Also in this letter:
■ Boat sets up M&A arm for ‘house of brands’ play
■ Koo to launch Facebook-style advisory board
■ Multiplier raises $60 million, and other done deals
Trell’s cofounder’s fiery note signals rift with investors
Pulkit Agarwal, cofounder of Trell, sent a fiery note to all investors of the firm last week, questioning the nature of a forensic audit being conducted by EY India. He claimed the exercise was ordered by a cohort of select financial backers, not by the company or its board.
Not again! The note is significant as it signals a rift between the company’s founders and some of its investors. It is reminiscent of the recent boardroom battle at BharatPe that led to the exit of cofounder Ashneer Grover and his wife Madhuri Jain.
ET was the first to report about the alleged related party transactions and the subsequent probe at Trell on March 12.
Details: In his note, which ET has reviewed, Agarwal did not name specific investors but said what had started as a mere inspection by an investor turned into an unauthorised audit and has now transformed into a ‘witch hunt’.
He asked the investor who told the media about the audit to identify himself or herself “within a few hours”.
- “(The founders) will not take a hit on their reputation lying down. If forced, we will do all that is within our command to protect our reputation and interest of the company and its shareholders,” the note read.
Responding to ET’s mailed query Wednesday, a spokesperson of Trell said the leaked note was “written some time ago and is being taken out of context.”
H&M Group, Sequoia Capital India, Mirae Asset, KTB Network, Beenext, Fosun and Samsung Venture Investment are among the top institutional investors in the influencer-led social commerce startup.
We reported on March 15 that the company was looking to fire hundreds of its employees in what it termed a ‘right-sizing’.
Boat sets up M&A arm for ‘house of brands’ play
Direct-to-consumer (D2C) consumer electronics firm Boat Lifestyle has set up a mergers and acquisitions arm for domestic and overseas acquisitions in the consumer tech space. It plans to build a house of brands similar to those of other unicorn startups such as GoodGlamm Group & Mensa Brands ahead of its proposed public listing.
Imagine Marketing, Boat’s parent company filed its draft red herring prospectus with Sebi in January, looking to raise Rs 2,000 crore from the public markets. It is awaiting approval from the regulator.
According to market intelligence firm IDC, Boat had 48% share by volume in the branded earwear category and 23% in the wearables watch market for December 2021.
Gambhir said the consumer devices categories in which Boat operates, such as earphones, watches, gaming accessories, home audio, mobile accessories and personal care appliances, make up a Rs 66,000 crore market, which is projected to grow 20-25% over the next four-five years and hit about Rs 1,50,000 crore by 2025. About 40-45% of this market is unorganised and largely being sold through informal channels.
Boat’s acquisitions so far include Tagg smartwatches and gaming accessories brand RedGear. Its own brands include personal care accessories label Misfit and mass-priced headsets brand Defy. And two months ago, the company acquired Singapore-based KaHa, a tech product development company.
TWEET OF THE DAY
Koo to launch Facebook-style advisory board
Indian microblogging platform Koo is in the advanced stages of constituting an independent advisory board – on the lines of Facebook’s oversight board – that will deliberate on content moderation.
Why? The company has been growing at a fast clip over the past few years and expanding significantly in regional languages. It is also looking to hire fact checkers to tackle the menace of misinformation.
Details: Koo CEO Aprameya Radhakrishna said the advisory board is expected to comprise five to 11 eminent individuals from the judiciary, bureaucracy, media and business, who will play a guiding role “especially when it comes to ambiguous scenarios regarding content”. It is expected to be constituted in the next quarter to two.
The Facebook Oversight Board, which comprises 20 independent members from around the world, makes binding decisions on what content Facebook and Instagram should allow or remove.
Yes, but: Salman Waris, partner at TechLegis, said, “The Facebook Oversight Board has not been as effective as it was being projected to be. Koo setting up an advisory board is a welcome move as it brings in self-regulation but we will have to see if the board has any real power or is a toothless entity.”
ETtech Done Deals
■ Multiplier, a business-to-business (B2B) enterprise employment platform, has raised $60 million in a funding round co-led by Tiger Global and Sequoia Capital India. The firm, which helps companies employ and pay talent anywhere in the world, will use the funds to expand its global infrastructure and add new capabilities, and for hiring.
■ Online taxation and fintech software provider Clear, formerly ClearTax, had acquired supply chain financing technology firm Xpedize. The size of the deal is Rs 100 crore, people aware of the development told ET. This is Clear’s second acquisition after it bought B2B payments platform Ybanq last July.
■ Health and fitness discovery platform Growfitter has raised $1 million in a funding round led by Inflection Point Ventures. The round also saw participation from First Port Capital, Mumbai Angels, Startup Angel Network, DevX Accelerator Fund, Blockchain Founders Fund (Singapore), and JPIN.
Construction materials startup Infra.Market faces tax probe
Business-to-business construction materials startup Infra.Market faces an investigation for allegedly not paying taxes, three people with direct knowledge of the development told us.
Driving the news: Income Tax officials have raided offices of the company in several cities, including Noida, Hyderabad, Bengaluru, Pune and Mumbai.
- “The founders’ homes were also raided,” one of the sources said. “There were some fake invoices and tax evasion noticed and investigation is being carried out for the same,” he added.
Company responds: In an emailed response to queries from ET, a spokesperson for the company said, “At Infra.Market, we give utmost importance to ensure we are in compliance with the law of the land at all times. The assertions in your mail are incorrect and misleading, [and] therefore, denied.”
“Tax authorities have raised certain queries due to non-filling of returns by certain suppliers and we are duly cooperating with them. However, we are legally bound not to publicly comment on it until further notice,” the spokesperson added.
Big picture: Corporate governance has been a niggling issue for many global and domestic risk investors, who have been struggling to make their portfolio companies compliant with laws and regulations. Companies such as BharatPe and Trell have been investigated in the recent past over alleged irregularities in their finances.
Ola Electric brings ex-LG Chem CEO on board for battery boost
Prabhakar Patil
Ola Electric said on Wednesday it has appointed Prabahkar Patil, former chief executive officer of LG Chem Power, a leading lithium-ion cell maker, to the company’s board as it plans to manufacture its own batteries.
Cost saving: Currently, Ola Electric buys lithium-ion cells from foreign vendors and assembles them to make battery packs at its factory in Tamil Nadu. The battery pack is the most expensive component of an EV.
Ola Electric is among the 10 companies that have applied for the Indian government’s $2.4 billion production linked incentive (PLI) scheme to develop and manufacture batteries for EVs.
Aggarwal said Ola Electric would set up a 50GWh cell manufacturing plant in India and that “Dr Prabhakar’s expertise will help us accelerate this process of bringing indigenously designed and manufactured cells to the market,” he said.
The company also said that it is scouting the world for strategic investments in companies focused on advanced cell chemistry research and other battery technologies. These, it hopes, will help it to offer better batteries for its upcoming vehicles.
The board: Prabhakar joins Aggarwal; Arun Sarin, former CEO, Vodafone Group; B V R Subbu, former president, Hyundai Motor India; Sumer Juneja, managing partner, SoftBank Vision Fund; Jaime Ardila Gomez, former executive VP and president of South America for General Motors; TVG Krishnamurthy on the company’s board.
Passenger EV sales jump: On March 8 we reported that the retail sale of passenger EVs has risen significantly over the past year. Sales of electric four-wheelers jumped 296% from 593 in February 2021 to 2,352 units in February 2022, while those of electric two-wheelers rose 433% from 6,083 to 32,443 units over over the same period, according to data from the Federation of Automobiles Dealers Association.
Also Read: Roadblocks on Bhavish Aggarwal’s way to building a super app for Ola
Other Top Stories By Our Reporters
Telangana govt to launch spacetech framework in metaverse: When the Telangana government launches its new SpaceTech Framework next month, the event will not be held in a government building or a five-star hotel. The virtual event will be hosted on PartyNite Metaverse, and is probably the first ever government event to be held in a virtual space.
Adobe preparing for metaverse disruption, says CEO: Adobe is poised to tap new technologies for fresh opportunities in the new world order, Shantanu Narayen, its chairman and CEO said at the Economic Times Global Business Summit. The company is preparing itself for the next disruption led by Web3 and the metaverse, he said.
Global Picks We Are Reading
■ ‘No-Code’ brings the power of AI to the masses (NYT)
■ The 300,000 volunteer hackers coming together to fight Russia (The Guardian)
■ Six months in, El Salvador’s bitcoin gamble is crumbling (Rest of World)
Today’s ETtech Morning Dispatch was curated by Zaheer Merchant in Mumbai and Judy Franko in New Delhi. Graphics and illustrations by Rahul Awasthi.
