Startups

Swiggy eyes Metro AG’s India ops; startups shift gear as large deals dry up – Economic Times


Swiggy, which recently suspended its subscription-based delivery service Supr Daily in five cities, citing losses, is one of the companies vying for the Indian unit of Metro AG. The German wholesaler, which operates 31 stores in India, has approached more than 10 companies to buy its local unit for around $1.5 billion, we reported previously.

Also in this letter:
■ Startups switch gears as VC large funding deals dry up
■ Some IT workers start voluntarily returning to office
■ CCI probe into Whatsapp faces delays


Swiggy in contention to buy Metro AG’s India operation

swiggy

Swiggy has emerged as a possible contender for the India operations of German wholesaler Metro AG, executives with knowledge of the matter told us. Thailand’s CP Group and Reliance Retail are the other two likely candidates for a possible acquisition of Metro Cash & Carry at the moment, they said.

Catch up quick: We reported on May 20 that the wholesaler, which operates 31 cash-and-carry stores in India, has approached more than 10 companies to acquire its India operations for an estimated $1.5 billion to $1.7 billion. Metro AG, which set up its first store in the country in 2003, reported a turnover of Rs 6,738.3 crore from its India unit in FY21.

What is Swiggy’s plan?
The potential purchase is aimed at taking Swiggy further into ecommerce and accelerating Instamart’s growth, said the people cited above.

“Swiggy has evinced interest in the acquisition, and a potential deal would enable Metro Cash & Carry’s wholesale stores to feed Swiggy’s Instamart delivery model,” one of the executives said. Instamart is Swiggy’s quick grocery delivery business.

“The idea is to create a hub-and-spoke model where Metro stores will supply to Instamart stores, which could be delivery-only or even stores where consumers can walk in.”

Supr Daily on the blink: Swiggy recently suspended its subscription-based delivery service Supr Daily in five cities, citing losses.

“Consolidation is the quickest way to get scale in the quick commerce segment despite challenges such as low margins and high delivery costs, and Swiggy is keen on the potential deal,” said another executive aware of the development.

Consulting firm Red Seer said in a recent report that quick commerce would be a $5 billion market by 2025, up from $0.3 billion presently.


Startups switch gears as VC large funding deals dry up

startup funding

The flood of venture capital directed at Indian startups in recent years is drying up.

Driving the news: Big-ticket funding rounds have suffered a huge blow in the past two months, and several global investors including Sequoia Capital have cautioned entrepreneurs about turbulent times ahead.

From April to May 16, there were only nine funding rounds of more than $100 million, totalling a little over $2 billion. There were 27 such deals in January-March, according to data sourced from New York-based analytics platform CB Insights.

Slowdown in deals over $100 million_Graphic_ETTECH

Unicorn rounds, which catapulted 42 companies into the once-elusive club in 2021, have also come to a screeching halt. To date, just 15 startups have hit a valuation of $1 billion or over this year. April and May saw only five such deals.

Overall capital raised by Indian companies has also fallen perceptibly in the past two months. They raised $3.82 billion across 268 deals during April-May 16, compared to $9.93 billion in January-March, per CB Insights. During April-May 2021, close to $4 billion was raised across 227 deals in India.

Early-stage funding retains momentum_Graphic_ETTECH

Deals in limbo: People in the know said “large deals are getting stuck or delayed as investors are in no hurry to commit capital when there is no competition for deals”.

Multiple sources told us M&A discussions such as Razorpay’s potential acquisition of payments solution platform Ezetap are taking much longer than they ought to because of “changing sentiment”.

What’s next? Founders have already shifted gears and are focusing on conserving cash even if they have recently closed a funding round.

“The rainy day we spoke about is here now,” said Sanjeev Bikhchandani, founder of Info Edge. “Companies with the right unit economics and those that are well-capitalised and growing well, will survive this but startups that need capital and fail to raise it will have difficulties.”

TWEET OF THE DAY


CCI probe into Whatsapp faces delays

WhatsApp soon expected to launch iPad version with multi-device 2.0

The Competition Commission of India (CCI) probe into the alleged antitrust practices by Whatsapp has been delayed as the instant messaging platform is reluctant to provide information related to its new privacy policy, people with direct knowledge of the matter told us.

Catch up quick: CCI commissioned an investigation into Whatsapp’s new privacy policy in March 2021 but the company has neither supplied the documents sought nor responded to the prima-facie observations made by CCI, our sources said.

CCI has sent three notices to Whatsapp – two in March 2021 and one in June 2021. Whatsapp moved the Delhi High Court challenging CCI’s powers to order an investigation into its privacy policy. The case is currently pending.

Standoff: WhatsApp’s stance is that it won’t provide its views on the subject until Parliament passes the data privacy law, they said. In the meantime, it is learnt to have shifted most of its India users to the new privacy policy on a “voluntary basis”.

However, CCI says its probe has nothing to do with data privacy, and is about WhatsApp’s alleged misuse of its market dominance to force its users to sign up to its new privacy policy.


MeitY withdraws circular on not sharing copies of Aadhaar cards

Aadhaar

On Sunday, the Ministry of Electronics and Information Technology (MeitY) withdrew a circular issued by a regional office of the Unique Identification Authority of India (UIDAI) that asked people to not share photocopies of their Aadhaar cards.

Catch up quick: According to government sources, the Bengaluru office of the UIDAI had received some complaints that Aadhaar numbers and other details such as addresses of the Aadhaar cardholders were being photoshopped and misused. To alert people about this, the Bengaluru office “issued the circular without much thought about the possible pros and cons”, a senior government official said.

The circular, issued by the Bengaluru regional office of UIDAI on Friday, went viral on social media platforms and alarmed citizens who routinely share photocopies of their Aadhaar card for services ranging from buying SIM cards to banking.

In the fresh notification, the IT ministry said the notification had been issued by the regional office “in the context of an attempt to misuse a photoshopped Aadhaar card.” It also asked people to “exercise normal prudence” while sharing their Aadhaar card numbers for verification.


Other Top stories By Our Reporters

delivery woman

Gender gap at ecomm and food delivery firms: New-age companies are struggling with a lack of diversity in last-mile delivery, which continues to be an overwhelmingly male bastion. Despite efforts by ecommerce and food delivery companies to onboard more women delivery agents, the needle hasn’t moved much over the last few years.

Cybersecurity presents new opportunities for IT firms: Cybersecurity is emerging as a big area of growth for IT services providers. Accenture, Deloitte, IBM, Persistent Systems and Tech Mahindra have all invested in areas like cloud, cybersecurity and sustainability, data from technology tracker ISG showed.

Ransomware attacks jump 13% globally: The 2022 edition of the Verizon Data Breach Investigations Report found that there was a 13% year-on-year increase in ransomware attacks globally, a jump greater than the past five years combined. This is based on an analysis of 23,896 security incidents, of which 5,212 were confirmed breaches.


Global Picks We Are Reading

■ ‘The end of the universe’: China’s forgotten celebs resort to selling stuff on livestream (Rest Of World)
■ With Elon Musk’s Twitter bid in flux, some Tesla fans say enough already (WSJ)
■ First she documented the alt-right. Now she’s coming for crypto (The Washington Post)

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





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