Global Market 

●In 2019, the global market size of plant based meat was valued at $11.1 billion with an expected CAGR of 15.8% by 2027

●With an estimated revenue of $23.2 billion by 2024, plant based meat is expected to register a steep uptick based on its CAGR from 2020-2027

●Beyond Meat Inc., a plant based food tech startup , generated ~ 600% return since it’s IPO in May 2019. The startup had increased its revenue by 230% in 2019 within a year and associated it’s products with some major brands such KFC , Taco Bell and Pepsi. The company has grown its market share from 2.3% in 2016 to more than 22 % in 2020.

●In Europe, another domain which has been gaining popularity amongst investors is Lab Grown Meat. They recently raised $ 78 million through Global Private Equity Investors to launch their industrial 3D printed meat substitutes across Switzerland, Germany, followed by North America and Asia.

The Indian Flexitarians 

●While Indian vegetarianism culture is no binary concept, their practice of distinct food practices led them to be coined as Flexitarians. Despite of being a small market currently, mock meat has popularised rapidly amongst Indian consumers. 

●As per The Good Food Institute estimates, approximately 63% Indians prefer purchasing plant based meat than regular meat. 

●The market has seen an uptrend in the PBM startups – I.E. VegetaGold, GoodDotEnterprises, Ahimsa Food, Vezlay and EVO etc. are some of the upcoming ones. 

●As per latest findings, India’s PBM Market accounts upto 10% of APAC market which is likely to hit $565 million mark by 2024.

Startup Spotlight – EVO Foods 

●This mumbai-based food-tech startup aims to bridge the gap between clean protein products and plant based alternatives for animal products. As the startupvouches for nation’s first 100% (plant based) vegan liquid egg, it also claims to mimic the same texture, protein content and taste of the conventional one.

●The foodtechrecently raised $330,000 through Big Idea Ventures and VegInvest in their pre-seed funding. Another undisclosed funding through ShiokMeat’s CEO Mr. Sandhya Sriram was made in July 2019.

●Despite of being a promising market and year to date sale of 40 million vegan liquid eggs, the startupfaces competition threats from Industry Giants such US based Impossible Foods and many more. 

●The startupplans to gear up operations in the US market by the end of 2021,as well as South East Asia and Australia in the near future.

 Is it the Rise of Meatless Meat? 

●The rise of meat alternatives has been driven by one main factor: that the meatless meat doesn’t necessarily have to be an alternative just for vegans or vegetarians. All the consumers, and not only vegetarians and vegans, are the target of the next generation of meat alternatives.

●Given the effect that meat has on the environment, the consumer consumption has shifted toward a the interest in meat alternatives.With an increasing awareness of healthy eating and healthy living, consumers are more of the products that they buy. This has in turn increased the demand for meatless meat or call it the great-tasting meat alternatives.

●However, with the global meat industry worth over $2 trillion and increasing at a CAGR of 15.7% in the next 5 – 7 years, will the plant – based- meat industry overcome hurdles, such as cultural barriers, objections from incumbent meat companies and the risk of any incident that affects consumer confidence?

Flipkart, an e-commerce giant headquartered in Bangalore and registered in Singapore, was originally an online book sales platform before diversifying into product categories like fashion, home essentials, and lifestyle products. Flipkart’s competition primarily is with Amazon and Snapdeal. As of October 2020, Flipkart holds a 31.9% market share, making it the largest online retailer in India. 

Flipkart’s Acquisition Timeline

Key Acquisitions

2012 

Flipkart had acquired Letsbuy for $25 million. Letsbuy.com was founded by Hitesh Dhingra and Amanpreet Bajaj in 2009. It was an online retailer of branded computer technology and digital lifestyle products from top international and domestic brands. 

The acquisition fitted with Flipkart’s strategy to have market dominance. The synergy from the deal would allow them to accelerate growth. 

2014

Flipkart acquired Myntra for $280 million. Myntra was founded by Mukesh Bansal, Ashutosh Lawania, and Vineet Saxena in 2007. The company has been performing well since its inception. Myntra continues to operate alongside Flipkart as a standalone subsidiary focusing on separate market segments.

The deal mutually benefited both parties as for Flipkart, this would facilitate entry into the online fashion industry while for Myntra, this would provide them access to Flipkart’s logistic network.  

2015

Flipkart acquired FX Mart for $6.8 million. The company, founded in 2012, engages in electronic payments, remittance, foreign exchange, and travel-related businesses.

The startup’s prepaid wallet was licensed by RBI and this allowed Flipkart to offer a digital wallet within itself and provided them with an option to cut their expenses of paying to the external wallet providers. The deal let Flipkart increase its proportion of cashless transactions.

2016

Flipkart acquired Jabong.com for $70 million. Jabong was founded by Praveen Sinha, Lakshmi Potluri, Arun Chandra Mohan, and Manu Kumar Jain in 2012. It was a fashion and lifestyle e-commerce portal. 

However, in February 2020, Flipkart formally shut it down to shift focus completely on its premium clothing platform Myntra. 

Flipkart acquired PhonePe for an amount in the rage of $10-20 million. Founded by Sameer Nigam, Rahul Chari, and Burzin Engineer in 2015, it went live in August 2016, to become the first payment app built on Unified Payments Interface.

However, in Dec 2020, PhonePe partially spun-off from Flipkart to pursue their vision to provide “financial inclusion” to a billion Indians.

2017 

Flipkart acquired eBay India in exchange for equity and eBay then invested $500 million in cash in Flipkart. However, after Walmart announced its decision to acquire a 77 per cent stake in Flipkart in May 2018, eBay sold its stake for about $1.1 billion.

eBay’s position at the global e-commerce market helped Flipkart to accelerate and maximize its opportunities and to have a strong hold in the market.

Recent Developments

On January 20, 2021, the Competition Commission of India (CCI) approved Flipkart’s proposal to acquire 7.8% equity stake in Aditya Birla Fashion and Retail – a pure-play fashion and lifestyle company with a strong bouquet of leading fashion brands and retail formats.

Aditya Birla Fashion had approved the issuance of equity shares on a preferential basis to Flipkart for Rs 1,500 crore.

However, it is rumored that The Reserve Bank of India (RBI) and Enforcement Directorate (ED) are yet to launch an investigation into the alleged FDI policy violation in this acquisition Flipkart and ABFRL.

Brief Overview

• In January 2019, Amazon picked up a 49% stake in Kishore Biyani’s Future Group’s – Future Coupons for $194 Million.
• In August 2020, Future Group’s listed entities including Future Retail, Future Lifestyle and Future Consumer merged into Future Enterprises Limited (FEL). Reliance Retail, a subsidiary of the umbrella Reliance Industries Limited (RIL) group then entered an agreement to buy Future Enterprises. As a part of the deal, Future Retail would sell its supermarket chain Big Bazaar, premium food supply unit Foodhall and fashion and clothes supermart Brand Factory retail as well as wholesale units to Reliance Retail.
• As for Future Retail, the cause of action arose when Amazon raised concern that Future Group has violated a non-compete clause and a right-of-first-refusal pact. The deal also required Future Group to inform Amazon before entering into any sale agreement with third parties.
• The outcome of the dispute embroiling Future, Reliance and Amazon is shaping India’s retail landscape, especially in deciding who will have an upper hand in the groceries market expected to be worth around $740 billion a year by 2024.

Consequences

Given that Future Retail failed to stop Amazon from presenting itself to the various government bodies and regulators, the e-commerce giant will be allowed to make its case, mainly on the basis of the arbitration award. However, it is also noteworthy that the anti-trust regulator, Competition Commission of India, approved the sale of Future Group’s wholesale, retail, warehousing and logistics business to Reliance Retail last month.

● FRL Cites Potential Risk-The solvency of over 6,000 SMEs and their employees is at stake. Approximately $408Million of public money in the form of bank loans and debentures issued by FRL and its group companies is also at risk.

● SEBI and India’s stock exchanges could still reject or take more time in approving the deal, which is critical for the survival of Future Retail, whose more than 1,700 outlets were hit hard by the COVID-19 pandemic.

● Future Retail has warned that failure to close the deal could lead to the company’s liquidation and job losses for more than 29,000 employees.

URBAN LADDER 

Founded by Ashish Goel and Rajiv Srivatsa in 2012, Urban Ladder sells furniture, decor, and mattresses via an inventory-led model. while it earlier also ran as a marketplace. Urban Ladder offers over 3000 products across 35 categories to more than 90 cities in India, with offline stores in Bengaluru and Delhi-NCR.

Urban Ladder has raised around INR 838.3 Crores from top venture capital funds, such as Sequoia Capital, Elevation Capital, Kalaari Capital, Ratan Tata’s VC fund, and a hedge fund called Steadview Capital since inception. The company closed its Series E round in 2017 but struggled to get funding after that. In November 2019, it managed to raise INR 15 Crores from Elevation Capital, Sequoia Capital, Steadview Capital.

Although some of its existing investors did not participate in the round. The Company had to keep raising funds to fuel their growth to compete with competitors such as Pepperfry and IKEA, who invaded the space in 2011 and 2018, respectively. Urban Ladder also started discussing the possibility of acquisition with players such as Flipkart, Fabindia, Livspace and WakeFit but none of them led to any fruition.

The furniture e-retailer went through a sticky patch throughout 2019. Several cracks started to appear in the firm’s business, including layoffs, and the exit of its co-founder, Rajiv Srivatsa. In October 2019, just months before a devastating pandemic swept the world, Srivatsa said in a press statement that his 8-year journey with Urban Ladder would come to an end. His exit came a day after Kalaari Capital’s Vani Kola resigned from the board of the company.

Urban Ladder was valued at around INR 1,200 Crores in 2018. This dropped to about INR 750 Crores in 2019. Their audited turnover was INR 434 Crores, INR 151.22 Crores and INR 50.61 Crores in FY19, FY18 and FY17, respectively.

Narrowing Down Expenses: Did Layoffs Lay the Path To Profitability?

Many reports surfaced in February’19 that Urban Ladder had laid off about 90 employees to cut back its losses. At that time, it employed 800 people. However, the company spokesperson clarified that 60 employees were laid off as the company was restructuring its business to become leaner and improve its business economics.

However, the employee benefit expenses narrowed down by merely 3% in FY19. The company spent INR 53.66 Crores on employee benefits in FY18, which came down to INR 51.98 Crores in FY19. Therefore, the real impact of these layoffs, which continued till June 2019, was seen majorly in FY20.

One of the biggest expenditures came from the purchase of inventory, which increased 1.79 times reaching INR 207.19 Crores in FY19, as against INR 74.19 Crores in the year before. Further, the depreciation costs were shown at INR 5.21 Crores for FY19, but since it is a non-cash expense, it doesn’t have much relevance for the company’s business.

One of the cut downs came into information technology. Urban Ladder had narrowed down IT expenses to INR 6.78 Crores from INR 8.97 Crores in FY18. The company’s advertising expenses also decreased by 20% reaching INR 37.65 Crores.

RELIANCE ACQUISITION

Reliance Industries’s (RIL) retail arm acquired 96% stake in online furniture retailer, Urban Ladder for over INR 182 Crores.

The deal helped Mukesh Ambani-headed RIL take on players such as Amazon, Walmart-owned Flipkart, Swedish home furnishing major Ikea, and smaller rival Pepperfry in the battle for India’s INR 2 Lakh Crore worth furniture market.

Reliance Retail Ventures (RRVL), a subsidiary of RIL, acquired equity shares of Urban Ladder Home Decor Solutions (Urban Ladder) for a cash consideration of INR 182.12 Crores. This investment represents about 96% holding in the equity share capital of Urban Ladder. RRVL has the option of acquiring the remaining stake. It has proposed to make a further investment of up to INR 75 Crores, which is expected to be completed by December 2023.

What does the deal mean for Reliance Retail?

The deal contributes to Reliance’s plans of building a stronger retail portfolio that supports its e-commerce play. An acquisition of such will enable the RIL group’s digital commerce initiatives and widen the bouquet of consumer products provided by the group while enhancing user engagement and experience across its retail offerings. With its existing portfolio of digital services including telecom, e-payments, online commerce, content streaming, etc. such acquisition will open the gates for vertical integration of services that experts believe would enable Reliance to keep a customer within its ecosystem for everything a user consumes online. The deal also gives Reliance Retail access to a growing online furniture retailer — which has seen its turnover grow by nearly 10 fold in three years to INR 434 Crores for the financial year 2018-19.

What does the deal mean for UrbanLadder?

During FY 19, UrbanLadder reported a profit of INR 49 Crores, the first since its inception in 2012. This was preceded by net losses of INR 118.66 Crores and INR 457.97 Crores in FY18 and FY 17, respectively. The acquisition means that the company can now stop worrying about funding to finance its losses.

How is the online furniture retail market shaped?

The growth in the Indian Online furniture retail was effectively a result of the work put in by two companies — Pepperfry and UrbanLadder.

Sectoral experts envisaged these companies, along with other smaller ones, to grow further as urbanisation and internet penetration in India increased. However, with the success of the omnichannel model, wherein online platforms established physical stores to tackle the ‘touch and feel’ problem in furniture e-tailing, traditional furniture are changing their approach. Nilkamal and Godrej have started consolidating their position, in terms of gross merchandise value, using the same model. Thus, establishing a scenario where online furniture platforms would look attractive to conventional companies in the furnishings segment as an add-on.

India’s largest online education startup, Byjus, is set to acquire the medical test prep leader, Aakash Educational Services Ltd (AESL), for $1 Billion in the upcoming months. This acquisition will be one of the largest in the Ed-Tech sector.

Byju’s has been on a fundraising spree since the pandemic driven demand for online education skyrocketed. It is adding over 5 Mn users every month and has an estimated revenue of $1 Mn for FY 21. AESL, backed by the Blackstone group, will pave Byju’s path into the test-prep market. 

This deal would bring about a change in the educational sector as it will unlock a blend of the pros of online and offline models. 

The high-tech and tried and tested platform of Byju’s combined with the skilled faculty of Aakash Institutes will prepare a model of hybrid learning where students would be able to learn through online medium as well as seek offline guidance from its brick and mortar presence, as and when required.

In a video posted by Khan Academy on YouTube, founder Salman Khan thanked Elon Musk for his generous donation of $ 5 million through Musk Foundation. Khan said that he hoped that Elon really felt good about the donation as the amount would help them in accelerating their subject-wise content starting from kids to early college stages and software development.

As the pandemic forced schools into adapting distance learning methods, many students who found it difficult to learn through this medium turned to Khan Academy to understand concepts better.

Khan Academy has 120 million + registered users, and upto 30 million per month users.

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Indian Government has announced on 29th June 2020 to ban 59 Chinese apps as it is believed to be prejudicial to sovereignty and integrity of India, security of state and public order. This move is following Galwan Valley clash between Chinese and Indian armies. 

Additionally, this decision also came after Reliance Industries Limited’s Jio Platforms owned by Mukesh Ambani has raised Rs 1.68 trillion ($22 billion) through a 24.7% stake sale to several stakeholders including Facebook. It is not surprising that one of the banned Chinese apps “TikTok” is the closest rival of Facebook. Will it pave the way for Facebook to launch its long awaited app “Lasso”, short video platform in India.

BANNED CHINESE APPS IN INDIA AND JIO’s PRESENCE IN THE INDUSTRIES  

Overall, this is a strategic move which not only safeguards Indian security by keeping its data safe in its own boundaries but also to make them self-reliant and promote home grown apps. The above graph highlights Jio’s presence in majority of the industries where Chinese Apps have been banned. This surely provides Jio with an easy entry and dominance in the Indian market which is hugely dependent on the Chinese Apps for entertainment and other daily activities. Additionally, with fund raising activity, Jio now has a substantial amount for cash burn to position itself in various industries.

We need to also highlight here that Indian Government’s decision is a welcoming move. Talking about Chinese economy, China has promoted lot of home grown apps by incentivizing them while restricting international apps in order to manage leakage of data. Chinese Government has been very diligent of the type of data and conversations are exchanged between its people. 

INTERNATIONAL APPS BANNED OR RESTRICTED IN CHINA

Some interesting case studies are provided for your read. Most of them are banned and others are restricted in China:

Surprisingly China also banned TikTok in order to have a control on content shared outside of China. LinkedIn is one of the few US social media companies that has broken into the giant and lucrative Chinese market. The site has north of 41 million users in the country.

The ‘Great Firewall’ in China prevents internet users from viewing or posting socially or politically sensitive content. Therefore, leading to banning of the global favorite apps. That is the major reason of India being one of the highly populated countries becoming favorite market for US giants such as Amazon, Facebook, Whatsapp, Netflix and similar companies. This is a wait and watch move for a New-India.

Contribution: Levin Tilak, working as a Consultant at Cretum Advisory. He is pursuing Chartered Accountancy and is a graduate from University of Delhi.

Global education market size is worth $6 Trillion. India is positioned distant 3rd after China and the US at $ 215 billion in terms of the market size in education sector.

Indian EdTech industry is estimated to be worth $2 billion in 2021 and is estimated to reach $5 billion by 2024. The Indian EdTech industry is categorized as below: 

Note 1: Estimated for year 2021; Source: Study on online Education by KPMG & Google  

India is moving towards digitization at a rate of 40% with emergence of large startups such as Byju, Unacademy, Vedantu and others, however it still is lagging behind when compared globally and benchmarked against its population. EdTech sector has also attracted large number of renowned investors since past 5 years such as Sequoia Capital, Blume Ventures, Gray Matters, Nexus Ventures, General Atlantic, among others. Indian EdTech startups have raised more than $1.8 Billion from 2014 to 2019; around 14 EdTech companies raised investment amid coronavirus pandemic. K-12 & Exam Prep Segment seen the maximum growth.

KEY GROWTH DRIVERS OF EDTECH INDUSTRY IN INDIA

There have been several factors that are driving the growth of the EdTech industry especially after COVID:

• Campaigns by MHRD, India like Bharat padhe online, SWAYAM & Digital India will make way for the infrastructure needed by students to study online with the aim to transform India into a digitally empowered society. 
• PM e-VIDYA: A multimode access to digital/online education with DIKSHA, QR coded energised textbooks for school education, Earmarked channels for education, Extensive use of Radio, community radio and podcasts and Top 100 Universities allowed (automatically) to start online courses
• Launch of Manodarpan (psychological support), New National Curriculum and Pedagogical Framework for school, early childhood and teachers and National Foundational Literacy and Numeracy Mission
• SWAYAM PRABHA DTH channels to support and reach those people not having access to the internet. 
• 200 new textbooks added to e-Paathshaala

Currently, 564 million Indians have access to the internet but its steady growth, especially in semi-urban and rural areas, provides high potential for the proliferation of online education. Google KPMG report estimates nearly 1.2 billion mobile internet users and 1 billion smartphone users in India by 2021

Largest Education Market base: India has 1.5 Million number of schools, 900 Universities and 39,071 Colleges

Over $2 billion is raised in funding in last 5 years in Indian Education sector, while Byju is driving major fundraising activity. Byju has raised more than 60% of the total fundraising in Indian Education sector. 

Source: Secondary Research; MHRD,IBEF, Inc42 

Contribution: Pratyaksh Dang working as an intern at FundTQ. He is a Business Economics graduate from College of Vocational Studies, University of Delhi.

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