Defying common sense 🤯
SPAC boom, Crypto raise, and DTC keeps moving.
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Market summary: 📊
No stopping for Indian markets with another straight day of gains after Monday’s upsetting round. US turned red during the day, but eventually finished positive.
US:
S&P 500 - up 0.45%
Nasdaq 100 - up 0.08%
India:
Nifty 50 - up 1.00%
Sensex - up 0.95%
What’s brewing hot? ☕
1️⃣ $1B slap in the face—the government embarrassingly lost a tax dispute case against UK based company Cairn in the international arbitration tribunal, which has now asked GOI to return around $1.2 billion in taxes it had withheld and shares of the company it had seized. India was basically claiming Cairn owed more taxes, and had taken steps to recoup the amount. The tribunal cited some provisions in the India-UK tax treaty that do not allow for such tactics.
2️⃣ Stop your careless digital lending—RBI has sounded the horn against unauthorized digital lending in India once again, asking citizens to be cautious while taking loans out online, while banks have been advised to report payment information on suspicious transactions. The explosive growth in digital services and the lack of a robust, standardized fraud and risk-management infrastructure around these services has opened the game to bad actors.
Riding the crypto boom 💰
CoinDCX, a prominent crypto exchange in India, filled its coffers with $14 million in a Series B haul. Block one led the round, with Coinbase, DG, Jump Capital, and Polychain Capital pitching in.
Crypto markets are rising back to prominence, with Bitcoin booking all time highs, and with ecosystem champions promising sufficient underlying technical progress to bring some of these tech platforms mainstream. So far, the average Indian investor has managed to keep temptations under control, but the exchanges are betting that wider adoption and ownership of the asset class is inevitable.
Placing a horse in this race, CoinDCX recently launched a consumer friendly product recently called Go, basically simplifying the purchase of most basic currencies for everyday retail customers. Fresh capital will drive hiring and growth agenda for the same platform.
What matters: irrespective of whether one is a believer in the tech or not, cryptocurrencies need a strong killer-app for adoption to spike, especially in India where users are extremely cautious about “investing” even when it comes to a lot more reliable asset classes like stocks. Will be a tough nut to crack for everyone, but likely inevitable in time.
While we’re on venture raises,
DTC brand Slurrp farm, which makes whole foods based healthy snacks for kids, scooped up $2 million for its Series A round from Fireside Ventures.
The company founded by two mom-turned entrepreneurs has had an impressive run so far, selling high-quality packaged food with 25+ distinctly unique products targeted to help urban parents balance nutrition for their children, while allaying concerns of preservatives and other bad-stuff that comes from traditional packaged foods for toddlers.
Leveraging an omni-channel strategy, the products are made available through 600+ stores across the nation along with an online store. Fresh funds will now fuel product innovation, marketing and also to beef up operations to service explosive demand. Some amazing DTC brands are emerging in India this year!
Peloton bought bike-maker Precor 💪
Exercise equipment maker Peloton’s growth beats all common sense — who would buy a $3,000 stationary exercise bike that instead can be rented for a few bucks a month at the local gym. “You cant even take them outdoors”. “Oh, that’s a stupid product”. The criticism wouldn’t stop.
Then COVID-man came. With gyms closed, hordes of locked down consumers flocked to have these bikes installed in their homes. By mid-2020, Peloton was reporting more than 200%+ revenue growth rates, literally selling bikes faster than it can get them manufactured, forcing long wait times on new consumers, and turning customers away to competitors.
When demand surprises like that, manufacturing glitches are very common as the value chain gets strained, and investors were furious with the management for letting this happen. Anyway, Peloton had its lesson and to de-risk going forward, the company spent $420 million couple days ago on acquiring Precor, a prominent maker of stationary bikes for gyms. Precor’s big manufacturing facilities and hardware R&D will now boost Peloton’s standing.
Also, Precor supplies hotel-gyms, offices, club-houses etc., now bringing all that market into Peloton’s pocket with just one stroke. Stock quickly ran to the sky, now taking the company close to $50 billion in market cap. Markets are happy that a vertically integrated Peloton (with more control over its product) will be capable of innovating faster for its community.
Bottomline: This company offers like a million lessons for marketers and community builders. They took a commodity product and turned it into a luxury essential, leveraging the power of exclusivity and community. They’re single handedly leading a disruptive revolution on the health-tech space, particularly from the home-equipment angle. Here’s an interesting thread.
Closing out—the blank-check feast 👋
We’ve probably mentioned the SPAC craze a thousand times so far, but the numbers tell you just how nuts the story really is. So far this year, more than 225 SPACs went public with the intention of merging with a startup and taking them public, raising more than $75 billion in capital — up 450%+ compared to last year.
SPACs (special purpose acquisition vehicles) make it easy for companies to go public without the prying eyes of bankers and too much regulatory scrutiny, making it really attractive to early companies that are chasing big markets and need more time to prove financials (like for example Opendoor). There’s some smart investors pushing SPACs, but plenty fluff too, and that mountain of hay could come down crashing pretty soon.
What else are we snackin’ 🍿
💰 Pressure to monetize getting to Telegram - with 500 million monthly active users, Telegram is on the clock to keep costs under control and make some money. In response, the app will introduce its own ad platform for public one-to-many channels as a trial, still prioritizing privacy, while making it easy for themselves to pay for server costs and traffic.
💪 Digital asset management platform - NITI Aayog launched India's first digital asset management platform DigiBoxx, to provide an easy and secure way for the average masses to store all the files in one centralised location. The CEO of NITI Aayog also signed up for an account, making him the first user - hoping that would drive some trust.
Hit that 💚 if you liked today’s issue.
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