It seems SPACs are everywhere these days. Grofers, the online grocery startup, is looking at going public in the US by merging with a blank-check company—aka a SPAC—floated by Cantor Fitzgerald, an investment bank and financial services company headquartered in New York. In other news, NPCI—and by extension, UPI—could soon see competition from the likes of Amazon and Visa.
Elsewhere in today’s letter:
- 💱 India’s blockchain conundrum
- 👋 Crypto selloff in India
- 🦄 Fintech dominates unicorn club
1. Grofers gets on the SPAC-wagon
Hi, it’s Samidha.
An Indian founder told me recently that his company was “SPACable”—yes, that’s an adjective now! It basically means that the startup is ready to take a plunge into SPACland.
And here I was thinking the madness around SPACs (you’d have to be living under a rock to not know it’s short for special purpose acquisition company) was restricted to the US.
- Today we have details of the one big SPAC-IPO that the Indian tech and startup world is awaiting. My sources tell me that grocery e-tailing startup Grofers is close to merging with one among half-a-dozen SPAC vehicles dished out by Cantor Fitzgerald—a New York-headquartered investment bank and financial services major. They have some eight.
- The India connection here is that Anshu Jain, former co-CEO of Deutsche Bank, is president of Cantor, but we’re not sure if that played a role. What surely would have helped the process is that Rajeev Misra, who heads SoftBank Vision Fund, and Jain are both Deutsche alums.
- Grofers aims to raise as much as $400-500 million through the IPO and is expected to snag a valuation of over $1 billion. Now that would be a good bump up for the company, which was last valued at around $650 million.
- Significant to note: SoftBank Vision Fund owns more than 45% of the company. Other early backers include Sequoia Capital, Tiger Global and Yuri Milner’s private investment vehicle.
Want to know more about SPACs?
Do read our explainer.
2. NPCI faces NUE money threat
The Unified Payments Interface (UPI), India’s wildly popular mobile payments platform,
could be in for some stiff competition soon. Created by the National Payments Corporation of India (NPCI), an association of 56 banks, UPI clocked a whopping 2.3 billion transactions last month. But its days as a near-monopoly are numbered.
The news: That’s because Amazon is set to partner ICICI Bank, Axis Bank, Visa, Pine Labs and Billdesk to create what the Reserve Bank of India (RBI) terms a ‘new umbrella entity’ (NUE) for digital payments. In other words, a rival to NPCI.
These companies are likely to present their proposal to the RBI before Friday, which is the last day to submit bids for setting up NUEs. The six firms may have near-identical stakes with slightly varying rights, sources told ET.
RBI’s call for competition: RBI had last August
issued guidelines for creating NUEs. Its goal was to foster competition in digital payments and reduce the risk that comes from relying too heavily on any one platform—UPI, in this instance.
NPCI has been instrumental in creating a world-class payments system in UPI, but the entrance of NUEs could spell bad news for it.
Non-profit NPCI: That’s because the RBI’s guidelines say that NUEs can be for-profit companies, while NPCI is a not-for-profit firm under the Companies Act.
How NPCI copes with competition from the likes of Amazon, ICICI Bank and Visa remains to be seen, but its status as a non-profit is more likely to hinder than help.
- It could end up blunting NPCI’s edge on innovation and lead to a talent drain as well, thanks to the rather deep pockets of its potential rivals.
- At worst, partners on NPCI’s platforms could take their business elsewhere, to entities that are allowed more flexibility with their business models than the RBI allows NPCI.
NPCI is not a regulatory body—at least not by definition. Its proprietary ownership of nearly all payment channels that power retail digital payments gives it the power and influence to control India’s digital ecosystem.
RBI has made it clear that NPCI cannot be allowed to become a monopoly—and that’s a good thing. But with NPCI and its future rivals on unequal footing, it will be interesting to see what happens to it when the NUE dust settles.
Tweet of the Day
user attention is ultimately a zero sum game. great media-tech CEO’s & PM’s get it and adapt. great example of… https://t.co/tDLLDO2Qju
— miten sampat (@miten) 1614095829000
3. Ban, tax fears trigger crypto selloff in India
Increasing uneasiness over a possible cryptocurrency ban in India and fears of tax on gains
triggered a selloff on Indian crypto exchanges in the last couple of days as investors rushed to book profits after the biggest fall in the history of Bitcoin.
Many Indian investors have been investing in Bitcoin over the years. After recording a high, the cryptocurrency dipped by about $10,000 and was trading at about $ 47,000.
“February 22, 2021, over $2 billion of bitcoin moved for an old address to book profits, which also brought some correction in the market,” said Kumar Gaurav, founder and chief executive of Cashaa, an online banking platform for cryptocurrency.
4. India’s blockchain roadmap: Too early?
India’s blockchain roadmap, recently announced by the Union Ministry of Electronics and Information Technology (MeitY)
is too much too soon, according to industry watchers. The government is best placed to help develop the blockchain ecosystem rather than be an infrastructure provider, they say.
Industry bodies—Nasscom, Global Impact Fintech and the Government Blockchain Association—want minimal interference from the government as the basic premise of blockchain is decentralisation. They are of the opinion that under the proposed rules, MeitY would have a tight control over blockchain in India thereby limiting innovation.
- India chapters of Global Impact Fintech and Government Blockchain Association have written to MeitY saying it is ‘’too early” for the government to come out with a regulatory framework.
- Nasscom has commented that the areas where the government intends to engage in blockchain regulation is “unclear” and the industry wants more details on the “role of the government”.
5. ETtech Done Deals
■ Food ordering platform
racked up $250 million in primary financing from existing investors Tiger Global, Kora, and Fidelity. The funding round values the foodtech startup at $5.4 billion, a significant bump-up from the $3.9 billion valuation it commanded
in the previous round just two months ago.
VerSe Innovation, the parent company of news aggregator Dailyhunt and short-video platform Josh, has
acquired Bengaluru-based AI solutions provider
Cognirel Technologies for an undisclosed amount. Cognirel’s team of scientists will join the firm while founder Ram Prakash will head the company’s newly instituted artificial intelligence lab.
Impact Analytics, provider of AI-driven SaaS solutions for planning and merchandising within the retail industry, has
raised $11 million in Series A from investors led by Argentum Capital Partners IV, LP.
has raised $6 million from venture debt fund
Trifecta Capital, as the B2B retail-tech company aims to hit a sales run rate of $500 million this year. “This capital will be used to fuel growth, with the network expansion and scaling up our supply chain capabilities to deliver better services to our partner stores,” CEO Khushnud Khan said in a statement.
6. Impact of ASCI’s influencer rules
Advertising spends in influencer marketing have been soaring on social media platforms, such as Instagram and YouTube. However, with the
new draft guidelines from Advertising Standards Council of India (ASCI) calling for clearer disclosures on paid partnerships, both influencers and marketers
are finding themselves at the crossroads.
Marketers expect a marginal drop in influencer ad spends as a result of the ASCI guidelines coming into force but said things may not change drastically.
Top Stories We Are Covering
Pixxel delays ‘Anand’ satellite launch again: Space technology startup Pixxel
has delayed once again the launch of its first satellite aboard the upcoming PSLV C51 mission scheduled for Feb. 28. The Bengaluru-based company said that the decision to pull out of the launch five days before lift-off was due to software glitches detected during the final stages of the satellite’s testing.
‘Clients’ digital spends going beyond their IT budgets’: Infosys, and the IT industry at large, is seeing more opportunities for growth over the next few years, as businesses are spending over and above their IT budgets to drive digital transformation,
according to Salil Parekh.
Global Picks We Are Reading