Monthly Archives: January 2020

Startups by 2020: Key questions asked

As we prepare to move into a new year, in the coming days, unexpected events are likely to dominate and even accelerate. If you’re thinking of starting startups, a side hustle, or a small business to kick off the new decade, here are some key questions to consider before you launch.

The start of the year is usually a good time for reflection or to say, self-correction. 2019, to say the least, was a year of ‘ entropy, ‘ with unexpected events across the economic, political, and business landscape: Whether it is the scrapping of Article 370, the possible return of Cyrus Mistry to the Tatas or the cohesion of the arch-rivals in Indian telecommunications to survive.

It has shown us, if anything, that things don’t run according to a fixed plan-predictable and untouched. Or how we tend to over-emphasize the set-up – the optimum starting point – and interpret every small repair work as the plan’s fault. According to author Rolf Dobelli, the most common misconception about the good life is a stable state or situation, but the fact is, is, is accomplished by our ability to amend and overhaul or continuous readjustment.

And, as we plan to move into a new year, in the coming days, unexpected events will likely dominate, or even intensify. In the sense of the fast-paced Startup / VC tech environment and in the midst of the ever-changing world, having a perfect business plan, a perfect investment portfolio, a perfect training is nothing more than a myth, it is worth looking at some of the trends now.

How long will the Blitzscaling continue?

Losing money to win or what became known as the famous Silicon Valley growth theory-‘ Blitzscaling ‘ is a concept popularized by Reid Hoffman, co-founder of LinkedIn, and Wasabi Ventures co-founder and investor Chris Yeh. By their definition, Blitzscaling (derived from Nazi General Heinz Guderian’s blitzkrieg or “lightning war” strategy) prioritizes “speed over efficiency” to achieve massive scale at incredible speed so as to seize the ground before competitors do and risks “potentially disastrous defeat to maximize speed and surprise.”

Find one of the day’s most valuable companies-Amazon. Amazon prioritized growth over profitability to build a hugely technical, customer base and infrastructure advantage. Jeff Bezos has taken an unprecedented risk in his bid for hyper-growth, borrowing billions to finance his ambition. And as companies began to be “Amazoned,” Venture Capitalists and start-up founders picked up ‘ Blitzscaling ‘ as the new tech-monopoly slogan.

However, the recent drumming of some of the flagship startups, that rose to fame as torchbearers of this Silicon Valley strategy, in public market has raised serious questions on this growth-centric strategy.  Now there is a growing buzz among VCs about the feasibility and sustainability of ‘ Blitzscaling ‘ as a growth model. It remains to be seen whether 2020 could be at the turning point for VCs / Startups betting on ‘ Blitzscaling. ‘

Read The foundations of a good start-up

Should SoftBank change its plan for the investment?

The year 2019 has been the litmus test for SoftBank, as its famed Vision Fund reported a $6.5 billion loss – first quarterly, in the last fourteen years – due to failure of its marquee investments, Uber, Slack and WeWork.  It is now being called out the investment thesis of building monopolies by prioritizing growth backed by virtually limitless capital with an end-game to control market and prices by killing competition.

There are plenty of comments claiming that SoftBank may be gearing up to change its strategy, funding hypergrowth, while others expect the late-stage investor’s famous demise. Often our judgment, however, is biased by ‘ heuristic availability, ‘ i.e. biased with the information available in front of us. It can turn out the reality is quite different. Should we foresee a future without the benefit of Softbank-the answer is a confident “yes” or a “no.”

Can startups of high value grow and monetise?

We’ve seen tremendous growth in technology space over the last decade, driven by innovation and massive capital. It is now time to consolidate and to monetise. First, there are increasing soundbites coming around that several startups are considering listing, such as Freshdesk, Pepperfry or an Ola. Who will first float the public and which markets will they choose – a NASDAQ listing or Indian bursary listing – is yet to be seen.

Second, many tech-unicorns that have ramped up through multiple business lines are looking for opportunities to merge their core and non-core businesses–including UberEats with Zomato. Consolidation would help the Consol-entities gain a greater share of the market, create market dominance and better control of the industry in an effort to move towards profitability.

Can 2020 really marks the beginning of mergers and acquisitions through high-value start-ups to consolidate the market and prioritize profitability overgrowth, and opt for public listing – on home markets as well. Who’s the first to bite the bullet?

Zoomcar Raises $30 Million From Sony's Fund

The Bengaluru self-driving car rental platform plans to raise an additional $70 million in the current round. Zoomcar lets users use their mobile app and website to book vehicles and pay online

In its ongoing Series D round led by Sony Innovation Fund, Zoomcar’s self-drive car rental platform raised $30 million and other existing investors, it said on Monday. The mobility startup, based in Bengaluru, plans to raise another $70 million in the ongoing round.

In June 2019, Japanese electronics giant Sony formed the Sony Innovation Fund in collaboration with Daiwa Capital Holdings to invest in growth-stage technology enterprises.

Zoomcar plans to deploy the capital for growth, improve its infrastructure for technology and data science, in addition to upgrading its IoT capability that is currently being used for its subscription service. The startup has been on the market since April 2019 to raise $500 million in the Series D round, but, according to a company statement, cut the round to $200 million. Zoomcar was valued at around $170 million in February 2018, when it closed its Series C round.

Mahindra and Mahindra Ltd (M&M), Ford Smart Mobility, Sequoia Capital and debt investors like InnoVen Capital and Trifecta Capital back up the mobility startup. To date, Zoomcar has leveraged around $130 million from strategic investors, including the current round.

American duo Greg Moran and David Back had founded the seven-year-old startup. Nevertheless, Back left the firm early in 2015 for personal reasons.

Zoomcar lets users use their mobile apps and website to book vehicles and pay online. It has over 10,000 four-wheelers on its fleet, including cars from Nissan, Toyota, Volkswagen and Renault.

It launched an associate program in April 2016, which allows users to lease their own cars under a revenue-sharing model on the platform. It also has a rental program, which allows users to sub-lease four-wheelers for periods of 3, 6, 9, and 12 months. The platform has issued roughly 15,000 subscriptions to date.

Zoomcar said in his statement that it planned to add about 100,000 vehicles to its fleet over the next 18-24 months, as urban mobility has seen a sharp rise in metro cities among commuters.

Several mobility startups, such as Bounce, Vogo, Yulu, and Drivezy, have been experimenting with easing last-mile commuting problems through two-wheeler rental services in the past year alone.

Mobility space investors and creators have been betting on a two-wheelers pay-per-use model that allows users to pick and drop vehicles inside city limits. Users use a mobile app to find the closest cars and pay for the distance travelled.

In 2018 and 2019, a large portion of the funding in shared mobility platforms focused on two-wheeler rental startups based in Bengaluru — Bounce, Vogo, and Yulu.

Out of that, Bounce, backed by Accel and B Capital, leads the pack, mopping up $250 million over the last two years.

Read also >>True Balance Raises $23 Mn In Series C Funding For Expansion And Growth
>Loantap raises $12 million in Series B funding round
>Penta, the German business banking startup, raises €8M additional funding
>How To Raise Funds For Your Startup? | Startup Funding Ideas

Learning App

Tiger Global invests BYJU’s $200 million; the value jumps to $8 billion

  • The investment will increase the valuation of India’s third-largest startup by around 45% to around $8 billion.
  • The company is on track to double its revenue in the current financial year to about ₹3,000 crores, Raveendran says.

Tiger Global Fund, based in New York, will invest $200 million in Think and Learn Pvt. Ltd, the learning technology firm owned and operated by Byju’s learning app, the startup said on Thursday. The investment will raise the valuation of India’s third-largest startup by about 45 percent to about $8 billion, according to a person familiar with the matter.

The latest investment from Tiger Global is stand-alone financing, unlike previous rounds when multiple investors bought into Byju’s together. Its last funding round saw an infusion of $150 million led by the Qatar Investment Authority in July last year, the above-mentioned person said on anonymity condition.

Byju’s has raised approximately $995 million from investors like Naspers, Tencent, Verlinvest, Chan-Zuckerberg Initiative, Sequoia Capital, Lightspeed Venture Partners, and Aarin Capital since its founding in 2011.

“We are delighted to partner with a powerful Tiger Global Management investor. They share our sense of purpose and this partnership will accelerate our long-term dream of making an impact by changing the way students learn,” said in a statement founder & CEO Byju Raveendran.

Tiger Global is one of the most active investors in consumer internet space and has supported around 14 companies in India till date.

The investment firm has also begun to focus on the Business-to-Business (B2B) segment and has recently invested $90 million in Ninjacart’s agri-tech startup. It has also invested in companies like NestAway, Grofers, and Razorpay payment company.

Raveendran, a former school teacher, was one of the early entrants when he started the company into the online learning space in India. Byju’s learning apps offer kindergarten-wide programs for high school students.

The company’s apps target students for a variety of programs including competitive exams such as the Common Aptitude Test and the Indian Administrative Services entrance. The cost of such online courses ranges from ₹5,000 to ₹100,000.

Its registered users have risen to 42 million, while it has another 3 million paid subscribers, a level that, according to industry officials, will allow the company and its subsidiaries to break into profits early

Byju’s says that in the financial year ended March it turned profitable, with revenue tripling year-on-year to a crore of ₹1,480. However, the company still recorded a net loss of some ₹15 crores in FY19, including its subsidiaries, compared to a loss of some ₹37 crores in the previous fiscal year.

Founder Raveendran said the company is on track to double its revenue in the current financial year to about ₹3,000 crores and is working on Indian language programs to make it accessible to learners in smaller towns. Additionally, in the coming months, the startup will launch’ Byju’s Online Tutoring.’

The company faces a number of challenges despite its positive track record, an analyst said.

“The biggest issue facing Byju’s is customer acquisition and customer retention,” said Sanchit Vir Gogia, analyst and chief executive officer at Greyhound Research.

“While there may be an increasing number of registered users, the percentage of renewals is significant. Most learners have a tendency to drop out,” said Gogia.

“Secondly, the content assumes a certain knowledge standard, so it is necessary to improve the applicability of the content,” added Gogia. “For example, the level of all students in the sixth grade may not be the same, but the content is standard.”

Byju’s need to enhance student engagement as it “has not figured out individual learning paths,” the analyst said.

Scott Schlifer, Tiger Global’s partner, said the firm is optimistic about the company as it “has emerged as the leader in the Indian education technology sector” and is “pioneering technology that shapes the future of learning for millions of school students in India.”

According to the government-backed India Brand Equity Foundation, India’s online learning market is expected to double to $5.7 billion by 2020.

Read also >> How To Raise Funds For Your Startup? | Startup Funding Ideas
>Penta, the German business banking startup, raises €8M additional funding
>Zoomcar Raises $30 Million From Sony’s Fund