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Market summary: 📊
Indian markets showed promise, gaining back ground lost on the previous day. US markets continued to remain choppy, losing a couple percentage points after the previous day's positive run.
US:
S&P 500 - down 1.76%
Nasdaq 100 - down 2.12%
India:
Nifty 50 - up 1.52%
Sensex - up 1.69%
What’s the latest from Startupland 🧐
A video platform that helps with creating customer experience related visual content, called Hippo Video, has raised $4.5 million in a Series A round led by Alpha Wave Incubation (AWI), with existing investors Sequoia Capital and KAE Capital pitching in.
Video can be a powerful medium to share information and get customers acclimatized to products. Hippo makes it easy to create, deliver and measure metrics of engagement with content for personalised videos that can be used in customer experiences and other outbound prospecting efforts. Founded in 2016 by an ex-Zoho team, the company will use the funding to propel GTM teams as well as ramp up the engineering efforts.
Next up,
Insurtech firm Acko has announced a strategic investment of $1.2 million in Pitstop, a Bengaluru-based full-stack car service and repair platform, as part of Acko’s strategy to improve customer engagement and smoothen the claim settlement process.
The two companies will work closely together to build a more end-to-end service and the co-founder of Acko believes the partnership and integration will help accelerate growth while serving a growing demand for contactless transactions and transparency in claims.
Well, sounds awesome. Who here hasn’t been frustrated with their traditional insurers and car maintenance service providers at least once!
Lastly, in fintech….
Direct investing platform Groww has raised $30 million as part of its Series C from Y combinator’s follow on fund — YC Continuity. Existing investors Sequoia India, Ribbit Capital and Propel Ventures also pitched in.
With that, Groww’s total raise-to-date has come up to $59 million. The company along with the other investing disruptors had recently come under some pressure after reports of widespread unprofitability hit the news mills. India’s investing market is still in nascent stages, and these companies need all the help they can get to survive the long winding road.
Searching for a compromise 👀
TikTok has found itself in a uniquely sticky situation between the US and China. On one hand the US has put the company on a deadline for a 100% sale, on the other hand China has issued laws blocking the sale of Chinese tech IP to a foreign entity, while TikTok management wants to ensure it at the least gets a fair price for all its hard work.
So most recently management has approached the US government again, to explore the possibility of a middle ground solution, where perhaps it could be allowed to restructure the deal such that not ALL of its operations are forced to be sold. The company is desperately looking for any leeway to hold onto, including running joint ventures, revenue shares, moving servers to the US etc. While a number of options remain on the table, the situation is fluid and will eventually depend on Trump’s mood, I guess. 🙄
Regardless, you can’t help but notice that despite cash rich players bidding for the company and Uncle Sam constantly having his tanks pointed at Bytedance, the company’s management has done a phenomenal job of negotiating and so far of not crumbling under pressure. Points for that!
Reward long term value 🚀
Not all companies are created equal, and that’s more true in technology or innovation driven enterprises than elsewhere. Sometimes product development cycles are long, innovation hits roadblocks, or tech challenges simply seem insurmountable, while earning profits over invested capital gets stretched out over decades.
Take the example of Tesla or SpaceX — the companies that are solving critical problems for mankind, some believe are still massively undervalued. Only finally when you see business show some life, do you see some movement in stock prices. Sometimes this takes decades and investors lose patience.
So how do we get profit-first Wall Street to recognise the value of such long-term enterprises? Silicon Valley may have the answer. In one of the most audacious endeavours, ex-VC and famed author of the book The Lean Startup, Eric Ries has launched a new Stock Exchange — one suited for long-term companies that embed the ethos of Silicon Valley.
Eric started work on LTSE about 5 years ago, and finally took the exchange live this week. Among other standard financial-reporting requirements mandated by the government, LTSE adds another few caveats for companies to list there, such as —
Which stakeholders are important
Environmental and community impact of the company
Company’s approach to diversity
Principles guiding investments in its own employees
And how the company rewards them for its long-term success.
Eric believes that the rise of recent SPACs and direct-listings instead of IPOs are precursors to an emerging need in the market.
Critics ironically believe that that's not entirely accurate, citing how R&D spending (which is at all time highs for public companies right now), or how Amazon’s stock was rewarded over the years as an indication of existing market conditions favoring innovative companies. Regardless, LTSE is worth keeping a tab on.
Told ya! ☝️
Reports emerged yesterday that Amazon may finally be willing to buy 40% of Reliance Retail for about $20 billion. To remind you, just yesterday had Silver Lake invested a billion dollars into RIL’s retail arm at a $50 billion odd valuation.
Of course Reliance was quick to refute the calls, terming these rumours baseless and that it will come out with the latest as things pan out.
Objectively, Reliance Retail and Amazon have tons of synergies. First of all, Reliance’s product catalog could be sold on Amazon, adding more optionality. India’s ecommerce penetration offers a significant runway ahead for both companies to worry too much yet about cannibalizing each other. Secondly, Reliance has well distributed 11,000 store-fronts in Tier 1-5 cities all over the country. Use those to stock up goods, fulfil Amazon orders, accept returns — massively streamlining operations. And perhaps, Amazon can teach ecommerce best practices to JioMart?
The cozying up is sure to make Flipkart management uneasy.
Bottomline: Well for Bezos, this move is a masterstroke. Amazon has spent billions of dollars in India but still is being considered a foreign entity. Despite trying hard to wear a sherwani and visit the Taj Mahal, Bezos has failed to warm up to the government. On the other hand, competitive pressures are mounting. So how do you solve all your problems in 1 strike? Take out your checkbook and buy into a synergistic competitor — who also happens to be the government’s buddy. Maybe you’ll be invited to all the chai-club meetings on 7, Race Course Road now.
Grand plans for next year 🔥
Clawing its way back up from the pandemic caused freeze, food tech and delivery startup Zomato has boldly announced plans of an IPO for early next year. The CEO claims internal teams are working hard toward that end, and investor enthusiasm is solid.
The company will also conduct a fundraiser one last time before the IPO, bringing its cash position upto about $600 million (from current $250 million levels). A $30 million program to liquidate ex-employees who hold stock options is also in motion as part of the entire process. Zomato was valued at $3.5 billion last.
Management believes it has burn rates under control and market shares growing in key regions and that fundamentals are very well aligned for retail investors to get excited. Sounds awesome!
Key takeaway: a bunch of companies including PayTM, Milkbasket and others have shown interest in IPOing next year, all benefitting strongly from secular shifts set in motion by the pandemic. If Zomato does manage to pull this off timely, it will be the first internet era company (after Naukri and MMT) to do so — a massive confidence boost to India’s startup ecosystem.
Tweet of the day -
What else are we snackin’ 🍿
💉 AZ is finding a path to recovery - Drugmaker AstraZeneca is expected to resume trials for its coronavirus vaccine week. They had halted global trials after a participant got an unexplained illness. The company cautiously proceeding with these trials has world citizens at comfort that the research is following all best practices.
👏 Another health-tech IPO - Cancer testing startup Grail Inc., backed by Amazon CEO Jeff Bezos has filed for an IPO in the US. The startup focused on developing a blood test to identify early stage cancers has set a placeholder amount of $100 million for public undertaking.
🎮 Riding the game wave - MSFT’s next gen Xbox game console of the X Series will be out on November 10 and will be priced at $499.99. MSFT calls it the world’s most powerful console and it will support 4K graphics and feature a solid state drive. Gaming equipment and software makers have so far had an excellent run in 2020, thanks to lockdowns!
🛵 Throwing itself in Global EV wars - Ola is gearing up to launch its 2 wheeler electric scooter. The bikes will be a reconfigured version of the Netherlands based Etergo, which was acquired by Ola electric in May. The ride hailing giant will launch the app scooter in the European market this year followed by Asia next year.
😷 COVID eating India - India’s COVID count crossed the 4.4 million mark after we recorded 90k new cases in the last 24 hours with the death slowly inching over 75K total. The number of total active cases now stand at about a million, with Maharashtra leading with 25% of those cases.
🐒 Them Apes from UK - A team of researchers has unearthed a 13 million year old fossil of a newly discovered Ape species in Uttarakhand. It is the earliest known ancestor of the modern day Gibbon. This finding fills a major void in the Ape fossil record, and will provide critical evidence about the ancestors of today’s Gibbon.
🚁 Following Amazon - In a bid to beef up its delivery business, Walmart is planning to run a test project to deliver groceries and household products via automated drones in partnership with end-to-end drone delivery startup Flytrex in the US. So far Walmart has had phenomenal success with ecommerce, thanks to COVID. Will they catch up to AMZN?
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