Also in this letter:
- Why the ‘Order Direct’ campaign is catching on
- HC to hear Twitter India MD’s petition next week
- Sequoia picks 13 Indian startups to accelerate
Online grocery sweepstake
E-grocer Grofers has signed a deal with Zomato and Tiger Global to raise $120 million, sources have told us. We were the first to report on May 7 that Zomato was in talks to invest $100 million in Grofers at a $1-billion valuation.
Details: Zomato will invest about $100 million in the firm while existing investor Tiger Global will put in the rest. New York-based Tiger is an investor in both companies, while SoftBank Vision Fund owns about 50% of Grofers.
- The new financing will value the Gurugram-based firm at a little over $1 billion and put it in a growing pool of Indian startup unicorns.
Grofers had earlier planned a listing on the Nasdaq through a Cantor Fitzgerald blank cheque firm. We subsequently reported that the company would scrap this plan after securing new funding.
Big picture: The fresh funds will help Grofers build a much-needed war chest as the pandemic increases competition in the grocery delivery sector. The company has lagged bigger rival BigBasket and its attempts to catch up has gone through many pivots. Despite not being able to snag any large, new investor after SoftBank first came on board in 2015, Grofers has been able to survive in a highly competitive sector.
Finding a home in Zomato is likely to be the endgame for Grofers. Sources tell us that the financing is a first step towards a final acquisition of Grofers by Zomato at some point in the next year or so.
- Zomato’s investment in Grofers comes soon after Tata Digital acquired a majority stake in BigBasket and invested another $200 million in primary capital in the firm.
- Horizontal e-tailers such as Amazon and Flipkart are also ramping up grocery plays as consumers increasingly migrate online for essentials.
- Zomato’s food-delivery rival
Swiggyis aggressively pushing daily essentials delivery through Supr Daily and quick grocery delivery service Instamart.
We reported on April 15 that the Softbank Vision Fund is close to deploying $450 million in Swiggy, largely to help it expand beyond food delivery.
According to data from PGA Labs, Grofers had a 13% market share in FY21, while market leader BigBasket had 37% and Reliance’s JioMart 4%. This data showed the Indian e-grocery market is estimated to touch $22 billion by 2025. Industry data estimated the market at about $3 billion last year.
More restaurants push direct orders, and not just for the money
The ‘Order Direct’ campaign, launched by restaurants to resist steep commissions charged by food aggregators such as Zomato and Swiggy, is gaining momentum for reasons beyond costs.
What’s that? The industry is waking up to the possibilities that having access to consumer data opens up.
Many restaurant chains are now pushing direct ordering through their own websites, or on platforms such as Dotpe and Thrive, which provide them with identifying information of customers. They say this data helps them customise offerings and drive higher sales from repeat customers.
- “Any business is based on an analysis of what is going on. To have as much data as possible allows you to make better informed decisions to create a better product for your guests,” said Sameer Seth, partner at Hunger Inc. that operates restaurants such as Bombay Canteen and O Pedro. “There is a constant feedback loop with the customer which is tremendously helpful.”
The Order Direct campaign, promoted by National Restaurant Association of India (NRAI), gathered steam during the second wave of the pandemic, which further devastated the restaurant industry.
A new market: A flurry of startups such as Dotpe, Thrive, and Peppo have sprung up to help restaurants go digital. These startups are hoping to woo restaurants frustrated by the aggregators’ high commissions and data masking.
Gupshup, which recently raised $100 million from Tiger Global to become a unicorn, also announced its foray into direct ordering earlier this week.
Yes, but: Restaurant owners are still getting limited traction from alternate channels. However, most of them now believe that including these options will pay off in the long run.
Tweet of the day
Karnataka HC to take up Twitter India MD’s petition on July 5
Yesterday, the Karnataka High Court adjourned the hearing of a petition filed by Twitter India MD Manish Maheshwari to July 5.
Details: Maheshwari’s petition challenges a UP Police notice asking him to appear in person for questioning at a Ghaziabad police station. The case concerns a video of an attack of an elderly man that recently went viral on the platform.
Petitions in Supreme Court too: Yesterday, the UP State Police also filed an appeal in the Supreme Court against the Karnataka High Court order that granted Maheshwari protection from arrest. The Twitter India executive also moved the apex court with a caveat petition stating that no interim order ought to be passed before he has a chance to be heard.
Second FIR: The UP Police have also filed a second FIR naming Twitter, Maheshwari and the company’s news partnerships head Amrita Tripathi, after it was found that the company’s website had a distorted map of India. The FIR was filed in response to a complaint by a Bajrang Dal leader in Bulandshahr.
13 Indian firms in Sequoia’s startup accelerator programme
Venture capital firm Sequoia’s Surge accelerator programme has chosen 13 Indian startups for its fifth batch, comprising 23 companies spread across India, southeast Asia and Hong Kong. In its previous batch, Surge had a dozen firms from India.
ApnaKlub, an agent-led B2B wholesale platform for FMCG goods; Mailmodo, an email marketing platform; and Belora, a make-up brand, are some of the Indian startups in the latest cohort.
What’s the plan? Surge typically invests $1-2 million in each startup, while other investors also put in funds. DSG Consumer Partners, Nexus Venture Partners, Y Combinator, WaterBridge Ventures, Accel and India Quotient are some of the co-investors in this round.
Y Combinator is also doubling down on India as one of its key markets outside the US, with a record number of startups from India in each of its recent batches.
Surge’s fifth batch is also its largest cohort since it started in 2019. The latest batch also has 10 women founders. Of the 23 companies, around 13 are into fintech, payments, communications, logistics and software-as-a-service (SaaS).
Meanwhile, here’s a look at today’s Done Deals:
■ Student engagement platform Quizizz has raised $31.5 million as part of its Series B funding round led by Tiger Global Management. Existing investors Nexus Venture Partners, GSV Ventures and Eight Roads Ventures also joined the round along with new backers including Yahoo co-founder Jerry Yang.
■ 10club has landed $40 million in one of the largest seed funding rounds in India. The financing was co-led by Fireside Ventures and an undisclosed international investor. The startup plans to use the money to expand its portfolio of brands, build its technology stack, and for working capital.
■ Industrial AI startup Detect Technologies has raised $12 million in a funding round led by Accel, as it looks to grow its presence in markets such as North America, Middle East and southeast Asia. The round also included Stride Venture, and existing investors Elevation Capital, Bharat Innovation Fund, BlueHill Capital, and Axilor Ventures.
Devas Multimedia seeks seizure of Air India’s assets in US
Devas Multimedia has filed a petition against Air India in a New York court.
Why? It seeks to seize the assets of Air India in the US as reparations for India’s failure to honour an $1.2-billion arbitration award the satellite firm had won in 2015.
This makes it the second company—after Cairn Energy Plc—to target the overseas assets of India’s beleaguered national carrier to enforce an arbitration award on the government.
In its petition to the court, which we have reviewed, Devas said the airline was the “alter ego of the Republic of India” and “therefore jointly and severally liable for the debts and obligations of India itself”.
- “India’s control over Air India is wide-ranging, extending from Air India’s legal existence through its day-to-day operations and its financial affairs,” the petition read. “India entrenches these powers by making Air India dependent for its financial survival on grants, loans, and guarantees from India.”
Backstory: The litigation stems from the cancellation of a satellite deal between Antrix Corp, the commercial arm of the Indian Space Research Agency (ISRO), and Devas in 2011 that culminated in the arbitration award.
Earlier in May, Cairn filed a similar petition in a New York court to seize Air India’s assets such as airplanes to recover $1.72 billion from the Indian government that an international arbitration tribunal had awarded the company.
Why Air India? Anirudh Krishnan, a partner at AK Law Chambers, said, “Private companies go after assets such as aircraft because most other state assets, such as embassy properties, are immune from attachment due to the concept of state immunity.”
Facebook partners with another VC to help grow small businesses
Facebook has partnered with venture capital fund Stellaris Venture Partners to help businesses scale quickly by giving them timely digital skilling support.
With this tie-up, the social networking giant now has partnerships with nine venture capital firms as part of its VC Brand Incubator programme. The previous eight are Sauce.vc, Fireside Ventures, Elevation Capital (formerly SAIF Partners), Sequoia India’s Surge, DSG Consumer Partners, Matrix Partners, Anthill Ventures, and Kae Capital.
What’s the plan? Through this programme, Facebook helps businesses leverage its family of apps including WhatsApp, Instagram and its flagship app for brand-building and advertising. The company claims to have trained and mentored more than 200 small businesses.
Last September, Facebook had announced a $4.3 million grant for more than 3,000 small businesses across Delhi, Gurugram, Mumbai, Hyderabad and Bengaluru.
Trillion-dollar company: Meanwhile, the company hit a major milestone on Monday as its market cap crossed $1 trillion for the first time, bringing it into an elusive club of tech firms that includes Apple, Microsoft, Amazon and Alphabet.
This was after a US judge dismissed federal and state antitrust complaints against the social media company that had sought to break it up, saying the federal complaint was “legally insufficient”.
The dismissal is the first major blow to state and federal lawsuits against Big Tech firms that are seeking to rein in alleged abuses of their dominant market power.
Yes, but: The judge noted that FTC “is on firmer ground in scrutinising the acquisitions of Instagram and WhatsApp”, as the court rejected Facebook’s argument that the agency lacks authority to seek injunctive relief against those purchases. FTC now has 30 days to file an amended complaint with more details.
Report incoming: Meanwhile, Facebook said it will release a report next month with information on content takedown requests it received from the government and users in India between May 15 and June 15, and the action it took. This is to comply with the new IT rules.
Other Top Stories We Are Covering
Tide’s India plan: Tide Platform Ltd., a UK-based fintech startup that helps small firms open business accounts, plans to invest £100 million (Rs 1,000 crore) and create 1,000 jobs in India over the next five years.
Axis-AWS deal: India’s third largest private lender Axis Bank has selected Amazon Web Services (AWS) to accelerate its digital transformation programme and meet the growing demand for its digital banking services.
Freshworks appointment: SaaS startup Freshworks Inc. on Tuesday said it has appointed diversity advocate Randi Bryant as its first chief diversity and inclusion officer. She is founder and president of Bryant Consulting Group, where she helped Fortune 500 companies and government clients navigate DEI issues.
Global Picks We Are Reading
■ Apple’s strategy bends the world (NYT)
■ Elon Musk’s Starlink to deliver internet nearly worldwide within weeks (Bloomberg)
■ Facebook announces Bulletin, its Substack newsletter competitor (The Verge)