SoftBank slashes Oyo’s valuation to $2.7B; Zetwork’s revenue up six-fold in FY22

SoftBank, the largest shareholder in IPO-bound Oyo, has slashed the hotel-booking firm’s valuation by 20%, from $3.4 billion to $2.7 billion, after benchmarking it against peers with similar operations. Three years ago, Oyo was valued at $10 billion.

giphy

Credit: Giphy

Also in this letter:
■ Zetwerk reports six-fold jump in FY22 revenue to Rs 4,961 crore
■ WhatsApp Pay India head Manesh Mahatme quits
■ ETtech Opinion: The necessity of edtech


SoftBank cuts valuation of IPO-bound Oyo to $2.7 billion

Ritesh Agarwal

Ritesh Agarwal, founder & CEO, Oyo

SoftBank Group Corp. has slashed the valuation of Oyo Hotels on its books by more than 20% as the once high-flying Indian startup prepares for an initial public offering (IPO).

Details: The Japanese investor, which is the largest shareholder in the hotel-booking firm, cut its estimated value for Oyo to $2.7 billion in the June quarter from an earlier $3.4 billion after benchmarking it against peers with similar operations. Oyo had hit a valuation of $10 billion in a 2019 funding round.

IPO plans: We reported on Monday that Oyo filed a fresh round of financial documents with India’s market regulator and was eyeing an IPO in 2023 after cost cuts and recovery in travel helped it reduce losses.

The startup was targeting a valuation of about $9 billion in its IPO after preliminary conversations with potential investors. In its preliminary filing last September, the company had said it planned to raise Rs 843 crore (about $1 billion) in the IPO.

Oyo’s response: The company said it was confident that its valuation shouldn’t have been marked down given its recovering business performance, adding that it hadn’t decided on the timing for an IPO.

Financials: Oyo said in its IPO filing addendum on Monday that its losses narrowed and sales rebounded for the year ending March 2022 (FY22) and the following three months (Q1FY23).

It reported revenue from operations of Rs 1,459.3 crore in Q1FY23. Its restated quarterly loss from continuing operations was at Rs 414 crore. The company claimed this was its maiden Ebitda-positive quarter.


Zetwerk reports six-fold jump in FY22 revenue to Rs 4,961 crore

Zetwork

Amrit Acharya, cofounder & chief executive, Zetwerk

Manufacturing services unicorn Zetwerk reported revenue of Rs 4,961 crore in its audited FY22 results on Thursday – a six-fold increase from the previous financial year.

The company clocked a revenue of Rs 835 crore in FY21 and Rs 321.7 crore in FY20.

Overall losses remained largely unchanged at Rs 42 crore, after factoring in the non-cash employee stock ownership plan (Esop) expenses. Zetwerk had reported a total loss of Rs 41.2 crore in FY21.

zetwerk financials

What’s driving growth? Cofounder and chief executive Amrit Acharya told us the jump in revenue was due to revenue growth from its consumer manufacturing business and international clients.

Zetwerk’s revenue from consumer manufacturing accounts for 30% of its overall revenue while international operations contribute 16%. The US market contributes to almost 70% of the firm’s international revenue.

On an operating level, the unicorn said it recorded an Ebitda profit of Rs 57 crore from operations. Its total gross merchandise value (GMV) also grew six-fold to Rs 5,718 crore in FY22 from Rs 951 crore in the previous fiscal year.

PLI boost: In 2021, the Indian government rolled out a production-linked incentive (PLI) scheme to boost domestic manufacturing, with an outlay of Rs 2 lakh crore for 14 sectors, including automobiles and auto components, specialty steel and white goods.

The idea was to reduce import bills and improve the cost competitiveness of domestically-manufactured goods.

Cement, metals and renewables continue to be the top manufacturing categories for Zetwerk.


WhatsApp Pay India head Manesh Mahatme quits

manesh mahatme

Manesh Mahatme, director and head of WhatsApp Pay in India, quit the company earlier this month after almost an 18-month stint with the Meta-owned messaging app.

Back to Amazon? Mahatme, who was earlier director and board member of Amazon Pay India, was hired by WhatsApp to head its payments vertical in April 2021. As director of WhatsApp Pay, he focussed on enhancing the payments experience for users and scaling the service.

He is expected to rejoin his former employer Amazon India in a strategic role, said a person aware of the discussions, who did not wish to be named.

WhatsApp’s UPI struggles: In November 2020, the National Payments Corporation of India (NPCI), which operates the Unified Payments Interface (UPI), gave WhatsApp approval to go live on the platform in a phased manner, with a maximum of 20 million customers to start with. It doubled this limit to 40 million by the end of 2021, then to 100 million by April 2022.

Despite the increase, WhatsApp Pay’s share of the total number of UPI transactions remains abysmal. It had a share of less than 1% of the overall UPI market in August, with only 6.72 million transactions, despite launching successive cashback campaigns in April and June, which resulted in a small increase in numbers.

Also Read | NPCI consults govt, other stakeholders on UPI market cap amid extension requests


ETtech Opinion: The necessity of edtech

edtech

During the pandemic, our house help was extremely worried for her children.

While the world had opened up, schools remained closed. Her kids, who went to school to study and socialise, stayed locked at home. In the absence of school, the only method of instruction was learning online.

Thanks to some enterprising teachers, the kids were given videos from the internet to learn from. Without educational technology, it would have been impossible for them to be educated.

The pandemic reversed decades of progress in learning, especially in developing countries like India, but more than 600 million children worldwide were affected. Learning poverty is real and could have far-reaching consequences for the world’s future.

Thirty-five million children in India have never been to school. More than 50 million children live in tier 2 and tier 3 cities, and many more in villages. Few have access to education like the privileged few in tier 1 cities.

Educational technology, or edtech, bridges this gap.

Click here to read the full column by Aviral Bhatnagar, founder of A Junior VC.


ETtech Done Deals

Deep Rooted

Deep Rooted cofounders (from left) Santhosh Narasipura, Avinash B R, Gururaj Rao, and Arvind Murali

■ Deep Rooted, a farm-to-consumer (F2C) brand for fruits and vegetables, announced it has raised $12.5 million in a funding round led by IvyCap Ventures, with participation from existing investors including Accel, Omnivore and Mayfield. Over the next 12 months, the startup plans to expand its operations to cover major cities in South India, strengthen its technology stack, and proactively hire across marketing, technology and business functions.

■ Cryptocurrency taxation and Web3 portfolio tracking startup Binocs said it has raised $4 million in funding led by Beenext, along with Arkam Ventures, Accel, Saison Capital, Premji Invest, Blume Ventures and Better Capital. It said it would use the funds to expand its product, engineering, growth and marketing teams.

■ Web3 chess startup and marketplace Immortal Game said it has raised $12 million in funding led by TCG crypto. Other tech and entertainment VC specialists such as Cassius, Greenfield One, Sparkle Ventures, Kevin Durant’s and Rich Kleiman’s 35V, Blockwall, Kraken Ventures and Spice Capital also participated in the round.

■ FS Life, earlier known as FableStreet, said it has raised Rs 50 crore in a funding round led by Fireside Ventures. Other startup founders such as Ghazal Alagh of MamaEarth; Mehul Agarwal & Vikram Chopra of Cars24; Malika Sadani of The Moms Co also participated in the round.

Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant in Mumbai and Gaurab Dasgupta in New Delhi. Graphics and illustrations by Rahul Awasthi.