17 October, 2024
Prosus writes off $22 billion Indian edtech giant Byju's to zero
Prosus, one of Byju’s largest investors, on Monday said its once-$2.1 billion worth stake in the Indian edtech startup is now worth nothing, but it is still hopeful that the formerly most-valuable Indian startup can be salvaged.
The largest external investor in Byju’s with a 9.6% stake, Prosus said in its quarterly report that its stake in the startup is now worth zero “due to the significant decrease in value for equity investors.” Prosus Group CIO, Ervin Tu, said on an earnings call that the firm is still hopeful about Byju’s outlook, but improving governance at the Indian firm will be key.
The Indian edtech giant has had a difficult couple of years as it grappled with a series of financial and governance setbacks that have tarnished its reputation and imperiled its future. The startup’s woes were amplified last year when it failed to meet financial reporting deadlines and ultimately reported revenues well below its own projections.
The financial stumbles were compounded by the sudden departures of its auditor and board members, including a Prosus executive, and scuttled a potential $1 billion fundraising effort. In a desperate bid for capital, the startup raised $200 million this year, but at a drastically reduced valuation of about $225 million to $250 million. This lifeline has also been entangled in legal disputes with some of Byju’s largest backers, including Prosus.
The South African-Dutch investor, whose portfolio includes high-profile companies like Tencent, Delivery Hero, Swiggy and Stack Overflow, has invested more than $570 million in Byju’s over the years. It has never sold any shares in the Indian edtech startup, whose valuation climbed to a peak of $22 billion in early 2022. Prosus on Monday said its stake in Byju’s now represented a fair value loss of $493 million, after the adjustment, in its current financial year.
Prosus has also cut down the value of its other investments: It reduced the value of its stake in Stack Overflow, which it bought for $1.8 billion in 2021, by 39%, and has lowered the worth of its stake in Indian online pharmacy, PharmEasy, by 35%.
The firm’s readjustment of Byju’s stake comes after BlackRock, the world’s largest asset manager, also wrote off its stake in the Indian edtech startup. Prosus last year complained that Byju’s had “regularly disregarded advice” from it.
Female-founded startups have raised $15.5 billion so far this year, but that’s not really good news
Funding to women-founded companies overall (including mixed-gender teams) has declined in the first half of 2024 compared to the first half of 2023, picking up $15.5 billion out of $93 billion — 17% — compared to the $24.8 billion out of $87.7 billion — 28% — in the first half of 2023, according to PitchBook data.
So far this year, companies with all-women founding teams have raised 2.2% of the venture capital allocated for the year. The data shows that all-women founding teams have never raised more than 3% in venture capital funding since at least 2014 and that for the past four years, all-women founding teams have raised just about 2% in venture capital funding, even when the amount of capital allocated to U.S. startups hit record heights.
Companies with all-women teams are having a more challenging 2024, as activity for them is showing to be much slower than last year, PitchBook’s lead venture analyst Kyle Stanford told TechCrunch. “Our data doesn’t necessarily indicate why this may be, but as investors retract to support their current portfolios, there is less capital available for investment into new companies,” he told TechCrunch. “Investment in women and diverse founders is also challenged by the current political climate. The ruling against Fearless Fund in June highlights this issue.”
He said the trouble for female founders can be seen in the dwindling deal counts. VCs backed 372 startups with female founders in 2024’s first half compared to 536 in the first half of 2023.
“A majority of female-founded companies remain in the seed and early stage of the VC lifestyle,” he continued. This can pose a problem as early-stage VC remains challenging, “where we have seen many companies struggle to advance due to increased benchmarks for new rounds.”
There have been some breakout successes though, such as the $50 million seed round Julie Bornstein’s new startup DayDream raised in June to work on an AI-powered e-commerce search engine.
And if there’s a bright spot in the data it’s that “venture growth-stage investment in female founders is on pace for an annual record high,” he said. One example of a success here: Romi Gubes’ Sensi.AI grabbed a $31 million Series B to monitor seniors.
There are other tidbits of good news in the data. Funding to companies with all-female founding teams saw a slight increase in year-over-year funding, picking up $1.1 billion this Q2 compared to the $900,000 in Q2 2023. Such teams haven’t seen a quarterly number that high since they picked up $1.5 billion in Q2 2022.
But the reality of the situation is that startups with all women founders are still on track to probably raise around a mere 2% of venture capital funding this year.
“Mixed-gender teams often secure more funding, perceived as offering balanced perspectives and a broader skill set,” Kate Bodrova, the founder of the edtech Amazy, told TechCrunch. She has a co-founder and is currently in the process of fundraising.
And while bias within the VC community is almost certainly a factor, rather than gaming the system, Bodrova says that founders (no matter their gender) should stay heads down focusing on growth as well as building a team resume that demonstrates the company is in capable hands.
“Focus on providing your value through performance,” she said. “Funding will follow.”
EXCLUSIVE: InMobi eyes $10 billion valuation in 2025 India IPO
Adtech startup InMobi is eyeing a valuation of about $10 billion in an initial public offering it is planning for next year, two sources familiar with the matter told TechCrunch.
The firm plans to list in India, the sources said, requesting anonymity as the deliberations are private. InMobi is profitable and plans to shift its domicile from Singapore to India in the coming months, the sources added.
An IPO in India at a valuation of $10 billion would make this one of the biggest listings by a local software startup. The majority of startups to list in India in recent years have sought valuations below $5 billion. Paytm, which listed at a $20 billion valuation in 2021, has seen its market cap fall to $3.5 billion since.
InMobi is planning to list at the group level, which includes its advertising arm as well as investments and ownership in Glance, a unicorn startup that operates an Android lockscreen platform, the sources added. InMobi expects to generate an annual revenue of more than $700 million by the end of March, one of the sources said.
Google, an existing backer of Glance, is engaging with InMobi to lead a new funding round of more than $200 million in Glance, according to one of the sources. A funding round could close within weeks.
An InMobi spokesperson declined to comment on Wednesday.
InMobi, founded in 2007, was the first Indian startup to become a unicorn, but the firm has had its share of ups and downs as it initially struggled to secure its foothold in the digital advertising space, dominated by Google and Meta.
InMobi operates a comprehensive advertising platform that integrates demand-side and supply-side technologies with a large ad exchange. It serves tens of thousands of app partnerships across 50 countries. The firm today counts Mastercard, Samsung, Vodafone, Ford, Kellogg’s, L’Oréal Paris, Nokia, Kia, KFC, Dell and Coca-Cola among its clients.
InMobi has raised less than $300 million to date, and counts SoftBank among its backers. SoftBank once wrote off its investment in the startup.
In the past decade, it has expanded its advertising business and built a consumer business, which it leverages for Glance.
Glance brings news, information on local events, sports, media content and games directly to the lockscreen of Android smartphones. The app is installed on more than 450 million smartphones and is active on about 300 million of them. Glance recently started a pilot in the U.S., TechCrunch reported.
The firm plans to soon launch a revamped version of Glance that will incorporate generative AI to bring personalized feeds and experiences to users. One feature will allow users to see themselves in clothes from different brands, according to internal demos reviewed by TechCrunch.
Glance doesn’t collect personal data on users. InMobi is betting that generative AI will help the app adapt to user preferences and offer experiences that will hook them to the platform and drive commerce.
InMobi is planning to roll out similar generative AI offerings in its advertising business to enable the creation and insertions of native advertisements into a wide range of content, according to the demos.
Databricks reportedly paid $2 billion in Tabular acquisition
Analytics and AI giant Databricks reportedly paid nearly $2 billion when it acquired Tabular in June, a startup that was only doing $1 million in annual recurring revenue, according to Bloomberg. That’s a pretty outrageous exit multiple, and it was purportedly fueled by a battle between Databricks and Snowflake.
Tabular had over $30 million in funding, backed by Altimeter Capital, Andreessen Horowitz and Zetta Venture Partners, when it was acquired just three years after it was founded. Tabular’s valuation was tied to Apache Iceberg, a popular open source table format that the startup’s founders created while at Netflix. The startup quickly became an expensive pawn in the war between Databricks and Snowflake. In fact, some Databricks employees were reportedly asked to like or share their CEO’s LinkedIn posts dunking on Snowflake, according to Bloomberg.
Snowflake’s stock price has fallen 36% this year, with its market cap of roughly $43 billion equal to Databricks’ current valuation. It didn’t help that Snowflake was linked to a massive data breach affecting “nearly all” of AT&T’s customers in July.
Zepto, snagging $1 billion in 90 days, projects 150% annual growth
Zepto co-founder Aadit Palicha told a group of analysts and investors on Tuesday that the three-year-old Indian delivery startup anticipates growth of 150% in the next 12 months, a remarkable figure suggesting the fast-growing quick commerce market in India is showing no signs of slowing down.
Palicha shared these insights during a call organized by an investment bank. Representatives from several prominent investment firms, including Abu Dhabi Investment Authority, Temasek, GIC, and Invesco, were among the attendees, according to materials reviewed by TechCrunch.
The spokesperson for the firm declined to comment when reached earlier on Tuesday.
Zepto’s annualized sales run rate recently exceeded $1.5 billion, Palicha told them, adding that a growth rate of approximately 150% would push its sales to more than $3.5 billion. Zepto competes with Zomato’s Blinkit, SoftBank-backed Swiggy Instamart, and BigBasket, all of them wooing customers with their 10-to 15-minute delivery services. BlinkIt’s current run rate stands at about $2 billion.
Quick commerce is rapidly gaining traction in India’s $1.1 trillion unorganized retail market. Zepto, BlinkIt, Swiggy, and Tata-owned BigBasket’s BB Now are collectively on track to clock annual sales exceeding $6 billion, compared to overall e-commerce sales of approximately $50 billion. Online grocer BigBasket, which delivers grocery to customers within a few hours, said Tuesday it is making a complete pivot to quick commerce.
The Indian e-commerce market, dominated by Flipkart and Amazon India, is growing at about 11% to 12% annually, according to industry figures. In contrast, quick commerce has experienced growth of more than 100% in each of the last three years.
Quick commerce firms are “clearly taking share” from larger e-commerce companies, said Rahul Malhotra, an e-commerce analyst at Bernstein. Quick commerce “may account for 40-50% of e-comm (some categories) over the next three years as per our checks, currently accounts for 10-15% of the total e-comm segment,” Elara Capital said in a note.
E-commerce giants are taking note. Flipkart launched its quick commerce offering, called Flipkart Minutes, earlier this month. Amazon India, a long skeptic of the model, is also eyeing launching its own quick commerce service as early as the first quarter next year, Indian newspaper Economic Times reported Wednesday.
Investors on Tuesday’s call questioned Palicha about the potential for quick commerce to expand beyond India’s top dozen or so cities, as these apps currently operate primarily in major urban areas. “Quick commerce is not a Tier 1 phenomenon,” Palicha said. “Our data points clearly to a huge opportunity in tier 2/3, regardless of the market sentiment.”
He also confirmed during the call that Zepto has raised $1 billion in the past 90 days, a war chest he said will allow the firm to more aggressively expand. Zepto counts Nexus Venture Partners, Lightspeed, Avra, YC Continuity, Contrary and StepStone Group among its backers.
TechCrunch had earlier reported that Zepto, now valued at $5 billion, was finalizing a $340 million funding round led by General Catalyst. The startup closed a $665 million funding round in June.
Databricks reportedly paid $2 billion in Tabular acquisition
Analytics and AI giant Databricks reportedly paid nearly $2 billion when it acquired Tabular in June, a startup that was only doing $1 million in annual recurring revenue, according to Bloomberg. That’s a pretty outrageous exit multiple, and it was purportedly fueled by a battle between Databricks and Snowflake.
Tabular had over $30 million in funding, backed by Altimeter Capital, Andreessen Horowitz and Zetta Venture Partners, when it was acquired just three years after it was founded. Tabular’s valuation was tied to Apache Iceberg, a popular open source table format that the startup’s founders created while at Netflix. The startup quickly became an expensive pawn in the war between Databricks and Snowflake. In fact, some Databricks employees were reportedly asked to like or share their CEO’s LinkedIn posts dunking on Snowflake, according to Bloomberg.
Snowflake’s stock price has fallen 36% this year, with its market cap of roughly $43 billion equal to Databricks’ current valuation. It didn’t help that Snowflake was linked to a massive data breach affecting “nearly all” of AT&T’s customers in July.
Prosus writes off $22 billion Indian edtech giant Byju's to zero
Prosus, one of Byju’s largest investors, on Monday said its once-$2.1 billion worth stake in the Indian edtech startup is now worth nothing, but it is still hopeful that the formerly most-valuable Indian startup can be salvaged.
The largest external investor in Byju’s with a 9.6% stake, Prosus said in its quarterly report that its stake in the startup is now worth zero “due to the significant decrease in value for equity investors.” Prosus Group CIO, Ervin Tu, said on an earnings call that the firm is still hopeful about Byju’s outlook, but improving governance at the Indian firm will be key.
The Indian edtech giant has had a difficult couple of years as it grappled with a series of financial and governance setbacks that have tarnished its reputation and imperiled its future. The startup’s woes were amplified last year when it failed to meet financial reporting deadlines and ultimately reported revenues well below its own projections.
The financial stumbles were compounded by the sudden departures of its auditor and board members, including a Prosus executive, and scuttled a potential $1 billion fundraising effort. In a desperate bid for capital, the startup raised $200 million this year, but at a drastically reduced valuation of about $225 million to $250 million. This lifeline has also been entangled in legal disputes with some of Byju’s largest backers, including Prosus.
The South African-Dutch investor, whose portfolio includes high-profile companies like Tencent, Delivery Hero, Swiggy and Stack Overflow, has invested more than $570 million in Byju’s over the years. It has never sold any shares in the Indian edtech startup, whose valuation climbed to a peak of $22 billion in early 2022. Prosus on Monday said its stake in Byju’s now represented a fair value loss of $493 million, after the adjustment, in its current financial year.
Prosus has also cut down the value of its other investments: It reduced the value of its stake in Stack Overflow, which it bought for $1.8 billion in 2021, by 39%, and has lowered the worth of its stake in Indian online pharmacy, PharmEasy, by 35%.
The firm’s readjustment of Byju’s stake comes after BlackRock, the world’s largest asset manager, also wrote off its stake in the Indian edtech startup. Prosus last year complained that Byju’s had “regularly disregarded advice” from it.
EXCLUSIVE: InMobi eyes $10 billion valuation in 2025 India IPO
Adtech startup InMobi is eyeing a valuation of about $10 billion in an initial public offering it is planning for next year, two sources familiar with the matter told TechCrunch.
The firm plans to list in India, the sources said, requesting anonymity as the deliberations are private. InMobi is profitable and plans to shift its domicile from Singapore to India in the coming months, the sources added.
An IPO in India at a valuation of $10 billion would make this one of the biggest listings by a local software startup. The majority of startups to list in India in recent years have sought valuations below $5 billion. Paytm, which listed at a $20 billion valuation in 2021, has seen its market cap fall to $3.5 billion since.
InMobi is planning to list at the group level, which includes its advertising arm as well as investments and ownership in Glance, a unicorn startup that operates an Android lockscreen platform, the sources added. InMobi expects to generate an annual revenue of more than $700 million by the end of March, one of the sources said.
Google, an existing backer of Glance, is engaging with InMobi to lead a new funding round of more than $200 million in Glance, according to one of the sources. A funding round could close within weeks.
An InMobi spokesperson declined to comment on Wednesday.
InMobi, founded in 2007, was the first Indian startup to become a unicorn, but the firm has had its share of ups and downs as it initially struggled to secure its foothold in the digital advertising space, dominated by Google and Meta.
InMobi operates a comprehensive advertising platform that integrates demand-side and supply-side technologies with a large ad exchange. It serves tens of thousands of app partnerships across 50 countries. The firm today counts Mastercard, Samsung, Vodafone, Ford, Kellogg’s, L’Oréal Paris, Nokia, Kia, KFC, Dell and Coca-Cola among its clients.
InMobi has raised less than $300 million to date, and counts SoftBank among its backers. SoftBank once wrote off its investment in the startup.
In the past decade, it has expanded its advertising business and built a consumer business, which it leverages for Glance.
Glance brings news, information on local events, sports, media content and games directly to the lockscreen of Android smartphones. The app is installed on more than 450 million smartphones and is active on about 300 million of them. Glance recently started a pilot in the U.S., TechCrunch reported.
The firm plans to soon launch a revamped version of Glance that will incorporate generative AI to bring personalized feeds and experiences to users. One feature will allow users to see themselves in clothes from different brands, according to internal demos reviewed by TechCrunch.
Glance doesn’t collect personal data on users. InMobi is betting that generative AI will help the app adapt to user preferences and offer experiences that will hook them to the platform and drive commerce.
InMobi is planning to roll out similar generative AI offerings in its advertising business to enable the creation and insertions of native advertisements into a wide range of content, according to the demos.
Index Ventures raises $2.3 billion for new venture and growth funds
Index Ventures is announcing $2.3 billion in new funds to finance the next generation of tech startups globally. These new funds are spread across different stages with $800 million dedicated to venture investment and $1.5 billion set aside for growth and late-stage companies.
How do these funds compare to the previous ones? In 2021, Index Ventures raised $900 million for Index Ventures XI and $2 billion for Index Ventures Growth VI , and it also has a separate early-stage fund. The firm raised $300 million in 2022 for its seed fund, Index Origin II.
So this fund is a hair smaller. But the firm says that this is just about raising the right amount for the current market. Index says it spent mere weeks on this fundraising process and raised the funds entirely with its existing LP base.
“We’re in a really fortunate situation where our funds were raised in a few weeks from existing LPs mainly, and we’re really oversubscribed,” Nina Achadjian (pictured left), an Index partner based in San Francisco and focused on B2B enterprise software, vertical SaaS and AI, told TechCrunch.
“And we were very intentional about the size. I think it would be very easy to just continue raising larger funds. And we had a bottom up approach and looked: ‘what are the sizes of growth rounds happening right now? Where are the opportunities in venture?’” she added.
For venture investment, the firm divides these rounds into two categories: AI and other. AI funding rounds at the seed and Series A stages are much bigger than the average funding round. But non-AI Series A rounds tend to be a bit smaller these days. That’s why it sorts of evens out and Index Ventures raised more or less the same amount on that front.
As for late-stage deals, the average size of late-stage rounds has fallen drastically since 2021. That’s why this year’s growth fund is smaller.
“We don’t think about aggregating assets. And I think to your point, other folks in the industry that have gotten big have actually moved towards asset accumulation, which is a totally different strategy,” Shardul Shah (pictured right), an Index partner based in New York and focused on enterprise investing, infrastructure security and AI, told TechCrunch.
AI as an accelerator to innovation
At the same time, the team believes the recent progress in artificial intelligence represents a significant technology breakthrough and could foster a new wave of startup opportunities.
“I think at this moment, there’s a real reckoning of the foundation models,” Achadjian said. “It seems like it’s kind of consolidating to three or four companies. It seems there are still some open questions around security, the cost of delivering — these inference costs — and also just how these things are going to scale over time.”
“But I think that actually there is a huge opportunity once those questions are answered for a lot of entrepreneurs to build upon those building blocks to really add value that’s not just like a feature,” she added. According to her, “the best may be yet to come” in the AI space.
Shah added that artificial intelligence also creates investment opportunities in new industries for VC firms. For instance, manufacturing, drug discovery and legal services aren’t usually tech-enabled industries. But AI might become an innovation catalyst in these verticals in the years to come.
With this in mind, Index Ventures will remain an opportunistic VC firm that invests across all stages in 24 tech ecosystems, from North America to the U.K., Europe and Israel. The firm has offices in San Francisco, London and New York but has a global strategy with global funds, a single unified team and funds that aren’t specific to a specific vertical because the tech industry changes at a rapid pace.
And when you look at Index Ventures’ investment portfolio, it includes some of the most successful tech companies of the past few years, such as Figma, Revolut, Roblox, Scale AI and Wiz. Over the past 28 years, Index Ventures has funded 108 unicorns, 23 decacorns and 57 companies that went public. There’s no reason to change a recipe that already works.