Good ol’ farmville 🌾
FB’s plans, Air India bids, and more unicorns.
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Market summary: 📊
Markets opened soft yesterday in India but eventually crawled back up to finish flat on the day. US markets show good momentum as vaccination picks pace nationwide.
US:
S&P 500 - up 1.29%
Nasdaq 100 - up 1.07%
India:
Nifty 50 - up 0.072%
Sensex - up 0.021%
What’s hot?
1️⃣ FB’s sneaky move — The success of Cameo set off some alarms at Facebook and rumours are the company is working on building an internal tool that will allow users to directly pay for live sessions with celebrities. To remind you, Cameo basically makes it super simple for fans to order custom shouts and videos from celebs—on one hand, giving fans a way to connect with celebrities, while on the other hand giving artists a way to diversify their income.
The company saw explosive growth amidst COVID and even an Indian clone raised big money on that momentum. For example, Kevin from the Office apparently made $1 million in 2020 just shouting birthday wishes to people on Cameo. TF.
2️⃣ Air India bids are in — center’s attempt to divest some of Air India to private ownership has received a total of 2 bids (far better than no bids the govt. had gotten in the previous attempt). One of the bids comes from the Tatas, who are keen on finding synergies and salvaging their existing airline investments (Vistara, AirAsia) and building a broad airline franchise. The other bid comes from an employee backed consortium along with US-based investor Interpus Inc. Results will be picked based on who values the airline more (enterprise value) and will be disclosed on Jan 5.
EV dreams take off in Tamil Nadu 🔌
Ola has entered a Memorandum of Understanding with the government of Tamil Nadu to secure support for its ₹2,404 crore capital investment on the e-scooter manufacturing plant in the region. Touting the facility as the “world’s largest scooter manufacturing facility”, Ola is eyeing a new chapter in its journey as it looks to transform into a traditional auto player.
About the plant—the facility will have an initial production capacity of about 2 million units each year (significant figure, which also shows how serious Ola is about this opportunity) and create nearly 10,000 jobs upon kickoff. In addition to supplying bikes locally, Ola plans on using the plant to export vehicles to serve an international customer base from countries such as Europe, Asia, and Latin America among others.
The domestic game however won’t be super easy and will likely need heavy investments. Ola will be taking on other emerging players including the promising Ather Energy as well as oldies like Hero Electric and TVS Motor Company. Also, quite amusing that literally no other traditional “ride-hailer” worldwide has tried becoming a traditional automobile vendor with the same fervor as Ola. Game on, all guns out.
What matters: India’s EV race suddenly feels so crowded and lit. Nobody knows for sure if consumers nationwide will warm up to the EV 2-wheelers 2.0 (the 1.0s were a dud), but urban consumers particularly are voting that this is one of the ways to keep their cities from stinking. The investments, infrastructure build outs, and market opportunities in retailing, servicing etc. created by this sudden boom are going to massively surprise near term.
Making a comeback 🎮
Gaming platform Zynga has launched an audio game for smart speakers, in an interesting pivot as the company looks to make a comeback and attract more casual gamers to its platforms, via emerging channels.
If you’re old enough to remember playing Farmville on FB, you probably know the clout Zynga held in the early days of social gaming, but since then the tides have turned and the company has been struggling to make a comeback.
Also, the gaming industry went through some structural changes. Earlier, games within social platforms found it easy to reach customers. Users would play a round or two of games and just log off—casual gaming was easy. Now unless you’re a hardcore gamer who’s looking to spend considerable amount of time gaming, consumers don’t generally tend to download games.
Despite that some of Zynga’s top games have reached millions, but investors seem to be asking for more. As a result, these platforms are actively looking to circumvent a complex, competitive arena and reach consumers directly through emerging channels. Audio and smart speakers in living rooms are emerging to be obvious no-brainer picks for platform builders.
Unicorn here, a unicorn there 🌈
Cloud software provider to the wellness and beauty industry, Zenoti scooped up $160 million for its Series D round, at a whopping $1 billion valuation, making it yet another company from India to join the elite club this year. PE giant Advent International led the round with Tiger Global and Steadview Partners pitching in.
The company basically supplies spas, massage centers, wellness centers etc. with software needed to run operations—including bookings appointments, employee shifts, customer support, payments etc. all integrated in one place. They also have easy integrations for ad buying, digital marketing, emailing—a pretty standard and must-have model these days that makes it easy for SMEs to scale and digitally build their business.
So far they’re catering to some 12,000 businesses in around 50 countries—all substantially boosted by the digitization enforced by COVID. Management claims growth rates hover around 100% right now, and further acceleration is expected next year at 120%, as pent up demand for haircuts and massages start coming into the market. ARR in 2019 was at $35 million, while the company aims for $100 million of run-rate over the next 18 months.
Most of Zenoti’s biz is driven by the US and the UK, with a minuscule portion being contributed by India and West Asia. Fresh capital will go to R&D and to scale its operations in the European union.
Bottomline: SaaS is on fire no doubt, but Indian SaaS companies are surprising everyone, beating all expectations of scale, growth rates, and momentum. About time some of these giants go public, let the average investor benefit from the value creation, and draw more interest from global capital allocators to the builders and creators in our country. We're so bullish.
Closing out 👋
Leading alt-asset investor Steadview Capital plonked $25 million to purchase stock from early-investors of Delhivery in a secondary transaction. One of the hottest logistics startups to come out of the digital-consumer boom of the past decade, Delhivery is cleaning up its cap table and structuring for an IPO soon.
In under 9 years, the company has grown to service 17,500 pincodes and 2,300 cities across India providing end to end 100% tech-enabled logistics services including LTL and FTL freight, reverse logistics, cross-border warehousing, B2B and B2C warehousing etc.—an immensely admirable scale and feat. Here’s a quick video of the founder explaining early days that will blow your mind.
What else are we snackin’ 🍿
🤝 SMEs to network within - Amazon wants sellers on its platforms to share knowledge with each other and network to support each other, and has launched a peer mentorship program called Saathi to facilitate these connections. Over 7 lakh sellers will participate, sharing industry specific information on running online businesses. Smart way to earn seller loyalty.
💻 MSFT making post COVID plans - Quite surprisingly Microsoft has leased 180,000 sq. ft. of fresh office space in BLR with commercial real estate player Tablespace, as the company looks to expand domestic operations. Nature of the deal is quite flexible with MSFT paying up on a per desk basis (some 16K each month). This is the second such deal done by them this year.
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