We have an action-packed edition of The Morning Dispatch this Friday AM full of scoops, exclusives, and stories you ought not to miss.
Jack Ma’s Ant Group has pared down its stake in the IPO-bound Zomato, which has raised a fresh financing round. Trump’s digital base is moving to Telegram post-Facebook purge. Chinese fintech lenders under ED and CID probe. Wingreens has scooped up cash-strapped Raw Pressery, and more.
Here are the must-read top tech news this morning.
1. Zomato all set to get $500 million more on its plate
Illustration: Rahul Awasthi
- Zomato is raising $500 million in a pre-IPO round at $5.5 billion valuation.
- Ant group expected to partially exit in a $250 million secondary transaction.
- Rest of the $250 million to come in as primary capital by existing investors.
- InfoEdge will emerge as the single largest shareholder at 17%.
- Plans to go public by June 2021, first large consumer internet IPO in India.
- Investor interest is bolstered by the bumper DoorDash IPO in December.
What’s the matter: Ant group has been on a back foot in India since the past year after
new FDI rules were introduced by the local government clamping down Chinese capital. Jack Ma’s Alibaba and Ant have been significant investors in Indian startups but that’s changed substantially since the past nine months. Alibaba is looking to exit another big portfolio firm, e-grocery platform BigBasket, by selling its stake to the Tata group
as we reported on January 20.
What’s next for Jack Ma in India? With ongoing stake sale processes at BigBasket and Zomato, the only big shareholding left for Jack Ma is in online payments firm Paytm. Ant Group still owns around 30% in the Vijay Shekhar Sharma-founded company. A Reuters report had surfaced in December that Ant
was looking for potential investors to sell its stake in Paytm.
2. As Joe Biden takes oath, cracks appear in the Cult of Q
Joe Biden taking oath on January 20 as US president has shaken the American far right, but some Donald Trump supporters are still holding out—they have now taken peddling their conspiracy theories on Telegram, after the Facebook purge.
Achieving clarity is tangible progress … especially true in chaotic start-up environments. Founders, please over-invest in it …
— Shailendra J Singh (@singh_sequoia) 1611217709000
3. ETtech Done Deals
It shouldn’t have ended this way.
Raw Pressery, which in some ways forced Big Beverage to rethink its sugary and aerated strategy in India,
has been acquired by dips maker Wingreens Farms at a fifth of its 2018 valuation.
This means curtains on a seven-year-old startup, which took “freshly-squeezed” beyond just oranges and introduced cold-pressed juices to fitness-obsessed Indian millennials. And it was backed by the biggest names in the venture capital space, including Sequoia Capital, which in an irony of sorts is also a prominent backer of Wingreens Farms.
So, what went wrong?
Raw Pressery perhaps paid the price of being too niche and expensive in a category that’s dominated by heavyweights — from Coca-Cola to Pepsi and Dabur India and ITC. It simply couldn’t match up the economies of scale at play here.
■ Cred founder
has made an undisclosed seed investment in OnePlus co-founder
Carl Pei‘s upcoming hardware venture. In December,
Pei had raised $7 million seed financing from a clutch of prominent investors including iPod inventor Tony Fadell, Twitch cofounder Kevin Lin, Reddit chief executive Steve Huffman, and Web Summit founder Paddy Cosgrave among others.
■ Turnip, a gaming livestream and community platform,
raised $1.63 million in a seed funding round led by Elevation Capital along with participation from Better Capital. The Bengaluru-based startup plans to use the funds raised to expand its reach to millions of gaming communities and for hiring talent.
4. India cracks down on China-backed fintech startups
What they said: “There is a big flaw here. Payment gateways, in a hurry to generate more cash flows, went and opened accounts for these Chinese entities,” an official in the know said. “They have to do the know-your-customer (KYC) checks to figure out the money trail.”
About 95% of the loan apps use Razorpay as their payment gateway, which has invited the scrutiny of the ED and state CID units.
5. Of data leaks, patchwork and whistleblowers
suffered data leaks three times last year, compromising personal information of over 300,000 users, cybersecurity researcher Rajshekhar Rajaharia has said.
With this, the cryptocurrency wallet and exchange platform, joins a list of recent high-profile data leaks, including those at Big Basket, Unacademy and JusPay—all in a pandemic year.
■ Tata group companies
Croma and Tata Sky
have fixed vulnerabilities in their websites after a cybersecurity researcher pointed out how the flaw could expose sensitive personally identifiable information to scammers even without hacking.
The information — names, addresses, phone numbers and purchase history — included personal data of celebrities, popular business people and doctors, among others. The vulnerabilities were discovered by Rahil Bhansali on December 29.
6. New H-1B rule not valid
The US Department of Labor
has withdrawn the 15 January notification revising its interpretation of its regulations concerning which employers of H-1B workers must file Labor Condition Applications, following which the requirements specified are no longer required.
Why it matters: The modification, proposed by the Trump administration, called for changes to the terms of employees placed at third-party locations and called for the end client to also be responsible for the employee. This would have made it more expensive for services companies to place employees at client sites as employees would have had to be paid at the prevailing wage rates at client organisations.
Immigration experts said the rule was unlikely to be revived by the new administration headed by President Joe Biden. However, recent changes introduced by Trump such as higher wage requirements may not be reversed.
Other Top Stories We Are Covering
has assured the Parliamentary Standing Committee on Information Technology that its subsidiary WhatsApp is not sharing personal data — like conversation and exchange of messages between individuals — with it. The social media site underlined that the exchange between users is fully encrypted and there is no breach of privacy.
■ Apple’s supplier
Pegatron Corp., which
launched India operations in September last year,
has increased the Indian unit’s authorised share capital to Rs 1,100 crore, paving the path for investment in its manufacturing operations. Pegatron’s upcoming India iPhone factory is expected to start production in 2022 and the Taiwanese company plans to make more investments in India over the next two years.
■ Adtech firm
InMobi, which recently raised $145 million from Google and Mithril Capital for its lock screen content platform Glance,
will start experimenting with various advertising and monetisation models this year as it expands the platform globally, its founder said. Glance is seen as a big bet for Bengaluru-based InMobi, which had till now lacked an ad inventory in the form of a social media or a content platform unlike competitors Google and Facebook.
Global Picks We Are Reading
What is the Signal Encryption Protocol? You might already know Signal, thanks to the popular end-to-end encrypted text messaging app by the same name, created by cypherpunk Moxie Marlinspike and in recent years hosted by the nonprofit Signal Foundation.
Signal, the messaging app, has an unparalleled reputation for security and privacy, with high-profile endorsements from NSA whistleblower Edward Snowden and WhatsApp founder Brian Acton, who left WhatsApp in 2018 to serve as the Signal Foundation’s executive director.
But the underlying crypto system that Marlinspike designed and on which Signal is built, known as the Signal protocol, has spread far beyond its eponymous app.
What internet censorship looks like: We’ve seen the internet magnify the best and the worst of ourselves. Abdi Latif Dahir, who writes about East Africa for The New York Times, has covered the most extreme examples of both.
Governments in the region regularly shut down internet access or manipulate online conversations to control dissent — Uganda did both ahead of last week’s presidential vote. But citizens also use social media to expose election manipulation and spread feminist movements.
Our conversation highlighted an essential question: Can we have the wonderful aspects of connecting the world online without all of the downsides?
(The New York Times)
Net neutrality on the line under Biden: Federal net neutrality rules are back on the table in the Biden administration, after being nixed by Trump, but now might be complicated by the debate over social media companies’ behavior.
Axios Re:Cap digs into why net neutrality matters and what comes next with Nilay Patel, editor-in-chief of The Verge and host of the Decoder podcast.