We were nervous before registration, admits the CEO of Delhivery; startups chase venture capital debt

After a lukewarm response to its IPO, new-age logistics company Delhivery debuted in the public market better than expected on Tuesday. Its shares traded at a modest premium and ended the day up 10% from the issue price. Afterwards, co-founder and CEO Sahil Barua told us in an interview that the company’s top brass were nervous ahead of the listing given the current uncertainty among investors, but were confident the issue would be fully subscribed. .

Also in this letter:
■ Delhivery debut more than doubles value of SoftBank stake
■ Startups chase VC debt as investment slows
■ Card tokenization rules will wreak havoc, industry bodies say


Market volatility made us nervous ahead of listing, says CEO of Delhivery

Delhivery’s senior management were “nervous” ahead of its listing on Tuesday due to uncertain investor sentiment, but were never “really concerned” that the issue was not fully subscribed, the co-founder and co-founder told us. general manager Sahil Barua after listing.

Delhivery ended its first day as a public company at a share price of Rs 537.25 on BSE, up 10.3% from its issue price of Rs 487 and around 9% higher than its opening price of Rs 493.

Delhivery IPO Watch

Last week, Life Insurance Corporation of India (LIC) listed at a discount to its issue price, raising doubts about the prospects for further IPOs to come.

The CEO speaks: “I would be lying if I said we weren’t nervous. But we knew the institutional investors; they generally do not validate their order on the first day of the opening of a number. We had no concerns that the number was fully subscribed. Yes, we knew that the commercial part would not be fully subscribed. Our job was to assess the problem conservatively,” Barua said.

Technical rout: Barua also said government markets have completely flipped over the past few months. “…retail investors have been skittish, and we can’t blame them. They have entered many mainstream internet stocks and have been affected by the current situation,” he said.

One-way traffic

Shares of Zomato, PolicyBazaar and Paytm have all fallen sharply since listing last year.

But Barua said Delhivery was more of a bricks-and-mortar business, so it would be wrong to associate it with other consumer tech companies.

“We are an infrastructure and capacity building company. The decisions we make, the kind of finances we have, will be long term,” he said.


Delhivery’s market debut more than doubles the value of SoftBank’s stake to $1 billion

delivery

Amid a global rout in tech stocks, Delhivery’s market debut has proven to be one of the best for a SoftBank-backed company this year.

  • In 2019, SoftBank invested around $390 million in two tranches in Delhivery. That investment is now worth nearly $1 billion based on Delhivery’s share price after its first day of trading. SoftBank owns nearly 19% of Delhivery.
  • Nexus Venture Partners, which invested around $40 million in the company, also made significant gains. He owns 7.92%, which is now valued at around $400 million.
  • Carlyle owns 5.08% in Delhi very post listing, which translates to a valuation of around $250 million.
  • Times Internet, which publishes ETtech, owns 3.91% in Delhivery after listing, valued at around $200 million.

Win some, lose some: In contrast, SoftBank’s huge bet on Paytm turned sour after a disastrous November listing. Its $1.4 billion investment in Paytm was worth around $800 million at the end of March 2022. SoftBank continues to own around 17% of the Noida-based company.

Its relatively small $100 million investment in Policybazaar saw a gain of about $300 million, according to a recent earnings report from SoftBank.

TWEET OF THE DAY


Startups chase venture capital debt as investment slows

resume

Venture capital debt is in high demand by startups after a sharp downturn in equity financing in recent months.

Startups in fintech, edtech, software as a service (Saas) and the direct-to-consumer (D2C) space are tapping into this option, industry experts said.

Venture capital firms closed 35 to 50 huge rounds in India last year, but their numbers have dropped dramatically in 2022, Sharma said.

“Demand for risky debt has been steadily increasing over the past 12 months. I think about $1 billion has been deployed in 2021. We’re seeing demand outpacing supply, which is also driving to a “flight to quality” from a risky debt perspective,” he added.

business

Another reason for the high demand for risky debt is the cautiousness of growth-stage investors. Even if startups want equity funding, they don’t get the valuations they want, said Ishpreet Singh Gandhi, founder and managing partner of venture capital firm Stride Ventures.

Venture capitalists believe that the momentum given last year for startup loans will continue uninterrupted this year as well.

growth

The amount of venture capital debt disbursed in India doubled to $538 million in 2021 from $271 million in 2019, according to the recent 2022 India Venture Capital Debt Report from Stride Ventures. reported offers.

YC’s warning: Last week, renowned Silicon Valley startup accelerator Y Combinator advised the founders of its portfolio companies to plan for the worst and prepare for an economic downturn by cutting costs and expanding their leads into the 30 next days.


RBI tokenization rules will wreak havoc, say industry bodies

Tokenization

The RBI’s mandate to replace card payments with unique tokens for all online, point-of-sale and in-app transactions, which will come into effect on June 30, could cause serious disruption, merchants and consumers say. payment aggregators. They claim that the banks did not provide data on their “readiness or success rate with tokenization.”

Trouble looms: In December, the RBI had granted a six-month extension to merchants and payment aggregators to implement tokenization and purge all existing data from registered cards.

With the deadline just a month away, industry groups have said that while online transactions currently take three to six seconds, generating a token can take 10 to 45 minutes. This, they said, will cause widespread disruption, especially among micro, small and medium-sized businesses.

“We have written to the RBI (to) understand what the bank’s preparedness is. We are still awaiting this information,” said Sijo Kuruvilla George, Executive Director of the Alliance of Digital India Foundation (ADIF).

Tokenization replaces the 16-digit number of a credit or debit card with another unique random 16-digit token derived from a combination of card, merchant requesting the token, and device that can be used for transactions online, mobile POS transactions or in-app transactions.


Closed deals ETtech

Seed funding

US-based live trading platform Firework said it raised $150 million in a funding round led by Softbank Vision Fund 2. It plans to use the funds to grow its workforce in the areas of engineering, product and marketing, while focusing on improvements to its platform. .

■ Supply chain finance provider Nakad said on Wednesday it had raised $7 million in its seed funding round, co-led by Accel and Matrix Partners India. The round also saw participation from the founders of AdvantEdge and several prominent startup founders.

■ Electric vehicle (EV) taxi company BluSmart said it raised $25 million through a combination of equity and debt financing. The seed round was led by BP Ventures and Green Frontier Capital and venture capital debt funding came from Stride Ventures, Alteria Capital, BlackSoil and UCIC.

■ Polymerize, a Singapore-based software-as-a-service (SaaS) startup, raised $4.2 million in a funding round led by Elevation Capital. The round also saw participation from existing investor InfoEdge Ventures. Polymerize plans to use the new funds to accelerate hiring and expand its presence in India, Japan and the United States.

■ Jovian, an edtech company focused on data science and machine learning, announced Tuesday that it has raised $1.5 million in funding led by Multiply Ventures. The new funding will be used to expand the startup’s team of data science experts, improve its curriculum, and provide mentorship to its growing student base.


Other Top Stories by our journalists

Rajeev Chandrasekhar

MeitY brainstorms with startups: The Ministry of Electronics and Information Technology on Tuesday held a brainstorming session with more than 80 startups and other researchers to discuss India’s strategy in the field of artificial intelligence and language technologies. . The meeting was chaired by Minister of State for Information Technology Rajeev Chandrasekhar.

HCL partners with WEF for freshwater management: HCL Group will commit $15 million over five years to support water-focused entrepreneurs and drive innovation in freshwater resource management. It has partnered with UpLink, the World Economic Forum’s open innovation platform that connects promising startups to the partners and funding they need to scale.


Global Choices We Read

Dutch police create deepfake video of murdered 13-year-old boy, hoping for new leads (The Guardian)
■ Broadcom weighs 60 billion dollars for VMware (WSJ)
■ Nothing could slow inDriver’s rise from Siberian startup to global competitor to Uber. Then Russia invaded Ukraine (Rest of the world)

Today’s ETtech Morning Dispatch was hosted by Zaheer Merchant in Mumbai and Judy Franko in New Delhi. Graphics and illustrations by Rahul Awasthi.



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John A. Bogar