Published: 4/16/2021

Good afternoon and welcome to the end of the week with a new potential unicorn being anointed this week. I was out running around Delhi looking for a PCR test so didn't get time to write a newsletter yesterday but we're back at it today. First off, a fintech company seems to be raising a bunch of money from SoftBank and Amazon is launching a venture fund in India.

  • https://tcrn.ch/2RughBF: Zeta in talks with SoftBank to raise $250M
  • ➡️ If last week was Tiger's, this week certainly seems to be SoftBank's. Firstly they were in the news to potentially invest up to $500M in Swiggy and now they are also in advanced talks to lead Zeta's ~$250M Series D, which will value the embedded finance startup at over $1B. We'd previously written about embedded fintech, where the core thesis is that eventually any application will embed financial services in their offerings (aka Lending is a feature). Companies like Zeta, Setu and Yap (amongst other) are building infrastructure along with partnering with banks and other financial institutions to let anyone embed financial services within their product.

    ➡️ And while a lot of these companies are working towards the same goal, they certainly are taking different routes to approach it. Zeta, for example, seems to be tackling the banking stack and working with banks like IDFC First and RBL bank. On one end, Zeta has the Tachyon product suite for fintechs and neobanks to be able to issue debit and credit cards along with launching their neobank. And on the other, it has the Fusion product suite that Banks adopt to be able to let fintechs use their financial products in their application.

    ➡️ It took me a while to find an actual customer for Zeta because they don't feature them too much on their website, but it sounds like the neobank for teenagers uses Zeta to power their banking stack using them to issue IDFC First Bank prepaid cards. I suspect a lot of other neobanks (at least those with IDFC and RBL as their banking partners) might be using Zeta as well, and the company also apparently has clients in several Asian and LatAm markets (I couldn't find too much on this myself)

    ➡️ I'd love to see customer and revenue numbers for Zeta but I couldn't find much on that either. Embedded finance and neobanks (both the actual banks and the Banking as a Service providers) seem to be all the rage in the last year, I was pleasantly surprised to see Zeta being valued at over $1B.

    2. https://tcrn.ch/3tomXzf: Amazon announces a $250M venture fund for Indian Startups

    ➡️ Seems like all the American tech giants are getting more and more serious about investing in Indian startups, and on Thursday Amazon announced it was setting up a $250M venture fund to invest in Indian startups focussing on the digitization of SMBs.

    ➡️ The company says "it wants to invest in startups that focus on helping small businesses come online, sell online, automate and digitize their operations, and expand to customers worldwide", but I can't tell if coming and selling online means on Amazon exclusively or not. If not, I could see Amazon chasing the KiranaTech/DukaanTech companies (Khatabook, OkCredit and the rest) to participate in their next rounds.

    ➡️ The fund has already made it's first investment in Gurgaon based M1xchange, which is an invoice discounting marketplace exchange for MSMEs. The fund will also look at companies in the agriculture and health spaces along with other companies who might intersect with SMBs (embedded fintech? 🤔)

    ➡️ Last year, Amazon had said that it wants invest over $1B to digitize 10M SMBs in India and the currently over 50k kiranas are using Amazon marketplace and over 250k new sellers have joined the platform.

    ➡️ With SMB digitization and tech around that being a key thesis at many venture firms across India, I'd expect to hear a lot more about existing and new companies building more in the space in the next couple of years.

    Feedback & ❤️ always appreciated BONUS (Tweet of the day): https://twitter.com/kunalb11/status/1382925185943228416

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