Weeks of May 2 - May 16
In this introductory episode, I cover the follow stories:
Amazon Prime Video launches Gulabo Sitabo
WhatsApp pay’s pre-launch challenges
Amazon’s increasing its stake in Future retail
Uber’s layoff’s in India
Dunzo facing competition
Funding news covered:
LoadShare
SirionLabs
Classplus
Company in focus - Setu
You can email me at - rahool@techbuzzindia.in
My bio - https://www.linkedin.com/in/rahoolgadkari/
Full Transcript
Hi Folks, Welcome to Tech Buzz India, a podcast that helps you stay in touch with what's happening in the startup world in India. I'm your host Rahool Gadkari. I've spent the last six years building products, both in India and the US. I'm passionate about technology and India's tech ecosystem.
A while ago, I found myself talking to some friends who were either in tech or curious about it and realised that to keep up with what's happening in this rapidly evolving sector they were reading and subscribing to all sorts of news apps, blogs, newsletters, and social media. All they really wanted was to keep up with the pulse of what's going on and stay on the above, ‘must know’ updates. That sort of gave me the idea for this podcast. So if you're interested in tech or want to keep up with what's happening and what's hot, this podcast is for you.
The format is pretty straightforward. Each episode will be around 15 minutes long. I'll highlight what I think are the most important updates. This will include news of funding, product launches, industry updates, and possibly hiring. You can expect material that doesn't make it to the headlines.
After that, we'll do a quick, deep dive into an interesting startup and see what it's been up to. To begin with, I'll release an episode every two weeks. So without further ado, let's dive right in.
We’ll cover the most important news stories over the last two weeks. Our first story is about Amazon Prime Video. Amazon Prime Video is acquired the rights to seven films for a direct to digital launch. This includes the big ticket movie Gulabo Sitabo starring Amitabh Bachchan and Ayushmann Khurrana. Why is this a big deal? Because it's the first time an OTT platform has got the right to screen a movie this big. What this really means is that the movie will first launch on Amazon Prime Video and not go to the theatres. Obviously this has really pissed off the theater groups with INOX writing a very strongly worded complaint, expressing the extreme displeasure and disappointment.
While it's no surprise that theatres are unhappy, this is actually great news for OTT platforms. Hopefully this trend accelerates and these platforms with the traction they've received, get a chance to screen more movies in the near future. It's possible that theatres moving forward will pay OTT players money to re-screen already released movies, especially for their older or originals.
Footfall to theatres is likely to remain low, and so I think this trend is going to just continue, if not accelerate. Don't expect theatres to back down without a fight, though. A lot of them are up in arms, and so let's watch this space to see what happens next?
Our second story is around WhatsApp Pay. WhatsApp has been trying to launch WhatsApp pay - its peer to peer payment solution. This has been stuck in a beta mode for the last two years around a dispute about data storage. WhatsApp finally agreed to save data locally earlier this year. However, the Supreme court has asked the RBI and the national payments corporation (of India, NPCI) to check whether WhatsApp actually complies with the regulations. Their report is due in the next few weeks. This would have been a green light for WhatsApp to launch beyond the beta of roughly 2 million users to its entire user base of over 400 million users. The P2P payment market is dominated by two companies, PhonePe and Google Pay. With the imminent launch of WhatsApp pay, these companies are likely to face stiff competition given WhatsApp 400 million plus install base. To add to this. The Competition Commission of India (CCI) recently received a complaint alleging that WhatsApp was forcing its payments feature down existing users’ throats. This anti-trust allegation is currently being investigated by the CCI. Given what's at stake it’s no surprise that efforts are underway to slow down this rollout. My take on this is that it's only a matter of time before WhatsApp Pay becomes the number one P2P payment transaction app. Given its wide distribution, and given the popularity of the app, I don't think WhatsApp is going to struggle with adoption.
Our third story is about Amazon. Amazon is buying a majority stake in the Future Group. It bought a 49% stake in Future Coupons last year. The holding company or Future Retail, this gave it a 3.58% ownership stake in Future Retail. The company Amazon actually cares about as it controls roughly 15% of the organised food and grocery market in India. Amazon has already committed to investing in his grocery business. You can order groceries on Amazon, and last month in a bid to accelerate this, they launched local shops on Amazon, a program to list nearby Kirana stores. I think there's going to be a fair amount of consolidation in preparation for the full scale launch by JioMart. With its investment from Facebook reliant is probably going to tap into WhatsApp's massive 400 million install base, which we talked about earlier. While this is speculation, a lot of people think it's on the cards. Netmeds last month launched grocery deliveries powered by Reliance Retail, and there's rumours that Reliance has said to make a strategic investment in the same company. The space today is dominated by Big Basket and smaller players like Grofers, Zomato and Swiggy following suit. It'll be interesting to see what happens with Jio’s entry and how the incumbents respond. One thing is for sure though, the space is going to remain hot. Qualifying as an essential service throughout the lockdown and seeing a surge of demand from consumers.
Our fourth story is an unfortunate one, but given the current COVID- 19 crisis and the lockdowns all over the country, companies have been faced with unprecedented circumstances. This has unfortunately led to a number of layoffs, most recently coming from the doors of Uber India, which is reportedly going to let go of 500 employees from its India staff. This on the back of a 3,700 employee reduction globally. Well, Uber has also canceled offers made at B-school campuses this year. Not just that, but Uber is likely to leverage the current crisis to trim much of its excess fat in anticipation of a long drawn out, down cycle. Other companies that have laid off employees as well, includes Zomato, which paid off 13% of its workforce and Cure.Fit for it, which reportedly laid off around 800 employees. Cure.Fit has also shut down into UAE business and downsized operations all across India. My take on this is that startups have still not fully understood the impact their businesses are likely to suffer as a result of the current slow down. I wouldn't expect the Uber layoffs to be the last one, and it's likely that in the coming months we'll see a few more companies downsizing their workforce.
I find that story is about Dunzo your neighborhood delivery service. Dunzo has been a favourite of a lot of people, saving the day many a times. Unfortunately with food delivery demand not likely to pick up soon firms like Zomato and Swiggy have been struggling to reach their peak order volumes. This is resulted in a lot of firms reportedly planning to do Dunzo like delivery. The first to enter the fray was Swiggy launching a service called Swiggy Genie. The big differentiator between Dunzo and Genie really being that Swiggy genie is present across a lot more geographies. Dunzo last year, restricted the number of zip codes it was delivering to in an effort to cut down costs and focused on unit economics. There are reports that Zomato is also planning to launch such a service. A lot of the focus for the delivery segment has been for firms to become full-stack logistics players in an effort to better utilise their massive delivery fleets. My take on this is that this is a not so straightforward switch for these companies to make. Swiggy especially has been associated with food delivery in the minds of the users. So this is not a feature launch, as much as a brand pivot. It would be interesting to see how users react to Swiggy and Zomato being their everyday delivery apps, possibly even Grofers, in the face of competition from Dunzo. This is also a market with very difficult unit economics and it will be very interesting to see how this plays out.
Let's move on to news about funding. There's been a lot of funding activity over the past two weeks and I had a fair number of companies to sift through. What I've done is tied to identify my top three picks.
This obviously doesn't include the big bang funding by the Reliance Jio. Do it just yesterday. It is another 870 million from General Atlantic moving its entire cache or funding over the last month to $8.9 billion USD.
Outside of that, to more earthly figures, my first pick is a company called LoadShare, which is a logistics tech startup, which has raised 13.2 million in a round led by Beenext, CDG group and existing investors - Stellaris Venture Capital and Matrix Partners. LoadShare enables regional players and logistics to operate more efficiently by providing them with technology and operation support required. LoadShare says that it aims to use the fresh capital to expand its network and foray into sectors such as pharmaceuticals, fast moving consumer goods and grocery delivery for essentials, capitalising on the current landscape. Next in line is Sirion Labs, which is a contract management , SaaS startup, which recently raised their Series C round from Tiger global, and Avatar Growth Capital. It's really good to see Tiger Global investing in India again. For those of you who don't know, Tiger Global was the marquee investor in Flipkart. They've made investments in Vedantu, Shiprocket and NoBroker amongst others over the last year. Our last funding update comes from classplus a platform that enables offline coaching institutes to go online. It's been described as the Shopify for tutoring centres. The company has raised $9 million from early stage investor, RTB global, and some existing investors. Interestingly enough, class plus was part of Sequoia India's surge accelerator program’s first cohort.
That's a wrap for the news and updates for the last two weeks.
Our next section focuses on covering interesting startups that are on the path to having disproportionate impact in their respective sectors. In this first episode, I covered a company called Setu. Setu provides low cost modular API infrastructure and partners with financial institutions to enable businesses to provide financial services. They're primarily focused on non Metro or non top-10 city markets. The company has a flagship product called collect, which helps merchants collect recurring payments directly from customers’ preferred payment obligations. Think of your favourite UPI app and being able to pay your bill, it's possible that Setu is powering that connection. They also offer speedy FasTag payments, something which all of us are going to have to use more and more in the future. See it was founders are Sahil Kini and Nikhil Kumar, both have a solid background in building financial products having collectively worked on AADHAR and UPI. They clearly understand the space and a testament that that was them raising a series eight round of $15 million. I find Setu very appealing because it's building at a time in the Indian market is prime for adoption of financial services. UPI has picked up pace. There were 1.3 billion transactions via UPI in February, 2020 with over a hundred million transacting users. This number is set to grow to 500 million over the next three years. Yet at the same time, the FinTech infrastructure on the whole is very dated, which is where Setu two comes in. An interesting stat I read was that according to the RBI, India's debt to GDP ratio is 12% whereas the global average is 60%. To increase this credit will play a major role and Setu’s API led democratisation approach is likely to work very well in this multiplayer market. And some of the products say two is working on are building on top of this.
Next in line fore Setu too is really building on products for savings, digital credit, and information aggregation - so helping you make sense of your finances. Setu is positioned to be an industry leader in the financial API space. Companies in the global market like Stripe and Plaid have proven that these type of businesses can work. Plaid was acquired by visa $5.3 billion earlier this year. Setu has a bold mission to make every company of FinTech, and I feel like the execution gives them a good platform to succeed.
An interesting initiative they also done on the site. It's called D91 Labs. It's a research effort which creates user stories to cover different aspects of financial inclusion. This includes stories about migrant labor, MSME, and different aspects of banking in rural India. I highly recommend you check this out. I've included a link to it in the description.
That's all for this episode. If you enjoyed it, please do share the podcast with your friends and family and leave a review on the podcasting platform of your choice. Also, if you have any feedback on the episode today or suggestions for the next one, please don't hesitate to reach out to me at rahool@techbuzzindia.in. I'm also looking for a research analyst to help me with this podcast. If you're interested, do reach out to me as well. I hope to see you all in two weeks until then, stay safe and thank you for tuning in.
Music credits
Opening /closing sequence: Jungle Juice by Wataboi, Creative Commons —
In-track: Twenties by Peyruis
Attribution 3.0 Unported — CC BY 3.0
Episode 1 - Amazon Prime Video's coup, Uber Layoffs, WhatsApp Pay's challenges and Setu