Sources have told ET that Reliance Jio Platforms is close to investing up to $200 million in Bengaluru-based venture capital fund Kalaari Capital. The deal will be one of the largest commitments ever by an Indian conglomerate to a venture capital firm.
Meanwhile, the Advertising Standards Council of India has issued guidelines for clearly labelling paid posts by influencers. But how much difference will the guidelines make, given that they aren’t legally binding? #NotMuch, we think.
Elsewhere in today’s letter:
- 🍔 Swiggy-Zomato duopoly under threat
- 🖥️ Biggest Indian IT buyout in the making
- 💱SBI latches onto JPMorgan’s blockchain
1. Jio Platforms set to invest $200 million in Kalaari Capital
is finalising an investment of up to $200 million in Bengaluru-based venture capital fund Kalaari Capital, led by veteran investor Vani Kola, two sources told ET. Jio has closed a $100 million infusion with another $100 million set to come in later.
With Reliance backing Kalaari as its anchor LP (limited partner), the deal will be one of the largest commitments by an Indian business conglomerate to a venture capital firm.
- “Reliance’s investment in Kalaari will give the company an early line of sight into startups and upcoming sectors. RIL won’t necessarily acquire all the companies in which Kalaari invests, but it will certainly act as a discovery pipeline,” said a person aware of the deal.
Zoom out: Reliance’s backing of Kalaari comes after some of the fund’s portfolio companies, including furniture retailer
Urban Ladder and lingerie retailer
Zivame, were acquired by units of Reliance Industries.
Too close for comfort? Startup entrepreneurs say it’s no secret that Kalaari has grown close to Reliance Industries in recent years. “I don’t think entrepreneurs will perceive RIL’s backing as a bad thing, but [Kola] does have a troubled history with some of the founders of her portfolio companies, which may be an issue,” said one entrepreneur.
- Kola has for the past few years been battling top-level churn, and disagreements and fallouts with portfolio firms and founders.
- We reported in January that Kalaari’s stake sale in hyperlocal grocery MilkBasket to Mahendra Nahata’s MN Televentures had foiled the startup’s plan to raise capital or explore an acquisition by suitors other than Reliance. Nahata is known to be an associate of Mukesh Ambani and Reliance Industries Ltd.
Kalaari’s rise: Kalaari came to prominence over the past decade after backing a string of e-commerce startups, including Snapdeal, Urban Ladder and Myntra, as well as unicorns such as online gaming platform
It has been in the market to raise its fourth fund for over a few years. The VC firm had mopped up $290 million back in 2015, its largest corpus ever, amid a funding frenzy in the Indian startup ecosystem.
2. Label paid posts as such, ad body tells influencers
Social media influencers in India have been having a party so far. Now, an ad council is suggesting it’s time for some after-party cleanup.
The news: On Monday, the Indian advertising industry’s self-governing body, ASCI, released a draft proposing
guidelines for influencer marketing on digital media. At the heart of this detailed three-page
document was one issue: “Much of what influencers post (on the internet) is promotional and a lot of it is not identified as such. Such non-disclosure is a disservice to consumers and is misleading.”
What ASCI wants: Influencers to disclose paid content upfront, and clearly. Dropping subtle hints won’t do. The draft lists specific disclosure labels that can be used on each of the prominent digital media channels just to be sure creators don’t devise their own creative ways to avoid paid-content disclosures. The influencer must also do their due diligence about any technical or performance claims made by the brands, the draft added.
Why so serious? The Indian influencer marketing industry is notorious for not disclosing paid brand partnerships. “A lot of influencers don’t like to disclose their association with a said brand, especially if the brand falls in the luxury or lifestyle space,” says Ramya Ramachandran, founder & CEO of Whoppl, an influencer marketing agency. The rot runs so deep that if an internet celeb discloses their paid partnerships, even indirectly, it gets
noticed by branding experts.
- And don’t blame the creators alone for this lack of transparency. It’s not like advertisers and creative agencies have shown much interest in enforcing stricter disclosure guidelines either. But things have escalated quickly in the past year with influencer marketing going from being a part of digital advertising to becoming the heart of it. Ergo, more scrutiny.
What happens now? Well, industry stakeholders have until March 8 to give their “feedback” on the guidelines. The final guidelines will be issued on March 31 and will be applied across platforms starting April 15. Mind you, ASCI’s guidelines are not legally binding so there will probably still be defaulters across the board. That said, one can certainly hope for a few #blessed, #foodporn and #wanderlust posts to be accompanied by #gifted, #ad, and #sponsored.
Tweet of the Day
There should be a family exchange program that allows children of business families and non-business families swap… https://t.co/N4UZaKXyXD
— Naman Sarawagi (@NamanSr) 1613978312000
3. may soon have a new owner
Private equity firm Carlyle Group
has emerged as a probable frontrunner to acquire MPhasis Ltd. from Blackstone Group, in what could be the largest buyout in the Indian IT space.
Driving the news: Carlyle is negotiating with a clutch of overseas banks and pension funds— from Deutsche Bank to CPPIB—to finance the acquisition. While a unit of the Canadian pension fund is likely to offer mezzanine debt, others are likely to come on board as senior lenders.
To be sure, ET had over a month ago reported that Brookfield, Bain & Co, Carlyle and Permira
are queueing up for a likely $3 billion MPhasis buyout. They are still in the race, but a decision is yet to be taken, one person aware of the matter said.
But at least seven people we spoke with said the spurt in Mphasis’ share price and the size of the transaction has muted the enthusiasm of the others.
4. Swiggy-Zomato duopoly under threat?
Zomato’s and Swiggy’s loss
could be Dunzo’s and Shadowfax’s gain.
Big-ticket restaurants—from Social to Mamagoto—are looking for alternatives to deliver food to their patrons, to save on commissions charged by the foodtech heavyweights. Dunzo, Delhivery and Shadowfax and ready to deliver their food at half the commission charged by Swiggy and Zomato. The savings are being passed on to the customer.
“This also enables access to customer data and direct customer feedback. It is necessary for businesses to start taking some control of their own digital landscape,” said Anurag Katriar, CEO of Indigo Deli and Tote.
5. Indian lenders grab turf from China
With Google removing nearly 500 China-backed fintech apps from its play store, small homegrown lenders
have seen a significant rise in loan disbursals. Most domestic fintech lenders ET spoke with said their business rose 20-40% month-on-month since December, when the crackdown started.
Fintech players further claimed that of the new applications received in the past two months, nearly 40-45% were from customers that had earlier dealt with China-backed lenders.
6. Zomato is hiring again
is hiring again, less than a year after it laid off a chunk of its staff to save on costs during one of the strictest coronavirus lockdowns in the world.
The firm, which is said to be drawing up its IPO plans, is looking to bring on board 400 people during the rest of 2021. In fact, after letting 500 people go in the early days of the pandemic, the company added 400 towards the end of last year as business picked up in the aftermath of the pandemic-induced lockdowns.
Top Stories We Are Covering
SBI latches onto JPMorgan’s blockchain: State Bank of India
has tied up with JPMorgan to use the US bank’s blockchain technology to speed up overseas transactions. The tie-up is expected to reduce SBI customers’ transaction costs and time taken for payments from a fortnight to a few hours.
OLX Autos appoints Gautam Thakar as global CEO: OLX Group
has appointed former Star Sports President and CEO Gautam Thakar as the global CEO of OLX Autos. He will manage the company’s offline and online presence across Asia, Africa, Latin America and US. Thakar will take up the role starting March 15 and lead a workforce of over 4,000 employees across various geographies.
It’s back to office for BPM staff soon: Business process management (BPM) firms
plan to bring more than two-thirds of their employees back to offices soon, as they explore a hybrid work model to effectively deal with critical client data and essential services. The plan is to have a 70:30 model of office and remote work once the Covid-19 vaccinations gather pace and the pandemic stabilises.
Kisan eMart thrives amid farmers’ protest: Kisan e-Mart transaction values
have touched nearly Rs 25 lakh so far, data showed, as scores of farmers flocked to the government-run online platform amid farmer protests in Delhi. The platform, which helps farmers sell their produce directly to buyers, was launched last year with a pilot project in Maharashtra.
Global Picks We Are Reading
Big Tech employees opened wallets for Biden campaign: Employees of big technology firms were a key source of contributions for Joe Biden’s presidential campaign, newly released campaign finance records show, eclipsing donations from employees at traditional Democratic fundraising sources such as banks and law firms.
(The Wall Street Journal)
Clubhouse Chats Are Breached, Raising Concerns Over Security: A week after popular audio chatroom app Clubhouse said it was taking steps to ensure user data couldn’t be stolen by malicious hackers or spies, at least one attacker has proven the platform’s live audio can be siphoned.
Microsoft, EU publishers seek Oz-style news payments: Microsoft Corp. is teaming up with European publishers to push for a system to make big tech platforms pay for news, raising the stakes in the brewing battle led by Australia to get Google and Facebook to pay for journalism.