Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy morning, folks. 🙏

Today we’re diving into -
- BharatPe’s attempts to shore up investor confidence,
- Net neutrality’s attempted arrival in India,
- And Captain Fresh’s $20mn round to blitz the fish market.

Our read time today is 4 minutes and 46 seconds - faster than you can finish a plate of paneer momos at Hauz Khas metro station. 🔥

Let's dive in. 👇

Market Vibe Check

BharatPe hunts for fresh funding. 🤔 

TLDR -
- BharatPe is hunting for $100 million in funding to build their lending business.
- Current leadership has been streaming out and investors are worried that valuations are too high.
- Their biggest competitors have slightly better margins + trust at scale.

Leadership exodus, frothy valuations, and a lending boom - BharatPe right now is like a badly cooked microwave meal.

Some parts are searing hot, others are ice-cold.

Let’s look at each of these -

1 - Leadership Leaving

It’s been no secret that BharatPe has been struggling to retain top talent.

Over the last few months, -
- CBO Nishant Jain left
- CEO Suhail Sameer left
- CBO (lending) Dhruv Bahl left
- Co-founder Satyam Nathani left
- CRO (revenue) Nishit Sharma left
- Head of Institutional Debt Chandrima Dhar left

Employee turnover is also super-high, with a ~25-30% attrition rate (basically, if 100 employees join in January, only 70-75 will be left by December).

This is BAD.

2 - Valuation Issues

When BharatPe raised their bumper $3 billion valuation round, they’d done it with an annual revenue of just $52 million.

That’s a revenue multiple of OVER 54X - a number only fathomable in a bull market.

Today, investors are concerned whether it’s worth as much.

BharatPe does $300 million of revenue/year now, with a much tighter grasp on margins than before.

Investors are concerned that they might not be growing into the $3 billion valuation, since it’s still a 10X multiple.

3 - Lending Boom

BharatPe needs the money pretty badly because lending is their bread-and-butter.

They make little-to-no margin on the actual transactions, but the actual dhandha happens when a merchant asks them for a 8-10L INR loan.

This debt is often pegged at ~12-20%, which makes it a massive cash cow for the business.

But the problem is - you need to have money to lend out.

BharatPe’s cash pile might be running low after years of burn…

Top telecoms ask companies to pay for their growth. 🙄

TLDR -
- Jio + Airtel are competitors who agree on one thing - streaming services should pay up.
- Almost 75% of telco traffic was because of video streaming.
- This puts OTT platforms in a bind - they’re essentially being pushed into a corner by the guys who control a LOT of their distribution.

Jio and Airtel are the kings of India’s telco market - the largest in the world.

And they just suggested to regulators that OTT providers should be contributing to the network development.

This is fancy diplomatic language that says - “we want Netflix, Amazon, YouTube, etc to PAY US based on how much of our traffic they use”.

Video consumption (such as Netflix, Amazon, Youtube, etc) was responsible for 75% of ALL traffic on Jio’s network last year.

Now here comes the insane part.

A lot of these streaming companies rely on telecom giants for their distribution.

Netflix themselves just signed a deal with Jio to bundle and sell subscriptions to Jio SIM users.

OTT companies rely on telcos for their traffic, and telcos are now milking it… 💀

Captain Fresh raises $20mn to sell fish across the world. 🐟

TLDR -
- Cap’n Fresh bagged $20mn to build up their B2B fish supply chain.
- They’re gonna be selling their own fish wholesale - so they own the entire backend.
- Puts them right into a bunch of very competitive cold chain startups.

An interesting market that not many startups are gunning for - the B2B cold chain.

India’s meat market does over $100 billion a year, and the lions share of this is dominated by unorganized wet markets.

Captain Fresh fixes that by selling their own fish supply wholesale, directly to suppliers.

There are a few others who have excelled in this very segment -
- FreshToHome raised $104mn from Amazon
- Licious is worth $1 billion+
- eFishery raised over $200 million at a $1b+ valuation

Great to see so many young companies getting into a “boring” industry… and making a killing while doing it.

In other news… ☕

Arm targets a $52 billion valuation (FT)

Baidu rallies $23 billion after AI chatbot launch (BBG)

Oil passes $90 for the first time this year (FT)

E-com financing startup Wayflyer inks a $1 billion deal with NB (TC)

Hinduja tries diversifying into Africa (Mint)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it. Have a mauj-masti filled weekend.

Lots of ❤️,

Team Cutting Chai