"EDITION 106"

Published: 7/6/2020

Happy Monday folks! Vedica here today, winding down from a nice 4th of July long weekend. I watched Hamilton, which seemed very appropriate. It's great! Yesterday Anmol and I also hosted a Zoom call on tech vs the media, riffing on the Twitter war that is still going strong between some VCs and journalists [side note: check out our tweet of the day for an interesting thread on this]. It was a really thoughtful and considered discussion - no memes or spitefulness in sight! - so thank you to everyone who joined. In today's news we look at Zomato's struggles with its Chinese funding and the results of a recent FICCI start-up survey which paints a bleak picture of how Covid has impacted the eco-system.

  • https://on.ft.com/2VOl54h: Zomato is unable to access $100M of investment from Ant Financial
  • ➡️ Food delivery start-up, Zomato, had announced $150M in fresh funding from Ant Financial, the Chinese digital payments giant. However, it has still been unable to access $100M of that total, in light of recent tensions between India and China.

    ➡️ Ant Financial has invested close to $560M in Zomato, which gives it a 25%+ stake in the company. The investment has been critical for Zomato in taking on rival Swiggy, which is also backed by Chinese investors Tencent and Meituan-Dianping, China’s largest food delivery group.

    ➡️ The $100M tranche of financing from Ant Financial is reportedly now going through the government’s more stringent and rejigged approval process. While the company is putting forward a bold face - saying it is “confident” the funds will come through and and still aiming for an IPO in 2021 - this uncertainty along with Covid must be incredibly testing.

    ➡️ Zomato is only the most high profile company to be caught in the geopolitical cross-fires between India and China. Last week some of the company's employees in Kolkata made headlines this week when they burnt their T-shirts to protest the violence and Chinese investment in the company (Zomato said the employees were terminated).

    2. https://bit.ly/3f3gItv: FICCi survey shows funding for 33% of start-ups currently put on hold

    ➡️ A nation-wide survey of ~250 start-ups jointly conducted by Federation of Indian Chambers of Commerce and Industry (FICCI) and Indian Angel Network (IAN) highlights the ongoing impact of Covid-19 on the ecosystem with 12% of startups saying they have had to shutdown.

    ➡️ 33% of companies said that investors have put investment decisions on hold. Another 10% stated that deals have been called off, with only 8% of startups receiving funds as per the agreements signed pre-Covid. Only 22% said that they had the required cash reserves meet the fixed cost expenses over the next 3-6 months.

    ➡️ Of the 27 investors who were surveyed 59% said their focus currently is on working with existing portfolio companies, with 41% considering new investments as well. The top five sectors of interest the investors highlighted were healthcare (unsurprisingly topical), followed by edtech, AI/deep tech, fintech and agri-tech.

    ➡️ Despite the small sample size, the survey is interesting in adding some data to a lot of the sentiments and stories we have been hearing about the impact of Covid on the start-up eco-system. It's not been an easy few months at all, and there's clearly an accelerated shaking out in the eco-system right now.

    Feedback & ❤️ always appreciated BONUS (Tweet of the day): https://twitter.com/margaretomara/status/1278768931755393026?s=20

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