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Rakesh Jhunjhunwala Photo Credit: Reuters

VCC Startups weekly wrap: Jhunjhunwala backs Nazara; SoftBank, Alibaba get CCI nod

16 December, 2017

One of the big newsmakers in the past week was veteran stock market investor Rakesh Jhunjhunwala who made a $27-million bet into gaming firm Nazara Technologies.

Also grabbing headlines is the Competition Commission of India (CCI), which gave Japanese investor SoftBank Group and Chinese e-commerce giant Alibaba Group the go-ahead to seal their deals with Flipkart and BigBasket, respectively.

The week also saw online furniture marketplace HomeLane and Ratan Tata-backed Teabox raising fresh funds. Bollywood actor Aamir Khan invested in furniture rental marketplace Furlenco, and Swiggy acqui-hired gourmet Asian food startup 48East. Facebook India’s revenue for 2016-17 doubles but profit growth slowed due to higher expenses.

Here is a rewind of the week gone by:

Rakesh Jhunjhunwala invests $27 mn into gaming firm Nazara
In one his rarer bets into private companies in the tech startup ecosystem, ace stock market investor Rakesh Jhunjhunwala invested Rs 180 crore ($27 million) in Mumbai-based mobile games developer Nazara Technologies Pvt. Ltd for an undisclosed stake.

The deal saw Nazara’s early investor, WestBridge Capital, pare its stake in the firm to around 30%. The transaction came at a time when the gaming firm has plans to list of the stock exchanges next year. On 24 November, the company’s board passed a resolution seeking approval for conversion to a public limited firm. Accordingly, the company will be renamed Nazara Technologies Ltd.

CCI clears SoftBank-Flipkart, Alibaba-BigBasket deals
The Competition Commission of India earlier this week approved two of the most significant investment deals in the Indian e-commerce ecosystem this year. Japanese Internet conglomerate SoftBank is buying 20% stake in homegrown e-commerce firm Flipkart, while Chinese e-tailer Alibaba is looking to acquire a stake in online grocer BigBasket.

Following the CCI’s nod, SoftBank is likely to become the single-largest shareholder in Flipkart, overtaking Tiger Global, which had invested more than $1 billion in the online retailer and has been looking for an exit.

Alibaba’s stake in BigBasket will grant not only the Chinese firm, but Paytm pole position in the e-grocery segment. Alibaba is a significant shareholder in Paytm.

Furlenco raises funding from actor Aamir Khan
VCCircle exclusively reported that online furniture rental startup Furlenco secured Rs 7.7 crore (around $1.2 million) in debt funding from Bollywood actor Aamir Khan and four other investors. The round was led by Vamsi Krishna Bandi, director at Hyderabad-based pharma-company Hetero Drugs, who put in Rs 5 crore (around $775,000) into the firm. All investors received non-convertible debentures.

Actors and sports celebrities are often given equity in lieu of being brand ambassadors for startups. However, Khan will not be a brand ambassador for Furlenco.

HomeLane gets $10 mn from Accel, Sequoia and RB Investments
Homevista Decor and Furnishing Pvt. Ltd, which owns and operates online furniture marketplace HomeLane, raised $10 million (Rs 64 crore) from venture capital firms Accel Partners, Sequoia Capital and RB Investments.

The Bangalore-based company said that it will use the funds to fuel expansion, strengthen technology innovation and operations.

The company also claimed that it has reached operational profitability and is close to breaking even. Last month, HomeLane had acquired online home interiors marketplace Capricoast for Rs 90 crore. Along with the acquisition, HomeLane launched its operations in the national capital region, the fifth city after Bangalore, Hyderabad, Chennai and Mumbai. The company also plans to set up an experience centre in Gurgaon within two months.

Swiggy acqui-hires 48East to ramp up new supply biz
Bundl Technologies Pvt. Ltd-owned food delivery platform Swiggy has acqui-hired Bengaluru-based gourmet Asian food startup 48East to strengthen its new supply business.

As part of the deal, Joseph Cherian and Nabhojit Ghosh, the co-founders of Love Food Ventures Pvt. Ltd, which runs 48East, will join Swiggy’s new supply business vertical. The food-ordering startup had also appointed former Reckitt Benckiser executive Vishal Bhatia as the chief executive of the vertical.

Bhatia’s appointment and the 48East acqui-hire come a month after the food ordering startup launched its maiden initiative, Swiggy Access, which is part of the new business vertical. The initiative offers partner restaurants a supply-only kitchen facility for faster delivery.

Ratan Tata-backed Teabox raises $7 mn in Series B round
Speciality tea e-tailer Teabox.com, operated by Bengaluru- and Singapore-based AsianTeaxpress Pte. Ltd, has raised $7 million (Rs 45 crore) in a Series B round from Singapore-headquartered investment firm RB Investments and existing investors.

Southeast Asian banking and financial services company DBS Bank Ltd also participated in this round by making a venture debt investment.

The company will use the fresh capital to expand its back-end infrastructure, including cold chain processing centres, besides investing in growth initiatives across key markets.

Flipkart wholesale arm’s FY17 revenue growth slows down
Flipkart India Pvt. Ltd, the wholesale arm of homegrown e-commerce marketplace Flipkart, has reported a slower rise in revenue for the financial year 2016-17 compared with the previous year.

The company’s revenue grew 19% to Rs 15,264 crore ($2.4 billion) in the year through March 2017 from Rs 12,818 crore in 2015-16, filings with the Registrar of Companies show.

This is slower than the 42% increase in 2015-16 compared with Rs 9,032 crore in 2014-15, shows data available with VCCEdge, the research platform of News Corp VCCircle.

Flipkart India did not divulge its profit or loss figure for 2016-17. In 2015-16, the unit had pared its loss to Rs 545 crore from Rs 828.2 crore in 2014-15.

Facebook India FY17 revenue nearly doubles, profit growth slows
Mark Zuckerberg-led social network Facebook Inc.’s India arm almost doubled its revenue for the year through March 2017 but its profit growth slowed due to higher expenses.

Facebook India Online Services Pvt. Ltd posted a 93% jump in revenue for 2016-17 to Rs 341.8 crore from Rs 177 crore the year before, show its filings with the Registrar of Companies. Net profit climbed 31% to Rs 40.7 crore from Rs 31 crore.

The slowdown in profit growth is a result of higher expenses. The company’s total expenditure nearly doubled to Rs 285.5 crore from Rs 147.5 crore.

Staff costs rose 73% to Rs 89.6 crore. Promotional expenses soared 148% to Rs 42 crore from Rs 17 crore while legal expenses surged 127% to Rs 42.5 crore from Rs 18.7 crore.

It’s a wrap, until next week.

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VCC Startups weekly wrap: Jhunjhunwala backs Nazara; SoftBank, Alibaba get CCI nod

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