Namaste, Sat Sri Akaal, and Salaam. 🫡

Hope you guys had a brilliant month - I’m excited to bring Cutting Chai back after an exams-induced hiatus. Thrilled to be back in your inbox now that differential equations aren’t tormenting me. 🙈

Today we’re diving into -
- Ambani’s $8.5bn marriage (with Disney, not with Radhika Merchant 😭),
- India’s swift reversal on AI regulation,
- and Shadowfax Logistics’ $100mn round.

Our read time today is 4 minutes and 57 seconds - faster than they rolled the red carpet out in Jamnagar…

Let's dive in. 👇

Market Vibe Check

Disney strikes a $8.5bn deal to merge with Reliance industries. 🥰

TLDR -
- Reliance just took a 16% direct stake in Disney for $1.4bn, valuing the business at $8.5bn.
- They indirectly own 47% more, and have a majority controlling share.
- Disney has been under pressure from their investors to ditch India for a good amount of time now - and they gave into a classic Motabhai setup.

Your Instagram feed is filled with the Ambani pre-wedding in Jamnagar, but I bet you didn’t know that a second Ambani wedding JUST happened.

This one is a ~$8.5 billion deal between Reliance (the Ambani family business) and Disney (the folks who decided to kill Olaf in Frozen 2). Reliance will be taking up a 64% majority stake in Disney’s India operations and infusing almost $1.4bn of cash to try take the business to new heights.

Disney has fought tooth-and-nail over the last 5 years to build their India business (Star), which is why it’s a little odd of them to just to let it go at such a hefty write-down.

But that is until you look at their India operation’s bottom line.

They bought Star (their current India business) back in 2019, and always viewed it as one of the most promising assets in their global media portfolio - until recently. Disney figured out that the economics of running a streaming business in India just didn’t work for them.

Their average monthly revenue per user in India is ~$0.69, while a non-Indian user generates ~$4.44. All other things held constant, a non-Indian subscriber is worth 7.5X more to Disney than an Indian subscriber!

Disney’s India revenues have also been tanking ever since they lost streaming rights to IPL. The day after they announced that they wouldn’t be streaming IPL, their sub counts dropped almost 30%. And the best part - guess who snatched said streaming rights from under their nose. Reliance and Mukesh Ambani - the same folks who just bought a majority stake for pennies on the dollar.

Probably one of the coolest bait-and-switches in global markets of late. 🤔

Shadowfax nabs $100mn to supercharge their logistics game. 🚚

TLDR -
- Shadowfax is a Bangalore-based startup (of course) which is patching up the holes in India’s fragmented last-mile delivery scene.
- They’ve picked up $100mn to expand their driver base from 125k and city base from 2.5k.
- They’ve already gotten $220mn of prior funding, which means that something about the business clearly works well.

Something magical happens when an emerging nation pushes past the ~$6.5-7k annual gross national income mark - industries, companies, and people get networked like CRAZY.

And this is what we’re seeing in India - we just cleared $7k USD of GNI per capita, and logistics companies are sprouting up all across the country.

The latest beneficiary of this massive boom in connections is a logistics startup called Shadowfax. They target India’s highly fragmented last-mile delivery infrastructure, which is a massive market - my missing Flipkart orders are a testament to it.

India’s last-mile delivery networks are often inefficient given how different each urban environment is, and there is close to no standardization in service quality.

Shadowfax is trying to fix this with over 125k active delivery boys across 2,500 Indian cities - and they just picked up over $100mn to spread their last-mile tentacles into every corner of India.

Most logistics companies are killing it of late with the hyper-local delivery and quick-commerce boom - Shadowfax grew at a clip of 35% last year.

Super exciting space with super exciting players: it’s always great to see people build market-shaking companies in otherwise mundane industries.

Indian AI regulators whip out the laathi-danda 🫠

TLDR -
- Indian regulators are nudging ‘significant’ AI companies to government-review their models before launch.
- Founders don’t like the idea of adding unnecessarily bureaucratic angles to an otherwise fast-paced industry, and they also don’t want to share all their proprietary tech.
- It’s tough, it’s definitely a first.

If you’re doing business in India, you better be on the right side of the law.

The latest shikaar (victim) of bureaucracy is Indian generative AI - India’s IT minister just made a statement that tacks on a hell of a lot of red tape to any AI-related business in Bharat, and here is a gist of his speech:
- anyone with an AI product needs to be 200% sure that it doesn’t allow bias, discrimination, or interfere with electoral integrity (fairs)
- all AI companies need to be labeling the unreliability of their AI outputs (fairs)
- “significant” tech companies SHOULD seek government approval before launching AI models (not so fairs)
- this pre-launch government review is non-binding FOR NOW and will likely become a permanent thing in the future for AI companies (not so fairs)

Most AI founders are understandably pissed, because not only do these regulations slow down the pace of growth and product development - which is KEY in markets like this - but they also add a lot of unnecessary bureaucracy to otherwise unregulated processes.

Plus, there’s also something inherently off about sharing all your proprietary tech with a third party, which startups definitely won’t enjoy.

Longer dev timelines, higher costs, slower launches, internationally competitive disadvantages - it’s the whole shabang.

Maybe they should ask ChatGPT to fix these laws… 🙈

In other news… ☕

Europe dishes out a $2 billion antitrust thappad to Apple (FT)

Hotel software company Mews nabs $110mn at a $1.2bn valuation (TC)

Nvidia leapfrogs Aramco to become the world’s 3rd biggest company (BBG)

Global green bond sales top $54bn in their busiest Feb ever (BBG)

Ennismore goes hunting for cash (ZW)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it.

Lots of ❤️,

Team CC