Kae Newsletter (Jul-Sep 2023)

Foreword (Not out of the woods yet, but glimmers of hope witnessed)

The trend of reduced investments in startups is continuing, however, funding has not dried up completely. Many funds announced their final close recently, such as Vertex Ventures, Trifecta Capital (Venture Debt), DSG Consumer Partners, pi Ventures, along with our own Winners Fund. The drought of unicorns for 2023 ended with the funding announcement of Zepto. However, late-stage rounds are still far and few, with investors still being wary of market conditions.

This quarter saw a massive win for indigenous technology, with the successful launch of Chandrayaan 3. This has further solidified India’s position globally as a Space tech power to be reckoned with and it’ll be exciting to see how this sector and allied sectors grow in the coming decade.

We saw one of the biggest exits for an Indian startup this quarter (CaratLane), with the founder’s and his family’s shares bought out by Titan for a total consideration of ?4,621 crore. A big win was also recorded for the fintech sector at large, with the recent announcement of Slice’s merger with North East Small Finance Bank (NESFB), which is a positive sign from regulators in embracing fintech, coming after a time wherein fintech startups have been jolted by stern regulations.

While certain sectors have flourished, Real money gaming had some bad news come its way. The GST council announced that online gaming (whether based on skill or chance) will be taxed at 28% on the full face value of transactions, thus disincentivising consumers and putting startups in a pickle. This could be a huge deterrent for new customers and make it difficult for businesses to thrive.?

State Of The Startup Ecosystem In India

Startup funding stood at a mere $1.7 Bn in Q3 2023 (Jul-Sep 2023), compared to $2.5 Bn in Q2 2023 and $2.9 Bn in Q1 2023. On the year-on-year (YoY) basis, funding in Q3 2023 fell 43.8%. The seed stage funding further plummeted to $159 Mn in Q3 2023, recording a 55% YoY fall, as per Inc42 data. This quarter saw the first unicorn of the year (Zepto), compared to 21 unicorns by this time in 2022 and 44 in 2021.

Portfolio Buzz In The Media

Funding

Certa, a compliance, governance, and risk management platform for enterprises, recently closed its Series B round of $35 million.

Disprz, an AI-powered right-skilling suite, helping enterprises unlock business potential by enabling organisation-wide skilling, announced a $30 million Series C round of funding.

Beyond the $$

SuperAGI is a dev-first open-source autonomous AI agent framework, enabling developers to build, manage, and run useful autonomous agents quickly and reliably. It has steadily gained traction and was the #1 Product of the Day on Product Hunt on August 4th, 2023.

Onwo, a B2B cross-border platform offering multi-country supply and demand for food products, was featured in Inc42’s 30 Startups To Watch (Jul 2023) list.

The team is digitising and reimagining global food supply chains, thus creating borderless commerce.

Nua, a women-focused wellness brand, was featured in the ‘89 D2C Brands That Are Disrupting India’s Consumer Market’ list by Inc42, celebrating the top D2C brands in the country.

Wysa, an advanced conversational AI chatbot for mental health, has been shortlisted for the 2023 Chat for Impact Accelerator. Wysa has been selected from 375 applicants across the globe.

Wysa’s co-founder, Jo Aggarwal, also published a piece on the impact of Conversational AI Care in Chronic Pain Management.

Foxtale aims to create a skincare brand that is specifically made for Indian women and the various climatic conditions they experience through rigorous research and making efficacy a priority. For the same, they won the D2C Brand of the Year - Beauty and Personal Care at the ET Retail E-Commerce and Digital Natives Award 2023

Traya Health has been making tremendous breakthroughs in helping its customers manage hair loss, thus impacting more than 2 lakh customers.

They recently won the Emerging D2C Brand of the Year award by ET Retail and 3 awards at the e4m D2C Revolution awards.

Kae Updates:

Fund Closure

We recently announced the closure of our Winners Fund II at $50 million. Through this fund, we will be able to back our founders in late-stage rounds as well as participate in rounds of other market-leading companies outside the Kae portfolio.

Blogs

1. Understanding Ideal Customer Profile (ICP) Part 2- Refining the ICP: In the first part of this series, we covered the basics of defining the Ideal Customer Profile (ICP). In this second part, we talk about refining the ICP to get desired results.

1. Minimum Viable Product (MVP): In the early days, it's important for a founder to build a Minimum Viable Product (MVP), with just enough basic features to share with early adopters. With an MVP, one can ship a product with their core ideas and refine it based on early adopters’ feedback. In this article, we did a deep dive into MVP.
2. Customer Feedback Loops: During the early days of company building, getting continuous feedback from the customers about the product and iterating on it is critical. In this blog, we covered how to create effective feedback loops and ensure these loops are completed.

Webinar

The Kae team organised a webinar on “Book closure for startups” for its portfolio companies, in partnership with PwC. The team took them through the various ways to improve the book closure/ audit process. They also shared some typical hygiene to-dos as well as some technical areas that can be planned better.