"WEEK 28"
Happy Sunday folks! Vedica here with the weekly round-up today. Just another ten days to go till we see the back of 2020. I want to say I can't wait, but am worried about jinxing 2021. We'll have lighter coverage next week and will be taking time off from the 24th of December to the 3rd of January. Anmol and I have also been thinking of how to reformat the newsletter, and will share updates on that front soon. In the meantime we had a busy week of news, and Anmol took some time to give kudos to founders who have made a conscious effort to build in public, even as they deal with the crab mentality of the ecosystem.
Building in public
The thing that annoys me most about the Indian startup ecosystem is the fact that we don't celebrate founders and entrepreneurs enough. It seems like the only time we congratulate founders is when they raise capital and the congratulations are for raising the capital, not building the company.
On top of this, founders who've been at it for years and have built great businesses are often met with a lot of hate. I'm not saying I've not done it myself at all, but the main difference I see in the American and Indian ecosystems is that in the US we have founders we celebrate and the general vibe of the ecosystem is much more positive.
Despite this, many of the next generation of founders are building in public and building a community and movement around their companies. This makes folks feel like a part of their companies and makes it is easier to celebrate and cheer them on. Raj Kunkolienkar, the founder of Stoa School, puts it best, "We're not building in public, we're building with the public. We're here to give a face and a voice to a movement that's long overdue. People are frustrated with how educational institutions have failed to keep up with the times."
Building in public also has other benefits especially when done in a genuine manner. "It has allowed us to create communities with whom we learn from everyday - folks are generous with their time because we are authentic in the public domain," says Rahul Mathur, the founder of BimaPe.
Both Raj and Rahul have taken a unique approach in running and building their companies in a very public matter. It certainly helps that they are largely building consumer companies and are able to engage with potential users, investors (and even haters) very directly.
Besides just building in public, I'm very bullish on the next generation of founders coming out of India especially from what I've seen in 2020. We have college dropouts, new graduates and even founders in college thoughtfully starting and running their companies. They are doing phenomenal things - hell, we even have a company founded by two 22 year-olds building a satellite imagery company called Pixxel Space!!
Another Gen-Z founder, Shiv has a slightly different take on things, "Irrespective of the access, information, and capital that the internet has unlocked for young founders, the wave of newly minted young founders with no experience is dicey. Founders would be better off with a couple years experience in the real/startup world either via skipping college to work somewhere, or hands-on internships during college." Still, he also acknowledges massive change since 2015 where Gen Z founders feel confident in starting companies.
Young founders have done phenomenal things in US previously - Stripe, Brex and Scale are just a couple of the companies founded by founders in their teens or early twenties. I'm excited to see how the current crop of Gen Z founders shape the future of India.
Weekly Recap:
Foreign funds colonising Indian startups says Naukri.com founder Bikhchandani: Internet entrepreneur Sanjeev Bikhchandani has argued that foreign funds are the new East India Company that are colonising successful Indian startups by transferring ownership abroad to skip Indian regulations and taxes. He claimed an estimated Rs 17 trillion of market cap has been transferred abroad after young Indian start-ups were forced to shift their company domicile overseas by foreign investors promising the funds they need for growth.
An ideological view to suspect foreign capitalists: Abhijit Banerjee: The Nobel laureate has taken an opposing view to Bikhchandani, arguing that pushing against foreign ownerships and listings is "effectively a subsidy to the Indian capitalist class. This way good companies remain cheap for them to buy out." He also took on the discourse around the EIC saying, " This is an colonial mindset. It's been a long time since we've had foreign rule over us, we are a $3T economy now." He noted that being defensive has always suited a particular group of capitalists who have the cash to get whatever is going cheap.
Zenoti becomes India's newest unicorn, raising $160M: Zenoti has raised $160M in their Series D round led by PE firm Advent International with existing investors Tiger Global and Steadview Partners participating in the round as well. The company helps spa and salon brands across 50 countries manage their business including scheduling appointments, POS operations, managing payments and reconciliation through its cloud-based software products. It also has an integrated CRM with built-in marketing solutions which help offline businesses digitize their operations.
Arya raises $21M in a Series B: "Only about a third of the yields Indian farmers produce reaches the big markets. Those whose produce makes it there today are able to leverage post-harvest services. Everyone else is missing out." Arya is solving problems for these famers through a couple of different means: it has a network of 1500 warehouses in 20 states where it can store over $1B worth of commodities, so farmers can store their produce at a location closer to their farms. The company has also disbursed $36.5M to farmers and its banking partners have disbursed an additional $95M.
WhatsApp plans to roll out financial services: WhatsApp is set to roll out more financial services for its 400M+ MAUs in India: health insurance and micro-pensions through partnerships with licensed financial service providers. The company will be partnering with SBI General to launch sachet health insurance covers and with HDFC Pension to make the Nation Pension Scheme available through the messaging app.
Wakefit raises a Series B led by Verlinvest & Sequoia: Direct to consumer mattress and furniture company Wakefit has raised a monster Series B led by Verlinvest & Sequoia Capital India. The company had started with just mattresses but has since expanded into sleep accessories along with other furniture products.
Rebel food invests in FoodyBuddy: Rebel Foods, the cloud kitchen company, has picked up an additional 14% of FoodyBuddy with an investment of 5 Cr in the home chef platform. With the investment Rebel Foods now owns 26% of the company, which also includes Prime Venture Partners on its cap table. FoodyBuddy is a marketplace where consumers can get home cooked food delivered from chefs in their neighborhood. It isn't exactly a new model - a bunch of companies with similar models came up in the 2015 FoodTech wave and didn't survive but hopefully that isn't the case with FoodyBuddy.
PointOne Capital announces the first close of their maiden fund: It seems like we have a brand new venture fund in India - PointOne Capital which is focusing on the Pre-seed and seed stages. The firm plans to raise a total of 50 Cr and will invest up to 1 Cr per company. The firm counts entrepreneurs, PE and VC partners and seasoned corporate leaders as its LPs so this might also be a way for some big firms to buy some optionality and get some of their deal flow through PointOne.