrelevant but strategically – an empathetic yes! It matters quite a lot.

Any business, big or small, has to operate within the realms of the society it is located in. Hence, tactical wisdom is to refrain from publically engaging on social or political issues, follow non-confrontational, rather subservient approach, while dealing with the state at any level – be it local administration, state or the union government, maintain silence on the bad actors or inefficiencies within one’s own industry.

Beyond tactical indifference, it can be argued that the constitution is a mega-strategy document, not just for activists or academicians, but for everyone, including startups and the investor community. Let us flip the question to stimulate our thoughts on Constitution’s long term significance-

For investors – Thinking for next 30 years, under what market & societal conditions wealth creation can be maximized?
For startup founders – thinking for next 30 years, under what societal conditions innovation can be maximized?

When we attempt to start thinking about long term societal change, the constitution becomes a guiding document as since inception, it was conceptualized as a transformative constitution, radically reimagining the society it happened to originate from. Reduced to its essence, the constitution is nothing but a profound set of ethics we collectively as individuals attempt to sustain and nurture, in the hope of a better future.

If we imagine a Venn diagram from a bird’s eye view, the niche segment, sector, technology, industry we are working in, can all be subsumed under the circle of ‘markets’. Intersecting with it is a circle of ‘state’, which represents the legitimate structure of power and authority. But both the circles are encircled within the larger societal circle. These abstract circles can now be imagined to be filled with a network of individuals who are constantly engaging within their circles and beyond.

Majorly, the Indian higher education system disincentivizes critical thinking on meta questions about society, state, and markets. It is geared towards hyper competition for the academically bright and diligent students, optimizing for exams. Undoubtedly, it has created an extremely competent class of technology & management professionals, who now command respect across businesses, the world over. But can they articulate a strategic societal imagination is a question worth pondering on.

Hoping that at a personal level, our engagement with the Constitution and the nuances inherent in creating society which maximizes wealth & innovation, I wish you all a happy Constitution day.

Ecosystem Ventures This Week

Key Highlights – Clients

We are happy to onboard a Dubai-based healthcare service provider.

It is a platform for data analytics, training and monitoring in preventive healthcare services. They provide services such as Visa Medical Services, Diagnostics and Travel Vaccinations with the help of an internally integrated system equipped with advanced technology. It is backed by a team of highly qualified healthcare professionals who are setting the latest medical standards across the Middle East, Europe, and Southeast Asia.

We look forward to working with them and wish them all the best for a bright future.

Startup Funding Summary

Bira91, Delhi-based craft beer brand, has raised $70 Mn in Series D funding from Japan’s Kirin Holdings – Read More

Healthkart, Gurugram-based healthtech startup, has raised $65 Mn in a funding from Temasek Holdings and A91 Partners – Read More

Celebal Technologies, Jaipur-based software service provider, has raised $32 Mn in a funding from Norwest Venture Partners – Read More

IndiaGold, Gurugram-based fintech startup, has raised $10 Mn in Series A funding from Alpha Wave, 3one4 Capital, PayU, Leo Capital, Better Tomorrow Ventures, Rainmatter Capital and other HNIs – Read More

ProcMart, Noida-based logistics company, has raised $10 Mn in Series A funding Sixth Sense Venturesfrom – Read More

M&A Snippets

Gurugram-based renewable energy semiconductor manufacturer BluPine Energy has acquired Kolkata-based solar power company Atha Group for $257 Mn – Read More

Bengaluru-based venture capital and private equity firm Lightrock India has acquired Gurgaon-based psychiatric inpatient unit Sukoon Healthcare for $15 Mn – Read More

Bengaluru-based media technology company Amagi has acquired California-based data platform for content distributors Streamwise for an undisclosed amount – Read More

Are drones the new Pushpak Viman? Copy

November 21, 2022

Humans love flying as symbolized in eternal stories such as the Pushpak Viman, before modern aircraft technology arrived. But when we remove the human physically, from the flying object, we enter the realm of drones. In this edition we would discuss the innovation and growth possibilities within the drone ecosystem in India.

Simplistically, drones are mechanical flying objects, either self propelled or remote operated, which can aid humans in certain tasks. Tasks which are typically dirty, dull, hazardous and repetitive are best suited to be operationalized through drones. E.g. When humans have to perform visual inspections in either difficult environments (Electric/telecom towers/mines) or over a large geographical area (agricultural farm/forest). Not only quantitatively, but also qualitatively drones can improve the outcomes. E.g. Urban aerial mapping through drones can be of much higher resolution than commercially available satellite imagery.

A stringent permission driven regime was institutionalized since 2014 for drone operations in India. The knee jerk reaction of de-facto banning use of drones was due to threat perception as assessed by the security agencies. One of the marketing gimmicks, in which a drone was choreographed delivering pizzas in a metro city, set off alarm bells within the security apparatus with the obvious argument of a pizza being replaced with an explosive. The unintended consequence of prioritizing threat mitigation was postponement of creation of a value-adding drone ecosystem in India. It slowed innovation in the sector and caused quite a few drone-focused startups to shut shop or move out of India.

This is likely to change as a new set of liberalized rules were notified in Aug 2021. The rules envision a trust based, self certification, non intrusive monitoring mechanism.. This is enabled by classification of drones based on their weight starting from Nano drones (<250 gms) moving up to Large drones (>150 kgs). All airworthy certified drones would possess a unique identification number upon registering with the ‘digital sky platform’.

Digital sky platform envisions the airspace in green, yellow and red. There is no restriction in flying drones up to 400 ft below a certain weight (< 500 Kg) in the green zone. Red & yellow zones (<12 km) are defined based on the proximity to an airport. Prior permission is required for operating a drone in these zones. If you check the digital sky map here, it appears that the first set of drone implementations would happen outside city areas, as invariably a 12 km radius across a tier 2 city covers almost the whole of it.

The rules have also streamlined the certified ‘remote pilot license’ process. This opens a new avenue for youth to be certified as a drone pilot for a class of drones based on his/her training. Given the drone population is going to increase, correspondingly humans required to operate them would increase.

Apart from the drone operation rules, the government has also initiated a production linked incentive (PLI) for the nascent drone manufacturing industry in India. The eligibility criteria is pegged to be a minimum of 40% value addition to be performed by an Indian manufacturer.

Drone enthusiasts claim long term ROI on drone implementation in an enterprise is not only high but also enables capturing a new set of data. It appears that the drone ecosystem in India is again picking up, after the brief interlude. This week two drone

We at Ecosystem Ventures aim to invest in the latest technologically advanced startups which possess the potential to disrupt sectors. Let us know your thoughts.

Ecosystem Ventures This Week

Key Highlights – Clients

We are happy to onboard a Pune-based hyper intelligence SaaS platform.

It is an Information Digitization Technology and SaaS-based platform that can automate any business process and related documents using the technologies such as Image, Text & Video Analysis, Pattern Recognition, Automation using Web & Windows Recorder, Automation over Citrix Environment and powered with RPA, OCR, NLP, AI & Machine Learning.

We look forward to working with them and wish them all the best for a bright future.

Startup Funding Summary

Amagi, Bengaluru-based media technology provider, has raised $100 Mn in a funding from General Atlantic, Accel, Norwest Venture Partners and Avataar Venture Partners – Read More

Clove Dental, Delhi-based healthtech startup, has raised $66 Mn in a funding from Investcorp, Tybourne Capital Management, SeaLink Capital Partners and other HNIs – Read More

Keka, Hyderabad-based HRtech startup, has raised $57 Mn in Series A funding from WestBridge Capital – Read More

Masai School, Bengaluru-based edtech startup, has raised $10 Mn in Series B funding from Omidyar Network, India Quotient, Unitus Ventures, Mithali Raj and Bhaichung Bhutia – Read More

Supertails, Bengaluru-based pet-care startup, has raised $10 Mn in Series A funding from Fireside Ventures, Saama Capital and DSG Consumer Partners, Kunal Shah, Sanjay Kapoor, Varun Alagh, Ankit Nagori and Shashank Mehta – Read More

M&A Snippets

Riyadh-based a joint stock company SALIC has acquired minority stake in Gurugram-based rice milling company LT Foods for $48 Mn – Read More

Mumbai-based logistics company Allcargo Logistics will acquire Hyderabad-based logistics company Gati Kintetsu for an undisclosed amount – Read More

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