"WEEK 21"

Oct 25 - 31

Happy Sunday, folks! It's election day in the US on Tuesday, so I expect the next few days to be a wash of anxiety as we see what happens with the results. What a time to be alive. In more regular programming we had a lot of interesting funding news this past week which we wrap up below. Anmol has really taken to the new approach of writing a slightly longer thematic update for the Whatsapp newsletter (while I have been so buried under work that even replying to a non-work email is too exhausting), so our long piece is his look at why Indian VCs might be investing in competing companies.

Weekly Recap:

  1. Netflix piloting new pricing strategies in India: Netflix plans to experiment with free access to users in India for a weekend as part of its plan to expand its reach in the country. Netflix has been conducting various pricing experiments in India and several parts of the world over the past year or so, in a bid to broaden its user base while retaining its premium offering.

  2. Jumbotail raises $10.5M Series B: Bengaluru-based online B2B marketplace for food and grocery, Jumbotail, has raised $10.5M in a funding round led by USA-based JumboFund1 with Canada-based Heron Rock AL Access Funds and its JUM Fund II also participated in this round. About 22 investors had participated in this round, including Nexus Ventures, Science, Engineering and the Environment LLC (SEE), Pimpernel Holdings India, E Analytics Partners India.

  3. Video creation platform InVideo raises $15M in a Series A: InVideo has raised a $15M Series A led by Sequoia Capital with participation from Tiger Global, Hummingbird, RTP Global and Base Partners. The company has built a platform that makes it super easy to create and edit videos and has a large template library, which helps users new to video editing get started.

  4. FreshToHome raises a $121M Series C: FreshToHome, has raised a $121M Series C from the likes of the Investment Corporation of Dubai, Ascent Capital, U.S. Government’s development finance institution (DFC) and the Allana Group. The company is also expanding its operations in the Middle East, currently already being operational in UAE with planned expansions to Saudi Arabia.

  5. Jitendra Gupta is set to launch a micro-lending app: The founder of the upcoming neobank Jupiter, which is set to launch next year, Jitendra Gupta is also apparently working on a micro-lending app called Bullet Money. The app is currently in a closed beta and is being rolled out to a select number of users. The micro-lending app will offer users loans up to Rs 20,000 and can be spent by them over UPI directly- both for online and for in-person transactions.

  6. BharatAgri raises a Pre-Series A: AgriTech startup BharatAgri has raised an undisclosed amount from Binny Bansal-backed 021 Capital & existing backer India Quotient in a Pre-Series A round. The company plans to use the capital to expand its reach in the country and develop its product further. The company was founded in 2017 and provides decision making support to farmers.

  7. Credgenics raises a $3.3M seed round from Accel: Loan recovery startup Credgenics is raising a $3.3M seed round led by Accel with participation from QED Innovation Labs, Breadlake Ventures and existing investor Titan Capital along with several angel investors as well. The company offers a loan recovery management product to lending startups & NBFCs and has a mix of online and offline services to offer them.

  8. Swiggy expects demand to return to pre-pandemic levels soon: In an update from the world of food delivery - Swiggy expects the daily food order levels to return to pre-pandemic levels by the end of the year. The company has also been onboarding over 7,000 new restaurants every month.

Investing in competitive companies — a norm for Indian VCs?

Why Delhi Is Becoming the Smog Capital of The World: QuickTake - Bloomberg

➡️ Last week, Lightspeed and Matrix announced their investment in Dukaan (and some messiness ensued). Dukaan and Khatabook are embroiled in a legal case that the investors might or might not have been aware of while investing in Dukaan. Sequoia, Accel, Matrix and Lightspeed were all in talks with the company at some point of time, with Matrix and Lightspeed ultimately leading the $6M round (and Sequioia participating through Sprout Investments)

➡️ Now I've always felt it was a bit weird how certain Indian investors make bets into competitive companies. Several investors in the US have written how they don't invest in competitive businesses (and others go even further to say that they won't even invest in adjacencies). There are of course investors who also do not follow belief and they probably have their own reasons for doing so.

➡️ With the investment in Dukaan, Lightspeed seems have potentially set up a competitive environment between one of the companies it has backed through their seed - Series B (and even leading the Series B through its US arm) - OkCredit. OkCredit was one of the earlier Khata apps and also recently launched their own Dukaan app called OkShop. The company also competes with Khatabook and has not been growing as quickly as the Sequoia-backed Khatabook. Now I wonder how this impacts the Lightspeed - OkCredit relationship but if I was a founder and my main investor backed a new upstart competing in one of the verticals I operate in, I wouldn't be very happy.

➡️ The Sequoia investment into Dukaan seems even more suspect with the current animosity between the two companies. This also isn't the first time Sequoia has backed companies that are either directly competitive or soon-to be competitive, they have backed: BYJUs and Unacademy, Khatabook & BharatPe and epifi & Jupiter (oh and TinyOwl and Zomato).

➡️ The one distinction I should make here is that not all these investments were made when the companies were working on products or features that directly competed with the firm's current investment - Zomato hadn't launched food delivery when the Sequoia first invested in TinyOwl and BharatPe launched their Khata feature well after Sequoia had invested in both companies.

➡️ There's a famous anecdote from famed SV investor Ben Horowitz who despite having backed Instagram wouldn't invest in future rounds and backed the company's short-lived competitor Picplz. A16z had invested in Picplz when Instagram was still Burbn and the firm fell obligated to back Picplz as it was the original company building a photo-sharing platform. But there's also the recent incident of Sequoia leading payment company Finix's Series B, later giving up their stake in the company because it would compete with Stripe too directly (one of Sequoia's largest private holdings).

➡️ Now I think it's fair to say that Sequoia has backed companies who seem to be competing with each other from the outset and I'm not sure if the firm has a policy of not making competitive investments. The one reason of the firm making competitive investments, that I could imagine, is that the Indian market is still quite small & Sequoia has several large funds to deploy which ensues companies invariably stepping on each other's toes. Sequoia's 3 funds (Surge, Venture, Growth) have a corpus of over $1.5B cumulatively (~3x Accel India's $550M fund & ~4x Elevate's new $400M fund who both don't make competitive investments to my knowledge).

➡️ While India still hasn't seen too many exits in the market yet, I wonder is a firm's decision to make competitive investments affects both companies negatively and impacts their chances of a successfully building a public company or helps one of the companies down the line with the more successful company potentially buying out the other. While I think one shouldn't judge Sequoia for their investment philosophy it is interesting to see how it somewhat differs between the US and India teams.

What we've read this week

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