Also in this letter:
■ Swiggy in talks to invest in bike-taxi startup Rapido
■ Card tokenisation to hit ecommerce firms from Jan 1
■ Salesforce launches startup programme in India
Amazon seeks CCI’s nod to buy Catamaran’s stake in Cloudtail
Amazon and Catamaran Ventures, the investment office of Infosys cofounder NR Narayana Murthy, said in a joint statement on Monday that the ecommerce major will acquire Catamaran’ stake in Prione, which houses Cloudtail, one of the largest sellers on Amazon In India.
The announcement comes four months after Amazon and Catamaran said they would discontinue their partnership in Prione in May 2022.
Yes, but: The deal is of course subject to regulatory approval. A source told us that Amazon has already made a filing with the Competition Commission of India (CCI).
Business goes on: The two entities said in the statement that the businesses of the joint venture would continue under the leadership of the current management. “Amazon will acquire Catamaran’s shareholding in Prione in compliance with applicable laws including all assets and liabilities…On receipt of regulatory approvals, the board of Prione and Cloudtail will take steps to complete the transaction in compliance with applicable laws,” they said.
Go deeper: Indian rules for foreign etailers bar any entity running an online marketplace and its group companies from owning equity in any of the sellers on its platform or having control over their inventory. To comply with this, Amazon reduced its stake in Prione from 49% to 24%, while Catamaran increased its stake from 51% to 76% in February 2019.
Cloudtail’s revenue in FY21 shot up by over 45% to Rs 16,639 crore with a profit of more than Rs 182 crore.
Will CCI clear it? Whether or not the CCI allows Amazon to pick up Caramaran’s stake in Prione remains to be seen and is by no means a foregone conclusion, given Amazon’s regulatory troubles in India.
The August announcement came after Reuters reported, citing Amazon documents, that the company had for years given preferential treatment to a small group of sellers, including Cloudtail, in an apparent violation of India’s ecommerce rules.
Amazon and Flipkart have also been the subject of a separate CCI investigation since last year for allegedly promoting select sellers on their e-commerce platforms and stiflling competition. Both companies have tried to halt the probe but in vain.
Cloudtail changing tack: Cloudtail has an overarching presence on Amazon India in several categories including smartphones, electronics and fashion. It has off-late reduced focus on fast-selling categories like smartphones and instead has been focusing on electronics and daily necessities.
Swiggy in talks to invest in bike-taxi startup Rapido
Swiggy is in the final stages of talks to invest in Rapido, a bike-taxi startup based in Bengaluru, two sources told us. The potential investment from the food delivery firm is part of a larger $150-200 million funding round that Rapido is in talks to raise.
Significance: If the deal goes through, it will be Swiggy’s first bet in the mobility sector. It will enhance the company’s last-mile delivery capabilities and boost its quick commerce ambitions.
Zomato talks fell through: People aware of the development told us that Rapido was also in talks with Zomato, but those conversations fell through recently. Zomato has been on an investment spree since going public, having backed startups such as Blinkit (formerly Grofers), Shiprocket and Magicpin.
Possible synergies: “Fundamentally bike taxis and food delivery are highly complementary,” said Kunal Khatter, who heads a VC firm Advantedge and is an investor in Rapido. “As much as 80% of deliveries happen during lunch and dinner time. There is idle capacity during mornings and evenings. Bike-taxis are the opposite (busy during rush hours and relatively free during mealtimes).”
For now, though, Swiggy’s investment is a purely financial one, multiple sources told us.
Swiggy has been aggressively foraying into new categories in recent months. We have been reporting on the meteoric rise of India’s so-called quick commerce firms, led by the likes of Swiggy’s Instamart, Zepto and Blinkit, which promised deliveries in 10-20 minutes.
Swiggy’s war chest: We had reported on September 28 that Swiggy was in talks to bring on board US asset manager Invesco in what was likely to be a pre-IPO round, making the company a decacorn (worth more than $10 billion). Srisharsha Majety, Swiggy’s cofounder and CEO, told us recently that $700 million of the new funds would be used to grow for Instamart.
Card tokenisation to hit ecommerce operations from Jan 1
Ecommerce and online service providers are bracing for major disruptions on January 1, when the Reserve Bank of India (RBI) tokenisation rule takes effect.
Five million have saved card details: About five million customers, the most frequent online spenders in India and the biggest – who have stored their card details with various online merchants – will likely be affected the most.
What’s tokenisation? The RBI’s mandate requires online merchants to erase all stored payment details of customers by December 31.
Tokenisation enables card transactions without disclosing the cardholder’s account information to either the merchant or any intermediaries. It involves replacing a 16-digit credit or debit card number with another string of 16-digit numbers known as a “token”, which is unique for each combination of card, token requestor and device. Importantly, tokenisation only applies to domestic, online purchases.
The measure, which the RBI had announced in September, is aimed at protecting cardholders from fraud.
Caught off-guard: Merchants, banks, card providers, payment gateways and other stakeholders said they haven’t had enough time to make the needed backend changes.
Quote: “Customers will be clueless and payments through card transactions will go down significantly,” said a senior executive at a top ecommerce company who’s part of its tokenisation initiative. Many could switch to UPI-based payments or go back to cash on delivery, said some executives.
What about EMIs? The change may also hit equated monthly instalments (EMIs) that customers pay through stored cards and buy-now-pay-later options, and cause chaos among online merchants required to process refunds. “No one is ready,” said the head of a large online retailer, asking not to be named.
‘Year-long disruption’: In the event the RBI doesn’t extend the deadline, disruptions could last nine months to a year before every card is tokenised, said executives at various companies.
We had reported earlier that global and local companies, through industry bodies such as Nasscom and the Alliance of Digital India Foundation ( ADIF), planned to ask the RBI to implement the mandate in phases, and for two years to make the transition.
ETtech Done Deals
■ Social commerce startup Gobillion has raised $2.9 million in seed funding round led by YCombinator, Tinder founder Justin Mateen, Pioneer Fund and others. The company will use the funds to ramp up its business expansion plans, launch more categories, and strengthen its operations, product development and technology teams.
■ Business services provider Quess Corp said group firm Monster.com, an online talent platform, has raised up to Rs 137.5 crore in a funding round led by Akash Bhanshali of Volrado Venture Partners and Mohandas Pai of Meridian Investments. Quess Corp also participated in the round. After the round, Monster.com is valued at close to $100 million (around Rs 755 crore).
■ Tyke, a Mumbai-based fintech startup, has raised $1.5 million in pre-seed funding from 9Unicorns, Better Capital, Ratio Ventures, and Venture Catalysts. Angels including Jitendra Gupta, Sweta and Amrish Rau, Varun Mittal, Sandeep Aggarwal, Navin Surya, and Ajay Rajan also participated in the round.
Salesforce launches startup programme in India
Customer relationship management firm Salesforce said on Wednesday that it has launched the Salesforce Startup Programme in India to work with startups and help them scale their ventures.
Tell me more: This programme will provide startups access to Salesforce technology, experts, ecosystems, as well as business mentorship to create impact.
The programme will provide a unified platform to help foster and accelerate an environment for innovation, growth and collaboration for startups across various functions and aspects of the Salesforce ecosystem. This includes potential investments by its investing arm, Salesforce Ventures.
According to market intelligence firm IDC, the Salesforce Economy (the combined influence of Salesforce and its partner ecosystem) will create 1.3 million jobs and $66.4 billion in new business revenues in India by 2026. Salesforce is driving immense growth for its partner ecosystem in India, which will make $6.55 for every $1 Salesforce makes locally by 2026, it said.
AngelList announces launch of rollup vehicles: AngelList, a platform that connects angel investors with startups, said on Wednesday in a blog post on Medium that it has launched roll up vehicles (RUVs) for India.
- “With RUVs, founders will be able to add a group of accredited, value-add investors as a single new entry to their cap table with zero friction,” the company said in a blog post.
What are roll up vehicles? They are a type of special purpose vehicle (SPV) designed for founders that want to raise capital from individual operators and angels with a single cap table entry. Traditional SPVs often require a stand-in investor to take on additional duties by acting as the fund lead to avoid conflict of interest issues for the founder. Roll up vehicles are designed to not need a stand-in investor and can be created and entirely managed by the founder.
Today’s ETtech Top 5 newsletter was curated by Arun Padmanabhan in New Delhi and Zaheer Merchant in Mumbai. Graphics and illustrations by Rahul Awasthi.
