Welcome to this week’s edition of our Investment Roundup! Here's a summary of the exciting investments that took place over the last week:
Startup Highlights
- Sector : Edu-Fintech
- Investment Amount: $35 Million (Over 3 years)
- Investors: QED Investors, Aavishkaar Capital, Ardent Investors LLC, 100Unicorns, DMI Finance, and cricketer Rohit Sharma
- Overview: LEO1 is a Mumbai-based Edu-Fintech company founded in 2017. Their mission is to improve financial health in the education sector by providing solutions for both educational institutions and students in India. For educational institutions, LEO1 offers a financial SaaS platform that streamlines fee collection and provides tools for managing finances. They incentivize students for early fee payments with a reward system, promoting a smoother cash flow for institutions. The funding will help LEO1 achieve several goals such as Innovation and Technology, Expansion, Financial Inclusion.
- Sector: FinTech
- Investment Amount: $2.4 Million
- Investors: India Quotient and prominent angel investors
- Overview: POP is a Bengaluru-based fintech startup launched in May 2023. Their mission is to create a network of Gen Z and late millennial e-commerce users through a loyalty program based on their virtual currency, POPcoin. The fund raised will help POP accelerate various initiatives, including the rollout of their UPI payment service within the POPclub app. Their success in obtaining approval as a Third-Party Application Provider (TPAP) from the National Payments Corporation of India (NPCI) positions them to compete with established players like Google Pay, PhonePe, and Paytm. The funding will also likely fuel their user acquisition goals as they aim to reach 10 million customers by the end of the year.
- Sector: Food & Beverage
- Investment Amount: $1.5 Million
- Investors: DSG Consumer Partners, Saama Capital, V3 Ventures along with notable angel investors (including Arjun Purkayastha)
- Overview: Go Zero is an Indian startup founded in 2022 by Kiran Shah. They cater to health-conscious consumers by offering a range of zero-sugar, high-protein, and vegan ice creams. Their mission is to provide a delicious and guilt-free indulgence compared to traditional ice cream options. The recent investment will help them further their success in Market Expansion, Product Development, Brand Awareness, Distribution Network.
- Sector: FinTech
- Investment Amount: $3.4 Million
- Investors: Capital 2B and Capria Ventures
- Overview: Supermoney is a Mumbai-based startup founded in 2018 by Nikhil Banerjee and Shiv Negi Nandan. Their mission is to provide accessible working capital solutions for small and medium-sized enterprises (SMEs) in India. They offer a digital platform that streamlines the lending process and tailors financing solutions to specific supply chain needs. The recent Series A funding roundwill help Supermoney achieve several key goals such as Increase Loan Disbursements, Platform Optimization, Market Expansion.
- Sector: D2C FashionTech
- Investment Amount: $4.25 Million
- Investors: Sorin Investments, MGA Ventures, Huddle, Dexter Ventures, Indian Silicon Valley, Arjun Vaidya, Avni Biyani, Nikhil Bhandarkar, Vijay Taparia
- Overview: The Pant Project, founded in 2020 by Dhruv Toshniwal and Udit Toshniwal, is a digitally-native brand headquartered in India. Their mission is to revolutionize the way men and women buy pants by offering a personalized shopping experience. The investment will fuel their Omnichannel Strategy, Increased Production Capacity, Product Line Expansion, Brand Building.
- Sector: FinTech
- Investment Amount: $1.55 Million
- Investors: Gokul Rajaram (Former Pinterest and Coinbase board member), Vinodh Bhat (Co-founder of JioSaavn), Ramakant Sharma (Founder of Livspace), Kunal Shah (Founder of CRED)
- Overview: Prosperr io is a fintech startup based in India, founded with an mission to simplify tax filing and planning for individuals, particularly young professionals and millennials, by leveraging artificial intelligence (AI). This pre-seed funding will fuel their Product Development, User Acquisition, Market Expansion.
Investment Trends
Despite a recent funding crunch, India's Deep Tech investment scene is experiencing significant growth.
1. Budget Boost for Defense Deep Tech: The Indian government announced a new scheme in the Interim Budget 2024 to fuel deep tech innovation in the defense sector.
This initiative includes a ₹1 lakh crore corpus for long-term interest-free financing for startups and established players.The scheme aims to develop advanced weaponry and critical defense technologies using deep tech solutions.
2. India's Growing Deep Tech Landscape: A report by Nasscom revealed that India now houses over 3,600 Deep Tech startups, with a significant surge in 2023 (over 480 new ventures).
Artificial Intelligence (AI) continues to be the dominant area, accounting for nearly 74% of the new startups. This growth signifies India's potential to become a global leader in Deep Tech innovation.
3. Deep Tech Hubs Emerge Across India: The Nasscom report also highlighted a trend of new Deep Tech hubs emerging outside traditional tech centers like Bangalore and Delhi. Over 110 startups launched in these emerging locations, showcasing a broader talent pool and supportive ecosystems fostering innovation nationwide.
Investment Trends in Deep Tech
India has emerged as a significant player in the deep technology (deep tech) sector, with growing investments indicating a strong future for this innovative field. Here are some key investment trends in deep technology:
- Increased Venture Capital Interest
- Rising Funding Rounds: There has been a noticeable increase in the number and size of funding rounds dedicated to deep tech startups. Venture capital (VC) firms are recognizing the potential of deep tech innovations in transforming industries and solving complex global challenges.
- Specialized Funds: Several VCs have launched specialized funds focused on deep tech, demonstrating a commitment to fostering innovation in areas such as artificial intelligence (AI), machine learning (ML), robotics, blockchain, quantum computing, and biotechnology.
2. Government Initiatives and Support
- Startup India and Other Schemes: The Indian government’s initiatives like Startup India, along with various state-level programs, are providing significant support to deep tech startups. These initiatives include financial incentives, grants, and incubation support.
- Collaborative Ecosystems: Government bodies are also promoting collaboration between startups, research institutions, and industry players to accelerate deep tech innovation.
3. Corporate Investments and Partnerships
- Strategic Investments: Large corporations are increasingly making strategic investments in deep tech startups to stay ahead in the innovation curve. These investments often come with partnerships that provide startups with access to resources, expertise, and markets.
- Corporate Venture Arms: Companies are setting up their venture arms specifically to invest in deep tech, aiming to integrate cutting-edge technologies into their business processes and product offerings.
4. Focus on Sustainability and Social Impact
- Green Technologies: Investments are flowing into deep tech startups focusing on sustainability, such as clean energy, water management, and waste reduction technologies. These investments align with global and national goals for environmental sustainability.
- HealthTech and AgriTech: There is a growing interest in deep tech solutions in healthcare and agriculture, driven by the need to address critical challenges in these sectors. Innovations in medical diagnostics, telemedicine, precision agriculture, and smart farming are attracting substantial investment.
5. R&D and Intellectual Property (IP) Development
- Strong Emphasis on R&D: Deep tech startups are heavily investing in research and development to create proprietary technologies. This focus on R&D is essential for developing breakthrough solutions that offer a competitive edge.
- Patent Filings: There is an uptick in patent filings by deep tech startups, indicating a robust pipeline of innovations and a focus on protecting intellectual property to enhance valuation and market positioning.
6. Regional Investment Hubs
- Bangalore, Hyderabad, and Pune: Cities like Bangalore, Hyderabad, and Pune are becoming hotspots for deep tech investments, thanks to their robust ecosystems comprising tech-savvy talent, academic institutions, and supportive infrastructure.
- Emerging Hubs: Other cities, including Delhi NCR and Chennai, are also witnessing growing interest and investment in deep tech, driven by regional policies and the availability of skilled professionals.
7. Cross-Border Investments
- International VCs and Corporates: Global investors and multinational corporations are increasingly looking at Indian deep tech startups as attractive investment opportunities. These cross-border investments bring not only capital but also global market access and strategic insights.
Kissflow’s Journey: From BMW Rewards to Layoffs:
Kissflow, a Chennai-based SaaS firm, experienced significant changes over the past two years. Once celebrated for its generous rewards to senior employees, the company recently made headlines for a substantial round of layoffs. Here’s a detailed look at the transformation.
CEO’s Statement: Suresh Sambandam, CEO and co-founder of Kissflow, emphasized that the layoffs were necessary to align with the company’s strategic focus on its primary low-code platform offerings. He assured that the decision, though tough, was aimed at positioning Kissflow for future growth and sustainability .
Celebratory Milestone in 2022
In 2022, Kissflow gained widespread attention for its extraordinary gesture of appreciation towards its senior staff. The company gifted brand new BMW 5 Series cars, each worth about ₹1 crore, to five senior executives. This move was in recognition of their long-standing contributions and dedication to the company. The announcement highlighted Kissflow’s commitment to valuing and rewarding its employees, reinforcing its image as a generous and supportive employer.
Strategic Shift and Layoffs in 2024
Fast forward to 2024, and the scenario at Kissflow looks markedly different. The company recently laid off approximately 45-50 employees, which accounts for about 15% of its workforce. This decision impacted roles across various departments including sales, marketing, and product development, affecting employees in India, the US, and the UAE.
Kissflow attributed the layoffs to a two-pronged approach:
- Strategic Shift: They cited a move away from "land-motion procurement" to focus on "expand motion," aiming to increase customer acquisition across their product portfolio. This streamlining might have involved letting go of employees in specific functions that no longer aligned with the new strategy.
- Performance Reviews: The company also mentioned conducting annual performance reviews, which could have resulted in additional terminations.
Companies, especially in the dynamic SaaS industry, often need to adapt to changing market conditions and internal priorities. Pivoting can involve:
- Focusing on Core Products: During economic downturns, companies might prioritize their "cash cow" products – those generating consistent revenue – and re-allocate resources away from experimental ventures. This could explain Kissflow's shift in focus.
- Optimizing Workforce: Streamlining operations and workforce size can be a harsh reality, but it allows companies to become more efficient and weather difficult periods.
- Market Saturation: The SaaS market is crowded, making customer acquisition increasingly competitive. Kissflow's focus on "expand motion" suggests they're prioritizing existing customers over acquiring new ones through potentially underperforming channels.
- Economic Uncertainty: A potential economic downturn could lead companies to tighten budgets, impacting SaaS adoption. Kissflow might be streamlining operations to weather such a scenario.
Reasons for Layoffs at Kissflow
- Strategic Product Focus: The recent layoffs at Kissflow were predominantly driven by a strategic realignment aimed at enhancing the company's core competencies. Kissflow has made the strategic decision to sunset its Procure-2-Pay (P2P) product, allowing it to channel resources and innovation towards the expansion of its flagship low-code platform. This strategic pivot is crucial for Kissflow to stay competitive in the fast-evolving enterprise software market. Consequently, this realignment necessitated a reorganization within the company, particularly impacting its go-to-market teams, to better position the company for growth in its core offerings.
- Performance Evaluations: In addition to strategic realignment, regular performance evaluations also played a significant role in the layoffs. Kissflow conducts biennial performance reviews to ensure that its workforce maintains a high level of productivity and performance. As a result of these evaluations, approximately 20 employees were released. This rigorous review process is integral to Kissflow’s commitment to operational excellence and its goal of sustaining a high-performance culture within the organization.
Support for Affected Employees:
Despite the layoffs, Kissflow has been proactive in supporting the affected employees. The company has provided severance packages and outplacement assistance. According to Kissflow, approximately 90% of those laid off have already secured new jobs, underscoring the company’s commitment to aiding their transition
The journey from awarding luxury cars to implementing layoffs illustrates the dynamic and often unpredictable nature of the tech industry. Kissflow’s actions highlight both the highs of rewarding success and the lows of strategic realignment. As the company navigates these changes, it remains committed to its core mission of providing cutting-edge workflow automation solutions to its clients.
Upcoming Events
- ICAI Startup Sphere 2024 (June 27, 2024): A comprehensive event featuring workshops, panel discussions, and networking sessions for startup founders and investors.
- Global Startups Club Networking (June 29, 2024): A networking event for global startups to connect and explore collaboration opportunities.
Get Involved
If you’re interested in learning more about these investments or connecting with the investors, feel free to reach out to us. Stay tuned for more updates and insights next week!
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CEO - Truedigital Ventures - A global fund-raising platform
6moThanks for sharing