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    The SaaS gold rush


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    Good morning,

    Website and mobile testing platform BrowserStack said on Wednesday that it has raised new funds at a valuation of $4 billion. This makes it India’s highest-valued software-as-a-service (SaaS) firm, overtaking Freshworks. Read on to find out why this sector has investors lining up.

    Also in this letter:

    • Govt’s tussle with Twitter hots up
    • Facebook co-founder bets on PharmEasy
    • Former Infy CEO’s startup raises funds

    BrowserStack is now India’s highest-valued SaaS firm

    BrowserStack

    Browserstack, co-founded by IIT Powai graduates Ritesh Arora and Nakul Aggarwal, is now valued at $4 billion after raising $200 million in a round led by famed Silicon Valley investor Mary Meeker’s Bond Capital. Insight Partners and existing investor Accel also participated in the round.

    Why it matters: For a couple of reasons, actually. BrowserStack was a bootstrapped firm until 2018 and then raised $50 million from venture capital fund Accel Partners. Three years later, it has hit a valuation of $4 billion.

    It’s interesting that over the weekend, ed-tech major Byju’s also disrupted the top order of most valued Indian startups by closing a $340 million funding from UBS Group to take its valuation to $16.5 billion. Paytm was previously India’s highest-valued startup at $16 billion.

    BrowserStack may not have been the most well-known startup in India, but it's been growing quickly over the past few years. While the company did not share revenue figures, its team size went from 300 people to 800 over this period. Now, it plans to add 200 more to take the total to 1,000 employees by the end of 2021.

    Cofounder Nakul Aggarwal said Browserstack will use the funds to scale up operations in the fast-growing market for cloud-based software testing, for strategic acquisitions, and to double the size of its team in the next 18 months.

    SaaS in focus: We are also reporting that SoftBank is doubling down on its portfolio firm MindTickle with another $100 million. This will also make MindTickle a unicorn. 🦄🦄

    MindTickle.
    (From left) MindTickele's Chief Product Officer Nishant Mungali, CEO Krishna Depura and CTO Deepak Diwakar.

    Sources tell us SoftBank is looking for a wider play in the SaaS sector and this could be an indication of things to come. A SaaS-focused growth stage investor told us SaaS or B2B firms (under a wider definition) are getting more attention from investors willing to write bigger cheques. These companies also have better unit economics and don’t burn as much money as consumer internet startups.

    Just last week, Zenoti raised $80 million more from TPG with a nearly 50% jump in valuation to $1.5 billion.

    Market size and outlook: A report from Bain & Co last December said the revenues of Indian software product companies are expected to touch $18-$20 billion by 2022, doubling their share in the global SaaS market to around 7-9%.

    Growth is being driven by significantly lower personnel costs, an abundance of engineering talent, round-the-clock customer service and a wide acceptance of products built and managed by Indian entrepreneurs, the report added.

    Some pointers: According to the Bain & Co report, the number of Indian SaaS companies has doubled to around 7,000-8,000 in the past five years, with over 1,200 of them having raised money.

    • Over 40 Indian SaaS firms have raised late-stage funding—Series C and beyond—compared to just 10 such firms five years ago.
    • For Indian SaaS firms, salaries for entry-level developers and sales resources are cheaper by 85% and 74%, respectively, compared to the US.
    • The country also has over 100,000 SaaS engineers and 120,000 sales agents.
    • Companies such as Zoho and Freshworks have around 400,000 and 200,000 customers, respectively, across over 150 countries, making Indian SaaS more visible.

    Twitter has ‘deliberately chosen’ not to comply with IT rules: Prasad

    Union Minister Ravi Shankar Prasad

    Union minister for electronics and information technology Ravi Shankar Prasad said yesterday that Twitter has "deliberately chosen the path of non compliance" with respect to India’s new IT rules.

    Catch up quick: The new rules, which were announced in February and came into force on May 26, are aimed at regulating content on social media and chat platforms such as Facebook, WhatsApp and Twitter, making them more accountable to legal requests for swift removal of posts and sharing details on the originators of messages.
    • The rules also require “significant social media companies” to set up grievance redressal mechanisms and appoint new executives to coordinate with law enforcement.
    First FIR: Prasad’s comments came after the Uttar Pradesh Police filed a first information report against Twitter Inc, its India unit and seven others in connection with a viral video of an attack on an elderly person in Ghaziabad. This is the first case against Twitter since the new IT rules came into effect.

    The minister said, "What happened in UP was illustrative of Twitter’s arbitrariness in fighting fake news. While Twitter has been over-enthusiastic about its fact-checking mechanism, its failure to act in multiple cases like UP is perplexing & indicates its inconsistency in fighting misinformation.”

    Intermediary status: Top government officials told us yesterday that Twitter may have lost its status as an intermediary, and thus be liable for content on its platform, as it was yet to comply with the new IT rules. On Tuesday evening, the company said it had appointed an interim chief compliance officer and would soon share the details with the government.

    Yes, but: Digital rights body Internet Freedom Foundation and several other digital rights experts have said that under the law, Twitter’s status as an intermediary and its protection from liability will be decided by courts and not the government.

    Internet Freedom Foundation also noted that the new IT Rules were unconstitutional and had been challenged in several high courts. The latest challenge from eminent Carnatic music vocalist TM Krishna, who filed a petition in the Madras High Court last week.

    So, what's the concern? Divij Joshi, a technology policy fellow at Mozilla, pointed out that intermediaries such as Twitter will be unable to claim safe harbour status for all third-party content on their platforms until they comply with the new IT rules, since the safe harbour provision is tied to compliance with the new rules and Section 79 of the IT Act.

    'No personal criminal liability please': Meanwhile, top industry bodies are seeking the withdrawal of the clause in the new IT rules that imposes personal criminal liability on the chief compliance officer of “significant social media companies” such as Twitter and Facebook.

    Experts said the personal criminal liability of the compliance officer is one of the main reasons why companies are hesitating to name local officers for this role.

    The Internet and Mobile Association of India ( IAMAI), the Confederation of Indian Industry (CII), the Federation of Indian Chambers of Commerce and Industry (FICCI) and others have asked for the provision to be dropped in the interests of “promoting ease of doing business” and “better enforcement of laws”.

    They also pointed out that modern corporate jurisprudence is leaning towards replacing criminal liability with monetary penalties.

    In a letter to the ministry of electronics and information technology, IAMAI said the personal liability clause for the chief compliance officer should be “replaced by an appropriate provision which is “proportional to the harms” caused by non-compliance.

    Tweet of the day


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    Facebook co-founder’s B Capital buys stake in PharmEasy

    pharmeasy

    Facebook co-founder Eduardo Saverin’s B Capital has picked up a minority stake in online pharmacy PharmEasy for $20 million through a secondary deal, sources aware of the matter said.

    • ET was the first to report about the deal on May 29. US-based investment firm Tiger Global is also finalising a $20 million primary capital infusion in PharmEasy’s parent API Holdings.

    Valuation jumps: The online pharmacy is now valued at $1.8 billion, up from $1.5 billion in April, when it joined India’s fast-growing pool of unicorns.

    Pharmeasy, which recently acquired smaller rival Medlife, is the only major standalone e-pharmacy firm in the country. It is currently eyeing a public market listing, aiming to raise around $400-$500 million at a valuation of $3 billion.

    E-pharmacy boom: Indian’s e-pharmacy segment was estimated to be $360 million in size last year, as per EY India. The size of the sector is estimated to swell up to $2.7 billion by 2023.

    Also Read: Tata Digital acquires online pharmacy 1mg

    IN OTHER DEAL NEWS

    ■ Vianai Systems, an artificial intelligence startup founded by former Infosys CEO Vishal Sikka, has raised $140 million in Series B funding from SoftBank Vision Fund 2 and industry luminaries, the company said in a statement on Wednesday.

    ■ San Francisco-based Sense, an artificial intelligence-driven talent engagement and communication platform, has secured $16 million as part of its Series C round. The funding round was led by Avataar Ventures. Existing investors Accel and Google Ventures also participated in the round.

    ■ Wherehouse.io, an on-demand warehousing solution provider for direct-to-consumer brands, has raised seed funding in a round led by Better Capital, which also included Snapdeal founders Kunal Bahl and Rohit Bansal's fund Titan Capital, Java Capital, First Cheque, and Upsparks.

    ■ Canadian edtech platform ApplyBoard has landed $300 million in its Series D funding round at a post-money valuation of $3.2 billion.

    ■ L&T Infotech is acquiring Pune-based Cuelogic Technologies in a $8.4-million deal, as it looks to tap into the market opportunity presented by digital engineering.

    Google Pay ties up with more banks for card payments

    Google Pay has tied up with a clutch of leading Indian banks including the State Bank of India (SBI) to provide tokenised card payment services to customers of its Unified Payments Interface (UPI) app.

    Tokenisation lets users make debit or credit card payments through a secure digital token attached to their phone without having to physically share their credit or debit card details.

    Details: Google Pay has added debit cards from SBI, IndusInd Bank and Federal Bank, and credit cards from IndusInd Bank and HSBC India to its tokenised offerings. Visa will be the network partner for these transactions.

    The payments app already allows customers of Kotak Mahindra Bank, SBI Cards and Axis Bank to make tokenised payments by linking their cards with the app.

    Why does it matter? The move comes at a time when the National Payments Corporation of India (NPCI), which owns and operates UPI, has introduced a 30% market share limit for third-party UPI apps. Google Pay currently has a 34.3% market share while rival PhonePe has a 45.3% share, as per the latest NPCI data.

    The government's zero-MDR (merchant discount rate) diktat for UPI transactions has also affected the revenue model for UPI apps in India. Adding card payments could be a way for Google Pay to monetise some of its customer base.

    Infographic Insight

    BrowserStack is the seventh Indian SaaS startup to join the unicorn club after Freshworks, Druva, Icertis, Postman, Zenoti and Chargebee.

    Seven Indian


    MX TakaTak most downloaded Indian app globally

    short video app

    MX TakaTak was the most downloaded Indian app globally in the first quarter of 2021 with over 80 million downloads, beating other popular social media apps such as Instagram, Facebook and TikTok, according to data from mobile app marketing intelligence firm Sensor Tower. (Full disclosure: MX Player and MX TakaTak are owned by Times Internet Limited, which also owns ETtech).
    • It was among the top ten most downloaded apps globally across both the Google Play and App Store, with TikTok, Facebook and Instagram being the three most downloaded apps.
    MX TakaTak counts Dailyhunt’s Josh and ShareChat’s Moj as competitors and was launched following the ban on popular Chinese short video app TikTok last year.

    Also Read: MX TakaTak rolls out Rs 100 crore fund for creators

    Ikea kicks off home deliveries in Bengaluru

    Swedish home furnishings giant Ikea has started home delivery of its products in Bengaluru.
    • Prior to this, Ikea’s products were available for home delivery in Mumbai, Pune, Hyderabad, Ahmedabad, Surat, and Vadodara.
    Ikea India had opened its first retail store in Hyderabad in August 2018, followed by online stores in Mumbai, Hyderabad and Pune in 2019. The firm opened its second store at Navi Mumbai in December 2020. It also launched a mobile shopping app last month, expanding its omnichannel approach in the country.

    Top Stories We Are Covering

    Swiggy, ANRA get approval to start drone trials for food delivery: An ANRA Technologies-led consortium, of which Swiggy is a part, has received clearance from government authorities to commence drone trials for Beyond Visual Line of Sight (BVLOS) operations in India.

    NTT divests 75% stake in Data Centre Holdings: Japanese technology firm NTT Corporation said it would collaborate with Tokyo Century Corp on its data centre business in India. NTT Global Data Centers Holding Asia will divest 75% of its shares in a special purpose vehicle to Tokyo Century and will jointly own the data centre’s assets currently held by a 100% subsidiary of the SPV.

    Wipro signs up for WEF’s initiative:
    Wipro has become one among the first 14 signatories of the World Economic Forum’s initiative on co-creating new work standards.

    Global Picks We Are Reading

    ■ Apple pre-installed apps would be banned under antitrust package (Bloomberg)

    ■ Podcaster turned tech investor raises $140 million fund (FT)

    ■ China is kicking out more than half the world’s bitcoin miners (CNBC)

    Today’s ETtech Morning Dispatch was curated by Zaheer Merchant and Karan Dhar in Mumbai.

    Updated On Jun 17, 2021, 02:34 PM IST

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