The Week that Was: Indian Startup News Overview (24-28 May)


The Week that Was: Indian Startup News Overview (24-28 May)

Another eventful week for the Indian startup ecosystem comes to a close. With funding for startups galore, massive deals in the making and helpful steps by SEBI to promote businesses making headlines, a lot has happened through the week.

We saw early stage VC firm, Blume Ventures launch its forth fund worth $150 million. The VC firm announced the launch of its fourth fund, which will be worth $120-150 million for which it will join India-focused large corpus funding. Unacademy, Purplle, Dunzo, and Healthfyme are among the unicorns that have received funding from the company. The Abu Dhabi Investment Authority (ADIA) will be one of the Limited Partners (LPs) who will invest in the VC fund and return to it.

The vision is to be the leading platform for sourcing, funding, nurturing, and creating value for India's brightest young startups – assisting them to 'blume'!

In keeping with the flurry of Indian startups joining the coveted unicorn club, banking tech firm Zeta became the newest entrant. SoftBank Vision Fund 2 led a $250 million Series D round for the startup that helps banks and fintech companies launch products.

Sodexo, an existing investor in Zeta, also participated in the funding round. This year, it was the 14th Indian startup to become a unicorn. Sodexo has invested $50 million in new financing, according to a person familiar with the situation.

Zeta is a modern banking technology company founded in 2015 by entrepreneurs Bhavin Turakhia and Ramki Gaddipati. The company provides a full-stack, cloud-native API-ready core banking and transaction processing platform for credit, debit, and prepaid product issuance, allowing legacy banks to launch modern retail and corporate fintech products.

“Banking software is a $300 billion industry globally. Most banks still employ technology which is significantly older than their customers, impacting user experience and engagement,” commented Munish Varma, Managing Partner, SoftBank Investment Advisers.

Early in the week we also saw SEBI increasing the overall limit for overseas investments by alternative investment funds and venture capital to $1,500 million (approximately 10,000 crore). These funds can now invest up to $1,500 million in foreign markets. Previously, the cap was set at $750 million.

This move would allow greater Indian participation in global companies and would accelerate the growth of the Indian AIF industry overall.

“It shall better position AIFs and VCs to hedge their overall investment risk. AIFs and VCFs shall get the benefit of diversification and at the same time the investors shall be protected from fluctuations in returns due to concentrations of investments in a particular sector or economy,” said Prashaant Vikram Rajput, Partner, White & Brief Advocates and Solicitors.

In other news, microblogging site, Twitter’s competitor Koo has raised $30 million (approximately Rs 218 crore) in Series B funding led by Tiger Global, with existing investors also participating. Existing investors Accel Partners, Kalaari Capital, Blume Ventures, and Dream Incubator also participated in the round, according to Koo.

Koo (also known as Koo App) is a social networking and microblogging service based in Bangalore. Aprameya Radhakrishna and Mayank Bidawatka created the app, formerly known as Ku Koo Ku, in March 2020. In August 2020, it won the Government of India's Aatmanirbhar App Innovation Challenge.

Over the past few days there has been a flurry of activity at Twitter with the Delhi police searching the firm’s India office. The popularity of home grown microblogging platform Koo has also been on the rise.

Notably, the fund raising comes as new IT intermediary rules go into effect, implying increased accountability and scrutiny for social media companies such as Twitter and Facebook. Koo has nearly 60 lakh users, making it a significant social media intermediary under the new rules.

Koo, last week, said it has complied with the requirements of the new rules and its privacy policy, terms of use and community guidelines now reflect the changes.

In a spate of funding activity, FanCode, a digital sports platform, has raised $50 million from parent company Dream Sports' investment arm, Dream Sports Investments (DSI), as it seeks to expand its reach and connect with its customer base.

FanCode, founded in March 2019 by YannickColaco and Prasana Krishnan, will use this round of funding to accelerate the growth and scale of its digital sports services.

Yannick Colaco, Co-Founder of FanCode, said, “The funding from Dream Sports will help us enhance our existing offerings and invest in further innovation in the sports tech domain as we scale up to our goal of growing to a user base of 100 million sports fans by July next year.”

In a good news for Indian crypto market, US based billionaire investor Mark Cuban made an investment in Polygon, an Indian layer 2 ethereum scaling solution, the startup's co-founder Sandeep Nailwal said.

Polygon is a protocol and framework for creating and linking Ethereum-compatible blockchain networks. Aggregating scalable Ethereum solutions to support a multi-chain Ethereum ecosystem. It can scale decentralized app in 30 minutes or less.

Polygon announced that it has now joined Mark Cuban's company portfolio. Cuban, whose net worth is estimated to be $4.4 billion (according to Forbes) and who has investments in over 100 companies, is a prominent supporter of cryptocurrencies, particularly ether and dogecoin.

One of the biggest news throughout the week however has been of Amazon reportedly being in talks for several weeks to purchase MGM, the Hollywood studio behind the “James Bond” franchise, for between $7 billion and $10 billion.

MGM began a formal sale process late last year after exploring a sale with investment banks Morgan Stanley and LionTree. The company had a market value of around $5.5 billion at the time, based on privately traded shares and debt.