Also in this letter:
- Latest on the Infosys-RSS controversy
Udaanvs Amul and Parle
- Govt plans semiconductor subsidies
Money will come to India regardless of what China does: GGV Capital’s Tung
Hans Tung, managing partner at GGV Capital told us in an
We had reported on August 17 that the increased liquidity meant that valuations were about 12-18 months ahead of time.
A record 25 startups have become unicorns this year so far. As of September 3, Indian startups have raised $21.2 billion across 627 deals this year, according to data tracking platform Venture Intelligence.
Tung is in third on the latest Forbes Midas list, which ranks the world’s top venture capital investors, and has 18 unicorns under his belt.
In his words: “When you have revenue at $10 million to $20 million, the asset value could be anywhere between half a billion and $1 billion, which is a lot higher than what you’ve seen in other places. But because India has such good potential, over time, companies can grow into those valuations and beyond,” he said.
Yes, but: That doesn’t mean every company will grow into its valuation over time, he cautioned.
On edtech: Tung said the ongoing regulatory crackdown in China has made the Indian edtech market more interesting to investors. On the spate of acquisitions such as companies like Byju’s, he said the market has space for more than one or two players.
- “Just because companies can raise money, doesn’t mean that the company will be able to sustain that growth. So, when I look at Vedantu, what I like about it is it is fundamentally delivering value to increasingly younger students. And they are delivering value with better technology that has better retention, that’s serving more students with the quality in their classes,” he said.
On India as a whole: Tung, who has also backed large Indian startups such as B2B ecommerce firm Udaan, said he remains bullish on India. “Regardless of what’s happening in China, India itself is doing interesting things that will increasingly attract international capital… We feel that [our India portfolio firms] are playing a role in making the country more efficient and over time it may even be able to export this efficiency to other regions. So, that’s how we continue to look at India and we’re bullish,” Tung said.
About GGV: Earlier this year, GGV Capital said it had raised $2.5 billion across four funds, taking its total assets under management to over $9.2 billion across 17 funds. Based out of Silicon Valley and Singapore, it has backed more than 68 unicorns and 51 startups that have gone public and is currently an investor in more than 276.
TCS plans to have 70-80% of employees back in offices by Jan
Tata Consultancy Services will ask its 500,000 employees to return to office by the end of the year as the majority of them have been fully vaccinated against Covid-19, its chief executive Rajesh Gopinathan told us.
If the return to office goes according to plan, TCS could set a trend in the IT industry, which shifted hundreds of thousands of employees to remote work in a matter of weeks last year.
What he said: “We expect that sometime towards the end of the calendar year or early next year, and depending on how this third wave turns out, we will get back to 70-80% (of people back) in the office.”
On why TCS is like Dravid: TCS, the second most valuable Indian company, does not plan to leverage its huge market cap — nearly $195 billion — for large acquisitions as it doesn’t see companies of “great attractiveness”. Instead it will look at acquisitions that can give it access to markets or capabilities.
“We’re just too conservative for today’s market. So our market cap might be high. But still, when it comes to paying out cash, we’re conservative,” Gopinathan said. “We like to play like Dravid.”
On TCS and Tata Digital: “We have a trusted role internally, but from our development and technology partner perspective, they are also becoming more and more self-sufficient, especially with new acquisitions. Now they’re more [of a] standalone [company]. In the early days, we were a larger partner.
On the competition: Infosys has outperformed TCS on growth in the past several quarters. To this, Gopinathan said growth is a market-facing metric but “not something that worries us”.
“There is good competition between us, which has benefited both of us. It helps us stay on our toes, but beyond that not I think the game is out there. All of us have fairly large plays and we are at different points of our evolution,” he said.
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‘Only demented minds can link Infosys to tukde-tukde gang’
Former Infosys board members TV Mohandas Pai and V Balakrishnan on Sunday criticised an article in the Rashtriya Swayamsevak Sangh (RSS)-affiliated publication Panchjanya, which alleged that the country’s second largest IT services firm was in cahoots with “anti-national forces” over glitches in the country’s income tax e-filing and GST portals.
Pai and Balakrishnan said that while criticising Infosys for its failure to address issues in the newly built Income Tax e-filing portal in a timely manner was valid, the scathing remarks made by Panchajanya, which questioned the company’s motives and linked it to the so-called “tukde-tukde gang”, was unacceptable.
Backstory: The article appeared on September 5 as a cover story and questioned whether Infosys was as negligent in its projects abroad, having ‘messed up’ the implementation of two government portals — GST and income tax.
RSS distances itself: Amid widespread criticism, an RSS spokesperson issued a statement on Sunday, distancing the organisation from the views expressed in the Panchjanya article.
Rapped for glitches: Last month, the finance ministry summoned Infosys CEO Salil Parekh to meet with Finance Minister Nirmala Sitharaman to discuss glitches in the Income Tax e-filing portal, which have persisted ever since the platform went live on June 7. In the meeting, the minister told Parekh that the company had until September 15 to solve all issues.
In January 2019. Infosys emerged as the lowest bidder and won the Rs 4,242-crore contract to create and deploy the two portals and manage them for about nine years.
FMCG giants Amul and Parle battle Udaan over distribution channels
Business-to-business (B2B) ecommerce startup Udaan is facing the heat from fast-moving consumer goods (FMCG) companies such as Amul and Parle Products for allegedly monopolising distribution to retailers.
Backstory: Last week, Udaan filed a complaint with the Competition Commission of India (CCI) against Parle Products, alleging that the company was “abusing its dominant position” by refusing to supply its products directly to the startup.
In its complaint, Udaan alleged that Parle was refusing to supply stocks of its biscuits brand, Parle-G, claiming this amounted to ‘abuse of dominance’ under Section 4(2) of the Competition Act.
But RS Sodhi, managing director of the country’s largest dairy maker Amul, told us Udaan was disrupting its distribution channels. “Amul has 10,000 exclusive distributors or small entrepreneurs. If platforms such as Udaan do the distribution themselves, they compete with our existing exclusive distribution partners and directly hurt them,” he said.
Udaan operates across the FMCG, lifestyle and general merchandise sectors. It has more than three million users, 1.7 million retailers and 30,000 sellers on its platform.
Govt plans semiconductor subsidies to kickstart sector
The government is looking to subsidise as much as 40-50% of the cost of setting up semiconductor fabrication plans in India after several failed attempts to kickstart the sector over the past two decades.
Driving the news: Late last month, it once again invited applications from companies to set up semiconductor “fabs” and reportedly offered $1 billion in subsidies for new investors.
Why now? Amid the global semiconductor crisis, companies are having to wait anywhere between 20 and 52 weeks for chips.
Over the past few years, India has built up a huge domestic electronics manufacturing ecosystem that not only caters to domestic needs but also to exports, officials said. Chip manufacturing will complete the chain and add value to local output, which is largely assembly driven.
Tata’s plans: Last month, Tata Group Chairman Natarajan Chandrasekaran revealed that the company was looking at the possibility of manufacturing chips. The market opportunity for manufacturing high-tech electronics is close to $1 trillion, Chandrasekaran said.
Bitcoin crosses 50,000 again; up 81% from Jan 4
Bitcoin rose 0.49% to $50,188.4 at 3:34 pm IST on Sunday, adding $245.24 to its previous close. The world’s biggest and best-known cryptocurrency is up 81% from this year’s low of $27,734 on January 4. Ether, the coin linked to the Ethereum blockchain network, rose 1.16% to $3,932.07 on Sunday, adding $44.97 to its previous close.
We reported earlier that the Communist Party of China’s crackdown on cryptocurrencies has caused massive issues for cryptocurrency mining companies there, which are now scrambling to migrate their machines out of China.
What’s happening? Bit Digital Inc, a Nasdaq-listed firm based in New York, has upped its efforts to move over 20,000 machines from China, it has been learnt. These high-powered computers are at the core of the New York-based firm, which makes its money by tapping them into cheap electricity sources so they can crack mathematical problems and unlock new Bitcoin.
Until last year, Chinese miners accounted for around 65% of Bitcoin mining worldwide.
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