Jayant Shilanjan Mundhra Profile picture
May 11 โ€ข 12 tweets โ€ข 6 min read Twitter logo Read on Twitter
Byjuโ€™s. Ola. Oyo. Swiggy- Why have investors slashed their valuations like crazy? ๐Ÿ“›๐Ÿ“›

Why should this be taken seriously? And why were they valued so high before?

Hereโ€™s why these questions deserve more attention! ๐Ÿ‘‡ Image
๐Ÿ‘‰ @BYJUS
Before: $22.5bn
Now (As per Prosus): $5.9bn
Now(BlackRock): $11.5bn
Cut down twice.

๐Ÿ‘‰ @Swiggy
Jan 22: $10.7bn
Now (Invesco): $5.5bn
Cut down twice.

๐Ÿ‘‰ @Olacabs
Before: $7.4bn
Now (Vanguard): $4.8bn
Cut down thrice.

๐Ÿ‘‰ @oyorooms
Before: $10bn
Now (Softbank): $2.7bn
But, why should these be taken seriously?

๐Ÿ”† SoftBank Group Corp. is $60bn Japanese tech giant operating 2 Vision Funds cumulatively holding startup assets worth ~$130bn
๐Ÿ”† BlackRock is the worldโ€™s largest investment firm managing assets (AUM) of $8.6 Trillion- 3x Indian GDP!

๐Ÿ”† Invesco is also a global asset manager with AUM of $1.5 Trillion- A little over half of Indian GDP!

๐Ÿ”† Prosus is meanwhile a tech investor, with assets worth $170bn!
Each of these long-term investors are listed companies with shareholders to keep happy- Or their own share price falls!

They have every reason to show that their investments are doing well.

And yet they are slashing their valuations again & again. What does that say?
๐Ÿ“› That they can no longer justify those lofty blue moon โ€˜claimedโ€™ valuations ๐Ÿ˜“๐Ÿ˜“

๐Ÿ“› And, if the worldโ€™s biggest listed investors can no longer do that, then are these startups really that big at all?

That raises the question:
How were these companies valued so much anyway?
Invesco says:

๐Ÿ”† Valuations are determined using SIGNIFICANT UNOBSERVABLE INPUTS

๐Ÿ”† When observable inputs are unavailable (when there is little or no market activity), unobservable inputs are used

Now, what does that mean in layman's terms?

Storytelling & Vision.
Say, a guy runs a Kirana shop that does Rs 5cr revenues per year, they could get a valuation of maybe Rs 10cr.

Now, read this:
๐Ÿ”† Scaled a Kirana shop to Rs 5cr sales, growing 30% annually

๐Ÿ”† Aiming to build 50 such outlets across Delhi NCR to grow sales

๐Ÿ”† Will offer not just Kirana stuff with private labels, but to also offer concierge services to gain a bigger share of customerโ€™s wallet
Iโ€™m not suggesting that this is an idea thatโ€™ll get funded. What I am suggesting is this ๐Ÿ‘‡

๐Ÿ”† VCs, angels or startup investors are not in the biz of betting on businesses

๐Ÿ”† They PRIMARILY bet on a founder & his vision. Those are the unobservable inputs
About the above-mentioned startups:

With successive rounds, the founder's storytelling & vision got more convincing & audacious backed by solid execution since the previous round was raised.

That's how the world of startups works ๐Ÿ’ฐ๐Ÿ’ฐ
Biz News+ WA group:ย openinapp.co/6wrx2

PS: I post one such deep-dive daily 11am. If interested, doย follow!

#byjus #swiggy #ola #oyo #startups #indianstartups #valuations #blackrock #softbank #invesco #prosus

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More from @jshilanjanm

May 13
Can we put an end to the #FakeNews that Byjuโ€™s is raising $1bn at $22bn valuation!? ๐Ÿ˜“๐Ÿ˜“

Break the numbers shared below the headlines, and the beans spill out!

The truth ๐Ÿ‘‡ Image
$1bn is what Byju's is reportedly chasing. Though visibility in the media is all about $950m.

This sum can be broken down into 2 parts ๐Ÿ‘‰
1๏ธโƒฃ A 3yr $250m convertible debt from Davidson Kempner Capital Management (DKCM) which is not known to invest in startups, but in financially distressed companies against significant equity & big interest rates

Like it bought #Adani bonds when they had crashed after #hindenburg
Read 15 tweets
May 12
Acquired by Mukesh Ambani in a hostile takeover,ย #Milkbasketย is growing on steroidsย ๐Ÿš€๐Ÿš€

Itโ€™s growing in cities where no competition has reached yet, & that too without much upfront investment!

Hereโ€™s how ๐Ÿ‘‡ Image
Founded in โ€™15, Milkbasket (MB) raised ~$40 million in its lifetime ๐Ÿ’ฐ๐Ÿ’ฐ

๐Ÿ”† It would let people order till midnight & then deliver by 7am

๐Ÿ”† By 2021, having grown to scale, it had burnt a lot of funds. Thus, the company was exploring sale to BigBasket, Swiggy or Amazon
This was when Reliance Retail swung into action:

๐Ÿ”† It got Vani Kolaโ€™s Kalaari Capital to sell its entire 15.26% stake to Mahendra Nahata at mere Rs 400cr valuation!

๐Ÿ”† As Nahata a Director on Reliance Jio Infocommโ€™s board, it was clear who the real buyer was
Read 13 tweets
May 8
How can long-term @IndiaMART investors not be delighted with @DineshAgarwal! ๐Ÿ™Œ๐Ÿ™Œ

The company released its Q4FY23 results some days back. So, I dived in & sliced through its numbers for the last 16 qtrs.

Here is all that I learned ๐Ÿ‘‡ Image
In last 4yrs:
๐Ÿ‘ย Revenue/month: Rs 85cr | Up ~90%
๐Ÿ‘ Profit/month: Rs 25cr | Up ~278%
Just look at those numbers!
How did it happen?

Outstanding jump in paying subscribers:
๐Ÿ”† 72% up in the Top-8 cities (~1.1L users)- 20% up in last 1yr alone
๐Ÿ”† 62% up in the cities with >5L people (~53k users)- 25% up in last 1yr alone
Read 13 tweets
May 7
Indiaโ€™s pvt sector is going gangbusters on coal mining, breaking all records โ›๏ธโ›๏ธ

A 5yr old #ModiGovt reform has set Indiaโ€™s captive coal economy on a big growth path.

Hereโ€™s all you should know! ๐Ÿ‘‡ Image
Indiaโ€™s coal is primarily produced by 2 sets of entities.

โ›๏ธ PSUs: #CoalIndia & #SCCL

โ›๏ธ Captives: Pvt sector entities or PSUs like #NTPC or #SAIL which mine coal to meet in-house power demand

Here is how their production (million tonnes/MT) has fared over the last 10yrs ๐Ÿ‘‡
Brackets show share of captives in overall production.

(Total | Coal India | SCCL | Captives)

FY14: 566 | 462 | 51 | 53 (9.3%)
FY15: 609 | 494 | 53 | 62 (10.2%)
FY16: 639 | 539 | 60 | 40 (6.2%)
FY17: 658 | 554 | 61 | 42 (6.4%)
FY18: 675 | 567 | 62 | 46 (6.8%)
Read 13 tweets
May 6
As @Paytm released its Q4FY23 results yday, I dived into last 8-qtrs of its lending biz ๐Ÿ’ก๐Ÿ’ก

Hereโ€™s a breakdown of numbers that you wonโ€™t find all in one place anywhere else ๐Ÿ‘‡

Tags: @vijayshekhar | #Paytm Image
Paytm earns 2 things on each loan given.

๐Ÿ’ฐ Commission (C): A %age of the loan amount

๐Ÿ’ฐ Performance bonus (PB): A %age of the EMIs collected, only when the loan is paid back
Some basics about the performance bonus!

๐Ÿ‘‰ In case of defaults, #Fintechs used to compensate the lending partners (LPs- NBFCs & banks) under #FLDG (first loan default guarantee) agreement
Read 15 tweets
May 3
An avg #Rapido rider does ~3 trips a day, earning just Rs 200! ๐Ÿ˜ฎ๐Ÿ˜ฎ

Whatโ€™s his persona & motivation? What does @rapidobikeapp earn out of it?

Hereโ€™s all that the companyโ€™s data reveals! A thread ๐Ÿ‘‡ Image
This morning, @livemint published a great data-rich story on #Rapido by @sumantbanerji. What did it show? A lot of things. But some key numbers are all that probably matters.
๐Ÿ”† No of riders: 7.5L

๐Ÿ”† Total monthly rides: 3cr

๐Ÿ”† Avg rider's monthly earnings: Rs 6k (Rs 200 daily)

๐Ÿ”† Full time rider's (10-12hrs) monthly earnings: Rs 20k (Rs 666 daily)
Read 15 tweets

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