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Amazon and N+1 Capital
Good morning - it's Friday! This is Vedica with the newsletter today. Anmol is now back safely in Delhi and getting used to IST 🙂 In continuation of yesterday's edtech theme, today we cover Amazon's forays into the arena, and N+1's new debt fund aims to invest up to $100 million to invest in startups.
https://bit.ly/3oL3CGt: Amazon takes on edtech companies with launch of Amazon Academy
➡️ Yes, we know edtech is the gift that keeps on giving, but it really is true! Amazon is launching Amazon Academy to cater to students preparing for the JEE (Joint Entrance Examination), which is used for admissions to engineering colleges, including the IITs. The move into this space will allow Amazon to take on the big players like Byjus's and Unacademy and tap into the country's $180B edtech sector.
➡️ The beta Amazon Academy app will be available free of cost on the web and the Google Play store, and will offer curated learning material, live lectures and comprehensive assessments in Math, Physics and Chemistry. Amazon Academy will offer users mock tests and provide them All-India Ranks based on their performance. Students will have access to personalised reports, which can help them track their progress and identify areas of improvement.
➡️ On the one hand, just reading about the offering makes me think that there's nothing here that isn't offered else where. I think it will come down toe execution and how many users Amazon can bring on board and monetize. At some level, while I understand the desire to go after the edtech opportunity I wonder if Amazon isn't a bit too late to the game.
➡️ That said, Amazon has a whole ecosystem behind it and I'm really curious to see how the Amazon brand effect plays out. Can the edtech play be a way to get more Amazon e-commerce customer? Or will the Amazon brand make it a trusted player even when it comes to education? I think its a fascinating case study to keep an eye out on.
https://bit.ly/3qzxean: N+1 Capital’s maiden fund to invest $100 million in startups
➡️ N+1 Capital, the newly launched revenue-based debt fund started by investment professionals Rahul Chowdhury and Ashish Singla, aims to raise up to $100 million to invest in startups. The fund will make its first close of around $19 million by February, and will subsequently start deploying the capital.
➡️ The fund is registered as an Alternative Investment Fund- Category II (AIF-II) and has received approval from SEBI, the Securities and Exchange Board of India. N +1 will offer growth-stage capital to startups across sectors with ticket sizes of ₹1 crore to ₹15 crore. The debt fund is looking at firms which are at least a year old with net revenue of ₹50 lakh and average gross margins of over 30%.
➡️ The firm is pioneering quick access to capital to entrepreneurs without any personal collateral, equity and board seats, associated with it. Unlike venture debt firms, N+1 isn’t dependent on future fund-raise of the startup, but will invest on the basis of its revenue outlook.
➡️ N+1 will provide startups access to capital, at a premium, without taking any equity share or collateral from the company. It will collect a percentage of the borrowing entity’s monthly revenues to pay the capital back, and aims to give steady returns to its limited partners on a quarterly basis.
➡️ This model is similar to what Clearbanc does, in offering non-dilutive revenue-share agreements with start-ups. It will be interesting to see how the fund plays out. I think there's definitely a case to be made for start-ups to have a varied "funding stack", and something like N+1 can potentially be a good / quick source of capital. Depending on the terms and circumstances, of course!
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