Weekly Musings – Big start-up updates for the week to January 26, 2024

28 Jan 2024 , 06:44 AM

After start-ups raised $1 billion in December 2023, the first 4 weeks of January 2024 has seen about half of that amount, or $509 million raised till date. In the previous two weeks; the start-ups had raised $145 million and $136 million respectively. In the latest week to January 26, 2024, start-ups raised $170 million across just 13 start-up deals. Once again, the start-up story was dominated by a handful of names in the segment. Deal sizes averaged around $13 million per deal for the latest week.

The number of deals were lower at just 13 deals, compared to 21 deals and 25 deals respectively in the previous two weeks. That is indicative of a lot of mid-ticket deals in the vicinity of over $10 million on an average. Compared to the average of the last 5 weeks, the start-up funding in the latest week was 8.97% higher, largely due to the start-up  fund raising sustaining above $100 million a week for the third week in a row. Here is the story of start-up fund raising over the last 6 weeks.

Funding Week	Start-up funding raised
Week ending December 22, 2024	$349 million
Week ending December 29, 2023	$90 million
Week ending January 05, 2024	$58 million
Week ending January 12, 2024	$145 million
Week ending January 19, 2024	$136 million
Average of previous 5 weeks	$156 million
Week ending January 26, 2024	$170 million

The start-up funding for the latest week ended January 26, 2024 was higher by 25% on a week-on-week basis, but higher by just about 8.97% compared to the average of the last 5 weeks. In fact, the start-up funding for the week marked the third consecutive week when start-up funding was above $100 million. In 4 out of the last 6 weeks, the start-up funding has stayed above the $100 million mark. Clearly, the momentum of December appears to be rubbing off on January also, although the quantum of start-up funding in the last two quarters remains sharply lower on a yoy basis. Here is the story of some of the key start-ups that dominated the funding narrative for the latest week ended January 26, 2024.

Vivifi raises $75 million to expand array of offerings to MSMEs

The non-banking finance company, Vivifi India, has raised a sum of $75 million (Rs623 crore) as part of its Series-B funding. Vivifi will sue the funds to expand its array of product offerings to medium, small, and micro enterprises (MSME) and the funding will be a mix of $60 million by way of debt infusion and $15 million by way of equity infusion. The Hyderabad based Vivifi has not disclosed the name of the funding partner in this case. Vivifi India was founded by Anil K Pinapala and Srinath Kompella in the year 2016. Its staple product offering is the buy now, pay later (BNPL) scheme FlexSalary, which is an instant personal emergency line of credit.

The company has already disbursed loans worth Rs1,000 crore and it now plans to expand its MSME asset book. In addition, Vivifi also plans to expand its workforce from the current 700 employees to 2,000 employees over the next year and half. The company has only disclosed that the cost of funding would be relatively higher, especially the debt portion. The investor is a US based investor, although the name is not yet officially disclosed.

Krutrim AI raises $50 million to become first Indian AI Unicorn

Krutrim, the artificial intelligence (AI) star-up floated by Bhavish Aggarwal of Ola, has raised $50 million (Rs415 crore) in an equity round of funding. The funding round was led by Matrix Partners India. More importantly, this makes Krutrim the first artificial intelligence company in India to get an indicative valuation of $1 billion (Rs8,300 crore). Krutrim becomes the third start-up from Bhavish Aggarwal to get Unicorn start-ups, after Ola Cabs and Ola Electric. Krutrim is not just the first AI start-up to get Unicorn status, but it is the third fastest start-up in India to achieve this status.

Krutrim plans to use the fresh funds to drive innovation, and also to rapidly expand its reach globally. While Matrix Partners India led the funding round, Several other PE Funds, existing investors and even family offices participated in this funding round. 

Namdev Finvest raises $15 million to expand its MSME offerings

The week saw two major start-ups raising funding to expand the offerings to MSMEs. After Vivifi raised $75 million in the week, another non-banking finance company (NBFC), Namdev Finvest, has also raised $15 million (Rs124 crore) to expand the offerings to MSMEs and also to explore various green finance options as part of the loan portfolio. Namdev Finvest is based out of Jaipur in Rajasthan and was founded in the year 2014 by Jitendra Tanwar. The start-up offers financial solutions that are fund based and fee-based to MSMEs with a substantial focus on rural India. This was part of a Series B funding round and was led by marquee names like British International Investment (BII) and LC Nueva AIF. In addition, existing backers like Incofin India Progress Fund also participated in this funding round.

Namdev Finvest will use the fresh infusion of funds to expand its reach, enhance product diversification, broaden, and deepen its technology stack and to expand the team. The start-up is committed to economic empowerment of the underserved segments that are outside the formal funding and credit markets in India, especially the rural markets. Its typical loan sizes range from Rs4 lakhs to Rs7 lakhs and has till date accumulated assets under management (AUM) of Rs1,000 crore. As of date, it has disbursed over 50,000 loans.

Infra.Market raises $12 million debt funding for working capital gaps

Infra.Market has raised $12 million (Rs100 crore) from SK Finance as debt capital to fund its working capital requirements. Part of the funds will also go towards items of general corporate expenses. SK Finance is a non-banking finance company (NBFC) that is focused on extending automobile loans like loans for commercial vehicles and other business related loans in the related space. 

This comes on top of Infra.Market divesting a 10% stake in its subsidiary, RDC Concrete. Infra.Market is a construction solutions start-up that offers a variety of infrastructure related solutions to projects on the implementation, financing, and sourcing side. The funding of Rs100 crore will be against the allotment of 1 Lakh unlisted, redeemable, non-convertible debentures to SK Finance.

Newme, the fashion start-up, raises $5.4 million led by Fireside Ventures

The fashion start-up focused on women’s fashion, has raised a sum of $5.4 million (Rs45 crore) in order to boost its supply chain network and also to boost its office offerings. The company, Newme, was founded in the year 2022 by Sumit Jasoria, Shivam Tripathi, Vinod Naik and Himanshu Chaudhary. Newme currently offers fashion wear for women in the aspirational age groups of 16 years to 24 years. 

Newme will use the funds for developing and nurturing the supply chain and for improving the technology stack and rolling out across verticals. In addition, the funds will also be utilized to expand its offline presence by opening around 40 stores across various locations like Pune, Delhi-NCR, Chandigarh, Chennai, Kolkata, and Guwahati over the next one year. While the funding round was led by Fireside Ventures, there was participation from AUM Ventures, 2AM Ventures and Allin Capital.

RagaAI gets $4.7 million to offer AI use case testing solutions

In another case of an artificial intelligence (AI) company raising fresh funds, RagaAI has raised $4.7 million (Rs39 crore) in a funding round led by Pi Ventures. Apart from Pi Ventures, a clutch of global investors including Anorak Ventures, TenOneTen Ventures, Arka Ventures, Mana Ventures and Exfinity Venture Partners also participated in this round. RagaAI was founded by Gaurav Agarwal in 2022 and its platform, the RagaAI DNA, allows AI-powered companies to test automation use cases in artificial intelligence. The RagaAI DNA platform supports LLMs, images/videos, 3D, audio, NLP, and structured data.

The platform has been tested and found to reduce 90% of the risks while accelerating AI development by more than 3x by AI-driven companies. It has a number of Fortune 500 companies in its client list and they come from an array of sector specializations like aerospace, automotive, insurance, finance, healthcare, ecommerce. These companies are spread across the US, Europe, and India. 

Former Instamart honcho raises $3 million for his Convenio Venture

Karthik Gurumurthy, the former architect of Swiggy Instamart, has raised $3 million (Rs25 crore for his latest venture, Convenio. The funding round was led by Matrix Partners India. However, the final funding may be higher since the round is still ongoing as of date. Karthik Gurumurthy had left Swiggy only in November last year to strike out on his own. Karthik Gurumurthy is better known as the brain behind Instamart and was responsible for scaling up the instant commerce arm of Swiggy to a valuation of $1 billion. Convenio is the latest offline retail venture floated by Karthik. In the funding round of $3 million, apart from Matrix Partners India, a number of angel investors have also participated.

Flaer bags $2.5 million funding to supply home interior materials

Flaer has raised $2.5 million (Rs21 crore) in a pre-seed funding round led by Singularity Ventures. In addition, the family office of Manish Choksi of Asian Paints and other angel investors also participated in this funding round. Flaer currently operates in the B2B2C home interior supply category. It will use the funds partially to quickly establish an omnichannel presence for its offerings. The funds will go towards driving consumer behaviour, identifying product market fit and outlining the go-to market strategy. Flaer, is a startup founded by Vikas Dosala. Incidentally, Vikas Dosala was also the co-founder of Fraazo, the D2C (direct to consumer) fresh food delivery start-up.

Fixerra raises $1.68 million to scale up its bank and NBFC offerings

Fixerra, founded by Akshar Shah, has just raised $1.68 million (Rs14 crore) from family offices. The company plans to offers its NBFC products to more than 200 digital businesses with its banking-as-a-service (BAAS) suite over the next 3 years. The Fixerra platform offers a very simple and user-friendly fixed deposit gateway through its partnerships with seven different banks and NBFCs. The family offices of Jaideep Hansraj of Kotak securities, Shailesh Haribhakti, and Oisharya Das of Kotak Private were some of the family offices that participated in this round of funding for Fixerra. The start-up plans to use the funds to expand its banking partnerships and enhance its product offering with additional features. Fixerra also aims to help digital businesses quickly launch banking products catering, at the same time complying to all banking rules and norms prescribed from time to time. 

News of the Week: News publishers want copyright protection from GenAI

In our news of the week column this week, we conclude the newsletter with news publishers demanding copyright protection from GenAI. Just to explain, we are talking about generative artificial intelligence (GenAI) platforms like ChatGPT of Microsoft, which can cull content from various sources and create meaningful output in a way that can be defined by the user. Publishers fear that such a methodology may be implicitly breaching copyrights, although it may appear to be legally OK. It is not surprising that New York Times has already sued Open AI and Microsoft (creators of Chat GPT) citing unlawful use of copyrighted content. That battle lines may be drawn.

There are two ways to look at this story. Firstly, generative AI is an idea whose time has come and it is usually tough to stop such an idea. However, the challenge in GenAI will be the same as in self-driven cars. The question is; who takes the responsibility? That question does not have a very simple answer and that is where it is likely to get stuck. This is certainly a debate worth watch in the coming days.