"WEEK 24"

Nov 15 - 21

Happy Sunday folks! It's been quite a week with all the S-1s (Affirm, Airbnb, Roblox and DoorDash & Wish from last week) and we also hit the 200th edition of the WhatsApp newsletter (over 100k words!!). Fundraising has been active as usual (we had a couple of later stage rounds this week) and there was also an acquisition. And for our weekly Tuesday piece, I riffed a bit on the past and present of Tourist Capital in the Indian Startup ecosystem.

Weekly Recap:

  1. SoftBank leads MindTickle's $100M valuation round: Sales enablement platform MindTickle has raised $100 million in a mix of equity and debt funding, led by Japan’s SoftBank Vision Fund 2, along with participation from existing investors Norwest Venture Partners, Canaan, NewView Capital and Qualcomm Ventures.

  2. Reliance Retail buys Urban Ladder for ~$25M: Reliance Retail has acquired a ~94% stake in furniture and decor platform Urban Ladder. This is yet another move by Reliance to push further into e-commerce as the largest retail chain in India gears up to fight Amazon and Flipkart.

  3. Turtlemint raises a $30M Series D: Indian Insurtech company Turtlemint announced that they have raised a $30M Series D. The round was led by GGV Capital, American Family Ventures, MassMutual Ventures and SIG; and existing investors Blume Ventures, Sequoia Capital India, Nexus Venture Partners, Dream Incubator and Trifecta Capital also participated in the round.

  4. MPL Sports is Team India's new sponsor: The Board of Control for Cricket in India (BCCI) officially announced that MPL Sports will be the official kit sponsor and merchandise partner of the Indian Cricket Team. This will bring an end to Nike's 15 year association with Team India.

  5. Animall raises a Series A from Sequoia: Animall has raised a $7M Series A from Sequoia and Omnivore Partners with participation from Lets Venture as well. This is the company's third round of funding this year following their pre-seed and seed (led by BEENEXT) rounds.

  6. Clinikk raises a Pre-Series A: Healthcare and Insurtech company Clinikk has raised a Pre-Series A round from EMVC, 500 startups' SEA fund, WEH Ventures, First Principles and a couple of angel investors. Times Internet also participated in the round.

Tourist Capital in India

India is no stranger to tourist capital and by this point we've seen several cycles of investors coming & going, while some stick around. In the early days of Indian venture ecosystem (late 00's and early 10's), there were several US firms who wanted to invest in India but not all looked to bringing on investors in the region and hence decided to leave the country several years later. While others, like Sequoia, realized that they'd only be successful if they let partners from the country run the firms locally.

There was then also the cycle of Rocket Internet and their model of starting companies- copying models from western markets and implementing them elsewhere. Rocket India's companies have largely all been failures with some large-ish acquisitions but none really turning into category-defining companies. One of the reasons that Rocket failed in India was the fact that the German internet conglomerate expected large and quick exits in India within 3-5 years of launching each company. Unfortunately India doesn't work that way and required more patient capital. As a result Jabong, Foodpanda and FabFurnish were all acquired and the conglomerate failed to build companies in India.

This isn't to say that all foreign investors in India have failed and left the country. Ex-Tiger Global Partner Lee Fixel has probably one of the most successful venture investors in India backing the likes of Flipkart, MakeMyTrip, Ola, Delhivery and Freshworks (among many more). He has also actually seen exits from India (Flipkart's acquisition by Walmart & MakeMyTrip's IPO in 2013) and continues to invest in India through his new fund- Addition. Similarly, while Softbank's entry in the country has been more recent it seems like they are here to stay for a while continuing the invest in largest companies in the region.

And now coming to present-day tourist capital in the country. If Flipkart put the Indian startup scene on the global map, Reliance and Jio have certainly accelerated the rate at which global eyeballs are moving towards to India. And as a result of it + the growing number of Indian companies in Y Combinator, we're seeing US and other western investors investing in India as early as the seed & pre-seed rounds and even leading the rounds at times. I think this is largely good for the ecosystem but definitely it is a nuanced subject.

If a company is going through YC and largely plans to sell products and services to US and global audiences, it certainly makes sense for the company to raise from US firms. But if someone is building for consumers or business in Tier 3+ India, does it make sense for the founder to exclusively raise money from partners who've only lived in the South Bay of Northern California? Maybe or maybe not. By bypassing all Indian investors, the company might potentially set itself up for a hard time raising their venture rounds (A, B) but that is probably a case-by-case difference.

On the other hand, it doesn't seem like all US investors investing in India quite understand the competitive landscape or know all the players in the Industry- I recently saw an American firm syndicating their first investment in the country where the company claimed they were the first to be building a product (while well known companies in the same space have existed for a couple of years and have already raised their seeds & As).

Regardless of some of the tourist capital, I think the western attention on India is still largely beneficial to the ecosystem. Some investors might not make the smartest decisions and will be burnt and some companies will die out. But over time, more and more investors will stay back and continue to invest in the country bringing more investors to the region. Just remember that if you're raising capital as an Indian company building for the Next Billion Users, it might not make the most sense if your investor's claim to fame is their Grammy Award.

What we've read this week