Meesho’s secondary share sale; consumer brands lure tech VCs

Also in this letter:
■ How VCs are planning exits
■ Cabinet nod for AI mission
■ Flipkart to start q-commerce

Peak XV, Tiger Global in talks to pick Meesho secondary stake

A group of investors including Peak XV Partners and Tiger Global has held talks to acquire a stake in SoftBank-backed ecommerce firm Meesho in a secondary deal, sources told ET.

Driving the news: Some angel investors and other early backers of Meesho are likely to sell shares worth around $200 million, people in the know said. The transaction is likely to take place at a valuation of $3.5-3.9 billion, depending on the final terms.

This would be a 20-30% cut in valuation for Meesho, which was last valued at $4.9 billion. This is typical of secondary transactions. Meesho will not get any funds from the secondary share sale.

Investor interest: Peak XV is an early backer of Meesho. However, Tiger’s involvement in this assumes significance amid a pullback by the New York-based fund from making fresh investments in India and other markets.

“Tiger’s participation may be relatively smaller, but Peak XV is in advanced stages of talks,” one of the people said. Another added that Peak XV is looking to take a bigger slice of the shares on the block.

More details: Other funds like Norwest Venture Partners are also in discussions with Meesho, but those talks are preliminary, sources said. WestBridge Capital may buy more shares in Meesho, ET had reported. Meanwhile, existing investor Meta may look to sell a part of its stake, people said.

Quick recap: ET first reported about the financing round at Meesho on January 2. In December, the company said its loss for the year ended March 31, 2023, narrowed to nearly half at Rs 1,675 crore, while operating revenue grew 77% to Rs 5,735 crore.

Amazon is coming at Meesho with a new vertical featuring low-priced, unbranded fashion and lifestyle products, called Amazon Bazaar, ET reported on February 21.

Tech-first VCs line up for consumer brand deals

Following the trend of tech-first venture capital (VC) firms investing in new-age consumer brands with an offline presence, Nexus Venture Partners is set for a $5-million infusion in coffee brand AbCoffee, tripling its valuation to $15 million in less than six months.

It has also handed out a term sheet to lab-grown diamond (LBD) maker Aukera, sources told ET.

Other deals: Accel, one of the earliest investors in Flipkart, is poised to close a $12-million round in fast-fashion brand Newme, the people said. Separately, ET was the first to report in February that Peak XV Partners led a $12 million funding round in luggage brand Mokobara.

Techspertise: These new-age brands, targeted at the youth, are building their businesses offline and leveraging technology to enhance efficiency.

“While startups like AbCoffee are seen as consumer brands, they are leveraging technology heavily for better capital efficiency in stores as well as sourcing coffee. That’s where investors like Nexus are finding a match in these firms,” said a person aware of the AbCoffee investment.

Luring consumers: Nexus’ investment in AbCoffee comes at a time when specialty coffee chains like Third Wave and Blue Tokai are challenging bigger rivals like Starbucks and Tim Hortons. Companies like Aukera are also seeing rising demand for LBD diamonds among affluent young consumers.

Foxtale raises $14 million: Direct-to-consumer (D2C) skincare firm Foxtale Consumer has raised about $14 million (Rs 120 crore) in fresh equity funding led by Singapore-based Panthera Growth Partners.

The Ayurveda Experience raises $27 million: Direct-to-consumer (D2C) focused firm The Ayurveda Experience (TAE) raised $27 million in a funding round led by Singapore-based venture investment firm Jungle Ventures. Of the $27 million, about $15 million came in primary funding, with the rest coming in secondary. It did not disclose the valuation at which the funding happened.

VCs hire professionals to help in exits as limited partners seek returns

(L-R) Chiratae Ventures’ Amish Dedhia, Accel’s Alok Bathija and Matrix Partners India’s Vijay Pillai

Amid a challenging funding landscape, VC firms such as Lightspeed, Accel, and Matrix Partners India have been recruiting executives for corporate development roles that include facilitating successful exits and redistributing capital to limited partners.

Appointments: The funds have sought out professionals with investment banking expertise. Here’s who they picked up lately:

• Matrix Partners India hired Vijay Pillai, an experienced hand in investment banking at ICICI Securities and o3 Capital, in January this year
• Accel recruited former UBS executive director Alok Bathija
• Chiratae Ventures hired Amish Dedhia, former VP of investment banking at Yes Bank and former director at PwC
• Anuj Bhargava, previously MD at Deutsche Bank, was roped in by Lightspeed

Responsibilities: Those hired into senior executive positions are tasked with overseeing and helping portfolio companies with follow-on financing, mergers and acquisitions, handling secondary market transactions, and navigating startups toward their initial public offerings (IPOs).

Rationale: One of the major criticisms or concerns raised by certain investors consistently regarding India has been the lack of exit liquidity opportunities. As the Indian VC ecosystem matures, returning capital to limited partners has become crucial for VCs looking to raise subsequent funds.

Also read | Consumer, fintech top sectors for venture debt funding in 2023: Report

Union Cabinet approves Rs 10,372-crore India AI mission

In a major push for India’s artificial intelligence (AI) plans, the Union Cabinet on Thursday approved a Rs 10,372-crore India AI Mission, aimed at creating computing infrastructure in public-private partnership (PPP) mode.

Driving AI: As many as 10,000 graphics processing units (GPUs) (compute capacity) will be made available to startups under the PPP model, Union commerce minister Piyush Goyal said at a press briefing in New Delhi. A marketplace will be created for the same and AI compute will be made available as a service to benefit R&D facilities and AI startups, he added.

Tell me more: Under the Mission, the government will aid in building high-end scalable AI computing ecosystems and promote AI applications in critical sectors. Two or three innovation centres will also be set up to develop large-scale multimodal models and domain-specific foundational models.

Data handling: Goyal said an India AI datasets platform has also been proposed to streamline non-personal data. This platform will be a one-stop solution and non-personal data will be made available for India’s startups and researchers.

Also read | Experts can’t find any legal basis for government’s LLM missive

Other Top Stories By Our Reporters

Flipkart to roll out quick-commerce venture soon: Flipkart is planning to launch a quick-commerce service in a few months. The delivery timeline targeted by the ecommerce major and the number of cities it plans to launch the venture are not yet known.

Expect quick-commerce firms to battle ecommerce soon: Zepto investor Glade Brook | Paul Hudson, founder of investment firm Glade Brook Capital, said the market is already moving in this direction with Blinkit and Zepto expanding their product assortment. The fund backed Mumbai-based Zepto last year and invested in Blinkit’s parent company Zomato back in 2019.

Indigo cofounder Rakesh Gangwal invests $20 million in Zetwerk: Contract manufacturing startup Zetwerk has raised $20 million (about Rs 166 crore) in fresh investments from venture debt and private equity firm Wheelhouse Venture Capital. Rakesh Gangwal, the cofounder of Indigo Airlines, has made the investment through the venture firm, Zetwork said.

ETtech Explainer: Legal tussle between OpenAI and NYT | OpenAI’s investor Microsoft and its co-defendant in the New York Times lawsuit sought to dismiss parts of NYT’s plea on the grounds that the news organisation did not show any “actual harm” or meaningful diversion of revenue from its website due to use of AI models like ChatGPT. ET explains the legal tussle.

Global Picks We Are Reading

■ How Klarna’s IPO prep got tangled up in a boardroom drama (Bloomberg)

■ Europe is breaking open the empires of Big Tech (Wired)

■ LLMs can do jaw-dropping things, but nobody knows exactly why (MIT Technology Review)

Also in this letter:
■ How VCs are planning exits
■ Cabinet nod for AI mission
■ Flipkart to start q-commerce

Peak XV, Tiger Global in talks to pick Meesho secondary stake

A group of investors including Peak XV Partners and Tiger Global has held talks to acquire a stake in SoftBank-backed ecommerce firm Meesho in a secondary deal, sources told ET.

Driving the news: Some angel investors and other early backers of Meesho are likely to sell shares worth around $200 million, people in the know said. The transaction is likely to take place at a valuation of $3.5-3.9 billion, depending on the final terms.

This would be a 20-30% cut in valuation for Meesho, which was last valued at $4.9 billion. This is typical of secondary transactions. Meesho will not get any funds from the secondary share sale.

Investor interest: Peak XV is an early backer of Meesho. However, Tiger’s involvement in this assumes significance amid a pullback by the New York-based fund from making fresh investments in India and other markets.

“Tiger’s participation may be relatively smaller, but Peak XV is in advanced stages of talks,” one of the people said. Another added that Peak XV is looking to take a bigger slice of the shares on the block.

More details: Other funds like Norwest Venture Partners are also in discussions with Meesho, but those talks are preliminary, sources said. WestBridge Capital may buy more shares in Meesho, ET had reported. Meanwhile, existing investor Meta may look to sell a part of its stake, people said.

Quick recap: ET first reported about the financing round at Meesho on January 2. In December, the company said its loss for the year ended March 31, 2023, narrowed to nearly half at Rs 1,675 crore, while operating revenue grew 77% to Rs 5,735 crore.

Amazon is coming at Meesho with a new vertical featuring low-priced, unbranded fashion and lifestyle products, called Amazon Bazaar, ET reported on February 21.

Tech-first VCs line up for consumer brand deals

Following the trend of tech-first venture capital (VC) firms investing in new-age consumer brands with an offline presence, Nexus Venture Partners is set for a $5-million infusion in coffee brand AbCoffee, tripling its valuation to $15 million in less than six months.

It has also handed out a term sheet to lab-grown diamond (LBD) maker Aukera, sources told ET.

Other deals: Accel, one of the earliest investors in Flipkart, is poised to close a $12-million round in fast-fashion brand Newme, the people said. Separately, ET was the first to report in February that Peak XV Partners led a $12 million funding round in luggage brand Mokobara.

Techspertise: These new-age brands, targeted at the youth, are building their businesses offline and leveraging technology to enhance efficiency.

“While startups like AbCoffee are seen as consumer brands, they are leveraging technology heavily for better capital efficiency in stores as well as sourcing coffee. That’s where investors like Nexus are finding a match in these firms,” said a person aware of the AbCoffee investment.

Luring consumers: Nexus’ investment in AbCoffee comes at a time when specialty coffee chains like Third Wave and Blue Tokai are challenging bigger rivals like Starbucks and Tim Hortons. Companies like Aukera are also seeing rising demand for LBD diamonds among affluent young consumers.

Foxtale raises $14 million: Direct-to-consumer (D2C) skincare firm Foxtale Consumer has raised about $14 million (Rs 120 crore) in fresh equity funding led by Singapore-based Panthera Growth Partners.

The Ayurveda Experience raises $27 million: Direct-to-consumer (D2C) focused firm The Ayurveda Experience (TAE) raised $27 million in a funding round led by Singapore-based venture investment firm Jungle Ventures. Of the $27 million, about $15 million came in primary funding, with the rest coming in secondary. It did not disclose the valuation at which the funding happened.

VCs hire professionals to help in exits as limited partners seek returns

(L-R) Chiratae Ventures’ Amish Dedhia, Accel’s Alok Bathija and Matrix Partners India’s Vijay Pillai

Amid a challenging funding landscape, VC firms such as Lightspeed, Accel, and Matrix Partners India have been recruiting executives for corporate development roles that include facilitating successful exits and redistributing capital to limited partners.

Appointments: The funds have sought out professionals with investment banking expertise. Here’s who they picked up lately:

• Matrix Partners India hired Vijay Pillai, an experienced hand in investment banking at ICICI Securities and o3 Capital, in January this year
• Accel recruited former UBS executive director Alok Bathija
• Chiratae Ventures hired Amish Dedhia, former VP of investment banking at Yes Bank and former director at PwC
• Anuj Bhargava, previously MD at Deutsche Bank, was roped in by Lightspeed

Responsibilities: Those hired into senior executive positions are tasked with overseeing and helping portfolio companies with follow-on financing, mergers and acquisitions, handling secondary market transactions, and navigating startups toward their initial public offerings (IPOs).

Rationale: One of the major criticisms or concerns raised by certain investors consistently regarding India has been the lack of exit liquidity opportunities. As the Indian VC ecosystem matures, returning capital to limited partners has become crucial for VCs looking to raise subsequent funds.

Also read | Consumer, fintech top sectors for venture debt funding in 2023: Report

Union Cabinet approves Rs 10,372-crore India AI mission

In a major push for India’s artificial intelligence (AI) plans, the Union Cabinet on Thursday approved a Rs 10,372-crore India AI Mission, aimed at creating computing infrastructure in public-private partnership (PPP) mode.

Driving AI: As many as 10,000 graphics processing units (GPUs) (compute capacity) will be made available to startups under the PPP model, Union commerce minister Piyush Goyal said at a press briefing in New Delhi. A marketplace will be created for the same and AI compute will be made available as a service to benefit R&D facilities and AI startups, he added.

Tell me more: Under the Mission, the government will aid in building high-end scalable AI computing ecosystems and promote AI applications in critical sectors. Two or three innovation centres will also be set up to develop large-scale multimodal models and domain-specific foundational models.

Data handling: Goyal said an India AI datasets platform has also been proposed to streamline non-personal data. This platform will be a one-stop solution and non-personal data will be made available for India’s startups and researchers.

Also read | Experts can’t find any legal basis for government’s LLM missive

Other Top Stories By Our Reporters

Flipkart to roll out quick-commerce venture soon: Flipkart is planning to launch a quick-commerce service in a few months. The delivery timeline targeted by the ecommerce major and the number of cities it plans to launch the venture are not yet known.

Expect quick-commerce firms to battle ecommerce soon: Zepto investor Glade Brook | Paul Hudson, founder of investment firm Glade Brook Capital, said the market is already moving in this direction with Blinkit and Zepto expanding their product assortment. The fund backed Mumbai-based Zepto last year and invested in Blinkit’s parent company Zomato back in 2019.

Indigo cofounder Rakesh Gangwal invests $20 million in Zetwerk: Contract manufacturing startup Zetwerk has raised $20 million (about Rs 166 crore) in fresh investments from venture debt and private equity firm Wheelhouse Venture Capital. Rakesh Gangwal, the cofounder of Indigo Airlines, has made the investment through the venture firm, Zetwork said.

ETtech Explainer: Legal tussle between OpenAI and NYT | OpenAI’s investor Microsoft and its co-defendant in the New York Times lawsuit sought to dismiss parts of NYT’s plea on the grounds that the news organisation did not show any “actual harm” or meaningful diversion of revenue from its website due to use of AI models like ChatGPT. ET explains the legal tussle.

Global Picks We Are Reading

■ How Klarna’s IPO prep got tangled up in a boardroom drama (Bloomberg)

■ Europe is breaking open the empires of Big Tech (Wired)

■ LLMs can do jaw-dropping things, but nobody knows exactly why (MIT Technology Review)