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Also in this letter:
■ Zetwerk reports a six-fold increase in FY22 revenue to Rs.4,961 crore
■ WhatsApp Pay India boss Manesh Mahatme resigns
■ ETtech Opinion: The need for Edtech
SoftBank cuts the valuation of IPO-going Oyo to $2.7 billion
Ritesh Agarwal, Founder and CEO of Oyo
SoftBank Group Corp. has slashed the valuation of Oyo Hotels on its books by more than 20% as the once-high-flying Indian startup prepares for an initial public offering (IPO).
Details: The Japanese investor, the hotel booking company’s largest shareholder, slashed its estimated valuation for Oyo to $2.7 billion in the June quarter from a previous $3.4 billion after comparing it to competitors with similar businesses. Oyo was valued at $10 billion in a 2019 funding round.
IPO plans: We reported on Monday that Oyo had filed a fresh round of financial documents with India’s Markets Regulator and is eyeing an IPO in 2023 after cost-cutting and a recovery in travel expenses helped pare losses.
The startup was targeting a valuation of about $9 billion in its IPO, after preliminary discussions with potential investors. In its preliminary filing last September, the company said it would raise Rs 843 crore (about $1 billion) in the IPO.
Oyo’s answer: The company said it was confident its valuation should not have been downgraded given the recovering business performance, adding that it has not yet decided on an IPO timing.
Finances: Oyo said in its addendum to the IPO filing on Monday that its losses narrowed and sales for the year ended March 2022 (FY22) and the following three months (Q1FY23) picked up again.
It reported operating income of Rs.1,459.3 crore in the first quarter of FY23. Adjusted quarterly loss from continuing operations was Rs 414 crore. The company claimed this was its first positive Ebitda quarter.
Zetwerk reports a six-fold increase in FY22 revenue to Rs.4,961 crore
Amrit Acharya, co-founder and CEO of Zetwerk
The unicorn of manufacturing services Zetwerk reported revenue of Rs.4,961 billion in its audited results for fiscal year 22 on Thursday – a six-fold increase from the previous fiscal year.
The company recorded FY21 sales of Rs835 crore and FY2020 sales of Rs321.7 crore.
Total losses remained broadly flat at Rs 42 crore, after accounting for non-cash employee share plan (Esop) expenses. Zetwerk had reported a total loss of Rs 41.2 crore in FY21.
What is driving the growth? Co-founder and CEO Amrit Acharya told us that the jump in sales was due to sales growth from the consumer products business and international customers.
Zetwerk’s sales from consumer goods manufacturing accounts for 30% of total sales, while international activities contribute 16%. The US market accounts for almost 70% of the company’s international sales.
On an operational level, the unicorn said it posted an Ebitda profit of Rs 57 crore from operations. Total Gross Merchandise Value (GMV) also grew six-fold to Rs.5,718 crore in FY22 from Rs.951 crore in the previous fiscal year.
PLI Boost: In 2021, the Indian government introduced a Production-Linked Incentive Scheme (PLI) to boost domestic manufacturing, with a Rs.2 crore investment in 14 sectors including automobiles and auto components, specialty steel and household appliances.
The idea was to reduce import bills and improve the cost competitiveness of domestically manufactured goods.
Cement, metals and renewable raw materials are still the top production categories for Zetwerk.
WhatsApp Pay India boss Manesh Mahatme resigns
Manesh Mahatme, director and head of WhatsApp Pay in India, left the company earlier this month after working at the Meta-owned messaging app for nearly 18 months.
Back to Amazon? Mahatme, formerly a director and board member of Amazon Pay India, was hired by WhatsApp in April 2021 to lead the payments industry. As the director of WhatsApp Pay, he focused on improving the payment experience for users and scaling the service.
He is expected to return to his former employer Amazon India in a strategic role, said a person with knowledge of the talks who asked not to be named.
WhatsApp’s UPI fights: In November 2020, the National Payments Corporation of India (NPCI), which operates the Unified Payments Interface (UPI), gave WhatsApp approval to gradually go live on the platform, initially with a maximum of 20 million customers. This limit was doubled to 40 million by the end of 2021 and 100 million by April 2022.
Despite the surge, WhatsApp Pay’s share of total UPI transactions remains abysmal. It had less than a 1% share of the total UPI market in August with just 6.72 million transactions, despite launching back-to-back cashback campaigns in April and June, prompting a slight increase in numbers.
Also read | NPCI Consults Government and Other Stakeholders on UPI Market Cap Amid Extension Applications
ETtech Opinion: The need for Edtech
During the pandemic, our domestic help was very worried about her children.
While the world had opened up, schools remained closed. Her children, who went to school to learn and socialize, remained cooped up at home. In the absence of school, the only method of teaching was online learning.
Thanks to some enterprising teachers, the children received videos from the internet to learn from. Without educational technology, it would have been impossible for them to be taught.
The pandemic reversed decades of learning gains, particularly in developing countries like India, but more than 600 million children worldwide were affected. Learning poverty is real and could have far-reaching implications for the future of the world.
35 million children in India have never been to school. More than 50 million children live in Tier 2 and Tier 3 cities and many more in villages. Few have access to education like the privileged few in Tier 1 cities.
Educational technology or edtech fills this gap.
Click here to read the full column by Aviral Bhatnagar, Founder of A Junior VC.
ETtech closed deals
Deep Rooted co-founders (from left) Santhosh Narasipura, Avinash BR, Gururaj Rao and Arvind Murali
■ Deep Rooted, a farm-to-consumer (F2C) fruit and vegetable brand, announced it has raised $12.5 million in a funding round led by IvyCap Ventures with participation from existing investors Accel, Omnivore and Mayfield Has. Over the next 12 months, the startup plans to expand its operations into major cities in southern India, strengthen its technology stack, and proactively hire people in marketing, technology, and business roles.
■ Binocs, a cryptocurrency taxation and Web3 portfolio tracking startup, announced it has raised $4 million in funding led by Beenext along with Arkam Ventures, Accel, Saison Capital, Premji Invest, Blume Ventures and Better raised capital. It said it would use the funds to expand its product, engineering, growth and marketing teams.
■ Web3 chess startup and marketplace Immortal Game says it has raised $12 million in funding led by TCG Crypto. Other technology and entertainment VC specialists such as Cassius, Greenfield One, Sparkle Ventures, Kevin Durant’s and Rich Kleiman’s 35V, Blockwall, Kraken Ventures and Spice Capital also participated in the round.
■ FS Life, formerly known as FableStreet, announced it has raised Rs 50 crore in a financing round led by Fireside Ventures. Other startup founders like Ghazal Alagh of MamaEarth; Mehul Agarwal & Vikram Chopra from Cars24; The Moms Co’s Malika Sadani also joined the panel.
Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant in Mumbai and Gaurab Dasgupta in New Delhi. Graphics and illustrations by Rahul Awasthi.