Also in this letter:
- Interview with
FreshworksCEO Girish Mathrubootham
- Apple’s online store proves a hit in India
Zomatoask govt for clarity on GST
ETSA 2021: And the nominees are…
Woman Ahead: As the name suggests, this award is about women who have started their own ventures and are giving tough competition to the best in the business. Nominees in this category must be CEOs at their startups, unless there is no one with a CEO designation. The women up for this year’s award run a diverse set of startups. They are:
- Vineeta Singh of direct to consumer cosmetics brand Sugar Cosmetics;
- Lizzie Chapman of ZestMoney, a leading Buy-Now-Pay-Later platform;
- Bhavna Suresh of 10club, a Thrasio-style venture,
- Jo Aggarwal of Wysa, an AI-powered mental health app, and
- Prukalpa Sankar of Atlan, which is a collaboration platform for data teams within enterprises that helps automate repetitive tasks.
Social Enterprise: This one rewards startups that combine public good with profits to achieve the ultimate ‘double bottom line’. The nominees include startups working on telemedicine amid the pandemic, a platform that offers mental health counselling, three that are trying to solve farmer financing, and one that is using robotic solutions to address various sanitation and healthcare issues such as manual scavenging and rehabilitation of paraplegic patients.
Covid-led Business Transformation: The pandemic has changed various aspects of our lives for better or worse. This category recognises startups that adapted their businesses to the realities of the pandemic and thrived over the past year. For this one, we have four nominees instead of the usual five. The list includes Urban Company, which doubled down on its at-home services and also entered the unicorn club this year. In no time, haircuts for men became its biggest money-maker during the pandemic. Meanwhile Rapido, a bike taxi provider, quickly and cleverly pivoted to partner with food delivery platforms such as
Freshworks IPO made 500
Freshworks CEO Girish Mathrubootham
Zomato’s stellar IPO broke many records on the Indian stock markets in July, setting the stage for consumer-tech startups to go public. Freshworks, which was founded in Chennai and listed on the Nasdaq yesterday, is likely to set a similar trend for Indian SaaS (software-as-a-service) startups eyeing the US markets.
Billion-dollar IPO: The company sold 28.5 million shares at $36 each, raising $1.03 billion from investors through its initial public offering at a market cap of $10.13 billion. This was up from the $32-$34 range it had announced earlier this week, pointing to strong investor interest.
After the successful listing, Girish Mathrubootham, cofounder and CEO of Freshworks told us after the listing that apart from opening the door for other Indian SaaS firms to go public, the IPO has created a lot of wealth for his employees — 500 of them have become crorepatis, and 69 of them are under the age of 30.
Here are some edited excerpts from the interview:
Would you say Freshworks going public is vindication for Indian SaaS? Do you think this will inspire more such companies to tap the public markets?
Ten years ago the number one problem for Indian startups was that there was a lack of exits. When the Flipkart exit happened, I think that was a big moment. Going public is really the kind of exit that investors want because it’s a massive opportunity, and this will supercharge the ecosystem. I personally believe that SaaS for India is as big as the IT services moment that happened in the ’90s.
If the rules allowed it, or made it easier, would you have liked to have listed in India?
Different companies have different realities. We have been a global company from day one. Our customers are in 120-plus countries and all of our revenues from day one have been recognised in the US. We’re structurally a US-headquartered company, and so I think for Freshworks, listing in the US made a lot more sense.
Tweet of the day
Almost written off, Apple’s online store proves a hit in India
Apple’s online store in India seems to have cracked the country’s hyper-competitive discount-laden online retail market.
Why it matters: This comes a year after the industry had almost written it off, saying it would be tough for Apple to compete with the hefty discounts offered on iPhones and iPads on Amazon and Flipkart.
Despite selling products mostly at full price, Apple’s online store accounted for around 4% of its total sales volume in India as of the June quarter, according to estimates by global market researcher IDC India.
Quote: “Consumers are not just buying the iPhones and iPads, but also expensive Mac computers, which are sold for a couple of lakhs on the online store. It is no mean feat,” said IDC India research director Navkendar Singh.
How did Apple crack it? Analysts and industry executives said the success of Apple’s online business in India is due to multiple factors, including its discount offers for students, financing options and exchange schemes, which put it at par with any other online store or marketplace. They also attributed it in part to pandemic-generated tailwinds, with many more people buying goods online.
Growth-stage startups to create one lakh white-collar jobs in 2021
Growth-stage Indian startups, which raised Series A to E and late-stage capital in 2020, are set to create about one lakh white-collar jobs on a net basis this year, according to data put together for ET by staffing company Xpheno. The estimate is based on these companies’ recruitments as of the end of August and their hiring plans for the rest of the year.
By the numbers: This cohort of 243 companies added nearly 55,000 new white-collar jobs during the first eight months of 2021, compared with 30,000 net additions for the whole of 2020.
- In the 20-month period since January 2020, these companies saw their collective headcount rise by more than 80%.
- They are also estimated to generate another 2.5-3 lakh indirect jobs (blue and grey collar) this year, with the arrival of the festive season and continuing capital flows.
Startup investments have been on a high in 2021, with the disclosed value of Series A to Series E deals and late-stage funding so far this year already double the amount raised in the whole of 2020. The year-to-date deal count in this growth series stands at 250 with a total value of $13.3 billion.
Quote: “Talent is gravitating towards the digital economy. Not just tech talent, but people from adjacent industries are also attracted to these growth stage startups,” said Pranav Pai, managing partner, 3one4 Capital.
Swiggy, Zomato reach out to govt for GST clarity
Food delivery platforms have sought clarification from the government on the recent decision to treat them on par with restaurants under the Goods and Services Tax (GST) framework.
Catch up quick: On Friday, the GST Council said that food delivery platforms such as Swiggy and Zomato should cough up 5% GST from January 2022.
But Swiggy and Zomato want clarity around how the GST will be levied and whether this could lead to “tax cascading” or problems in claiming input tax credits. As of now, these companies pay GST only on the amount they charge over and above the cost of the food. Going ahead, however, GST will apply on the total price of the order.
Potential issues: Legal experts said due to the unavailability of input tax credit and other complications, Swiggy and Zomato may see tax cascading or double taxation. As GST would be applied on two stages of the supply chain—once by the restaurants, then by the platforms—they would not be able to set it off under the input tax credit mechanism.
Reliance Retail is expected to take on Nykaa, MyGlamm and Myntra in the beauty and cosmetics ecommerce business.
What’s new? Reliance Brands, a unit that sells upmarket brands, has devised a two-pronged strategy of a dedicated web store and a new brick-and-mortar chain of stores selling high-end cosmetics products, along the lines of LVMH’s Sephora.
This comes a week after we reported that Tata Digital is finalising plans to launch a new ecommerce platform exclusively to sell beauty and cosmetics products. “With rise in personal grooming and multiple gifting occasions, this space is certainly one to watch out for,” a Reliance Brands spokesperson said.
iD Fresh Food India eyes Rs 400-450 crore funding
PC Musthafa, cofounder and CEO, iD Fresh Food
Ready-to-cook packaged foods startup iD Fresh Food India plans to raise about Rs 400-450 crore from investors, sources told us.
The Azim Premji-backed startup has begun talks with private equity funds and a deal is expected to be signed by early November, they said, adding that the funding would value the company at Rs 1,800-2,000 crore.
Stake sale: In the proposed round, existing investor Helion Ventures is expected to sell its 17% stake, while an additional 5-6% will be diluted for primary capital. An early investor, Helion had paid Rs 35 crore for its stake.
More done deals
■ Fintech startup ZestMoney, which specialises as a Buy Now Pay Later (BNPL) platform, has raised $50 million from Australia-based BNPL player Zip Co. The company said the Series-C funding is part of a larger round that could see participation from existing investors such as Goldman Sachs, Quona Capital, Xiaomi and Alteria Capital.
■ FrontRow, a learning platform for non-academic skills, has landed $14 million as part of its Series A funding round led by Eight Roads Ventures and GSV. The company plans to use the money to scale up to more than 10 categories and over 300 courses over the next year, it said in a statement.
■ IT solutions provider Mphasis has acquired Blink UX, a user experience research, strategy, and design firm, for about $94 million in an all-cash deal. The Blink leadership will join Mphasis following the acquisition.
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WhatsApp alerts India users that its payments service exists: Several WhatsApp users in India received notifications regarding payments on the platform, an indicator that the world’s largest messaging service plans to create greater awareness about the feature that went live almost a year ago.
Karnataka gaming ban draws flak from All India Gaming Federation: The Karnataka government’s decision to ban online gambling, which includes skill-based games, is a setback to the large professional players’ community in the state and would damage its reputation as a startup hub, the All India Gaming Federation (AIGF) has said.
Plea in Supreme Court for social security for gig workers: A petition has been filed before the Supreme Court seeking social security benefits for gig workers engaged by food delivery apps Zomato and Swiggy and taxi aggregator apps, Ola and Uber.
Unacademy can’t use PrepLadder app: The city civil court of Mumbai has temporarily restrained educational technology company Unacademy and subsidiary PrepLadder from using the latter’s app which helps students prepare for medical entrance tests
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