Days after it invested $75 million in health and fitness startup CureFit, Tata Digital is set to acquire online pharmacy 1mg. With this, the conglomerate has thrown its hat in the ring for a four-way battle with Amazon, Reliance and Flipkart.
Also in this letter:
📱 Biden revokes, replaces TikTok ban order
🛒 UK to probe Amazon’s use of data
💸 BharatPe makes its first acquisition
Tata Digital buys majority stake in 1mg
GIF Credit: Giphy
Tata Digital is busy striking startup deals as it prepares its super app play to take on the likes of Amazon,
Driving the news: The Tata Sons subsidiary is acquiring a 51-60% stake in online pharmacy 1mg, days after it pumped $75 million into health and fitness startup CureFit and appointed its co-founder Mukesh Bansal as president.
- 1mg is said to have received about $100-$120 million in primary capital and $220-240 million overall, including secondary investments, according to people close to the development.
- Existing investors Redwood Global-Korea Omega and World Bank’s International Finance Corporation (IFC) have also pumped in primary capital. The deal values 1mg at $450 million, a person briefed on the deal told us.
- Sequoia Capital and Omidyar Network are fully exiting the firm while other early investors are opting for partial exits.
In May, Tata Digital had announced its purchase of a 64% stake in online grocer BigBasket, in one of the largest M&A deals in India’s digital sector.
With the 1mg deal, India’s online pharmacy sector is now more or less a game of corporate giants, with Reliance having acquired a majority stake in Chennai-based Netmeds for Rs 640 crore last August and Amazon, ramping up its prescription drug deliveries in Bengaluru through its largest seller Cloudtail.
Odd one out: Pharmeasy, which recently acquired smaller rival Medlife, is the only major standalone e-pharmacy firm in the country. It is currently eyeing a public market listing, aiming to raise around $400-$500 million at a valuation of $3 billion. The startup is also in advanced negotiations with Facebook co-founder Eduardo Saverin’s B Capital and New York-based investment major Tiger Global for a potential stake sale at a valuation of $1.8 billion.
Big picture: The e-pharma sector is among the few e-commerce verticals that has seen significant growth during the pandemic. Industry reports estimate that about six million new households have bought medicines online in the past year, taking the total user base to about nine million.
Indian’s e-health sector is expected to become a $16 billion opportunity by the financial year 2025, growing from $1.2 billion at a compounded annual growth rate of 68%, according to RedSeer.
Madras High Court issues notice to union govt over IT rules
The Madras High Court has given the union government three weeks to respond to a writ petition filed by eminent Carnatic music vocalist TM Krishna, challenging the constitutional validity of the country’s new IT rules, which came into effect on May 26.
- “The Impugned Rules offend my right as an artist and cultural commentator by both imposing a chilling effect on free speech and by impinging on my right to privacy. Part II of the Impugned Rules violate my rights as a user of social media services while Part III of the same Impugned rules are in breach of my rights as a creator of online content,” said Krishna, a Magsaysay award winner.
Part II of the rules pertain to the due diligence and grievance redressal by social media platforms, while Part III seeks to regulate online news portals and streaming services.
“The processes instilled by Part III of the IT rules create a culture of executive oversight of online speech wholly inimical to the right to freedom of expression. The rules establish vague responsibilities on producers of online curated content that will only inevitably lead to a chilling of the creative process. Independent creators who are keen to stretch the boundaries of cultural and social acceptance will find themselves thwarted by a law that sanctions arbitrary ministerial supervision,” Krishna added in his petition.
WhatsApp’s lawsuit: Last month, WhatsApp filed a rare lawsuit against the government over the traceability requirement in the new IT rules, which it says would force it to compromise the privacy of its users and lead to mass surveillance.
Electronics and information technology minister Ravi Shankar Prasad later claimed that the government had no intention of violating the privacy of individuals. Read our explainer on the government’s rules and WhatsApp’s argument in this standoff.
Last week, Google also filed an appeal with the Delhi High Court against its search engine being classified as a “significant social media intermediary”, thus placing it under the purview of India’s revised IT Rules.
Tweet of the day
💰💰 ETtech Done Deals
■ Fintech startup BharatPe has made its first acquisition by purchasing multi-brand loyalty programme Payback India from American Express and
■ Cult.fit has acquired Bengaluru-based connected fitness startup Tread to bolster its portfolio of hardware products. The purchase will help the Tata Group-backed firm to launch its hardware-at-home vertical. It aims to launch a suite of smart fitness hardware products, including Tread smart bikes. This is Cult.fit’s third acquisition this year after fitness facilities aggregator Fitternity and US-based fitness company Onyx.
■ Neobanking startup Niyo has acquired Bengaluru-based personal finance startup Index, marking its second acquisition in less than a year. It had previously acquired mutual fund investment platform Goalwise in a cash-and-stock deal last July. The firm plans to integrate Index’s services to its newly launched savings and wealth platform NiyoX, launched in partnership with Equitas Small Finance Bank.
■ Digital advertising firm Affle is buying Latin America-based mobile marketing firm Jampp and also increasing its stake in social keyboard provider Bobble AI to 17.72%. The Jampp buy will help Affle scale its business in markets like the US and Latin America, said founder Anuj Khanna Sohum.
■ Slintel, a startup that builds sales intelligence platforms for enterprises, has closed a $20 million Series A funding round, led by GGV Capital. Existing investors Accel, Sequoia India and Stellaris Venture Partners also participated in the round. The startup claims to have seen 5X growth in both revenue as well as customer base over the last 12 months due to the Covid-19 pandemic
■ Logistics tech startup Kale Logistics has raised $5 million in its Series A funding round led by Inflexor Ventures. The startup plans to use the funds to improve its product and global business growth by deploying its solutions at additional overseas airports, ports and enterprise cargo customers.
■ Hygiene and wellness brand Pee Safe has raised $3.75 million funding in a round led by entrepreneur Shaival Desai and existing investor Alkemi Growth Capital. The money will be used to build its personal care brand FURR, invest in research and development initiatives and for product launches in the feminine hygiene and sexual wellness space.
■ Leverage Edu, a foreign education consultancy and admissions platform, has raised $2 million in a debt financing round from venture debt firm Trifecta Capital. The company currently gets about 70% of its business from non-metro cities and it plans to use the money to go deeper into tier 2-4 markets in India, said founder Akshay Chaturvedi.
■ Bengaluru-based mobility and EV technology startup Cell Propulsion has raised $2 million in debt and equity from its existing investors Endiya Partners, growX Ventures, Huddle Accelerator and Micelio Mobility, among others. The fresh funds will be used to accelerate adoption of its electric commercial vehicles. The company has raised a total of $4 million in its three years of existence.
Biden revokes US ban orders on Tiktok and WeChat
US president Joe Biden signed an executive order on Wednesday revoking the Trump-era bans on popular Chinese social apps TikTok and WeChat for a more targeted strategy.
What’s the new plan? Biden has now directed Secretary of Commerce Gina Raimondo to conduct its own review, aimed at evaluating security concerns posed by apps tied to China, and take action against those that pose national security risks.
The commerce department will also provide recommendations on protecting against “harm from the unrestricted sale of, transfer of, or access to United States persons’ sensitive data, including personally identifiable information, personal health information, and genetic information” as well as harm from “access to large data repositories by persons owned or controlled by, or subject to the jurisdiction or direction of, a foreign adversary”
Under many microscopes: A separate national-security review of TikTok by the Committee on Foreign Investment in the United States (CFIUS) is still ongoing and will be unaffected by these orders. “The CFIUS action remains under active discussion by the US government,” an administration official told The Washington Post.
China’s reaction: China’s Ministry of Commerce said this move was a “positive step in the right direction”. The country’s foreign affairs ministry also urged the US “to stop generalising the concept of national security and abusing state power to suppress Chinese technology enterprises”.
UK competition watchdog to probe Amazon’s use of data
The United Kingdom’s competition watchdog is planning to launch a formal probe into how Amazon uses the data collected from smaller sellers on its platform, reports The Financial Times.
What’s it about? The Competition and Markets Authority (CMA) has been studying the online retailer’s business for months and the investigation may revolve around whether it favours merchants that use its logistics and delivery services, it said.
- CMA has reportedly analysed how Amazon decides which merchants appear in the “buy box”, a white box that appears on the right side of the product detail page, where customers can click to add products to their cart.
In 2019, the European Commission had opened an antitrust investigation against Amazon on similar charges. About a year later, it had accused the firm of using non-public seller data to benefit its own retail business, through which it directly competes with third-party sellers. It had also announced a second investigation into Amazon’s e-commerce practices to evaluate the possible preferential treatment to its own retail offers and those sellers who use the company’s logistics and delivery services.
Last July, Amazon founder Jeff Bezos had said during a US congressional hearing that he couldn’t guarantee that the company wasn’t accessing third-party seller data to develop its own competing products. The company and its executives had previously denied this allegation.