Delhi-NCR based edtech startup Classplus, on Tuesday (February 11), announced that it has raised $2.5 Mn in Pre-Series A round from Blume Ventures. As Classplus was the part of the Sequoia Capital India’s Surge programme, the venture capital company has also invested in this funding round.
Angel investors such as Cred’s founder Kunal Shah, general manager of Xiaomi Indonesia Alvin Tse, partner at Locus Ventures Eric Kwan among others also participated in the funding round.
Classplus founder Mukul Rustagi said that the recently raised funds will be primarily used to improve existing technology. The startups will also expand the team across engineering, product, and business verticals, Rustagi added.
Founded in 2018 by Rustagi and Bhaswat Agarwal, Classplus lets coaching institutes, tuition centres and private tutors to take their traditionally offline class management setups online with a mobile-first product. The startup claims to have a client base of more than 3000 tutors spread across 50 cities in India.
The startup takes a subscription fee from coaching institutes for its software suite, which handles class communication, payments, assessments, online learning programmes and attendance, thereby reducing their time spent on management activities and focusing more on classroom teaching. The mobile application brings tutors, students and parents on a single platform which results in better communication and tracking of the education of a student.
The product also helps its clients to acts as an online content repository and distribution platform. It also enables tutors to set up ecommerce channels to make online learning programmes available to students outside their traditional network. As of now, Classplus claims to be catering to over 500K students on a regular basis.
While many edtech startups are only focussed on the end learners, Rustagi explained that he wanted Classplus to tap the internet wave to provide a productivity tool to both tutors and students.
In its Annual Tech Indian Startup Funding report 2019, DataLabs by Inc42 noted that Sequoia Capital was the most active venture capitalist last year. The firm enabled 43 deals, mostly powered through its early-stage accelerator Surge, which was launched last year.
Continuing the trend in 2020 now, three Sequoia Surge startups have raised funds till now. Prior to Classplus, while fintech startup Klub had raised $2 Mn in a pre-seed round led by Sequoia Surge, a game streaming platform Rheo also raised $2 Mn in seed funding in 2020.
Emarketplace for end-to-end construction services Brick&Bolt has raised $1.5 Mn in Pre-Series A round led by Sequoia’s accelerator programme Surge.
Livspace founders Anuj Srivatsava and Ramakant Sharma, Trifecta Capital partner Aakash Goel, IndiQube cofounder Meghna Agarwal, and Piramal Fund Management senior principal Navin Dhanuka also participated in the round.
With its operations limited to Bengaluru, Brick&Bolt is planning to use the funding to expand into operations in Tier 1 and Tier 2 cities. For this financial year, Brick&Bolt has planned to expand into two to three cities.
The company has currently zeroed down on Mysore for immediate expansion. Moreover, the company will also be working on enhancing its technology platform and getting more people on board.
Founded in 2018 by Arpit Rajpurohit and Jayesh Rajpurohit, Brick&Bolt is a digital platform that allows users to connect with contractors based on their requirements. The company acts as a mediator and ensures timely constructions. The company claims to be profitable.
How Does Brick&Bolt Work?
Rajpurohit describes Brick&Bolt as a “control marketplace” that controls “each and every part of project executions” ranging from designing to construction. Brick&Bolt cofounder Rajpurohit noted that the traditional construction businesses usually end up costing much more than what actually was planned. Moreover, there is a lack of transparency, and quality assurance, along with delays in constructions.
“Typically, the whole experience of construction tends to be daunting and time-consuming – from finding the right contractors, quality issues, price escalation and project delays,” the company said, in its press release.
That’s where Brick&Bolt comes into play, assuring safe money transactions, quality checks and timely and transparent construction. The company noted that Brick&Bolt platform mitigates issues with the traditional construction experience by making customers experience seamless.
From finding the right contractors and architects to enabling transparent pricing the company handles it all. Moreover, the company also levies penalties on the service provider in case of delays, which ensures that the construction is completed by the said deadline. The company currently has over 260 independent constructors on board, who are paid on project bases.
Enabling Hassle-Free Services For Customers
The company relies on cutting-edge technology and state-of-the-art systems to provide hassle-free and reliable service for its customers. The company’s platform is powered by Artificial intelligence (AI)-enabled tools.
All a customer has to do is fill out a service request form, which is available on its website and mobile app, and specify the services they’re looking for. Based on the interaction, the request is scored and the AI-enabled platform connects the customer to a contractor with the same level of score.
“We also understand the schedule of each project, depending upon the weather… The engine also predicts the ideal schedule for the project that needs to be completed,” Rajpurohit. The company also plans to integrate a computer vision that will take constant photographs of the site to keep track of the progress made and the cause for delays.
Cheaper Than Your Average Solutions?
The company also offers different packages to the customers based on the service they want to procure. These packages include house construction packages starting from INR 1,465 per sq ft, compound wall packages starting from INR 680 per running ft, woodwork packages starting from INR 1080 per sq ft and commercial construction packages starting from INR 1,350 per sq ft, including GST.
Brick&Bolt also claims that, compared to the traditional contractors, the company is “much better” in terms of cost-effectiveness. The company is also hoping to bring down the costs even further by setting up its own supply chain to provide construction material to the contractors. In January 2020, Brick&Bolt started ready-mix concrete (RMC). In the next one or two years, the company is hoping to transfer the benefits to its customers.
Indian Startups Look Into Construction Business
The Indian construction industry is poised to reach $640 Bn in 2022, which will be aided by government initiatives in infrastructure development and affordable housing, Rajpurohit highlighted.
Looking at the market size and potential, various entrepreneurs have jumped in to offer their own tech solutions. Some other startups working in the domain include Delhi-based Tracecost and Bengaluru-based 100Pillars, among others.
Both the startups claim to be profitable, even though the companies have been in operations for not more than two years. 100Pillars was founded by Srinivas Jayaram and Kishan Raj in November 2018, whereas Tracecost was founded in 2019 by Prabh Paul, Madhvi Walia, and Sunny Vohra.
Video editing and content creation software maker InVideo, has raised $2.5 Mn in a round led by Sequoia Capital India’s early-stage accelerator programme Surge. Former Facebook exec and Five9’s Anand Chandrasekaran, and DoorDash’s Gokul Rajaram have also invested in the round. So far, the company has raised $3.2 Mn.
InVideo plans to use the funding to scale up its platform for a global audience, “while investing in its community and expanding the current product pipeline,” the company said in a press release.
Besides the funding, InVideo has also announced the launch of its new AI-powered video editing platform that suggests improvements in real-time. In simple terms, the AI-powered video editing platform comes with an autocorrect feature for videos in production.
“We’re on a mission to democratise access to professional video software now available to anyone with drag and drop ease. Our Grammarly-like editor means no more time wasted over common technical mistakes or frustrating visual design decisions. We’re using AI to automate the entire video-making process so even beginners can create videos so good, you’ll stop your scroll,” said Sanket Shah, CEO and cofounder of InVideo.
The video editing platform will guide users to avoid technical errors with helpful alerts, just like a spellchecker in Google Docs. The suggestions include proper font choices, animations, colour palette and more.
Moreover, the new platform has an inbuilt self-driving design that allows amateurs and professionals to edit videos seamlessly. The video editing platform also has how-to videos, promo videos, corporate presentations, recipes and family vacations as templates.
“A big gap exists between DIY efforts and pro-quality videos you see on LinkedIn and Instagram. Professional video-editing programs are available, but are still expensive and require a steep learning curve to master,” the company noted.
InVideo was founded in 2019 by Shah, Harsh Vakharia and Pankit Chheda. The platform launched its web-based video editor in 2019 that allows users to create videos from scratch, convert existing pieces of static content into videos and even add automated voiceovers in native languages.
It has over 24K users across 145 countries, who have created videos in over 75 languages. The company claims that its customer base is growing by 10% every week. InVideo plans to expand its customer base to a million users in 2020.
“Over 7/10 kids in schools take an after school class and over 75% of them go to an after school class for maths,” said Manan Khurma, founder of Cuemath.
Yes, maths remains as daunting for kids today as it has been for generations past. But technology and startups are definitely reducing the learning curve to a great extent. Like SplashLearn, BYJU’s Toppr, Vedantu, Unacademy, and Cuemath.
Since 2014, Cuemath has been providing online lessons under its Foundation maths Program and live online classes. The former caters to kids in the bracket between kindergarten and grade six, where Cuemath partners with teachers, and provides students and teachers with the right learning material and a Cuemath tablet. Its live online classes are for kids between grades seven and ten and include slightly more complex lessons.
For Khurma, maths has always been a passion — and when it comes to maths, a passion for numbers is half the battle won. He started teaching maths basics to other students even when he was a student at IIT Delhi leading him to start LOCUS Education in 2007. But after teaching thousands of students he arrived at the conclusion that by grade tenth, the fundamentals are either built or not. “It is very difficult if not impossible to build capability in later grades without a good foundation in earlier grades. So I exited the business and founded a new startup focused on younger grades i.e K-10, the crucial years that create the maths ability needed to win in today’s world,” he said.
But what is it that makes most children dread maths as a school subject?
A 2012 paper published by the Homi Bhabha Centre for Science Education at the Tata Institute For Fundamental Research states, “If one were asked to isolate and point to one single challenge as the most important among the plethora of problems that we have mentioned, it would have to be that of creating a pool of good mathematics teachers in the required numbers.”
Further, introducing systemic measures to achieve quality in teacher preparation is perhaps the most urgent need in Indian mathematics teaching today.
On similar lines, Khurma believes that by building user-friendly pedagogy and customised tools, Cuemath can enable every teacher to be a great maths teacher. “The real problem we are solving operationally is the lack of quality maths teachers at the scale, the world now needs,” he added.
Cuemath Founder Manan Khurma
Can Cuemath Teach Teachers?
As per an analysis by Datalabs by Inc42 in The Future Of India’s $2 Bn Edtech Opportunity Report 2020, live online classes will gain popularity in the year ahead and in 2021 as a visual explanation of concepts will be a crucial factor in creating engagement.
In today’s business environment where there are many players for every category of product, consumer experience is the king. Thereby, offering the best quality no longer serves as a competitive advantage and businesses need to look beyond.
For Khurma, the focus is on the teacher. That’ll be the difference, he reckons.
“Quality content is available for free at Khan Academy, then why buy a video lesson?”
Cuemath bets high on the “presence of teacher” factor in online classrooms offering individual attention. “For many other platforms content is the business they are in. We don’t believe that only content leads to better outcomes. We need to customise it for every child and that is the role of the teacher,” said Khurma.
Cuemath Live Online Classes
The brand competes with other players in the same market offering personalised online classes namely, Khan Academy, SplashLearn, Byju’s, Toppr, Vedantu, Unacademy, Mathspace, Prepworks and MySchoolPage among others.
Unique to Cuemath is LEAP, its platform that customises every class, every worksheet for every student, and allows the completion of course curriculum 20% faster than other competing options.
“Our data shows that kids almost double speed in six months and double logical ability in a year,” Khurma added.
Backed by Sequoia Capital, CapitalG, Manta Ray Ventures, Unitus Ventures, Alphabet and Trifecta Capital Advisors among others, Cuemath believes that the investors have helped them in various aspects but largely through mentorship and guiding the team to building tech for a global scale.
The Tough Sums Of Business
The emerging edtech sector of India is faced with various challenges that range from parental bias, brand discovery challenges, language barriers and disrupted content streaming among others. Khurma believes that the challenge is always about creating the capability to learn better and faster amongst kids at scale. It’s not about doing this for just a few kids, but delivering better outcomes for an entire generation.
He added that to deliver massive learning outcomes at scale the key is to personalise the learning journey for each kid, get them to love maths and do this consistently for millions of kids.
“Every kid can be good at maths, there is no such thing as a maths gene.”
However, Khurma believes that this is not just a pedagogy issue but a deep tech problem. “In the last two years, we have invested over 50% of our engineering team strength to this task. We have now created a unique maths teaching platform. The technology allows kids to complete the coursework in 80% of the time that is standard across medium, with about half the amount of time spent in a formal class with top tier results,” he said.
He added that the progress so far gives the startup the confidence that it can serve the needs of millions of students worldwide. A student typically pays about INR 2000 per month for 12 classes.
Khurma said the company does not want to operate its own centers but rather wants teachers to operate from their own homes with the use of technology. With over 5K teachers currently on board, Cuemath handles training, certification and enters into revenue-sharing arrangements with them.
Cuemath claims a gross revenue of $10 Mn ARR (annualised run rate) and is banking high on its digital platform. “Our growth focus is through the digital platform that we have built in the last 12 months. Our digital business is growing at breakneck speed and by the end of this year will account for more than 50% of our revenues. Digital classes are also instrumental in expanding outside India as well and have students from over 15 countries,” said Khurma.
As for trends, Khurma believes that for maths the complexity will dramatically increase as the world becomes more AI-driven and rapid adoption of new techniques will be required, which give maths-focussed platforms a massive opportunity.
India is second only to China in terms of international student enrollment in overseas colleges and universities, according to QS World University Rankings, but Indian students have a mountain to climb even if they are ever admitted to a college abroad. That’s because student loans are often daunting, to begin with, and the prospect of finding no suitable job after college and having the burden of loans scares away most students.
“These are smart, hard-working students who got in the best programs and have a great future ahead. Yet, the education loans they avail of are at interest rates twice as high as their American peers,” said Vaibhav Singh.
The Leap Finance cofounder is positive that technology can solve this too. While there is no dearth of lenders for students in terms of personal loans or even education loans in India, not many digital lending startups are focussed on higher education. This is where Leap Finance is looking to carve a niche with low-interest rates thanks to its full-stack underwriting model.
Founded by Singh and Arnav Kumar, Leap Finance began operations in August 2019. It has now secured seed funding of $5.5 Mn from Sequoia Capital with the participation of angel investors such as Bhupinder Singh, founder and CEO, Incred and Kunal Shah, founder, Cred among others.
With offices in Bengaluru and San Francisco, the focus of the company is to bring financial access to Indian students pursuing higher education in international universities and colleges.
Talking to Inc42, Kumar said the company will use these funds to hire aggressively for its technology team in Bengaluru and the capital team in San Francisco. The company aims to enable 1000 students for the coming Fall 2020 courses.
Leap’s Full-Stack Student Loan Tech
In simple terms, Leap Finance is a financial services platform for students seeking loans to study abroad. But the difference is that it’s a direct lender and uses a proprietary underwriting technology.
At present, much of the education-related lending in the country is also governed by the credit score or is in lieu of guarantees or securities. Leap Finance is offering unsecured loans. So how is it able to afford these loans? Singh said the unsecured loans are disbursed in US dollars instead of INR.
“Essentially, we are financing the students in the US because, at that point, the student needs foreign currency, and borrowing in Indian currency is more expensive than the foreign currency. You don’t only get the benefit of FX but you also get a substantially cheaper loan,” Singh explained.
Another big advantage is that the company offers better interest rates than its Indian peers, who charge a rate between 15% and 30%. For Leap Finance, the interest rates right now are around 7.9%, which is half the battle won in many cases.
The lower interest rate is all thanks to the underwriting engine, which takes into account several alternatives and derived data points to predict future income potential. Some of the 700 to 800 data points include past academic background, future earning potential, work experience and more. These data points are matched together to identify the student’s earning potential, based on which, the loan is sanctioned on a particular interest rate.
The Focus On STEM
Leap Finance provides loans to cover the full tuition cost, stay and incidentals. In markets such as the US, health insurance is an essential part of a student’s living expenses. Even if colleges don’t include insurance in their tuition fees, Leap Finance takes up the charge. It has tie-ups with 150 US colleges for nearly 1000 STEM courses.
So why the focus on STEM courses and why only US? Singh believes STEM courses are the most active streams in India. “Almost 90% of the total students going abroad opt for this, so it was a clear choice for us. We may add additional courses over time, as need be,” he added.
As for choosing to begin with the US, Singh has good things to say about Canada, Australia and UK in terms of growth, but again said that the most active market is the US. Hence, it was a clear choice as a starting point.
In terms of repayment, the company follows a similar model to other players, where students have to pay some part of the loan during the course and in monthly instalments after graduation, along with a buffer for the job search.
Singh also talked about building the credit behaviour for the students, saying that many students who go abroad, decide to settle there after finding jobs and credit behaviour is an important metric in international markets. He added that students are then able to build credit management habits, which are beneficial for them to further their expenses, which does not happen with loans from traditional banks.
Debt At An Early Stage: Is It Risky?
In India, lending tech has been the flavour of the season for the past few years, and it was no different in 2019. There is no stopping the up-and-coming businesses in the lending space, with electronics companies joining the hordes too. But the reliance on NBFCs or venture debt is a big hurdle.
Leap Finance is confident enough in its differentiated product that it compares itself to players in the international lending market rather than Indian companies. This can also be attributed to the decades of experience behind the founders.
Singh has 12 years of experience working with big banks and in the fintech space, he has worked with Capital Float and InCred. For Kumar, he has worked in derivatives structuring with Deutsche Bank. Kumar co-founded GoZoomo, a used car marketplace, and went on to work with SAIF Partners, which has helped them bag investors in the US.
That’s where the confidence stems from. That and the fact that it does not have to concern itself with the liquidity issues in the current NBFC market in India.
Singh said that while Leap has begun with the US, it will quickly expand to other countries, so the funding and liability strategy has to be global as well and cannot be rooted to the Indian venture capital market. Hence, the company believes that its liability strategy, which is leveraging global capital markets and global debt providers, strongly backs its ability to actually fund these loans. Kumar would be more than happy if the company is able to give its investors a healthy yield in the global market, where the conversation is very different than the Indian debt conversation.
“The global debt market stands at $17 Bn, which is currently earning in negative. There is a supreme hunger in all developed markets to get quality assets, which are getting reasonable yield,” he said.
With 31 confirmed cases of coronavirus in India, the government has confirmed that the virus has reached community transmission levels. State governments have been asked to form rapid response teams at the district, block and village levels to cater to preventive measures and take action on the ground. In terms of the business impact, several tech giants and startups have asked employees to work from home, while large-scale global events have been cancelled or postponed.
In such times, Sequoia Capital, with a portfolio of over 420 companies in India, has now floated a letter to its founders addressing the challenges in the ecosystem due to the coronavirus outbreak and what can be done to manage businesses better.
While entrepreneurs across the world are busy taking stock of employee health and are putting preventive measures in place, Sequoia is urging founders to look beyond the current situation and aim to ensure sound health of the business in the medium to long term as the fallout from the coronavirus impact is expected to last a few quarters. Besides disruptions in events, the coronavirus epidemic in China has also impacted manufacturing as well as the pharmaceutical markets.
DataLabs by Inc42 has noted that in 2019 Sequoia Capital cemented its place at the top of the venture capitalists with over 2x the deals from 2018. The venture capital firm participated in 53 deals in 2019 and funded 45 startups.
Sequoia Capital noted that coronavirus is “the black swan of 2020” and said that it will take considerable time — perhaps several quarters — before the epidemic has been contained.
“Some of you may experience softening demand; some of you may face supply challenges. While The Fed and other central banks can cut interest rates, monetary policy may prove a blunt tool in alleviating the economic ramifications of a global health crisis.”
Highlighting the concerns founders should question about their businesses, Sequoia said:
Does your business have enough cash runway, where it can withstand a few poor quarters if the economy sputters? Does the team have a contingency plan? The firm advised founders to ask these questions now to avoid potentially painful future consequences.
Noting that private financings softened significantly in 2001 and 2009, founders need to question their plan of action if fundraising on attractive terms proves difficult in 2020 and 2021? Many of the most iconic companies were forged and shaped during difficult times, Sequoia added.
What would happen to sales if customers cut down on their expenses? Sequoia asked founders to anticipate the impact this may have on sales as deals that seemed certain may not close. The key is to not be caught flat-footed, it added.
Due to the impact on sales, founders may need to control their customer acquisition costs and consider raising the bar on ROI for marketing spend.
The firm also advised founders to evaluate critically whether they can do more with less headcount and raise productivity.
Until founders have charted a course to financial independence, Sequoia advised them to examine whether the capital spending plans are sensible in a more uncertain environment.
“Having weathered every business downturn for nearly fifty years, we’ve learned an important lesson — nobody ever regrets making fast and decisive adjustments to changing circumstances. In downturns, revenue and cash levels always fall faster than expenses. In some ways, business mirrors biology,” the VC firm noted.
The firm advised founders that false optimism can easily lead them astray and prevent them from making contingency plans or taking bold action. “Avoid this trap by being clinically realistic and acting decisively as circumstances change. Demonstrate the leadership your team needs during this stressful time,” it added.
With the world going under quarantine, even the venture capital (VC) outlook is bleak for 2020. With layoffs on the cards for startups, VCs have also braced themselves for a slowdown. Besides the revenue of their portfolio startups and returns on investment, the funding capacity of VCs has also taken a hit due to crashing public markets. So how should startups approach fundraising in such a climate?
Joining our ‘Ask Me Anything’ series withInc42 cofounder and CEO Vaibhav Vardhan, Sequoia Capital India’s managing director GV Ravishankar delved into the changing venture capital ecosystem, the shifting priorities and outlook for 2020. Ravishankar also touched upon the possible innovations in the booming edtech and healthtech space.
In our earlier conversations with angel investors and VCs, it is clear that the ecosystem will see a slump in growth-stage investments (Series B, Series C rounds), while early-stage rounds will also dry up as funds focus shoring up their on existing investments.
“What tends to happen in times of uncertain market conditions is that the number one priority for most of the funds is to look at their portfolio companies and try to do whatever they can to help companies.”
With several dedicated funds being launched in India, funding opportunities will still present themselves to investors, but the challenge is going to be about standing out from the competition. According to Ravishankar, what will change is that VCs will raise the bar for investments, so those companies that do not have a unique model might not get capital anymore. There will be tougher questions from VCs to founders, funding rounds may take a little longer than usual to close. “People are going to slow down investing, for the most part, but there will be some that will continue to be active.”
At the beginning of the pandemic, Redpoint Capital’s Tomasz Tunguz had compared the current state of fundraising to the financial crisis of 2008. In 2008, the investment velocity fell down by 50% in the three quarters following the stock market crash. Markets did grow back to their original levels, but it took nearly two years to get there.
Responding to that, Ravishankar said, “Overall, given the sentiment and the expectations on earnings or growth, company valuations will moderate, how much it moderates will, however, be a function of company’s own performance and how they’ve been affected by this.”
He predicted that there is a high chance of demand to be softer in the post-Covid world. There’s been a big disruption, people have potentially lost jobs or have had a reduction in their incomes, so consumption is obviously expected to slow down.
“So what that means is most companies, which projected growth at 50%, 70% or 80% in the before Covid-19 world, will now be lucky to even see a growth of 30% or 40% in the current market. And valuations also reflect how fast the companies are growing. So, we would expect company valuations to be down now valuations are lower,” he added.
Further, he noted that this impact will largely be for companies that have already raised Series A and are looking to raise capital in Series B or beyond. For an early-stage company raising seed round or Series A funding, Ravishankar does not foresee significant drops in valuations, but he agreed that the average ticket size will fall in such a market, because there’s a higher perception of risk and uncertainty at this point.
“I would expect investors to spread their investments across multiple rounds, instead of investing $10 Mn at one go, they’ll start with investing $5 Mn or $6 Mn now and then in nine months, they will invest the rest. This way it will have a sense of safety, of knowing exactly how this capital is being used and how the markets behave before they invest a lot more capital,” he added.
The Opportunity In Edtech, Healthtech
Given the growing adoption of edtech solutions across the country, Ravishankar noted that Indian Tier 2 and Tier 3 markets have merged with Tier 1 consumers in terms of accessibility to edtech products and services. However, there still remains a gap in terms of the purchasing power because of the per capita income disparity across these geographies.
Edtech startups have had to tailor some of their solutions for the audience in Tier 2 and 3 cities now. In some cases, they may even have to think in terms of providing regional language options because users there might not be as comfortable in English-only content.
Further, commenting on the potential of video analytics startup as monitoring and tracking will become the new norm, Ravishankar said, “If you’re teaching remotely, the big difference is that you don’t have the ability to monitor students the way that you’re monitoring in a classroom environment. So there will be a demand for tools that allow people to understand engagement, maybe even tools that are able to read people’s faces to see how well they understood something or not.”
In terms of healthtech also, there’s been much more adoption of technology by consumers which means people will now start looking for more convenient forms of access to healthcare. Earlier, Prashant Tandon of 1mg has also noted that, while teleconsultations will not take over completely, they will replace less critical follow-up consultations and minor diagnostics.
“This increased adoption of healthcare products will create demand for products with the ability to take better quality pictures for doctors to remotely monitor a patient. Further, wearables like maybe a ring or watch that could send patient’s real-time vitals to the doctor wil alsol grow in demand,” said Ravishankar.
He added that India is also seeing a growth in companies working on genomics, as some of this data is easier to get in India and is also less regulated as compared to the West. Further, because of growing urbanisation, aggregation services for healthcare delivery are also expected to evolve with interesting models.
The coronavirus pandemic has also raised concerns around the wave of isolationism in trade, and the unwillingness of businesses and governments to collaborate with global countries in innovation as there’s a lot of distrust in the market. However, Ravishankar thinks one should not forget the benefits of global companies operating in India.
“I’m actually quite optimistic about Indian companies building global businesses. And that’s because you know, India is not an easy market and once you win in this market, you can probably win anywhere,” he added.
Tier 2 and Tier 3 markets have merged with Tier 1 consumers in terms of accessibility to edtech products and services, said Sequoia Capital India’s managing director GV Ravishankar while speaking in an ‘Ask Me Anything’ session with Inc42cofounder and CEO Vaibhav Vardhan.
“Typically 60% of BYJU’S users have come from Tier 2, and Tier 3 cities and the same numbers have been observed by other edtech startups as well. So I would say it’s a level playing field from an availability perspective,” said Ravishankar.
Quality education has always been limited to top tier towns because of their high population density which increases the chance of acquiring new customers. Whereas in rural areas, the demand is not as clustered making online education models well suited for such locations.
However, Ravishankar added that Tier 2, Tier 3 cities face challenges in terms of varying per capita income. So companies will have to adapt their products to some of the specific demands of these markets such as accessibility in vernacular language education for students enrolled in regional medium schools.
New Opportunities In Edtech
As schools and colleges turn to online classrooms during coronavirus lockdown, most edtech platforms observed a spike in new organic users. Sequoia-backed BYJU’S saw a 150% growth in the number of new students on its app, after announcing free classes in March 2020.
This sudden shift from classroom education to online has increased the need for video analytics startups as monitoring and tracking will become the new norm, noted Ravishankar. The crucial difference between teaching in physical classrooms and online classrooms is that teachers cannot monitor students, as they could do in a physical classroom.
“This will create demand for tools which will allow people to map student’s engagement level, maybe even tools that are able to read people’s faces to see how well they understood something or not,” he added.
He noted the examples of edtech companies which are building a solution where one can monitor the video feed of all students and track which students are actually listening to the lecture, who isn’t listening, and how attentive they are. He added that there is also a need to find out who is not focused in the classroom.
The overall size of India’s education sector is estimated to be $101 Bn in FY2019. Of this, the online education market stands at $563 Mn, which is about 0.56% of the total education market. According to Inc42 Datalabs ’The Future Of India’s $2 Bn Edtech Opportunity Report 2020’, there are a total 4,450 edtech startups operating in India currently. In terms of funding size, Byju’s, Unacademy, Vedantu, Toppr and Eruditus are the most funded startups.
Venture capital firm Sequoia Capital, on Monday (April 27), announced the names of the 15 startups shortlisted for the third cohort of the Surge programme. Surge is a 15-week long programme which kicked off online on April 13.
Out of 15, seven startups have been selected from India. One Indian startup, which is a direct-to-consumer (DTC) brand, is currently operating in stealth. Till now, around $39 Mn has been raised by the selected startups in their Surge rounds.
As part of the programme, Surge invests $1 Mn to $2 Mn of seed capital with company-building workshops, global immersion trips and support from a community of founders. Entrepreneurs like BYJU’s Byju Raveendran, Zomato’s Deepinder Goyal, Cred’s Kunal Shah, Freshworks’ Girish Mathrubootham are some of the notable mentors for the programme.
Shortlisted startups span a wide range of sectors, including SaaS, enterprise tech, consumer services, fitness, food and beverage (F&B), edtech and healthtech.
For the third cohort, Sequoia used video conferencing platform Zoom, Surge app and other digital tools to ensure that the quality of mentorship wasn’t affected due to the Covid-19 lockdown.
Founders: Tamanna Dhamija, Tarun Dhamija and Kartik Bansal Headquarters: Hyderabad Founded In: 2019
Convosight is a community management platform, which leverages data analytics and machine learning to help admins and brands to create, moderate, grow and leverage communities in a better way.
Founders: Jitendra Chouksey, Sonal Singh, Jyoti Dabas, Bala Krishna Reddy and Rohit Chattopadhyay Headquarters: Pune Founded In: 2019
Fittr started as a platform which lets people get help from each other for achieving their fitness goals. It has registered over 800K users across the world.
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Last9 is a site reliability engineering (SRE) platform, which helps enterprises to run their systems at scale. The platform is currently deployed in closed beta at some of the websites in India and ASEAN countries.
In the context of startups, ‘seed funding’ or ‘seed money’ are terms that are getting more and more familiar to the casual audience. In fact, with startups becoming household term in India, chances are most people know at least someone who is looking to raise funds to kickstart the business. But that’s not to say that seed funding by itself is growing. After hitting a peak in 2016, seed-stage investments in the Indian startup ecosystem have continued to fall every year. With risk-averse investors in the ecosystem staying away from seed-stage deals but continuing to bet on growth and late-stage... This is an Inc42+ Member Exclusive story. Read this story on Inc42.
Menlo Park-headquartered Sequoia Capital has announced that it has closed a $1.35 Bn India venture and growth fund to go along with its corpus dedicated to the early stage investments through Sequoia Surge. The firm said that it has received commitments of $525 Mn venture fund and $825 Mn growth fund for India and Southeast Asia. The VC didn’t reveal its investors but collectively referred to them as Sequoia’s Limited Partners, the majority of which are non-profits, foundations and charities.
Sequoia said it will now operate investment vehicles across asset classes, such as seed, venture and growth. With this fund, Sequoia Capital’s total assets under management for India to an estimated $5.4 Bn, across the seven funds it has raised for investments in India and across Southeast Asia. This includes the highly contentious Sequoia Surge accelerator, through which the fund has made a big mark on the early stage startup ecosystem, as seen in the recent Inc42+ deep dive into the accelerator.
Shailendra Singh, the managing director of Sequoia Capital said that the firm is excited about the depth of opportunities in this region, which is undergoing a massive technology-led transformation. “This region will become home to a number of massive technology companies during the next decade,” Singh wrote.
The Sequoia chief added the pandemic has catalyzed a massive change in almost every startup’s trajectory— with dozens of founders demonstrating leadership and agility. “The leadership teams inside our startups are more aligned, focused and determined than ever before. We need to build on this Covid-induced state of high performance, stick to first principles, and remain relentless in our pursuit of sustainably successful companies,” he noted.
Singh emphasised that from Sequoia’s vantage point, “the future of our region will be shaped by those few founders who are resolutely committed to building enduring companies with unshakable foundations.”
In its last 14 years of investing in India, Sequoia has made over 200 investments in India and Southeast Asia so far. This includes notable names such as Zilingo, Bira, Mu Sigma, Freshworks, Druva, Freecharge, Pine Labs, and JustDial among others. From the sixth fund, its Indian investments include two-wheeler rental startup Bounce, payments aggregator BharatPe and student housing firm Stanza Living.
The firm closed its sixth fund of $695 Mn for India and Southeast Asia in 2018. In 2019 alone, the venture capital firm funded 45 startups. As per DataLabs by Inc42+, Sequoia Capital India participated in 219 deals across 105 startups between 2014-2019.
Sequoia Capital had launched its startup accelerator and incubation programme, Surge, with the idea of investing up to $2 Mn in early-stage startups working on innovations that could one day graduate up to the Sequoia growth-stage fund. Surge claims to have invested approximately $100 Mn in all the startups across its three cohorts till date.
Sequoia’s chief also noted that Covid-19 has brought it closer to embracing some hard truths. “The startup ecosystem in India and SEA has had a tumultuous journey over the last decade…It’s time to aspire for massively large and profitable companies. It’s time to build more products that can compete globally on quality, not just on price,” he added.
Data pipeline startup Hevo has raised $8 Mn in a Series A round led by Singapore-based venture capital firm Qualgro and Lachy Groom, a former executive at payments company Stripe, TechCrunch reported on Wednesday.
Hevo is an automated unified data platform, which allows companies to integrate data from more than 150 sources, into a single data warehouse. The startup claims that integrating such data which emerges from applications used to manage a company’s sales, finance, marketing and customer support among other operations, could help improve the company’s performance.
The San Francisco-headquartered company, founded in 2017 by Manish Jethani and Sourabh Agarwal, has previously raised $5 Mn in two funding rounds, according to data available on Crunchbase, the last of which was in October last year when the company raised $4 Mn in a seed funding round by Bangalore-based tech venture capital firm Chiratae Ventures, and Surge, a rapid scale-up program by Sequoia Capital for early-stage startups.
Hevo’s Series A funding will be used by the company to increase the number of integrations available on its platforms, also hiring sales and marketing teams in more countries, including the US and Singapore.
Hevo was conceptualised while co-founders Jethani and Agarwal were working on their previous venture, food delivery startup SpoonJoy, which was acquired by Grofers in 2015. “All of our team members would come to us and say, ‘hey, we want to look at these metrics,’ or we would ask our teams questions if something wasn’t working. Oftentimes, they would not have the data available to answer those questions,” Jethani told TechCrunch.
Hevo Data largely focuses on online commerce, financial technology and healthcare sectors, which rely heavily on customer data to drive sales. It plans to utilise this funding to expand its services in the US and other western markets.
Hevo Data currently provides its services across five nations with over 40 mid-size companies, and its portfolio also includes some big companies like LendingKart, Fynd, Ninjacart, Swiggy, Curefit, PharmEasy and Meesho.
Other startups in this domain include Formcept, IntelligenceNODE, Indus Insights, Axtria, BRIDGEi2i, DataCultr, etc. According to DataLabs by Inc42, enterprise tech has seen a total capital inflow of $ 1.44 Bn in 2014-2018, third only to fintech and ecommerce sectors. These top three sectors accounted for almost 50% of the total $10.25 Bn-plus poured into growth-stage Indian startups in the same time period.
Mumbai-based student loans startups Eduvanz Financing is raising INR 23 Cr ($3 Mn) in Series A funding round led by Sequoia’s SCI Investment VI fund. Redwood Trust, Vistra ITCL on behalf of Unitus Seed Fund India II and QED Innovation Labs will also be participating in this round.
According to the ministry of corporate affairs filings accessed by Inc42, the company has already received INR 4 Lakh ($5K) from Redwood Trust in exchange for 136 Series A compulsorily convertible cumulative preference shares (CCCPS). Overall, Redwood will be investing INR 12.59 Lakh ($16K) in Eduvanz Financing for 421 Series A shares.
The filings further add that Sequoia’s SCI Investment VI fund will be investing INR 17.83 Cr ($2.27 Mn) for 59,626 Series A CCCPS. Vistra ITCL on behalf of Unitus Seed Fund India II will pick up 14,678 shares worth INR 4,39 Cr ($585K) and QED Innovation Labs will pick up 2,342 shares worth INR 70 Lakh ($93K).
Eduvanz Financing will be allocating 77,067 Series A shares at a face value of INR 100 ($100.31) and premium of INR 2891.31 ($38.54) each share leading to INR 23,05,32,287($3 Mn). The usage of the funds has not been revealed in the filings, but Inc42 has reached out to the company seeking more details on the same.
Founded in 2016 by Varun Chopra, Raheel Shah and Atul Sashittal, Eduvanz Financing is a non-banking financial corporation (NBFC) and private finance company that offers low-interest student, education, career, skill development loan.
The startup uses technology to assign credit scores to loan-seeking students, based on their socio-economic and demographic background. It has also partnered with more than 80 institutes such as Imarticus, K-11, and ISBM to boost its value proposition beyond loans to offer placement and scholarship support for students.
The company received its NBFC license from the Reserve Bank of India (RBI) in 2017, after which it raised $500K funding in a round led by Blinc Advisors. Last April, Eduvanz Financing had also raised $2 Mn funding from Unitus Ventures and the Michael and Susan Dell Foundation to expand its lending operations.
The Crunch In Students Loans
With over 33 Lakh Indian students going overseas to study every year, India is the second-largest source of international students after China. According to the Reserve Bank of India (RBI), tuition and hostel fees by Indian students studying abroad has increased by 44% from $1.9 Bn in 2013-14 to $2.8 Bn in 2017-18.
The spending and the prevalence of international universities are expected even more in the future, overcoming the current pandemic blues. Though loans come as a handy option for an average middle-class Indian student, it has shrunk by 25% between 2015 and 2019.
According to a Times of India report, the number of students able to secure loans from institutionalised banks has fallen to 2.5 Lakh in 2019 from 3.34 Lakh students as of March 31, 2015 due to high non-performing assets levels. The NBFCs have been filling that void to offer better financial solutions to students looking to study in India or abroad.
Interestingly, Sequoia backs another student loans startup Leap Finance, which was founded by Arnav Kumar and Vaibhav Singh in 2019. With offices in Bengaluru and San Francisco, the focus of the company is to bring financial access to Indian students pursuing higher education in international universities and colleges.
Recruitment startup for grey and blue-collar workers Apna has raised $8 Mn in Series A funding round from Greenoaks Capital and Rocketship VC. Existing investors Lightspeed India and Sequoia Capital India also participated in the round.
Apna has currently marked its presence across five cities and will use this funding to test new markets and launch in multiple cities every month. A part of the fund will also be used to hire talent for leadership positions and broaden its user base to more blue and grey collar verticals.
Besides this, the company will also use this capital to expand its product offering to incorporate learning new skills, earning credentials, launching their own new businesses.
“With a world-class team comprising talent from top companies such as Apple, LinkedIn and Grab, Apna is building to create value for its users in India and beyond. Apna believes it is serving a burning need that’s relevant globally including in emerging and established markets like South East Asia and the US, where millions of workers have lost jobs in the wake of Covid-19 pandemic,” the company said in its press statement.
Apna was founded in December 2019 by Nirmit Parikh to offer a professional network of grey and blue-collar workers. The app comprises vertical communities for skilled professionals like carpenters, painters, field sales agents and many others, where users get access to local job opportunities, network with peers, share their accomplishments and gain new skills.
Since its launch, the platform has been able to attract 1.2 Mn users engaging on its platform. In the last 30 days, the company claims to have facilitated more than 1 Mn job interviews, growing more than 3X month-on-month. The company, in its press statement, also highlighted the more than 3 Mn professional conversations have happened on the platform in this same period.
Harshjit Sethi, Principal at Sequoia Capital India LLP added, “There are over 250 million blue and grey collar workers in India at present and providing meaningful employment opportunities to this segment is one of the biggest challenges in our country. With internet usage in this demographic growing rapidly, further catalysed by the Jio effect, apps such as Apna can play a meaningful role in democratizing access to employment and skilling.”
The development comes after global tech giant Google announced that it will launch its entry-level job search platform Kormo Jobs Android app in India to target temporary jobs, gig economy workers or any business which has a high workforce requirement. With this, Google Jobs Spot, which was launched in India last year, will also be rebranded to Kormo Jobs to create a consistent experience for users.
Jaipur-based Non-Banking Financial Company (NBFC) Finova Capital is raising around INR 260 Cr from existing investors Sequoia Capital India (SCI) Growth Investments and Faering Capital.
According to filings with the Ministry of Corporate Affairs (MCA) accessed by Inc42, the company has received the approval from its Board of Directors to allot 10 equity shares at a face value of INR 10 per share and a premium of INR 732.81 per share and 29,18,637 Series C Cumulative Compulsorily Convertible Preference Shares (CCCPS) at a face value of INR 100 per share and a premium of INR 642.81 per share to SCI Growth Investments III, aggregating to a total amount of INR 216.8 Cr.
The company has also received approval to allot 5,81,575 Series C CCCPS to two separate investment funds operated by Mumbai-based private equity firm Faering Capital India, aggregating to a total amount of around INR 43.19 Cr.
The company is also raising around 9.74 Cr from its founders, Mohit and Sunit Sahney.
Founded in 2015 by Mohit Sahney, Finova is an NBFC licensed by the Reserve Bank of India (RBI) and looks to provide loans to those in the financially excluded and unorganised MSME sector. The company provides loans to both urban and rural poor to meet their productive requirements in starting a new business or for growing an existing business.
Faering Capital was the lead investor in Finova’s $15 Mn (INR 109.96 Cr) worth Series B round of funding last year, in which Sequoia Capital India also participated. In 2018, Finova raised $6 Mn (INR 43.98 Cr) from Sequoia Capital India.
Sequoia Capital has invested in multiple fintech startups, including payment gateways – Mobikwik and Citrus Payment, consumer lending startups such as MoneyTap and Capital Float, and a point of sales machine manufacturer Pine Labs.
A whopping 80% of the formal loans in India are accessed by just 24 Mn households falling under the elite and affluent income categories, whereas the other 124 Mn households, who earn an annual income of INR 1.4 Lakh to INR 4.5 Lakh, have only received 10% of the total credit from the formal market.
Lending Set For Boost In India
As per DataLabs by Inc42 estimates, the credit demand in India is projected to be worth $1.41 Tn by 2022. The estimated growth rate in credit demand is 3.73% between FY17 and FY22. However, the Covid-19 crisis is said to be an unprecedented boost to the lending space in India.
Paytm founder Vijay Shekhar Sharma, talking at the ‘Ask Me Anything’ webinar hosted by Inc42, highlighted that lending is one of the biggest opportunities which comes out of these times. “Companies that swing around to the opportunity of distributing unsecured loans and collecting them well, and underwriting them well will become the champions of tomorrow,” he added.
Bangladesh-based social commerce platform ShopUphas raised $22.5 Mn in a Series A round, which was led by Sequoia Capital India and Flourish Ventures, with additional participation through VEON Ventures, Speedinvest, and Lonsdale Capital.
With this fresh capital, the company plans to increase its retail reach, deepen partnerships with manufacturers, and focus on building tech-first infrastructure.
ShopUp is a social commerce platform that helps micro-entrepreneurs in Bangladesh to set up a storefront on Facebook, access working capital and grow their business by automating many sales and operational processes.
ShopUp uses a proprietary algorithm that analyses over 2,000 data features to assess a merchant’s capital requirements and repayment capacity, then refers them to partner institutions for loans.
“We believed in the power of internet and technology adoption by small businesses and founded ShopUp as we wanted to be a key driver of this transformation. Covid-19 has further underscored the need for digital transformation for the country’s smaller businesses. This fresh round of funding will support us in increasing our retail reach, deepening our partnerships with manufacturers, and focusing on building tech-first infrastructure. We have a deeply passionate team that is committed to playing its part in redefining Bangladesh’s growth story,” said Afeef Zaman, CEO of ShopUp.
Earlier this year, ShopUp had opened an office in Bengaluru to hire local tech talent in the nation.
In February, Bengaluru-based fashion retailer Voonik had merged with ShopUp, with both the founders of Voonik joining ShopUp as cofounders.
After being a part of Sequoia Surge batch 1, ShopUp currently has over 95K micro and small businesses on the platform.
Video editing and content creation software maker InVideo has raised $15 Mn in a Series A funding round led by Sequoia Capital India. The round also saw participation from Tiger Global, Hummingbird, RTP Global and Base.
The company plans to use the fresh capital to leverage its technological solutions and help more individuals and businesses create unique videos. The funding will help accelerate product development and build out InVideo’s cross-device video creation suite, InVideo said in a press statement.
Founded in 2019 by Sanket Shah, Harsh Vakharia and Pankit Chheda, InVideo launched its web-based video editor in 2019 that allows users to create videos from scratch, convert existing pieces of static content into videos and even add automated voice overs in native languages.
Sanket Shah, CEO and cofounder of InVideo said, “Making professional-quality videos is hard. InVideo is set to change that. We have a single goal: to replace the current crop of cumbersome and expensive video editing software with an intelligent, yet flexible platform. InVideo cuts the time to create a professional quality video by over 90% and allows the creator to focus on impact and message. InVideo’s vibrant creator community from across the globe is a testimony to the capabilities of our platform.”
It has over 80K users across 150 countries, who have created videos in over 75 languages. The platform operates in a freemium model with paid plans starting at $10 per month and $30 per month for unlimited access. InVideo claims to have P&G, Dropbox, Reuters and ATT as users.
Its competitors include Filmora, Adobe Premiere Pro, Animoto, iMovie, Adobe, Spark, Camtasia and Final Cut Pro X.
Earlier, InVideo has also announced the launch of its new AI-powered video editing platform that suggests improvements in real-time. Simply put, the AI-powered video editing platform comes with an autocorrect feature for videos in production.
Peer-to-peer livestock trading platform Animall has raised INR 44.45 Cr ($5.9 Mn) in Series A funding round led by Sequoia Capital. Omnivore Partners and LetsVenture Fund have also participated in the round.
According to the ministry of corporate affairs filings, Animall has allotted 53,832 Series A preference shares at an issue price of INR 8,264.9 per share. Sequoia Capital has led the round with an infusion of INR 22.2 Cr ($2.9 Mn) while Omnivore Partners INR 7.4 Cr ($1 Mn) and INR 2.03 Cr ($273K).
Prior to this, Animall had raised INR 15 Lakhs in a pre-seed funding round from Pratilipi’s vice president Gauri Kanekar and angel investor Rakesh Yadav. Later in June, the company raised INR 5.65 Cr seed round led by Beenext Asia, Shaadi.com’s founder Anupam Mittal and WEH Ventures had also participated in this round.
According to an Entrackr report, which first reported the development, the company is valued at INR 175 Cr ($23 Mn) in the latest transaction. The company’s valuation has grown 7x in the last six months, and was valued at INR 25 Cr during its seed funding round back in May.
Founded by Anurag Bisoyi, Sandeep Mahapatra, Libin Babu and Neetu Yadav in 2019, the company enables dairy farmers to sell and buy cattles on its platform, allowing them to save their time, money and efforts.
It also allows dairy farmers to connect and engage with experts and doctors on the platform. It’s services are available across all major parts of the country.
The platform operates mainly through its website and Android-based application called “Pashu Mela” and has over a million downloads on the Google Play Store app.
Sequoia Capital India has been named as one of the top 10 venture capital firms in India, according to Inc42 Plus report The State Of Indian Startup Ecosystem Report 2020.. It is based on investments made between January 2014 and the first half of 2020. Sequoia Capital is an American venture capital firm, headquartered in Menlo Park, California.
It is said to have assets worth $5.4 Bn under management in India, alone, spread across seven funds. The company has invested in nearly 245 companies in India including BYJU’S, Bira91, OYO, Khatabook, Rupeek, Meesho, and CRED.
The VC firm also holds an accelerator programmed called the Surge to mentor and invest in companies across Southeast Asia, including India. Every six months, Sequoia shortlists 15 to 20 startups for each cohort and provides a capital investment of $1 Mn to $2 Mn with participation from other investors.
The post 
In the context of startups, ‘seed funding’ or ‘seed money’ are terms that are getting more and more familiar to the casual audience. In fact, with startups becoming household term in India, chances are most people know at least someone who is looking to raise funds to kickstart the business. But that’s not to say that seed funding by itself is growing. After hitting a peak in 2016, seed-stage investments in the Indian startup ecosystem have continued to fall every year. With risk-averse investors in the ecosystem staying away from seed-stage deals but continuing to bet on growth and late-stage... This is an Inc42+ Member Exclusive story. 
