Also in this letter:
- Self-regulation for
- Mamaearth valued at $730 million
- Inside IISc Bangalore’s Incubation Lab
We have the luxury of being really patient: Info Edge founder
Eleven years ago, Sanjeev Bikhchandani, founder and vice chairman of Info Edge, wrote a Rs 4.7 crore cheque to Zomato — the food startup’s first institutional investment.
Info Edge, which remained Zomato’s sole investor in its first few funding rounds, has been with the company through its ups and downs. But it saw its early bet pay off and then some last week, when Zomato became the first domestic startup to go public in India. Its stake is now worth roughly 1,000 times what it put in.
In an interview, Bikhchandani told us Info Edge plans to hold on to the bulk of its stake (around 15%) as it continues to see tremendous potential for Zomato to grow.
He also spoke about what the company’s IPO means for the wider startup ecosystem, and how investor exits — whether through mergers, acquisitions or IPOs — will ensure more money is ploughed back in.
Excerpts from the interview:
For Info Edge, the
Overall, the Zomato investment has delivered handsome returns – our back-of-the-envelope calculation is that the IRR is more than 60%. Over a 11-year period, this must be some sort of a record. Great companies do that for their investors. We are holding on to the bulk of our shareholding because we see tremendous growth potential in Zomato going forward. The credit goes to the Zomato team and not to us – they make us look like smart investors.
What is your investment horizon for Zomato, especially since a window to offload shares has opened up?
We are in no hurry to sell. I was speaking to Rakesh Jhunjhunwala (well-known stock market investor) a few months ago. He gave me some advice: “Sanjeev, if you come across a good company which is growing fast why should you ever sell? Hold on for life.” We have perpetual capital, unlike funds that have a defined time frame within which they need to give money back to the LPs. So, we have the luxury of being really patient.
What’s the next Zomato in your current portfolio?
We have a number of other investments where the companies are looking very promising. The best known one is PolicyBazaar but there are also several others that have got strong external investors coming in after we invested – Bijnis, Shopkirana, Gramophone, Ustraa, Shipsy, Medcords, Dotpe, TrueMeds and Udayy.
Read the full interview here.
How Zomato executed its IPO plan: On September 12, 2020, in an email to employees, Zomato cofounder and CEO Deepinder Goyal wrote that the company was on course to tap the public markets by mid-2021.
Samidha Sharma delved into how Goyal and his team planned and timed the company’s IPO journey to perfection.
Coming soon: self-regulation for crypto ads
India’s cryptocurrency firms will soon have a set of rules to follow when advertising their services.
Driving the news: The Blockchain and Crypto Assets Council (BACC), of which
Details: The rules have not been finalised, but sources told us they will include a standard disclaimer for TV and streaming ads. Nischal Shetty, chief executive of WazirX, said the disclaimer may include words such as “volatility”.
- The rules may also specify the duration for which the disclaimer must be shown.
- The committee has not decided whether ads must include voice-overs, as is mandatory for mutual fund ads.
High court case: Earlier this month, two advocates filed a public interest litigation against crypto exchanges WazirX, Coinswitch Kuber and CoinDCX. The petition asked the court to direct India’s capital markets regulator Sebi to issue guidelines and take steps against crypto ads on TV that run without standard disclaimers.
These three exchanges told us they already issue disclaimers with their TV ads, and that BACC’s guidelines will make this standard practice for the industry.
ASCI guidelines: Last Thursday (July 22), the Advertising Standards Council of India (ASCI) flagged crypto ads as an “area of concern” and said it may soon issue advertising guidelines for cryptocurrency exchanges.
Tweet of the day
Mamaearth valued at $730 million in new funding round
Mamaearth, which makes beauty and baby care products, has closed a $50 million funding round led by Belgian investment fund Sofina.
Existing investor Sequoia Capital also participated in the round, while early investors Fireside Ventures, Stellaris Venture Partners, Sharp Ventures and Titan Capital sold some of their shares, the company said.
Valuation: The company is now valued at $730 million, making it one of the highest-valued new-age direct-to-consumer (D2C) brands in India.
The company was last valued at $200-$300 million, sources told us. After raising funds in early 2020, Mamaearth’s valuation was pegged at around $100 million but this increased gradually following secondary share sales over the past few months.
Mamaearth will use the money to grow its brand by expanding offline and to explore acquisitions in the beauty and personal care space.
The company clocked sales of around Rs 500 crore in the previous financial year. “The plan is to double sales this year. Because of the second wave, offline expansion was halted but now we plan to deepen our offline presence,” said cofounder and chief executive Varun Alagh.
Rise of D2C: D2C brands have been growing in popularity over the past year or so. These include boAt (electronics), Sugar Cosmetics (makeup), and Bombay Shaving Company (men’s grooming).
Though born online, many of these brands are expanding into offline retail.
According to investment bank Jefferies, Mamaearth’s D2C platform generates 35% of total sales while offline channels account for 20%. The rest is from third-party ecommerce platforms such as Amazon, Flipkart, Nykaa and BigBasket.
A peek inside IISc Bangalore’s incubation lab
The Society for Innovation and Development (SID) at the Indian Institute of Science Bangalore (IISc) has incubated over 40 startups since 2014, including five led by women entrepreneurs.
- These startups are working on a range of innovations—from developing vaccines and innovative medical devices to space technology—aimed at solving real-world problems.
The society has created an enabling ecosystem for deep science researchers and entrepreneurs to commercialise science. Read the full story here.
Millennials suffer the most from online fraud
Indian consumers experienced a high online fraud encounter rate of 69% in the past year, according to the Microsoft 2021 Global Tech Support Scam Research report.
- Each month, Microsoft Corp. receives about 6,500 complaints globally from people who have been the victim of a tech support scam. This is down from 13,000 reports in an average month in prior years.
By the numbers
- 31% of Indians lost money through a scam—the highest globally.
- 73% of men in India who proceeded to interact with a scammer were likely to lose money.
- In India, millennials (aged between 24 and 37) were the most susceptible to such scams in 2021: 58% of those who communicated with the scamster incurred a loss.
China continues crackdown on tech
China’s market regulator has said it would bar Tencent Holdings from exclusive music copyright agreements and fined the company for unfair market practices in the online music market after its acquisition of China Music Corporation.
This comes a month after China’s markets regulator began an antitrust probe into SoftBank-backed Didi Chuxing ahead of the ride-hailing giant’s US IPO. In July, the regulator ordered the removal of 25 apps owned by Didi Global from app stores citing violations of rules against collecting personal data.
Earlier this year, China slapped a $2.75 billion fine on Alibaba Group after an anti-monopoly probe found the e-commerce giant had abused its dominant market position.
Other Top Stories We Are Covering
Aurum Group arm Majesco to acquire 51% in tech firm K2V2: Realty developer Aurum Group-controlled information technology consultancy and software company Majesco has approved the acquisition of 51% stake in Pune-based software technology firm, K2V2 for Rs 40 crore.
Amazon is hiring a digital currency expert: Amazon may allow users to pay in cryptocurrencies soon as the e-commerce giant is hiring a digital currency and blockchain product lead for its payments team. According to its latest job listing, Amazon’s Payments Acceptance & Experience team is “seeking an experienced product leader to develop Amazon’s Digital Currency and Blockchain strategy and product roadmap”.
3one4 Capital to fully tie up commitments for over $100 million fund this quarter: 3one4 Capital — an early stage venture capital firm that primarily invests in technology companies — expects to fully tie up commitments for its latest fund of over $100 million corpus during the current quarter.