Also in this letter:
■ Singed by Luna’s collapse, crypto investors rethink bets
■ GIC in talks to invest $75 million in Wow Skin Science
■ Reliance Retail plans separate platform for third-party sellers
FirstCry pauses IPO plans as markets remain volatile
FirstCry will delay its planned $1-billion IPO by a few months, sources told us.
Delhivery effect: They said the company’s cautious approach follows the muted response to Delhivery’s IPO last week, amid broader headwinds in global markets.
Only 24% of Delhivery’s IPO was subscribed on the second day of its issue, signalling a lack of excitement from retail and high-net-worth investors, leaving company insiders on tenterhooks until the IPO was fully subscribed on the final day.
Details: The Pune-based e-tailer had finalised plans to file its draft IPO papers this month but is pulling back on the advice of its investors and bankers, sources said.
FirstCry, which also runs offline stores, is also thinking of ‘recalibrating’ its issue size and the valuation it will seek for the IPO, they added.
It was aiming for a valuation of close to $7 billion for an issue size of $1 billion with an offer for sale (OFS) component of around $700 million, we reported last month.
Rough waters: Public markets have been choppy for months, led by changes in macroeconomic conditions and the current Ukraine-Russia crisis, forcing even Life Insurance Corporation of India (LIC) to postpone its gigantic public offering and cut its issue size. Delhivery, too, had delayed its IPO and reduced its size from Rs 7,460 crore to Rs 5,235 crore.
Last week, SoftBank – the biggest investor in FirstCry – said it would cut down new investments by up to 75% this year after reporting record losses in its Vision Fund units. Chief executive Masayoshi Son said public markets globally would take another year or two to recover.
Bloodbath: Share prices of new-economy companies that listed during last year’s bull run – such as Zomato, Paytm and Nykaa – are currently trading well below their highs. Zomato’s shares dipped below their issue price of Rs 76 in late April and were at Rs 56.75 on Friday. Paytm’s shares have lost more than 70% of their value from the issue price of Rs 2,150.
On hold: PharmEasy, which has received regulatory clearance for its Rs 6,250 crore IPO, Snapdeal, Oyo and Boat are other new-age firms that are going slow on their IPO plans after having filed their draft papers.
Singed by Luna’s collapse, crypto investors rethink their bets
Ashwin Nadar, a 25-year-old software engineer based in Mumbai, is still reeling from the sudden collapse of Luna, a popular cryptocurrency, last week.
“It was a disturbing event. I bought Luna at $73 and got out at 24 cents,” he said. “I had a small investment, but as someone who believed in ‘smart contract’ cryptos, it was painful to watch the event unfold.”
Crashlanding: Luna plummeted to $0.0002996 on Sunday after touching an all-time high of $119 over the past 12 months, wiping out crores from Indian crypto investors’ portfolios.
Already reeling from India’s harsh new taxes on crypto, many are rethinking their investments and rejigging their portfolios as bears continue to batter the market.
Dhruv Sharma, a 26-year-old Supreme Court lawyer in New Delhi, said his portfolio is in the red, despite having started investing in crypto four years ago, because he continued to buy more crypto over the past year when these digital assets hit all-time highs.
Like Nadar, he is moving out of altcoins and buying Bitcoin and Ethereum at lower prices to stabilise his portfolio.
The Luna crash has also scared away many new crypto investors, who aren’t used to this kind of volatility.
Bought the hype: Experts said the problem was that many Indian investors had little or no investments in relatively stable cryptocurrencies such as Bitcoin and Ethereum as their prices were already high. Instead, they bought altcoins (the name given to all cryptocurrencies other than Bitcoin) without understanding the risks.
VC firms hit, too: Indian retail investors are not the only ones suffering after the collapse of Luna and UST, its associated ‘stablecoin’ on the Terra blockchain. Indian venture capital firms that had exposure to the Terra ecosystem have also taken a hit.
Accel India had backed at least two projects building for the Terra ecosystem, Stader Labs and Leap Wallet, despite the red flags around the blockchain and its founder.
And Sequoia Capital India, which has backed about a dozen web3 startups in India, including Polygon, made about 70% of these investments in exchange for crypto tokens, which have lost significant value over the past week or so.
GIC in talks to invest $75 million in Wow Skin Science
Singapore’s sovereign wealth fund GIC is in talks to pick up a significant minority stake in direct-to-consumer (D2C) beauty and personal care brand Wow Skin Science for $75 million, four sources told us.
The deal would give the ChrysCapital-backed company a post-money valuation of $400-420 million.
The company’s existing investors will also top-up capital to maintain their stakes, said one of the people. Last year, ChrysCapital acquired about 35% stake in Wow for $50 million, valuing it at Rs 900 crore.
It has also evaluated some smaller acquisition targets to fill product and distribution gaps, the source added.
Founded in 2014 by brothers Manish and Karan Chowdhary, the company’s operating revenue grew to Rs 100 crore in the financial year ending March 31, 2021, from Rs 6.5 crore in FY20, filings showed. It recorded a loss in FY21 of Rs 8.8 crore compared to a profit of Rs 9 lakh in FY20.
Wow competes with clean beauty and natural beauty D2C brands such as Plum, EarthRhythm, Juicy Chemistry, Organic Harvest, mCaffeine, Beardo, Mamaearth and Bombay Shaving Company.
TWEET OF THE DAY
Reliance Retail plans separate platform for third-party sellers
Reliance Industries has started roping in independent sellers on its ecommerce platform, JioMart. It plans to eventually create a separate marketplace where it will house all third-party sellers, two industry executives aware of the plans said.
Reliance is looking to be prepared for the government’s proposed ecommerce policy, which is likely to prohibit marketplace operators from having related parties or associated enterprises as sellers on their platforms.
The Tatas and a few others are reportedly opposed to such a condition, but Reliance is said to be in favour of it and wants to support independent sellers through a separate platform, the executives said.
The proposed platform, which is yet to be named, will have the ‘Jio’ branding. JioMart will remain the ecommerce arm of Reliance Retail for all its own brands and formats after the new marketplace comes up.
Need ARR-based valuation amid hype around SaaS firms: report
The software-as-a-service (SaaS) landscape has seen a surge in unicorns, but some valuations have been inflated by ‘hype’ and companies will soon need to return to business fundamentals such as creating great products and improving customer service, according to a report by venture capital firm Bessemer Venture Partners.
Annual recurring revenue (ARR) – a SaaS metric – is the right yardstick to measure success in this field, the report said, underscoring $100 million ARR as an inflection point in a SaaS company’s journey.
“At $100 million ARR, [companies] have product-market fit, scalable go-to-market strategy, and a growing customer base,” the report said.
SaaS entrepreneurs agreed there was a need to redouble focus on fundamentals, but strongly disagreed that valuations were “hyped”.
TCS introduces Tata brands to the metaverse
Tata Consultancy Services (TCS) is engaging with Tata group companies like Tanishq, Tata Motors and Croma to deploy metaverse solutions, a senior executive told us.
What’s happening: Tata group’s jewellery arm Tanishq recently launched its new collection in the metaverse, where customers can try on bespoke pieces. The company is also working on a solution to launch a museum metaverse for the Tamil Nadu government, said Ashok Maharaj, Head, TCS XR Lab.
Last month, Jaguar Land Rover, a subsidiary of Tata Motors, announced the launch of its open innovation platform that will build a mobility ecosystem incorporating the metaverse.
Other Tata brands like Tata Tea have also been tapping the metaverse for product launches.
The company is also partnering with a number of Big Tech companies in facilitating both hardware and software solutions in the metaverse and related areas.
Other Top Stories By Our Reporters
Paytm sees over five-fold growth on loans: Paytm disbursed 15.2 million loans in fiscal year 2022 (FY22), more than five-fold growth from FY21 when the number of overall loans disbursed on the platform stood at 2.6 million, according to data released by its parent company One97 Communications on Sunday.
Vital to tap the right talent, says Nasscom chairman: The IT industry’s top priority is to make India the digital hub of the world, said Krishnan Ramanujam, the newly appointed chairman of IT industry body Nasscom. Tapping India’s massive talent base effectively to support the current demand environment for the $220 billion Indian IT industry over the next decade will be key to this goal, Ramanujam told us in an interview.
Technocrats are guided by the motto ‘in science, we invest’: An influential set of technocrats is actively investing in core areas of research and placing long-term bets on top scientific institutions in search of boundary-smashing breakthroughs.
How ‘giving’ was diversified beyond billions: In 2018 during Daan Utsav, the weekly festival of giving held across India, a group of six volunteers started questioning why India didn’t have anything like the Giving Pledge, under which several billionaires world over had pledged to donate a certain portion of their wealth to charity. In the past few years, several head honchos from India Inc have pledged to donate at least half their wealth towards charity under Living My Promise (LMP).
Global Picks We Are Reading
■ Behind fake-account issue that Elon Musk cited in calling Twitter deal ‘on hold’ (WSJ)
■ Global tech’s changemakers (Rest of World)
■ Can we create a moral metaverse? (The Guardian)
Today’s ETtech Morning Dispatch was curated by Zaheer Merchant in Mumbai and Judy Franko in New Delhi. Graphics and illustrations by Rahul Awasthi.
