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Paytm's board games
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Paytm, which plans to go public in a few months, has agreed to give its founder Vijay Shekhar Sharma the right to appoint one member to its board. The agreement, which is subject to Sharma meeting certain conditions, must first be approved by shareholders.
Also in this letter:
Paytm CEO Vijay Shekhar Sharma will have ‘protective rights’ to appoint one member to the board, so long as he owns 2.5% equity in the company he founded and continues engagement with it in an executive capacity.
Sharma currently owns nearly 15% of Paytm.
Details: These rights have been included in the new shareholding agreement that Sharma and Paytm signed last month. Under the new agreement, Sharma will no longer be classified as the company’s ‘promoter group’.
Alibaba also gets one seat on the board, while SoftBank Vision Fund and Elevation Capital (formerly SAIF), which own stakes in Paytm, can nominate one director each.
Shareholders must approve: While the new agreement is already in effect, the proposal to give Sharma protective rights after its listing must be ratified by shareholders. Since all existing investors -- including China’s Alibaba and its affiliates -- that own nearly 40% of Paytm agree with the proposal, it is likely to pass uncontested.
Why? Many Indian consumer-tech startups such as Paytm, CarTrade, Nykaa, Policybazaar, MobiKwik and Delhivery are in various stages of finalising their public listings. Ahead of these high-profile IPOs, many in the startup industry are seeking regulatory safeguards that give individual promoters more flexibility in exercising operational control over the companies they founded — even after they go public.
“It is a well-established industry norm to give founder members rights linked to board nomination, subject to public shareholder approval,” a source told us. “In the current case, the shareholding of the founder is significant and thus needs to be protected.”
Right to first offer: Sharma and certain other investors in Paytm also have the ‘right to first offer’ if any existing shareholder seeks to divest their stake in the company.
The huge digital push created by the pandemic has sparked an unprecedented CXO hiring spree by Indian startups. Flush with funds from risk investors, they are budgeting more money than ever before to hire top talent.
Startups are spending as much as 30-35% of the funds they raise to get the right candidate, up from 10-15% earlier, CEOs, search consultants and industry experts told us.
Zomato’s blockbuster public issue and a string of upcoming IPOs have prompted senior talent from legacy firms to join these relatively small companies in return for huge pay packets that include employee stock options.
Example? Some recent top hires include:
One world, one market: “Top talent, especially in a virtual world, is globally mobile. One has to compete on compensation at a global scale. One does need to budget more money to attract talent when raising funds,” said Tushar Vashisht, founder and CEO of Healthifyme.
Mohalla Tech, the parent firm of regional language social media platform ShareChat and short-video app Moj, said it has raised an additional $145 million in its Series F funding round led by Singapore’s Temasek and Moore Strategic Ventures. Mirae-Naver Asia Growth Fund also participated in the latest financing.
Valuation jump: The latest funding values ShareChat at $2.88 billion, up from $2.1 billion in April, when it snagged $502 million in a round led by Tiger Global. Overall, ShareChat has raised over $911 million to date.
Where will the money go? ShareChat said the money will help it double down on its strategic priorities: improving their artificial intelligence (AI) feed, attracting and incentivising a diverse creator base, and strengthening safety on its platform.
The firm has recently hired senior executives in the UK and the US with expertise in AI and machine learning, and is looking to hire more people in such roles, it said.
In other deal news…
■ Singapore-Mumbai based B2B payments platform Nium has raised $200 million in a funding round led by Riverwood Capital, valuing the firm at over $1 billion. The round also saw participation from Singapore's state investor Temasek Holdings, payments processor Visa and venture capital firm Vertex Ventures. Earlier this month, Nium had acquired fraud-hit Wirecard’s foreign exchange unit in India as part of the latter’s insolvency process.
■ Online travel app Ixigo has bagged $53 million from investors led by Singapore sovereign wealth fund GIC, ahead of its proposed initial public offering, according to regulatory filings sourced from Tofler. “The company is looking at a valuation of $750-800 million for the IPO that is scheduled for the fourth quarter of the current calendar year,” said a person with knowledge of the development. “It plans to raise Rs 1,200-1,500 crore via its IPO for which it will file its draft red herring prospectus next month.”
■ Health food brand The Whole Truth has landed $6 million in a Series A funding round led by Sequoia Capital India. The company has so far raised Rs 52 crore including this round.
■ Medical technology startup Axio Biosolutions said it has secured $6 million in a funding round led by Truescale Capital. Existing investors Omidyar Network India, University of California-Ratan Tata Fund, and Accel also participated.
■ Bengaluru-based social gaming and live-streaming startup Eloelo has raised $2.1 million in a funding round co-led by Waterbridge Ventures and Lumikai Fund. Better Capital and Exceed Entertainment also participated. The startup plans to use the funds to strengthen creator partnerships and aid the launch of new live-gaming formats to scale the platform for the next 10 million users.
Walmart-backed Flipkart has moved the Supreme Court challenging last week's Karnataka High Court order which paved the way for India’s antitrust watchdog to probe firms like Flipkart and Amazon India, according to sources aware of the matter.
Flipkart has filed an appeal and the matter may be heard later this week, a person aware of the matter said. Amazon India is also likely to file a similar petition in the top court to challenge the probe, the person added.
What’s the case? CCI had initially ordered the probe against the two ecommerce marketplaces in January 2020, saying it had “prima facie” found evidence to begin an investigation under Section 26 (1) of the Competition Act, 2002.
Draft e-commerce rules: These developments come amid proposals by the consumer affairs ministry to change India’s e-commerce rules. These include a ban on flash sales and curbs on in-house labels. Read our explainer on why e-tailers are upset over these draft guidelines.
Several industry groups are seeking major changes to these proposals as they believe they could hurt growth and negatively affect consumers.
A year has passed since a government-appointed panel entrusted the Ministry of Electronics and IT (MeitY) to lead the implementation of its Artificial Intelligence (AI) Mission, final approval for the marquee programme is still awaited from the cabinet.
Sources said Niti Aayog had earlier made a Rs 7,000 crore proposal for the project, but the cabinet note prepared by Meity had estimated a slightly lower budget.
While MeitY will lead the roll out of the national programme on AI, it will also involve academic institutions such as IITs, industry partners for advanced R&D, and the ministries of health, education and agriculture.
WazirX, India’s largest cryptocurrency exchange by volume, is in the advanced stages of launching a decentralised exchange, cofounder Nischal Shetty said.
What’s the difference? Unlike a centralised setup, where an exchange is the custodian of a customer’s cryptocurrency and controls who can or cannot open an account on it, a decentralised exchange operates without an intermediary organisation for clearing transactions. The trades are made using self-executing smart contracts.
“Because a decentralised exchange does not own the data, even the authorities can't really go to the developer of the exchange and say ‘I want the data’,” Shetty said. The data is available on the blockchain for everyone to see, he added.
This development comes as WazirX has found itself in the crosshairs of regulators. The Enforcement Directorate (ED) issued a show-cause notice to the exchange in June, asking it to explain transactions worth Rs 2,790.74 crore that allegedly violated foreign exchange rules. The exchange is believed to be preparing its response.
Grofers joins express delivery rush: Grofers has launched a 15-minute online grocery delivery service in Gurugram, cofounder Albinder Dhindsa wrote in a blog post on Tuesday. He claimed the company delivered groceries in over 7,000 households within 15 minutes on Monday.
Ola CEO 'strongly disagrees' with Tesla, Hyundai on import duties: Ola CEO Bhavish Aggarwal said on Tuesday that he “strongly disagreed” with the views of Tesla and Hyundai on lower import duties for electric vehicles in India. He said India should have confidence in its ability to build electric vehicles indigenously while also attracting global manufacturers.
Koo app calls on users to apply for its yellow-tick verification system: Following the furore over Twitter's blue tick verification applications and the selection criteria, Indian microblogging platform Koo is calling on users to apply for Eminence, it's yellow tick verification mechanism on the platform.
Also in this letter:
- Startups on CXO hiring spree
- ShareChat parent raises $145 million
- WazirX to launch decentralised exchange
Paytm’s Sharma can appoint one board member
Paytm CEO Vijay Shekhar Sharma will have ‘protective rights’ to appoint one member to the board, so long as he owns 2.5% equity in the company he founded and continues engagement with it in an executive capacity.
Sharma currently owns nearly 15% of Paytm.
Details: These rights have been included in the new shareholding agreement that Sharma and Paytm signed last month. Under the new agreement, Sharma will no longer be classified as the company’s ‘promoter group’.
- If Sharma meets both conditions, he will have the right to appoint any person of his choice to the new board.
- If he meets one of the two conditions, he will only be able to nominate himself to the board.
- If he meets neither, he will lose the right to board representation entirely.
Alibaba also gets one seat on the board, while SoftBank Vision Fund and Elevation Capital (formerly SAIF), which own stakes in Paytm, can nominate one director each.
Shareholders must approve: While the new agreement is already in effect, the proposal to give Sharma protective rights after its listing must be ratified by shareholders. Since all existing investors -- including China’s Alibaba and its affiliates -- that own nearly 40% of Paytm agree with the proposal, it is likely to pass uncontested.
Why? Many Indian consumer-tech startups such as Paytm, CarTrade, Nykaa, Policybazaar, MobiKwik and Delhivery are in various stages of finalising their public listings. Ahead of these high-profile IPOs, many in the startup industry are seeking regulatory safeguards that give individual promoters more flexibility in exercising operational control over the companies they founded — even after they go public.
“It is a well-established industry norm to give founder members rights linked to board nomination, subject to public shareholder approval,” a source told us. “In the current case, the shareholding of the founder is significant and thus needs to be protected.”
Right to first offer: Sharma and certain other investors in Paytm also have the ‘right to first offer’ if any existing shareholder seeks to divest their stake in the company.
Indian startups are on an unprecedented CXO hiring spree
The huge digital push created by the pandemic has sparked an unprecedented CXO hiring spree by Indian startups. Flush with funds from risk investors, they are budgeting more money than ever before to hire top talent.
Startups are spending as much as 30-35% of the funds they raise to get the right candidate, up from 10-15% earlier, CEOs, search consultants and industry experts told us.
Zomato’s blockbuster public issue and a string of upcoming IPOs have prompted senior talent from legacy firms to join these relatively small companies in return for huge pay packets that include employee stock options.
Example? Some recent top hires include:
- Vivek Gambhir, former managing director of Godrej Consumer Products, who joined consumer tech products brand BoAt as its CEO
- Himanshu Verma, who left Amazon to join Licious as chief product and technology officer
- Mrinal Sinha, who moved from Bajaj Allianz Life Insurance to Cars24 as chief HR officer
- Bhavesh Singhal, former head of growth for Medlife and Myntra, who joined MyGlamm as chief growth officer
- Sharad Sodhani, who left Rapido and joined Wakefit as its finance chief
One world, one market: “Top talent, especially in a virtual world, is globally mobile. One has to compete on compensation at a global scale. One does need to budget more money to attract talent when raising funds,” said Tushar Vashisht, founder and CEO of Healthifyme.
ShareChat parent raises another $145 million
Mohalla Tech, the parent firm of regional language social media platform ShareChat and short-video app Moj, said it has raised an additional $145 million in its Series F funding round led by Singapore’s Temasek and Moore Strategic Ventures. Mirae-Naver Asia Growth Fund also participated in the latest financing.
Valuation jump: The latest funding values ShareChat at $2.88 billion, up from $2.1 billion in April, when it snagged $502 million in a round led by Tiger Global. Overall, ShareChat has raised over $911 million to date.
Where will the money go? ShareChat said the money will help it double down on its strategic priorities: improving their artificial intelligence (AI) feed, attracting and incentivising a diverse creator base, and strengthening safety on its platform.
The firm has recently hired senior executives in the UK and the US with expertise in AI and machine learning, and is looking to hire more people in such roles, it said.
In other deal news…
■ Singapore-Mumbai based B2B payments platform Nium has raised $200 million in a funding round led by Riverwood Capital, valuing the firm at over $1 billion. The round also saw participation from Singapore's state investor Temasek Holdings, payments processor Visa and venture capital firm Vertex Ventures. Earlier this month, Nium had acquired fraud-hit Wirecard’s foreign exchange unit in India as part of the latter’s insolvency process.
■ Online travel app Ixigo has bagged $53 million from investors led by Singapore sovereign wealth fund GIC, ahead of its proposed initial public offering, according to regulatory filings sourced from Tofler. “The company is looking at a valuation of $750-800 million for the IPO that is scheduled for the fourth quarter of the current calendar year,” said a person with knowledge of the development. “It plans to raise Rs 1,200-1,500 crore via its IPO for which it will file its draft red herring prospectus next month.”
■ Health food brand The Whole Truth has landed $6 million in a Series A funding round led by Sequoia Capital India. The company has so far raised Rs 52 crore including this round.
■ Medical technology startup Axio Biosolutions said it has secured $6 million in a funding round led by Truescale Capital. Existing investors Omidyar Network India, University of California-Ratan Tata Fund, and Accel also participated.
■ Bengaluru-based social gaming and live-streaming startup Eloelo has raised $2.1 million in a funding round co-led by Waterbridge Ventures and Lumikai Fund. Better Capital and Exceed Entertainment also participated. The startup plans to use the funds to strengthen creator partnerships and aid the launch of new live-gaming formats to scale the platform for the next 10 million users.
Flipkart moves Supreme Court to stall CCI probe
Walmart-backed Flipkart has moved the Supreme Court challenging last week's Karnataka High Court order which paved the way for India’s antitrust watchdog to probe firms like Flipkart and Amazon India, according to sources aware of the matter.
- Last week, we reported that both firms were likely to take the case to the apex court after the high court dismissed their appeals, terming them "devoid of any merit and substance".
Flipkart has filed an appeal and the matter may be heard later this week, a person aware of the matter said. Amazon India is also likely to file a similar petition in the top court to challenge the probe, the person added.
What’s the case? CCI had initially ordered the probe against the two ecommerce marketplaces in January 2020, saying it had “prima facie” found evidence to begin an investigation under Section 26 (1) of the Competition Act, 2002.
Draft e-commerce rules: These developments come amid proposals by the consumer affairs ministry to change India’s e-commerce rules. These include a ban on flash sales and curbs on in-house labels. Read our explainer on why e-tailers are upset over these draft guidelines.
Several industry groups are seeking major changes to these proposals as they believe they could hurt growth and negatively affect consumers.
Govt’s AI mission delayed, awaiting cabinet nod
A year has passed since a government-appointed panel entrusted the Ministry of Electronics and IT (MeitY) to lead the implementation of its Artificial Intelligence (AI) Mission, final approval for the marquee programme is still awaited from the cabinet.
- The five-year AI programme, which was announced in the 2018 union budget, was already delayed because of a tiff between MeitY and Niti Aayog. This was resolved last September by a committee headed by the principal scientific adviser to the prime minister, K VijayRaghavan.
Sources said Niti Aayog had earlier made a Rs 7,000 crore proposal for the project, but the cabinet note prepared by Meity had estimated a slightly lower budget.
While MeitY will lead the roll out of the national programme on AI, it will also involve academic institutions such as IITs, industry partners for advanced R&D, and the ministries of health, education and agriculture.
WazirX to launch decentralised exchange next month
WazirX, India’s largest cryptocurrency exchange by volume, is in the advanced stages of launching a decentralised exchange, cofounder Nischal Shetty said.
What’s the difference? Unlike a centralised setup, where an exchange is the custodian of a customer’s cryptocurrency and controls who can or cannot open an account on it, a decentralised exchange operates without an intermediary organisation for clearing transactions. The trades are made using self-executing smart contracts.
“Because a decentralised exchange does not own the data, even the authorities can't really go to the developer of the exchange and say ‘I want the data’,” Shetty said. The data is available on the blockchain for everyone to see, he added.
This development comes as WazirX has found itself in the crosshairs of regulators. The Enforcement Directorate (ED) issued a show-cause notice to the exchange in June, asking it to explain transactions worth Rs 2,790.74 crore that allegedly violated foreign exchange rules. The exchange is believed to be preparing its response.
Other Top Stories We Are Covering
Grofers joins express delivery rush: Grofers has launched a 15-minute online grocery delivery service in Gurugram, cofounder Albinder Dhindsa wrote in a blog post on Tuesday. He claimed the company delivered groceries in over 7,000 households within 15 minutes on Monday.
Ola CEO 'strongly disagrees' with Tesla, Hyundai on import duties: Ola CEO Bhavish Aggarwal said on Tuesday that he “strongly disagreed” with the views of Tesla and Hyundai on lower import duties for electric vehicles in India. He said India should have confidence in its ability to build electric vehicles indigenously while also attracting global manufacturers.
Koo app calls on users to apply for its yellow-tick verification system: Following the furore over Twitter's blue tick verification applications and the selection criteria, Indian microblogging platform Koo is calling on users to apply for Eminence, it's yellow tick verification mechanism on the platform.
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