Also in this letter:
■ Meesho lays off more than 150 employees from grocery biz
■ Crypto trading volumes down 92-98% from 2021 peaks
■ LeadSquared could be India’s next startup unicorn
Small sellers anxious as Cloudtail sends termination notice to vendors
Cloudtail has sent contract termination notices to several vendors who were working with the firm, saying it would stop listing and selling products on the online marketplace in the “near future”.
This notice marks the first time Cloudtail has formally informed vendors of its impending closure.
Small sellers anxious: The letter sparked anxiety among many small sellers, who said they were yet to be told where their current inventory and businesses would be moved to. Cloudtail managers told them they would hear from the company soon but did not provide any additional details on the timelines, two vendors told us.
“We received the notice last week and tried contacting our respective managers from Cloudtail but there is no clarity as to how the transition will take place,” one of the merchants said. “I am aware that some vendors that move a larger volume of goods through Cloudtail have already got new agreements on transfer of business to other seller entities.”
We reported on March 28 that Cloudtail had started shipping its inventory in top categories such as electronics, health and personal care to other big sellers on Amazon India, such as VRP Telematics, Rocket Kommerce and Cocobulu Retail.
Amazon decided to shut Cloudtail as India’s current regulations bar entities running online marketplaces and their group companies from owning equity in any seller on their platform or having control over their inventory.
Cloudtail’s legacy: Cloudtail played a critical role in the initial success of Amazon in India by delivering large numbers of orders to consumers in a day or two.
In the financial year 2021, its revenue increased by more than 45% to Rs 16,639 crore with a profit of more than Rs 182 crore. Cloudtail was credited with shipping over half of all products sold on Amazon India at one point. That’s before the government tightened the ecommerce rules in 2016, saying that a single seller could not account for more than 25% of total sales on an online marketplace.
Meesho lays off more than 150 employees from grocery biz
Ecommerce firm Meesho has laid off 150 employees from its grocery business, which it recently restructured and rebranded as Meesho Superstore from Farmiso.
The company said last week it would integrate the grocery vertical into its main app, leading to talk of redundancies at the firm.
Sources close to the development told us around 400 employees would be affected by the company’s downsizing. But Meesho denied this, saying only 150 were being asked to go.
Superstore accounts for the highest number of Meesho’s employees, with a headcount of more than 500, said a source within Meesho. The roles that have been affected are city level managers, product, design and executives who worked on its user interface.
- “The redundancies do not impact any positions at the core Meesho marketplace business, where we continue to hire and grow talent,” Meesho wrote in a blog post on Monday.
An employee who was laid off said the company told them it was pivoting its grocery business and would move to a model that wouldn’t require city-level executives. The person said none of the employees had been given prior notice about their terminations.
Stop the burn: The layoffs are an attempt to reduce its cash burn, according to sources in the know. We reported in September that Meesho was burning around $20-25 million a month amid intense competition in the online retail market. That rose to as much as $50 million a month earlier this year, sources said.
Unacademy laid off 1,000: On April 7 we reported that edtech startup Unacademy had laid off around 1,000 employees in the past few weeks, including on-roll staff and teachers on contract as it looked to rein in its burn rate. Of the 1,000, about 300 were educators who worked with Unacademy on contract while the rest were in sales, business and other departments.
Crypto trading volumes down 92-98% from 2021 peaks
Trading volumes on crypto exchanges have plummeted because of the uncertainty around crypto regulations in India.
Wipeout: According to data from cryptocurrency aggregator Coingecko.com, trading volumes on top crypto exchanges (normalised for the year) were down 92-98% at one point on April 10 from their peaks last year.
WazirX saw anywhere from 65-90% of its business erode after e-wallet Mobikwik disabled its services on the platform a few days ago.
We were the first to report on April 11 that Mobikwik had stopped working with crypto exchanges due to a lack of clarity on the usage of the Unified Payments Interface (UPI) for processing transactions.
US-based Coinbase, which announced its India entry last week, has also hit the UPI roadblock and disabled the service.
The drop in trading volumes is due to the new crypto tax rules, which came into effect on April 1, and the refusal of payment aggregators and service providers to work with crypto exchanges, several senior executives at crypto exchanges said.
SaaS startup LeadSquared in talks to raise $100 million, become unicorn
Sales automation software provider LeadSquared is in talks to raise $100 million in a round led by WestBridge Capital, multiple sources told us.
The round is expected to value the company at $1 billion, they said, which would make it India’s latest startup unicorn. The latest fundraising comes after International Finance Corporation joined its cap table last October to fuel its expansion worldwide.
LeadSquared had also raised $32 million in a round led by private equity fund Gaja Capital in December 2020, with participation from existing investors Skateboat Capital and Silicon Valley-based serial entrepreneur Jyoti Bansal, who had sold his company AppDynamics to Cisco for $3.7 billion in 2017.
ETtech Done Deals
■ Medikabazaar has raised $65 million in a funding round led by Lighthouse India Fund, valuing the B2B medical supply platform at $700 million. Lighthouse, an investor in Nykaa, Bikaji Foods and Duroflex, brought in $30 million, with the rest coming from existing investors such as Creaegis, Health Quad, Ackermans & van Haaren, British International Investment (formerly CDC) and KOIS Holdings.
■ PhableCare, a chronic disease management company, has raised $25 million in a funding round led by Kalaari Capital. The company said it would use the funds to further strengthen its ecosystem and accelerate its market expansion, acquire customers (doctors and patients), build its brand, and create new revenue streams.
■ Healthcare provider Medfin has raised $15 million in fresh funding from investors including Arka Nxt, HealthXCapital (Singapore), Blume Ventures, Axilor Ventures, Sony and Kotak Investments. The company offers patients access to the latest surgical treatment procedures at affordable prices. It said it will use the funding for geographical expansion, investing in R&D, technology, and hiring people.
■ B2B fintech platform EximPe has raised $3.5 million in its seed round, led by early-stage venture capital firm Leo Capital. Singapore-based RB investments, Founder Bank Capital, iSeed Ventures, 2 am VC, LetsVenture, and BoldCap also participated in the round.
TWEET OF THE DAY
TCS net profit rises 7.4% year-on-year in March quarter
Tata Consultancy Services (TCS) on Monday reported 7.4% on-year growth in consolidated net profit at Rs 9,926 crore for the quarter ended March. It reported a 15.8% on-year rise in consolidated revenues at Rs 50,591 crore.
This met the expectations of analysts, who predicted TCS would report on-year revenue growth in the range of 11-16%. Profit growth was projected in the range of 8-9% year-on-year.
On a sequential basis, net profit grew 1.6% while revenue grew 3.5%. For the financial year ended March, the company’s consolidated revenue rose 16.8% to Rs.191,754 crore and net profit clocked Rs 38,327 crore, up 14.8%.
The Tata group company hit the highest-ever order book at $11.3 billion in terms of total contract value in Jan-Mar quarter. The metric stood at $34.6 billion for the full year.
Attrition rate for the quarter was up at 17.4% compared to 15.3% reported last quarter. Employee headcount grew by 35,209 on a net basis, the highest in a quarter ever, to reach 592,195.
Ola board approves acquisition of Avail Finance
The board of Ola’s parent company ANI Technologies has approved the acquisition of Avail Finance, people briefed on the matter told us.
Related-party transaction: Ankush Aggarwal, cofounder of Avail Finance, is the brother of Ola founder and CEO Bhavish Aggarwal. We had reported on March 25 that the deal would be considered a related-party transaction as both brothers are directors of Goddard Technical Solutions, which operates Avail Finance.
Ankush Aggarwal is expected to lead Ola Financial Services, Ola’s fintech arm, according to a source. We had reported in March that he would be primarily responsible for the lending business.
Ola had said last month that it would acquire Avail Finance in a $50 million share swap deal, subject to the board’s approval. We reported on the same day that Ankush Aggarwal and Avail Finance’s investors, including Alpha Wave Ventures and Matrix Partners, would get a stake in ANI Technologies after the acquisition.
Loans for drivers: Ola said acquisition of Avail Finance, which provides loans to blue-collar workers, would help it strengthen its play in the credit-underserved segment, which includes its driver partners.
Other Top Stories By Our Reporters
Digital adoption fuels new global capability centres in India: Over a dozen global multinationals have set up global capability centres (GCC) in Chennai, Bengaluru or Pune in the last month or two. These include 3M, Airbnb, Lowe’s, Zoom and Rolls Royce. Market estimates suggest that almost 60 new GCCs came up in India in 2021.
KKR picks up 9.9% stake in Shriram General Insurance: KKR has agreed to buy a 9.9 percent stake in Shriram General Insurance Company for an undisclosed sum, both the companies said in a statement. Founded in 2008, Shriram General Insurance is a joint venture between Shriram Capital, the holding company for Shriram Group’s financial services business and Sanlam Limited, a leading pan-African financial services group.
Elon Musk won’t join Twitter’s board: Twitter’s chief executive Parag Agrawal said on Monday that Tesla founder Elon Musk has decided not to join the social media company’s board, days after he disclosed a 9.2% stake in the firm.
Global Picks We Are Reading
■ In Ukraine, Elon Musk’s Starlink finally found its right place, right time (Rest of World)
■ Apple’s big bet on India gets bigger still (WSJ)
■ What job crisis? Top Chinese regulator says tech is booming (CNN)
Today’s ETtech Morning Dispatch was curated by Zaheer Merchant in Mumbai and Judy Franko in New Delhi. Graphics and illustrations by Rahul Awasthi.
