India’s startup unicorn club saw one new entrant in January, two in February, one in March, and three in the first six days of April, including two just yesterday. PharmEasy and Cred are the latest members.
Also in today’s newsletter:
- ⚡️ BPM firms see higher demand
- ⚖️ ByteDance gets court relief
- 💰 Clubhouse adds monetisation feature
Pharmeasy is India’s 7th unicorn of 2021
Last October we reported that South Africa’s Naspers and US private equity firm TPG Capital were in talks to invest in Mumbai-based online pharmacy PharmEasy. That funding materialised yesterday with Prosus Ventures — a subsidiary of Naspers — and TPG leading an investment of $350 million (Rs 2,570 crore) in API Holdings, Pharmeasy’s parent company.
Club Unicorn: The deal valued the online pharmacy at $1.5 billion, making API the latest member of India’s rapidly growing startup unicorn club. Credit card payment platform Cred also joined the exclusive club yesterday (more on that below), while social commerce platform Meesho did so on Monday. The other startups that became unicorns this year are Digit Insurance, Innovaccer, Infra.Market and Five Star Finance.
Why the glut? Risk investors are flocking to India to back companies at the forefront of the digital economy.
Back to Pharmeasy: Existing investors Temasek, CDPQ, LGT Lightrock, Eight Roads and Think Investments also participated in the round. API Holdings said it had already received $323 million and that further investment of $27 million would be closed soon. Two-thirds of the capital will be primary funding while the rest would be a secondary investment, sources said.
The company said it would use the money to expand the base of pharmacies it works with from 80,000 today to 120,000 in the next 12 months. It plans to increase this to 200,000 in the next two years, helping it expand beyond the 100 cities it operates in today.
Big money, bigger competition: The funding comes as companies such as Reliance Industries (through Netmeds), the Tata Group (through 1MG), and Amazon are entering the online pharmacy sector.
India’s largest pharmacy chain Apollo Pharmacy is also entering online retail, while pharmaceutical majors such as Sun Pharma, Lupin, Alkem, Torrent Pharma and others are planning to start their own B2B pharma distribution business with their acquisition of Pharmarack.
Cred’s valuation jumps to $2.2 billion
Credit card repayment platform Cred has raised $215 million in fresh funds, catapulting the two-year-old startup to the unicorn club. The round was led by new investor Falcon Edge and existing backer Coatue Management.
Valuation zooms: The fundraising has bumped Cred’s valuation to $2.2 billion from $800 million three months ago, when it secured $81 million in funding.
The financial services startup, which launched an aggressive ad campaign during the IPL season last year, is also kicking off a buyback of employee stock option plans (ESOPs) worth $5 million for eligible employees. This comes on the heels of a similar buyback worth $1.2 million in January.
The contrarian unicorn: While most startups in India are eyeing the “next billion users”, Cred has taken a different approach. It is targeting India’s upper and upper-middle classes to earn higher returns per user. The company claims to currently have 5.9 million users with a median credit score of 830.
Cred’s business model: The startup allows customers to pay their credit card bills in return for discount points called Cred Rewards. It also charges its partner businesses a fee for increased engagements and its customers’ fiscal discipline. Last year, Cred also strengthened its monetisation strategy with two new products — a monthly rent payment product called Rentpay and a personal loan product for eligible customers called Cred Cash. In December it launched Cred Pay, a payment checkout facility with Visa and RazorPay for select merchants.
Tweet of the day
BPM firms see higher demand
Business process management (BPM) companies are seeing higher demand from the healthcare segment as Covid-19 vaccine programmes pick up pace in the US, the UK and other markets.
What’s happening? Companies such as Genpact, Startek, HGS, WNS and others are witnessing strong growth in new deals with demand rising for services such as adverse event reporting related to Covid-19 vaccinations, virtual patient care, health monitoring and other services related to healthcare in their key markets, said industry observers.
- Higher demand for back-office services is also fuelled by healthcare companies transitioning to telehealth systems powered by data, virtual platforms and artificial intelligence tools.
“There has been a surge in both new as well as incremental business that can be attributed to testing and vaccination. We have won new business with a medical devices company that is at the forefront of genome sequencing and building, supplying solutions for testing and vaccination,” Keshav Murugesh, Group CEO, WNS, told ET.
ByteDance gets relief from Bombay High Court
The Bombay High Court has directed banks to partially freeze ByteDance’s accounts – to the extent of Rs 79 crore – providing some relief to TikTok’s parent company.
- Beyond this blocked amount, the company should be able to operate its bank accounts, the court said on Tuesday.
Backstory: India’s tax authorities had in March ordered HSBC and Citibank in Mumbai to freeze the bank accounts of ByteDance India. The indirect tax department alleged the company had not paid its full quota of GST. Bytedance later challenged this in the Bombay High Court.
“We are pleased that the high court agreed with us that our bank accounts in India should be unblocked. This in turn allows us to continue carrying out our operations in India and look after our employees. We are prepared to take further steps required by the court and are confident in our position on this tax matter,” a ByteDance spokesperson said.
What this means: The company is now in a position to pay the salaries and reimbursements to its employees as well as payments to its partners, sources familiar with the matter told ET.
ET earlier reported that ByteDance has been restructuring its TikTok team in the country. TikTok’s India head Nikhil Gandhi and others working in the technology team have been moved under the MENA, GCC and Turkey region.
Clubhouse rolls out monetisation feature
Audio-based social platform Clubhouse has rolled out its first monetisation feature, allowing users to send payments directly to creators on the app, which remains invite-only (and iOS-only) for now.
How will it work? While all users will be able to send money, only a group of select users will be able to receive payments for now. Clubhouse said it will expand this feature in phases. The Andreessen Horowitz-backed live voice chat app said the entire payment will go to the creator and Clubhouse will not take a cut of the transaction.
This comes weeks after Clubhouse started its first creator accelerator programme, through which it aims to help 20 creators build their audiences and monetise their shows.
The audio chat segment has seen increased competition with players like Twitter rolling out its live feature ‘Spaces’ to Android users. Clubhouse is still restricted to iOS users. Social media giant Facebook too is working on a similar app.
India’s digital vaccination certificate gets a thumbs up
Researchers at the Center for Global Development have quoted the Indian digital vaccination certificate solution architecture for the US, which is still relying on handwritten paper cards, as it makes a case for digitising vaccination certificates globally.
Why it matters: Despite leading the world in the number of vaccinations (one in four vaccinated people are in the US), the US does not issue a digital certificate. However, for nearly 60 million people in India, it is easy to verify their vaccination status simply by scanning a QR code either on their smartphones or in a paper copy downloaded from the national vaccination portal.
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