Category: Investment

Softbank Warns Of Longer Startup Winter Due To Unicorn Founders Unwilling To Cut Valuations

Softbank Group has recently reported a quarterly loss of more than $23 billion. The company said this net loss in the June quarter “was recorded mainly due to the monetization of investments in public portfolio companies.” As a result, this may cause a longer funding winter for startups. 

Masayoshi Son, the founder and chief executive of SoftBank Group, is due to the unicorn founder’s unwillingness to accept lower valuation in fresh funding deliberation. This assertion has led the 64-year-old executive, whose Vision Funds have backed over 470 startups globally in the past six years, to believe that the “funding winter” may last longer for unlisted companies. 

Masayoshi said unicorn leaders “still believe in their valuations, and they wouldn’t accept that they may have to see their valuations go lower than they think.” The 64-year-old executive also stated that the winter for publicly-listed companies is continuing, but a similar downturn for startups may last longer.” 

Startups worldwide are facing a sharp crunch in funding as investors grow cautious about the market conditions – despite increasing, startups are raising record amounts of funds in recent months. Klarna, a SoftBank-backed firm, raised $800 million in new financing round that valued the firm at $6.7 billion, down from $45.6 billion a year ago. In another case, Stripe, one of the world’s most valuable startups, cut its valuation by 28% in an internal assessment. 

The founder of SoftBank Group, about the market conditions, said that “Now seems like the perfect time to invest when the stock market is down so much, and I have the urge to do so, but if I act on it, we could suffer a blow that would be irreversible, and that is unacceptable.”

Comparing the company’s last year’s investment profile to the current year, SoftBank invested $600 million in the quarter that ended in June, down from $20.6 billion during the same period a year ago. The company has also reduced the size of its check, taking only 5% to 10% ownership in firms it backs. 

Other high-profile investors, including, Sequoia, Lightspeed, and Y Combinator, have advised their portfolio founders to “plan for the worst” and accelerate any fundraising deliberation if the runway isn’t long enough. 

The quarterly loss is the company’s biggest. Masayoshi Son expressed his remorse, stating, “When we were turning out big profits, I became somewhat delirious, and looking back at myself now. I am quite embarrassed and remorseful.”

China-based MegaRobo raised $300-million in a Series C funding round

MegaRobo Technologies is a China-based company that uses robotics and artificial intelligence for life science research.  

The company has recently led a Series C funding round which was led by Goldman Sachs’ private investment arm, venture capital company GGV capital, and Asia Investment Capital. 

The funding round also saw participation from the likes of Sinovation Ventures, Pavilion Capital, and Starr Capital. The Series C funding round also saw the participation from China-focused investment companies Yumeng Capital, Redview Capital, and Harvest Capital, as well as investment bank Taihecap, which were involved in the deal. 

The company announced that through the Series C funding round, it has raised a total of US$300-million. The company plans to use the fresh funds to fund research and development, increase capacity and expand its presence in new international markets. 

MegoRobo was founded in 2016 to develop a suite of robotic automation solutions that integrate AI software, analytical instruments, laboratory hardware, and consumables to help clients in the life science sector achieve more stable and efficient experimental results. It targets industry issues such as a growing lack of biotech talents in areas ranging from new drug R&D to genetic engineering and clinical diagnosis.

The company claims to employ close to 1,000 people, of which about 600 of them are research professionals, across offices and labs in Beijing, Suzhou, Shanghai, and Shenzhen in China, as well as in the U.K. and U.S.

The company whose product includes a COVID-19 testing solution is also the latest start-up from the pharmaceutical industry to capitalize on a jump in investor interest in the sector after the COVID-19 pandemic.

On its official website, MegaRovi stated that it has raised more than US$150-million in seven previous venture rounds. Prior to the current funding rounds, the company started raising capital for its Series B round in November 2020 which raised about US$125-million of funding from investors. It is speculated that the company has reached a unicorn valuation of over USD 1 billion.

India’s ShareChat in advance talks with Google, and Temasek to close $300-million funding with $5-billion valuation

According to reports from Reuters, Indian-based ShareChat’s parent firm Mohalla Tech has raised nearly $300-million from Google, Indian media conglomerate Times Group, and the Singapore government’s Temasek Holdings. 

This latest funding puts the value of the social media firm at nearly US$5-billion with the deal set to be announced as early as next week. 

This is Google’s second investment in India’s short video sector with Google previously investing in other short video apps, having previously invested in VerSe Innovation which runs a short-video company named Josh which is already valued at US$5-billion, that competes with ShareChat’s sister firm Moj. 

ShareChat’s app is available in 15 languages and currently has 180-million monthly active users and more than 32-million creators according to their website. 

ShareChat was last valued at US$3.7-billion in a US$266-million funding round from investors including Alkeon Capital and Temasek in 2021. The firm also includes the likes of Twitter and Snap among its investors. 

The social media firm is backed by the likes of Snapchat, Tiger Global, and Twitter. ShareChat was founded in 2015 by three Indian Institute of Technology graduates – Ankush Sachdeva, Bhanu Pratap Singh, and Farid Ahsan. 

Short video apps like Moj and Josh shot up in popularity after India 2020 banned their Chinese competition ByteDance’s TikTok and Helo etc, following a border clash with China. India’s short-video market is expected to reach 650-million monthly active users by 2025. 

India’s unicorn startup, Cars24 cuts 600 jobs

The used car e-commerce platform, Cars24 backed by investors in the likes of SoftBank and Alpha Wave Innovation, has asked 600 of its employees to leave, even as it pushes ahead with its international expansion plans and attempts to steer through the gloomy market conditions. 

The Cars24 layoff, which represents about 6% of the startup’s workforce, affects staff across multiple divisions. A spokesperson for Cars24 insisted in a statement that “THis is business as usual as these are performance-linked exits that happen every year.”

In December last year, Cars24 closed a $400-million round of funding, including a $300-million Series G equity round alongside a $100-million debt from diversified financial institutions such as SoftBank, Alpha Wave Global, and DST Global among its backers. 

The $400-million injection of funding saw the platform being valued at $3.3-billion, about double its previous round in September 2021. 

The company has recently announced the launch of seven ‘Mega Refurbishment Labs’ (MRLs) in India which is an industry first, and one MRL in the UAE which is among Dubai’s largest ever commercial leasing deals. 

Vikram Chopra, Co-founder & CEO of Cars24 said that “As we continue to build the best infrastructure for the future with an end-to-end digital customer experience, we are confident that this will delight our customers with our high-touch industry experience.”

The recent layoff by Cars24, however, did not come as a surprise as investors are advising startups to cut their costs and increase the runway by as much as three years as plenty of funding rounds that were getting finalized a few weeks ago are increasingly being renegotiated, stalled or canned.

This sentiment by investors saw Indian edtech Vedantu letting go over 620 people in recent weeks, whereas Cars24’s chief rival, Unacademy, has fired about 1000 individuals. Other startups like Meesho, OkCredit, Trell, Furlenco, and Lido have also cut several roles within their firms in recent weeks. 

India’s Latest Unicorn, Rebel Foods, Enters The Club After Raising $175m

Cloud kitchen startup Rebel Foods has entered the unicorn club after raising $175 million in its Series F funding round that was led by sovereign wealth fund Qatar Investment Authority (QIA), with a valuation of $1.4 billion. Other investors also include existing investors such as Coatue and Evolvence.

Rebel Foods has said that it is moving towards profitability, with an annual run rate sales of $150 million, growing 100% year-on-year.

“While we are excited about becoming the next unicorn, our focus continue to remain on improving customer experience the Rebel way. This round of funding will be re-invested in building our technology, increasing our global presence and also acquiring new brands. Rebel Foods is working towards an IPO in the next 18 to 24 months,” said Piyush Kakkad, Rebel Foods’ chief financial officer.

The startup was founded in 2011 by INSEAD alumni Jaydeep Barman and Kallol Banerjee.They are the 31st unicorn to emerge from the Indian startup ecosystem this year and the first in the cloud kitchen space. A cloud kitchen restaurant prepares food only for delivery and does not offer dine-in services.

Rebel Goods manages more than 45 brands and 450 kitchens globally across 10 countries and regions. These include India, Indonesia, Malaysia, Singapore, Thailand, the Philippines, the United Arab Emirates, the United Kingdoms, and Bangladesh. It also operates over 4000 internet restaurants.

Goldman Sachs acted as the exclusive financial adviser and Shardul Amarchand Mangaldas acted as the legal adviser to Rebel Foods on the transaction.

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