Swallow disruptors
Drug problems, Venture street booming, and the week ahead.
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What’s brewing hot? ☕
✅ Drug problems — the apparent benefits of crypto tech also make it a favorite among drug lords, arms dealers, and everybody else in the organized crime circles. WazirX, the crypto exchange, was served a notice by the narcotics bureau, demanding information on some transactions that narcotics believes are linked to local drug lords. Looks like a routine check so far, but such noise continues to work against building credibility for the asset class.
Quite a lousy news weekend otherwise… let’s run down the little things that mattered real quick!
Eat your disruptors 💰
JP Morgan did just that — acquiring UK based online investing and consumer finance platform Nutmeg, for $1 billion, in one of the largest deals for a fintech by an old school bank.
Nutmeg sells “managed” investing products, like a robo advisor, retirement savings, as well as options to buy stocks, bonds and ETFs, for 140K users, with over $5 billion assets under management, and is actually one of the hottest fintech platforms gaining traction in the UK, alongside Starling, Monzo and Revolut.
For JP Morgan, it's an odd yet fitting purchase — odd because JP Morgan already has a consumer investing operation through its subsidiary Chase bank, and fitting because JPM is actively building a neobank of its own (like Goldman’s Marcus) which is due to launch this year, and Nutmeg gives them access to a ready made base ripe for frontier testing.
Big picture — banks will increasingly be found waiting on the sidelines for disruptive consumer fintech startups to dish it out amongst themselves, and then quietly scooping them up in due time (with their thick wads of cash). Much better operating strategy than competing from ground zero.
Weekend happenings from Venture Land 🧐
Communities are hot — Kutumb, a startup trying to be a vernacular Reddit of India, raised $26 million for its Series A round led by Tiger Global.
Kutumb basically offers a mobile-only app interface that allows users to build and participate in vernacular-first communities, with content mostly served in Hindi. Started barely a year ago, by ex-Pratilipi execs (the vernacular publishing service) Kutumb has scaled to nearly 11 million users, riding the boom for regional content services, as smartphone and internet penetration rip through heartland India bringing millions of new users online each year.
Then quickly turning heads over to Insurance, 🙌
RenewBuy, a digital insurance platform, closed a sizable $45 million Series C led by Apis Growth Fund, with Lok Capital and IIFL Wealth pitching in.
RenewBuy runs the ever-common online marketplace and policy comparison portal that caters to 2.5 million users across 650 cities — selling motor, health, life and other insurance products. Combination of an online and offline strategy, with a 50K+ offline agent workforce has helped the business reach rural and semi-urban regions at an alarming pace, with revenues apparently growing 60%+ on the back of COVID’s push.
Big picture —only 10% of India’s 1.4 billion population is insured in any way, and despite HEAVY competition, we’re farrrrr from any saturation overall.
Quick look at the week ahead 📋
In the backdrop of the Adani-stock fiasco, and rising inflation, here’s a quick look at key happenings on the mind of Dalal Street as we walk into a new week…
COVID, how it hangs? — new-cases curve continues to drop lower, now at the same levels as we had been at the end of March 2021 — about 60K new infections per day. Meanwhile, vaccinations are catching up, nowhere close to where things should’ve been ideally, but up 60% month over month for June, with about 6 crore shots administered. Some hope!
Jio made a comeback — after 4 straight months of trailing Airtel in new subscriber additions, Reliance pulled ahead in this lap, adding 7.3 million paid subscribers for the month of March 2021. Airtel came in at 4.8M, while VI churned 40K users. Telco wars appear far from being called yet, with COVID throwing new challenges like jammed networks in residential areas, and overconsumption fatigue, offering Jio’s competitors’ a reasonable chance to make a comeback.
Earnings season closure — last round of earnings season begins, with several PSU (Oil India, Bharath Electronics) as well as Ashok Leyland, Info Edge, and a few other well known names disclosing March quarter numbers. No fireworks, because what happened between January and March rarely matters anymore, but markets will be judging confidence based on management commentary.
Closing out — Crypto is THE category of 2021 🙌
Retailers aren’t the only ones riding the hype. Venture capitalists plowed a record $17 billion into crypto startups in 2021, nearly 3.5 times more than the $$ invested here in 2020.
The data is a bit skewed by a single deal worth $10 billion into global crypto exchange Bullish Global, but even excluding that, 2021 is on its way to be the highest grossing dollar year for the ecosystem on a YTD basis.
Top 5 $$ investments went into Ledger (hardware wallet), BlockFi (crypto lending), Dapper Labs (gaming and other apps), and Paxos (crypto infra and APIs) — all building infra for security and institutional consumption of the asset class.
Tweet of the week 🐦
One of the biggest “unknowns” in investing is “management” qualities — and if you’re thinking about reallocating into one of the FANG mega caps, perhaps this is worth a read…
What else are we snackin’ 🍿
🖕 Keep him there - 41,000 people have signed a petition to not allow Jeff Bezos to come back to earth after his space mission. Ain’t happening, but a sign of waning popularity.
Hit that 💚 if you liked today’s issue.
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