Blackstone’s edtech bet; GlobalBees and Spinny score big

Blackstone, the NY-based private equity firm, is set to pick up a controlling stake in edtech startup Simplilearn for a quarter of a billion dollars.

Also in this letter:

💰 GlobalBees raises $150 million
📱 Pegasus used to spy on 300 Indians
💸 Zoom to buy Five9 for $14.7 billion

But first, a correction: Monday mornings can sometimes be tough! In our piece on BigBasket’s plan to launch express deliveries in today’s ETtech Morning Dispatch, we mistakenly linked to the wrong episode of The Rundown by ETtech, our weekly chat show. Here is the correct link to our discussion with BigBasket’s cofounders Hari Menon and Vipul Parekh.

Now back to the news.


Blackstone acquires majority stake in Simplilearn

Edtech

Nearly three months after selling Aakash Education Services to edtech firm Byju’s, private equity major Blackstone has backed an online education firm.

Driving the news: Blackstone is acquiring a controlling stake in online digital skilling platform Simplilearn for $250 million. As part of the deal, early investors Kalaari Capital, Helion Ventures and Mayfield Fund will exit the firm while founder Krishna Kumar will stay on to run the operations.

What does it do? Simplilearn provides online training across technologies and applications in data science, AI and machine learning, cloud computing and other digital disciplines. It claims to have more than 2 million learners on its platform and hopes to increase this to 5 million by 2023. As much as 60% of Simiplilearn’s business comes from international markets.

Byju’s-Aakash deal: In April, Byju’s made its largest acquisition by buying out Blackstone-backed tutorial chain Aakash Educational Services Ltd (AESL) in a cash and stock deal estimated at $950 million. Following this, the private equity firm had received a minority stake in the Bengaluru-based startup. Blackstone also made a separate investment in Byju’s last month, making the edtech company India’s highest-valued startup at $16.5 billion.

Globally, Blackstone has acquired or backed edtech firms such as educational content and software tools provider Ascend Learning, higher education technology solutions provider Ellucian, and SaaS corporate training platform Articulate.


GlobalBees raises $150 million for Thrasio-like house of brands

fashion online iStock

GlobalBees has raised $150 million in a mix of equity and debt for its Thrasio-style investment platform led by FirstCry and some of its investors. Lightspeed Venture Partners also participated in the round. We first reported FirstCry’s plans to launch a Thrasio-style investment platform on April 28.

  • SoftBank’s Vikas Agnihotri, Lightspeed’s Harsha Kumar, Premji Invest’s Atul Gupta, Chiratae Ventures’s Sudhir Sethi and Chrys Capital’s Kshitij Sheth will join the GlobalBees board as part of the deal.

What’s the plan? GlobalBees looks to partner with digitally native brands across categories such as beauty, personal care, home, kitchen, food, nutrition, sports, and lifestyle among others, with a revenue rate of $1 million to $20 million. It is already in the process of integrating around 10 digitally native brands in the country.

Big picture: In the past couple of years, private brands run by small business owners have gained traction on online marketplaces such as Amazon and Flipkart. However, they find it challenging to scale beyond a particular revenue threshold since they lack resources to invest in technology, marketing, optimisation tools and supply chain expertise, among other things.

Ecommerce veterans see this as an opportunity to roll up such brands and provide various tools and services to accelerate their growth. The model was popularised by US-based Thrasio, which is the world’s largest acquirer of third-party private label businesses on Amazon. It has bought, consolidated and scaled up about 100 brands on the platform in three years.

Others in the fray: While the business model is still in its early days, it is already buzzing with deal activity, with several local startups raking in money from venture capital firms. Last month, 10club landed $40 million in one of the largest seed funding rounds in the country while Mensa Brands, the new venture of former Myntra CEO and Medlife co-founder Ananth Narayanan, raised around $50 million in a mix of equity and debt in May.

Goat Brands Labs, started by veteran fashion retail executive and Flipkart alum Rishi Vasudev, is also set to raise about $20 million in a round likely to be led by Tiger Global. Venture capital firm Mayfield Fund and Flipkart’s venture fund are also expected to back the firm.

Car lineup

Used car retailing platform Spinny has secured $108 million in its Series D funding round led by Tiger Global. The funding, a mix of primary and secondary capital, values the firm at $750-800 million. New York-based Avenir Growth also participated in the round along with existing investor General Catalyst and others.

  • The round includes a primary capital infusion of $105 million and a secondary sale of $3 million by select angels and early-stage investors. Tiger Global pumped in $75 million, while Avenir Growth invested around $20 million. Overall, Spinny has raised about $230 million to date.

Where will the money go? Spinny founder Niraj Singh said they will use the fresh capital to expand to seven more cities, taking its network to the top 15 cities in the country. “By December, we will be present in 20 cities,” he told us.

Other key deals
■ Health tech startup Eka.Care has landed $4.5 million from investors such as 3one4Capital, Eximius Ventures, Speciale Invest and other marquee angel investors. The company will use the money for building its team, product development, marketing and helping doctors set up digital clinics, it said in a statement.

■ Vaccine technology startup Mynvax, which was incubated by the Society for Innovation and Development (SID) at the Indian Institute of Science (IISc), Bengaluru, has secured $4.2 million in its Series A funding round led by venture capital firm Accel. The money will be used for the clinical development of novel recombinant vaccines for Covid-19 and influenza.

We had reported earlier that a team of researchers led by Raghavan Varadarajan, professor at the molecular biophysics unit of IISc and co-founder of Mynvax, were working on a vaccine for Covid-19 but that project was facing financial issues.

■ Fintech startup Razorpay has acquired Bengaluru-based TERA Finlabs, which provides technology, risk and capital solutions to enable embedded financing solutions for businesses. The startup will provide its entire technology stack, risk management capabilities and onboarding solutions to create a credit line for Razorpay’s merchant network, the Bengaluru-based startup said in a statement.

Tweet of the day


BigBasket plans to relaunch express deliveries

Bigbasket sales

Tata-owned online grocery platform BigBasket will soon relaunch express deliveries, cofounders Hari Menon and Vipul Parekh told us.

Explain? BigBasket had earlier acquired a small express delivery startup called Delyver in 2015 but was unable to scale its under-an-hour deliveries. Over the next 2-3 months, the company will give it another go.

Menon said, “We have learned from the past [how] to build this vertical… and will now launch it under the Tata umbrella.”

Speaking on our weekly audio chat show The Rundown by ETtech on Twitter Spaces, Menon said, “We have gone deep into three-four hour deliveries. In fact in most cases it’s 2-3 hours. Now, [under-an-hour delivery] is what we are going to do next.”

“The focus is on setting up dark stores, bringing inventory and warehouse closer to the customer, and making sure the cold chain works efficiently,” he added.

Why? To keep pace with companies such as SoftBank-backed Swiggy, which is investing heavily in this space.

Tata Digital and BigBasket have also held talks to buy out a company in this category, sources indicated.

The two co-founders said these new initiatives would play out over the next few months as Tata Digital prepares to launch its ‘super app’ later this year.

Also Read: Tata Digital’s plan to launch a super app

Medicines, too: Last month, we reported that online pharmacy 1mg, in which Tata Digital recently picked up a majority stake, was working to launch under-an-hour deliveries of medicines starting with the National Capital Region.

The competition: Tata’s bet on BigBasket comes amid heightened interest not only from specialised e-commerce players such as Amazon and Flipkart but also conglomerates such as Reliance Industries.

Parekh said, “This has always been a competitive place. With Reliance Jio coming in, they said we would be in trouble. So? We have been in trouble for a long time—for our entire existence. Yet we continue to lead (in terms of market share).”

Listen to the full Twitter Spaces session here.


Pegasus used to spy on 300 Indians, including two ministers

Pegasus

Pegasus, a spyware developed by Israeli firm NSO Group that is only licensed to governments, may have been used to bug the phone of 300 Indians, including two serving union ministers, three opposition leaders, a constitutional authority, current and former heads of security organisations, administrators and 40 journalists and activists, according to an expose by a global consortium of media organisations.

French media nonprofit Forbidden Stories and human rights group Amnesty International had obtained a list of more than 50,000 phone numbers and shared it with 16 partners in the global media consortium.

Yes, but: While the presence of a number on the list indicates it was a surveillance target, whether the phone was actually infected with Pegasus or not can only be determined by a digital forensic analysis. Such tests, conducted on a small subset of phones as part of this project, revealed clear signs that at least 37 phones, including 10 in India, were infected with Pegasus.

Govt’s response: Earlier today, India’s IT and Communications Minister Ashwini Vaishnaw claimed in the Lok Sabha that “any sort of illegal surveillance” by unauthorised persons was not possible in India due to various “checks and balances present in our laws and our robust institutions”.

On Sunday, WhatsApp CEO Will Cathcart posted a series of tweets urging governments and companies to take steps to hold NSO Group accountable, and impose a global moratorium on the use of unaccountable surveillance technology.

“In 2019, WhatsApp discovered and defeated an attack from NSO. They rely on unknown vulnerabilities in mobile OSes, which is one of the reasons why we felt it was so important to raise awareness of what we’d found. At the time, we worked with @CitizenLab , who identified 100+ cases of abusive targeting of human rights defenders and journalists in 20+ countries. But today’s reporting shows that the true scale of abuse is even larger, and with terrifying national security implications,” Cathcart said.


Also read: Apple says Pegasus-type breaches highly sophisticated


Zoom to buy Five9 in $14.7-billion deal

Zoom

Video conferencing firm Zoom is acquiring cloud-based call centre software provider Five9 for $14.7 billion in an all-stock deal. This is the company’s largest acquisition so far.

Zoom was one of the first — and among the biggest — beneficiaries of the pandemic and quickly became a household name. The company is now capitalising on its growth to expand its offerings as more businesses switch to remote or hybrid work model.

Why it’s important: The acquisition is expected to give Zoom a boost with enterprise customers and accelerate its long-term growth opportunity as it competes with bigger players such as Microsoft, Google, Cisco and Facebook.

  • Five9, which went public in 2014, claims to have more than 2,000 customers across the world, including the likes of Citrix, Under Armour, Siemens and lululemon.

Zoom launched its cloud-calling product Zoom Phone in January 2019 and has sold 1.5 million licences so far, it said last month. Five9 will work as an operating unit of Zoom. Rowan Trollope will become a president of Zoom and continue as CEO of Five9, reporting to Zoom founder Eric Yuan.

Details: Five9 stockholders will receive 0.5533 shares of Class A common stock of Zoom for each share of Five9. Based on the July 16 closing share price of Zoom, this values Five9 at $200.28 a share, a nearly 13% premium. Zoom’s market cap is currently around $106 billion, a massive increase from its IPO valuation of $9 billion two years ago.

Previous acquisitions: In May 2020, Zoom acquired identity management startup Keybase to build end-to-end encryption capabilities for its video conferencing solution. The firm also bought real-time machine translation solution provider Kites GmbH last month.

Today’s ETtech Top 5 was written by Vikas SN in Bengaluru and edited by Zaheer Merchant in Mumbai.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *