Prosus CEO on Byju and others; Zepto valuation increases

Happy Monday! Newly appointed CEO of tech investor Prosus and parent company Naspers, Fabricio Bloisi spoke with us about Byju’s write-off and more. We have all the details from that conversation in today’s ETtech Morning Dispatch.

Also in this list:
■ Delay in IT transaction execution
■ Garuda Aerospace expands operations
■ Jai Kisan NBFC License

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ETtech Exclusive | Closing New Deals in India Despite Byju’s Fall: Prosus CEO

Fabricio Bloisi, CEO of Prosus and its parent company Naspers, said the group is optimistic about funding Indian startups despite the loss it suffered on its investment in ailing edtech firm Byju’s.

After resetting the quote: Bloisi, who took over as Prosus CEO from interim CEO Ervin Tu in May, said the valuation reset in the tech world is typical of the sector’s funding cycles and is not discouraging long-term investors from betting on India.

Prosus doesn’t “live in cycles,” he told us. “I started the company 20 years ago… I don’t get worked up about valuations… it’s part of life.”

In the Indian market: Bloisi said India remains a “global priority” for the group, which has invested about $7 billion here, backing companies such as Swiggy, Meesho and Urban Company. Prosus is looking for deals in the high-profile generative AI space and online marketplaces, he said.

On the Byju disaster: “There were some management issues within the company (Byju’s)… and for some time, even before the bigger issues arose, there were differences of opinion on how to manage it,” Bloisi said.

Prosus wrote down a 9.6% stake in cash-strapped Byju’s, implying a loss of $493 million. Pharmacy startup PharmEasy also weighed on the numbers. Prosus said in June that Pharmeasy’s internal rate of return was minus 35%.

Read also: ET Explainer: Byju’s steps on the insolvency trap. What next?

Upcoming IPOs: Bloisi said 5-10 companies from his Indian portfolio are likely to tap public markets in the next few years. One of Prosus’ biggest bets, Swiggy, and digital payments major PayU are both preparing for initial public offerings (IPOs).

Read also: Prosus Promotes Ashutosh Sharma to Market Leader for India and Southeast Asia

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Zepto Set to Raise Another $310 Million; Mars Growth Joins Funding Round

(L-R), Aadit Palicha and Kaivalya Vohra, founders of Zepto

Zepto is poised to fuel an already intensified high-speed trading battle. More here in our Monday morning recap:

Offer details: Less than a month after Zepto raised $665 million, the three-year-old company is set to raise another $310 million at a post-money valuation of $5 billion. That’s about 40% higher than Zepto’s valuation in June.

New investors: Mars Growth Capital — co-led by Mitsubishi UFJ Financial Group Inc and Israel-based Liquidity Group — is expected to participate in the round, joining US-based General Catalyst and other existing investors in the Mumbai-based firm. Some top high-net-worth individuals (HNIs) are also investing, sources told us, adding that a term sheet for the round has already been signed.

Read also: Exclusive: Flipkart-Zepto deal talks fall through; fast-paced commerce startup targets financial investors

Timeline: Zepto’s funding over the past year has been emblematic of the growth of fast-trading platforms, as well as the demand for fast delivery of food and non-food items. In just one year, its valuation has increased by 257% to $5 billion from $1.4 billion in August last year.

Threshold: Although Zepto is raising new capital at a higher valuation, the current round is capped at $350 million, provided it closes within 90 days of the last round.

Read also: VCs Invest in Fast Street Deals and D2C Success

More firepower: Zepto will raise more capital in the new round to take on rivals, especially Blinkit, the current market leader. Blinkit has announced plans to expand to 2,000 dark stores by 2026. Its annual gross order value is over $2.3 billion, while Zepto is around $1.5 billion. Flipkart Minutes has launched in Bengaluru, while Swiggy Instamart is also expanding.

Read also: Exclusive | Fast-paced retail is eating up market share in kiranas, not e-commerce: Delhivery CEO Sahil Barua

Infinyte.Club raises $3.6 million: Infinyte.Club, a wealth creation and management platform for tech and startup employees, has raised $3.6 million in a funding round led by Elevation Capital.

Truva earns $3 million: Truva, a real estate technology platform, has raised $3 million in a funding round led by early-stage venture capital (VC) firm Stellaris Venture Partners.

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IT companies see a slowdown in the execution of large transactions

India’s $250 billion IT industry is struggling to translate deal momentum into actionable results.

Why the delay: Analysts believe that the situation may worsen in the next few quarters due to growing concerns about a recession in the US, delays in decision-making and slow implementation of signed agreements.

“Global economic challenges, including inflationary pressures, interest rate hikes and geopolitical tensions, have made clients more cautious…” said Saurabh Gupta, president of research and advisory services at HFS Research.

Read also: The Great Reset of India’s IT Sector: Green Shoots in Q1 Results

Decoded data: “There was $1.5 billion in publicly announced contract activity in April-June. That was only half of the $3.0-3.5 billion in contract value that closed during that period, with the majority of that being related to digital and technology transformation,” said Hansa Iyengar, senior principal analyst, enterprise IT, at technology research and consulting firm Omdia.

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Other top stories from our reporters

Agnishwar Jayaprakash, founder of Garuda Aerospace

Garuda Aerospace prepares to spread its wings in Sri Lanka: Drone startup Garuda Aerospace has expanded its operations in Sri Lanka, the first step in Garuda’s global initiative to expand its operations to 50 countries, the company’s CEO Agnishwar Jayaprakash told ET in an interview.

Rural fintech startup Jai Kisan secures NBFC license: Jai Kisan, a rural fintech startup, has received a non-banking financial services (NBFC) license after acquiring a majority stake in Kushal Finnovation Capital, an NBFC specialising in supply chain finance.

From India, with intelligence information: How India’s GCCs Are Driving Parent Success | India’s Global Capability Centres (GCCs) are playing a critical role for global companies, going far beyond traditional back-office functions. This evolution is making these centres a key part of their global decision-making – transforming them from cost centres to strategic partners, contributing significantly to the growth of parent organisations.

AI spending is driving cloud evolution, but challenges remain: The surge in spending on generative artificial intelligence (AI) is driving a comprehensive transformation of cloud infrastructure, according to industry body Nasscom.

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Global elections we read

■ Where have the OpenAI founders gone? (FT)

■ How Elon Musk is using his empire to launch xAI (WSJ)

■ Google’s rise was inevitable. And so was its antitrust ruling (Wired)