August 18, 2022

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Cred is all set to make its second acquisition since its inception. The Kunal Shah-led...
Cred is all set to make its second acquisition since its inception. The Kunal Shah-led startup has agreed to acquire Happay, a corporate expense management platform, valuing it at $180 million. In October, Cred acquired alcohol delivery startup HipBar.

Also in this letter:

■ The coming together of Indian SaaS & IT
■ RateGain Travel IPO opens on Dec 7
■ India IT spending to top $100 billion in 2022

Cred to acquire Happay to expand its suite of fintech offerings

Cred founder Kunal Shah

Kunal Shah’s Cred has agreed to acquire Happay, a corporate expense management platform, in a cash-and-stock deal to add to its suite of fintech offerings.

About the deal: While financial details of the proposed Cred-Happay deal weren’t disclosed, the transaction pegs Happay’s valuation at nearly $180 million, according to a statement released Wednesday. The company, founded by Anshul Rai, will continue to operate independently but work closely with Cred’s leadership to leverage its ecosystem, build distribution and expand product offerings. The Happay team will get all the benefits extended to Cred employees, including its ESOPs programme.

More about Happay: The expense management platform, at present, serves more than 6,000 businesses, managing work-related expenses for over one million users globally with about $1 billion in annual spends. Its software stack and in-house payments will help Cred members manage professional expenses on their credit cards.

Quote: “Happay’s product strength, customer experience, and vision align with our intent at Cred to reward responsible financial behaviour and we’re excited to partner them in their journey towards leading the category,” Shah said in the statement.

Newtap Technologies Pvt. Ltd., a company floated by Shah personally, recently acquired Parfait Finance & Investment, a non-bank lender. Cred has applied to the Reserve Bank of India for a payments aggregator licence, in line with the company’s strategy of enabling ecommerce on its platform. Separately, Cred has launched Cred Mint to enable users to on-lend to other Cred customers following a tie-up with LiquiLoans—an RBI-registered peer-to-peer non-banking lender.

Other Done Deals

startup funding

■ Cloud kitchen startup EatClub Brands – formerly known as BOX8 – has raised $40 million from New York-based venture fund Tiger Global. Following the fundraise, the company is valued at $340 million. The company will use the funds to build its technology stack and expand to 500 kitchens in the top 15 cities in the next two years.

NxtWave, a Hyderabad-based education technology startup, has raised $2.8 million in a funding round led by Orios Venture Partners and Better Capital. A clutch of angel investors—including LivSpace founder Ramakant Sharma, CarDekho’s Umang Kumar and Anupam Mittal of—participated in the fundraising.

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■ Online higher education platform CollegeDekho said it has closed its Series B funding of $35 million to further improve its offerings for students and colleges, both within India and abroad. The round was led by Winter Capital, ETS Strategic Capital, Calega and existing investor Man Capital. Disrupt ADQ and QIC also came on board.

Indian SaaS and IT — A symbiosis that’s starting to take root


As Indian SaaS startups gain scale and vie for larger global deals, there’s a growing opportunity for them to partner some of the country’s largest IT services firms to manage and implement digital transformation projects at a rapid scale.

Early signs of such partnerships are already visible.

Building partnerships: Nasdaq-listed Freshworks Inc., which announced a strategic tie-up with Tata Consultancy Services Ltd, in June last year, is partnering with India’s IT bellwether on around 50 projects.

  • The Chennai- and San Francisco-based firm also has partnerships with Accenture Plc and Hexaware Technologies.

Quote: “What we have seen is services companies realise that the disruption is coming from Cloud and SaaS. Traditional system integrator business models were high-value, multi-year contracts, but companies like TCS actually understand that there is a change coming,” Girish Mathrubootham, cofounder and chief executive at Freshworks, said at the Nasscom Product Conclave on Wednesday.

For healthcare-focused SaaS firm Innovaccer, which has partnered with HCL Technologies Ltd, the next stage of growth will be dependent on partnerships with system integrators and large IT services companies, cofounder and CEO Abhinav Shashank said.

  • “We are now starting to hit that $100 million annual-revenue-run rate mark, and the next level of growth is going to be very dependent on the partnerships that we create with SI vendors and large IT services companies,” he said.

Big opportunities: Both Shashank and Mathrubootham believe that there is a big opportunity for a symbiotic relationship between Indian SaaS and IT firms. While some of it might be scale dependent— given the size of the software services firms, small software makers might find it harder to build meaningful partnerships—but as the industry for Indian software products grows, so will the opportunity.

Tweet of the day

RateGain Travel IPO opens on Dec 7, price band fixed at Rs 405-425

RateGain Travel IPO

RateGain Travel Technologies, a software maker for the travel and hospitality sector, will open its three-day initial public offering (IPO) for subscription on December 7, making it the first Indian software-as-a-service firm to list on the local bourses that is planned for December 17.

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IPO details: The company has fixed a price band of Rs 405-425 per equity share, with the public issue consisting of a fresh issue of shares worth Rs 375 crore and an offer for sale (OFS) of up to 22.61 million shares by investors and promoters.

At the upper end of the price band, the total issue will be worth Rs 1,336 crore, the company said, with issue proceeds being used for repaying of debts and payment of deferred consideration for one of its acquisitions, apart from investments in growth and acquisitions.

Quote: “Given the pandemic, if I ask you or anybody what the one thing you want to do coming out of it is, the unanimous answer is travel. It’s this pent up demand, combined with rapid vaccination rates and positive global outlook that’s driving a CAGR of 26% in travel,” said Bhanu Chopra, founder and chairman at RateGain.

Financials: According to the company’s red herring prospectus (RHP) filed with India’s markets regulator on November 30, RateGain posted a loss of Rs 28.6 crore in FY21, compared to a loss of Rs 20.1 crore in the previous fiscal. Revenue on the other hand dropped to Rs 250.8 crore in FY21, from Rs 398.7 crore in the previous year on account of disruption due to the pandemic.

However, RateGain said that in the five months ending August 2021, it clocked a revenue of Rs 127.3 crore, a growth of around 28% when compared to a revenue of Rs 97.8 crore in the same period last year.

Offloading stakes: As part of the IPO, RateGain’s investor Wagner Ltd. will offer 17.1 million shares, while promoters Bhanu Chopra will offer up to 4 million shares, Megha Chopra 1.3 million shares and Usha Chopra up to 0.15 million shares. The offer will include a reservation of Rs 5 crore worth of shares for employees of RateGain at a discount of Rs 40 per share.

India IT spending to top $100 billion in 2022 in sign of post-pandemic revival


India’s IT spending is set to breach the $100-billion mark for the first time in at least three years, signalling a post-pandemic revival on the back of digital transformation deals.

The forecast: According to Gartner, India’s IT spending will grow 7% year-on-year to $101.8 billion in 2022. That compares with its forecasts of $81.89 billion expenditure in 2021, $79.26 billion in 2020 and $92.01 billion in 2019. The growth next year will be driven by investments in software solutions that’s likely to grow 14.4% over the year-ago period to $10 billion.

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Quote: “India experienced one of the fastest recoveries despite being one of the worst-hit regions in the second wave of the pandemic… In 2022, CIOs in India will build on renewed interest in technology from the business to gain funding for new IT projects,” said Arup Roy, vice president of research at Gartner.

Devices: Spending on devices, which accounts for 43% of India’s total technology expenditure, will grow at 7.5% in 2022 after 14% growth in 2021. Hybrid work adoption and pent-up device upgradation cycle will drive this segment.

IT Services: Spending in this segment is likely to increase by 9% year-on-year to $19 billion in 2022. Software spending will also increase thanks to collaboration solutions, digital enablement apps, security and hyper-automations solutions, Gartner said.

Nykaa plans to open 300 stores to drive offline growth: Falguni Nayar

Nykaa founder Falguni Nayar

Nykaa founder Falguni Nayar

Nykaa plans to more than triple its brick-and-mortar stores to 300 to significantly increase its offline presence in India, CEO Falguni Nayar said without specifying a timeline for the planned expansion.

The cosmetics-to-fashion retailer is targeting 100 cities, adding to the 84 retail outlets it already operates in 40 cities, she said.

  • “The process of store expansion had slowed down due to the pandemic for a year or so,” Nayar said in an interview. “But this year we have revived our store rollout.”

Despite the rapid growth of ecommerce and the likes of Inc. in India’s near-$900 billion retail market, most shoppers still buy products offline. Nykaa has said it is targeting a sub-segment of that sector—the $70 billion beauty, personal care and fashion market.

Like many other retailers, Nykaa was hit hard by the pandemic as work-from-home rules reduced demand for office wear, cosmetics and shoes. The company, which had a stellar debut on India’s stock exchanges last month, reported a 96% slump in profit in the three months ended Sept. 30.

Also Read: How Falguni Nayar built Nykaa to stand out from the crowd

Stellar market debut: Nayar garnered massive public attention last month when her company made a glowing stock market debut with a valuation of $14 billion. Top private equity firms such as TPG and Fidelity, and Bollywood actors Alia Bhatt and Katrina Kaif, have financially backed FSN E-Commerce Ventures Ltd., the company that owns the Nykaa brand.

Today’s ETtech Top 5 newsletter was curated by Arun Padmanabhan in New Delhi. Graphics and illustrations by Rahul Awasthi.