Old-school pivot 🧐
Shifting insurance, venture raises, and big tech legal wins.
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Market summary: 📊
Indian markets opened this week on a positive note, with both indices gaining steadily through Monday’s session. US markets showed a similar strength, particularly towards the end of the day.
US:
S&P 500 - up 1.61%
Nasdaq 100 - up 1.91%
India:
Nifty 50 - up 1.60%
Sensex - up 1.59%
First things first… ☝️
1️⃣ A federal judge has set aside Trump’s ban that barred TikTok from all app stores in the US by midnight yesterday, giving the company some relief to figure out final details of its deal. Despite a tentative deal having been accepted, Trump had still kept the ban in place via an executive order.
TikTok lawyers may have breathed a sigh of relief, but a concrete deadline remains set for the company to get the transaction done by the US elections in November. And I thought we were done with this ballad…
2️⃣ Uber has been re-granted with a license to operate in London for the next 18 months, after a UK judge overturned a ban that the city had put in place for quite sometime. The city had banned Uber because the company wasn’t doing enough to protect passengers — referring to a glitch in systems which allowed unauthorized drivers to upload a fake driver picture and pick up passengers. Sounds silly and fixable in no time yet the city claims Uber let it stay for some 14,000 rides!
Anyway, Uber is back on the streets but passengers unfortunately aren’t, thanks to repeat COVID-19 waves overtaking UK right now. So neither investors nor management are cheering. Onto the important stuff now…
Shifting insurance priorities 🤔
Data released by the Insurance Regulatory and Development Authority of India (IRDAI) gives a sneak-peek into how Indians have changed their insurance spending habits—abandoning auto insurance on one hand, now that car sales are tanking, while embracing health insurance on the other, to hedge against COVID-19 risks.
Between April and August, motor insurance premiums dropped by nearly 15.7%, while health insurance premiums rose 13% over the previous year. That’s quite a consequential shift for an emerging market where a burgeoning middle class couldn’t buy more cars fast enough.
Expansion in the general insurance category was modest too, up just 3.4%, bringing total spending to some ₹74K crores, which hints at continued economic weakness or limited growth in the buyer base. The health insurance business collected about 31% of the total spend or ₹23K crores, forming about 31% of the mix.
The shift is expected to continue for a while and agents better adjust for it.
Takeaway: one of the positives hopefully to come out of this mess is that citizens are much more likely to be aware about their health and hygiene going forward. Which in addition to being great for public health when we enter recovery, is also a thriving opportunity for health-tech, fitness-tech and other related ventures to capitalize on.
Capital talks 🔥
Fintech is back with a bang. Smallcase scooped up $14 million in a blockbuster Series B round that finally harkens its “arrival” in the market. DSP Group along with Sequoia, Blume Ventures, Rakesh Jhunjhunwala, Kunal Shah and others pitched in.
One of the flag-bearers of the revolution democratizing investing in India, Smallcase’s simplified portfolios have been a big win among retail investors who often find themselves struggling with complex products and jargon thrown around by traditional asset managers. Hear hear!
New funds will go to further strengthen infrastructure, which sounds reasonable considering India’s still lacking investing tech stack, and to add more investment products and partners. We’re rooting for you! 👏
Switching gears to ecommerce —
PepperFry, the furniture retailer, has found itself very close to profitability, all thanks to pandemic’s boost to digital shopping, and will be aiming for an IPO as early as next year. Locked down consumers paying more attention to the aesthetics of their indoors may have helped their case.
Regardless, the online furniture industry is showing great momentum. Estimates suggests put the market north of $700 million last year, growing 80-85% rates. Despite that, online barely made a dent in the massive $17 billion furniture market in India. The runway ahead for companies serving this arena is long and healthy.
Tale of a digital awakening… ⌚
News broke out yesterday that the Tata Group is looking for potential investors and technology partners to invest in and help build a new “digital platform”— well convinced that they can pull off a Reliance-like makeover to become a digital-first company as far as their consumer businesses go.
No further clarity was offered on what the plans look like, which has us guessing. A marketplace? A self-branded shopping portal? Or perhaps allied services like insurance and lending? Take your best shot. The statement also mentions that Tata hopes they can raise enough capital from partners to help pay off debts, just like RIL, making them much more nimble in the process. Hmm…
What to expect: Well, sure this appears like a textbook attempt of copy-paste, but strategically it does make a ton of sense for them. You see, the Tatas own a well diversified empire stretching from coffees to cars to clothing — covering all imaginable needs of a sane human being. To add, they bring unparalleled nationwide distribution, brand recognition, and manufacturing prowess to the table.
At a time when an inevitable shift to digital commerce is looming, it most certainly makes sense to get ahead of the curve, and adapt to the new reality, rather than just waiting until it's too late. On the other side of the aisle, any tech company with unfulfilled ambitions to enter the Indian ecommerce and digital services market will be glad to partner with them. So yes, it can be a match made in heaven that heats up domestic competition. But…
The Tata Group is a mammoth, old school company saddled with bureaucracy at every level. Not to forget, they lack the single-minded, aggressive approach of a shot-caller, like Reliance has in Ambani. So odds are equally good that any partnership could quickly turn into a sour mismatch and end up in a mess in no time. Watch closely. 🤞
Tweet of the day —
What else are we snackin’ 🍿
✋ No free stuff anymore - Google Meet has decided to start charging customers for calls over 60 minutes after 30th September. Currently, all calls are free unless on an enterprise plan, however under pressure to monetize its businesses, Google is finally looking to unapologetically push the needle.
👏 Fake news purge - Maharashtra government has blocked nearly 5,000 posts online in the last 6 months in an attempt to cut down on hate speech and misinformation on the pandemic, religious bigotry, other trivial subjects. Those damn forwards!
✈️ BLR’s saving grace- if you made a chart of the top places on earth that desperately need a Hyperloop, Bangalore’s Airport will be a top contender. And a wish here may finally be granted. Virgin Hyperloop is in talks with the BLR folks to conduct feasibility studies for a network that will bring commute time to under 10 mins.
🔐 Unlock 5.0 - COVID isn’t going away, might as well numb yourself out drinking… guess that’s what Maharashtra is thinking with its plans to open bars and restaurants in the state starting the first week of Oct. One a serious note, the decision will be a relief for small businesses and could work well if social distancing and cleanliness prevail.
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