What a shame 😓

Hardware winners, big raise, and some planes.

Hi 👋, Tanvi here.

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Market summary: 📊 

Indian stocks crawled back a bit. US stocks had a mixed day, with traditional companies running up, while tech got hammered.

US:

  • S&P 500 - up 0.57%

  • Nasdaq 100 - down 1.40%

India: 

  • Nifty 50 - down 0.38%

  • Sensex - down 0.54%


Hot from the oven

1️⃣ Slamming China on the way out—Trump’s days may be numbered but he’s not going out without throwing the markets some surprises. With a fresh executive order the President has banned US firms from doing business with Chinese payment app Alipay, as well as some 18 more companies, citing security risks to US citizens from Chinese owned software. 

FYI, Alipay is the same fintech venture that Alibaba’s Jack Ma was taking to an IPO, which was blocked at the last minute by regulators. Absolutely horrible days lately for Ma.

2️⃣ Save ‘em before they drown—Maharashtra has slashed real estate developer fees for approvals by half, to offer some pain relief to builders ravaged by the pandemic. COVID has landed an horrific blow to India’s real estate industry as work-from-home shift hurts office space demand, and lockdowns along with digital shopping hurting commercial-retail demand.


boAt cruising against big waves 🎧

Next time you hear Indian tech’s only about software, don’t forget to bring up boAt. The low-to-mid range maker of wearables, device accessories and other lifestyle products have gotten one of the largest PE giants, Warburg Pincus, to write them a $100 million check. 

boAt had recently made waves when they got ranked at the 5th spot alongside FitBit in global wearables market share by IDC. Their value proposition knocked it out the park, selling cost-friendly alternatives to the increasingly digitizing Indian consumer, offering an alternative to expensive electronics accessories sold as add-ons by branded vendors.

The company claims 100%+ sales growth rates for a couple years now—a stupendous feat, which also explains why Warbug seemed so enthusiastic about this. Current round values them at a modest $300 million—which although a bit low, seems fair given how hardware businesses come with low margins and slightly weaker unit economics (compared to software).

Last 12 month revenues were $95 million, which company management is confident to more than double this year. COVID has obviously elevated D2C digital brands like never before, and with big money in the pocket, growth should easily compound here on out.

Takeaway: Not everyday you see global money come for Indian hardware, and that should tell you everything about how we’ve turned a page on the India growth story. In time, think we can build something like an Apple here? Solid odds.

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Latest from venture street 💰

B2B marketplace Udaan becomes the latest to raise big money—raising $280 million more in an extended Series D round at a $3.1 billion valuation.

Ram Parmeswaram’s Octahedron Capital as well as Moonstone joined the round while existing bidders Lightspeed, DST, GGV Capital, Altimeter pitched in. Surprisingly, Chinese Tencent is in too (no sour like Alibaba?).

India's B2B sourcing market is extremely fragmented, with over 90% of wholesale procurement done via small, old-school vendors who barely give a damn for digitization. Pen and paper is how people run systems, which makes it incredibly hard to discover better prices, build credit, and access services. But that’s changing rapidly, with the penetration of smartphones, and general awareness around tech. Which also makes the entire opportunity to build and serve tools here extremely attractive.

So far, Udaan’s growth obviously has been super promising—since founding barely 4 years ago, they’ve grown to serve nearly 3 million retailers, while on the other hand working with big brands like Coke, Pepsi, Boat, Micromax and others. Rapid entry into lending and other associated financial products has been a big winner in improving user experience—especially as banks and traditional lenders consistently drop the ball on servicing these vendors.

What matters: India’s wholesale game is a $500B+ annual endeavor—when you club basic financial products along with it, you have an opportunity to build a robust $50B+ business line. Global investors running after category leaders here further validates the market.

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Buying them planes like peanuts ✈️

In a power move of epic proportions, Amazon is looking to acquire nearly 11 more big cargo planes from US carrier Delta and WestJet to beef up its fleet of cargo aircrafts. 

With no humans to fly around lately, airlines are going out of business. The planes need to be put to work somehow to make sure the assets churn money. Obviously, the only stuff that’s moving these days is ecommerce deliveries.

Globally, Amazon has grander plans of slowly morphing into a critical infrastructure vendor for digital commerce. For example, nearly 65%+ of merchandise volumes on the platform now come from 3rd party merchants (from your local kirana store who’s moved online, to digital-only brands that are literally scaling on top of Amazon exclusively). Bezos seems increasingly interested in being an enabler that enjoys the fruits of “commissions”.

Lastly, the ROI on these moves can be crazy high. Because replicating delivery infrastructure as robust as Amazon’s needs big money, and not every brand can spend on making that. The right investments at the right time only ensure their competitive moat is solidified.


Closing outwhat a travesty 👎

The US had a shameful day yesterday, with a bunch of lunatics protesting against Trump’s loss in the elections, storming the US Capitol building (kinda like the lower house of the parliament) demanding the results be overturned.

Trump encouraged the protests, then when shit hit the fan, he began asking the crowd to step back. Twitter and FB weren’t gonna have it anymore and promptly deleted his tweets with threats of blocking the account.

In summary, this is some banana republic shit, nothing like the US has ever seen before. Everyone seems pissed. 


What else are we snackin’ 🍿

🚗 Doubling down on India Auto - Fiat Chryslar will invest $250 million to assemble and manufacture four new sport-utility vehicles (SUVs) in India. The capital will be used for production of four new Jeep SUVs in order to expand its local product lineup.


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