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Also in this letter:
■ K’taka govt moves SC to restore ban on online games
■ Paytm won users with cashbacks, not services: veteran banker
■ Games24x7 raises $75 million, and other done deals
Indian startup IPOs remain on hold amid geopolitical headwinds
Amid high volatility in the public markets, many top-tier Indian startups have decided to postpone their IPO plans.
Delhivery, for instance, received Sebi’s approval for its IPO in January, but in an exclusive chat at Economic Times Startup Awards in Bengaluru on March 12, Sahil Barua, its cofounder and chief executive broke the news that the company had decided to put its IPO plans on hold, partly because of market volatility.
“We want to go public when our company is well understood. While valuation is one of the factors (behind the delay), it is not a critical factor, since we do not require the capital, and market conditions currently are bumpy,” he said.
Backed by SoftBank and Carlyle, Delhivery said in its draft red herring prospectus (DRHP) in November that it planned to raise Rs 5,000 by issuing new shares. The IPO will also include an offer for sale in which existing investors will sell shares worth Rs 2,460 crore.
Who are the others? Delhivery isn’t the only startup that has decided to postpone its IPO.
- Mumbai-based API Holdings, which runs PharmEasy, is also uncertain about its IPO plans despite receiving the clearance from Sebi last month. The company, which acquired diagnostic chain Thyrocare last year, was initially planning to launch its Rs 6,250 crore issue this financial year.
- As for companies such as Urban Company, which was planning an IPO in the next 18-24 months, the focus has changed. “This year we would rather just focus on the business and continue to grow. When markets become neutral we will reconsider (our IPO),” said Abhiraj Singh Bhal, its cofounder and chief executive.
Watch the full panel discussion at ETSA 2021 here.
Karnataka govt moves Supreme Court to restore ban on online games
The Karnataka government has moved the Supreme Court, challenging the high court judgement that quashed some key amendments to the state’s Police Act, 1963, which banned ‘games of chance’ online.
Catch up quick: The Karnataka governor had notified the law on October 5, 2021 after the state legislature passed the bill in September.
But on February 14, the high court said the amendments were unconstitutional. It said it was not striking down the entire law, only the parts of it that violated the Constitution.
The judgement came in response to writ petitions from several gaming companies and the All India Gaming Federation (AIGF) challenging the law.
Govt’s view: But the Karnataka government told the Supreme Court it needed such a law to protect people from losing money in online games.
“We had amended the law as reports showed the use of money for betting in online games had ruined large numbers of youth and their families. We decided to place some restrictions to eliminate the use of money and responded with a law,” Karnataka Home Minister Araga Jnanendra told ET.
“But the court struck down the amendments. We still think our response was right as many families have said the online betting menace has destroyed them financially. That is why we decided to move the Supreme Court,” he added.
Not the only state: Last year, Tamil Nadu had also promulgated an ordinance amending its Gaming & Police Laws Act, 2021, banning online gambling. The Madras High Court, however, struck down the amendments and called the law unconstitutional.
Kerala, too, had prohibited online rummy under the Kerala Gaming Act, but this ban was also set aside by the high court.
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Paytm won users through cashbacks, not services, says veteran banker
Veteran banker Aditya Puri has raised questions about Paytm’s business model, saying the company has won customers not by rendering services but through cashbacks.
Puri, who led HDFC Bank from inception and turned it into the largest private lender by the time he retired in 2020, also questioned Paytm’s business model and lack of profits.
“Paytm… makes payments, when did [it] make a profit,” Puri asked at an event organised by the IMC Chamber of Commerce at the University of Mumbai.
The remarks come amid a steep decline in Paytm’s shares, which are now trading 75% lower than the price at which investors bought them at the initial public offering. This is not the first time that Puri has gone public with his concerns about the business models of such companies.
ETtech Done Deals
■ Games24x7, a multi-game platform, has raised $75 million in a funding round led by Malabar Investment. Existing backer Tiger Global also participated in the financing, which valued the firm at $2.5 billion.
■ FarMart, a business-to-business food supply platform, has raised $32 million (Rs 244 crore) in a funding round led by US venture fund General Catalyst, with participation from existing backers Matrix Partners India and Omidyar Network India.
■ Enterprise software-as-a-service (SaaS) firm OSlash has raised $5 million led by entrepreneurs from India and the US, including Kunal Shah, founder of Cred; Christian Oestlien, vice president of product at YouTube; Kevin Weil, president at Planet; Akshay Kothari, chief operating officer at Notion; and Cristina Cordova, partner at First Round Capital.
■ UK-based global talent investor Entrepreneur First (EF) has announced early-stage investments in six tech startups in India in its latest ‘Investor Reveal’. Amikus AI, Grabbit Live, Capitall, unScript AI, Coupl and FloWorks. EF has so far invested in 42 tech startups in India since its launch in 2019.
FBI says Russian hackers pose ‘current’ threat to US energy systems
Russian hackers have been scanning the systems of energy companies and other critical infrastructure in the US, and state-sponsored hacking by Russia presents a “current” threat to American national security, a top FBI official has told lawmakers.
“The threat from Russia in a criminal sense, in the nation state sense, is very, very real – and current,” said Bryan Vorndran, an assistant director in the FBI’s cyber division, during a hearing before a US House of Representatives panel.
He added that “instances of Russian scanning” networks in the US energy sector have increased recently, and that such activity represents a “reconnaissance phase” by Russia to try and understand a company’s defences and whether it has vulnerabilities that could be exploited.
Facebook advertisers can sue the platform as a group: Meanwhile, a US judge has ruled that a lawsuit accusing Facebook of deceiving advertisers about its “potential reach” tool can proceed as a class action. The ruling allows potentially millions of individuals and businesses that paid for ads on Facebook and Instagram since August 15, 2014 to sue as a group.
Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant in Mumbai. Graphics and illustrations by Rahul Awasthi.
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