Also in this letter:
- API Holdings appoints five independent directors
- Won’t file detailed affidavit on Pegasus, govt tells SC
Uberdrivers are employees, not contractors: Dutch court
Freshworks aims for $9 billion valuation in US IPO
Freshworks CEO Girish Mathrubootham
Freshworks hopes to raise over $800 million from its initial public offering (IPO) in the US, for which it is seeking a valuation of up to $9 billion, Reuters reported, citing a regulatory filing by the company on Monday.
Details: Freshworks, which rivals Salesforce, said it would sell 28.5 million shares priced between $28 and $32. At the top end of the range, it will raise $912 million.
- It will be listed on the Nasdaq under the symbol “FRSH”.
- Morgan Stanley, JPMorgan and Bofa Securities are the lead underwriters.
What it does: Freshworks was founded in Chennai in 2010 by Girish Mathrubootham and Shan Krishnasamy. The software-as-a-service startup offers a suite of software products, which includes a messaging platform and an artificial-intelligence-powered chatbot, to help businesses with customer management. Its technology is used by more than 50,000 firms in 120 countries, including Delivery Hero, Vice Media and Swedish payments firm Klarna.
Funding and valuation: The company raised its first round of funds in 2011 and bagged its first customer—Atwell College in Australia—the same year. Venture capital firm Accel and technology investment giant Tiger Global Management were among its early investors. Others include Sequoia Capital India and CapitalG.
The firm was valued at about $3.5 billion during its last funding round in November 2019.
Another SaaS IPO: Freshworks isn’t the only Indian software-as-a-service (SaaS) company looking to go public soon. Last month, Rategain Travel Technologies, a travel and hospitality technology services provider, filed draft papers for its proposed IPO with Sebi. The company plans to raise Rs 400 crore through the initial share sale.
The SaaS boom: According to a report by Chiratae Ventures and Zinnov earlier this month, the value of India’s SaaS market is expected to surpass that of IT services by 2025-30. Titled ‘Indian SaaS Revolution: Rising Trillion Dollar Global Opportunity’ the report said that at the current rate of growth, India’s SaaS industry revenues would grow 8x from $5.3 billion in 2020 to $42.2 billion in 2025.
Ahead of IPO, PharmEasy’s parent firm appoints five independent directors
Pharmeasy CEO Siddharth Shah
PharmEasy’s parent firm API Holdings has appointed five independent directors to its board ahead of its IPO later this fiscal.
Who are they?
- Vineeta Rai, retired IAS officer former revenue secretary of India
- Subramanian Somasundaram, former chief financial officer of Titan
- Ramakant Sharma, founder and chief operating officer of Livspace
- Dr Jaydeep Tank, a Mumbai-based gynaecologist and secretary general of Federation of Obstetric and Gynecological Societies of India.
- Deepak Vaidya, a veteran of the pharma industry, as well as microfinance, healthcare and private equity
With these appointments, and the resignation of several investor nominee directors, API Holdings’s board now has 12 members.
Quote: “With diverse experience of our board, our platforms will continue to significantly invest to improve access to affordable healthcare,” Siddharth Shah, cofounder and chief executive officer of API Holdings, said in a statement. “We remain resolute in our mission to offer affordable healthcare across every single zip code of India, be it consultation, tests of treatment within a 24-hour TAT, and contribute to the Indian healthcare ecosystem.”
IPO plans: We reported on August 27 that PharmEasy was likely to file its draft IPO papers by October, but that the company’s discussions with Japan’s SoftBank for a new funding round fell through because the two parties couldn’t agree on a valuation.
PharmEasy is still negotiating with new investors to raise $200-300 million before its listing, at a valuation of $5.6 billion. API Holdings was valued at $4.2 billion in June.
Consolidation: PharmEasy is the only large independent player remaining in India’s online pharmacy market.
Reliance Industries bought more than 60% in Netmeds last year and Tata Digital acquired 1mg in June. PharmEasy itself bought smaller rival Medlife last year, though the deal officially closed only earlier this year.
The online pharmacy market in India will grow to about $2.7 billion by 2023 from about $360 million in 2020, according to an EY report last year.
New pastures: Besides medicine delivery and diagnostic testing, PharmEasy is also ramping up online doctor consultations. A recent report from Praxis Global Alliance said the pandemic has increased demand for teleconsultation in India. It said this was a $163 million market as of March 2021 and could grow to $800 million by March 2024.
Tweet of the day
Uber drivers are employees, not contractors, says Dutch court
Uber CEO Dara Khosrowshahi
Uber Technologies Inc. has lost another lawsuit over its drivers’ working rights.
A Dutch court has ruled that drivers who transport passengers via the Uber app are covered by the collective labour agreement for taxi transportation. It was another court victory for unions fighting for better pay and benefits for gig workers, and followed a similar decision earlier this year about Uber in the UK.
The Amsterdam district court sided with the Federation of Dutch Trade Unions, which had argued that Uber’s roughly 4,000 drivers in the capital are in fact employees of a taxi company and should be granted benefits in line with the taxi sector. “The legal relationship between Uber and these drivers meets all the characteristics of an employment contract,” the ruling said.
Double whammy: The court also ordered Uber to pay a fine of €50,000 ($58,940) for failing to implement the terms of the labour agreement for taxi drivers.
Quote: “We are disappointed with this decision because we know that the overwhelming majority of drivers wish to remain independent,” said Maurits Schonfeld, Uber’s general manager for northern Europe. Uber said it would appeal against the decision and “has no plans to employ drivers in the Netherlands”.
Won’t file detailed affidavit on Pegasus, govt tells SC
The union government told the Supreme Court today that it won’t file a detailed affidavit on petitions seeking an inquiry into its alleged use of Israeli firm NSO Group’s
Solicitor General Tushar Mehta told the court that whether a “particular software was used or not is not a matter for public domain”.
Supreme Court puts its foot down: But a bench of Chief Justice NV Ramana, and Justices Surya Kant and Hima Kohli told Mehta, “The Supreme Court has given a reasonable and fair opportunity to file a detailed affidavit to know its stand on crucial issues linked to petitions. If the government does not, then the Supreme Court will hear parties and pass appropriate orders.”
Govt’s line on Pegasus: In July, the IT ministry said that there had been no “unauthorised surveillance”.
The petition: In July, a petition was filed before the Supreme Court by advocate ML Sharma, seeking a court-monitored probe by a special investigation team (SIT). It said Pegasus could be used not only to eavesdrop on conversations but also access the entire digital imprint of a person’s life. In August, The Editors Guild of India also approached the Supreme Court, urging it to set up an independent SIT to probe the allegations.
What now? The court has reserved its interim orders and said it would announce them in two to three days. It added that the government could approach it before then if it changed its mind on filing an affidavit.
A brief history of Pegasus
2016: Researchers at Canadian cybersecurity organisation The Citizen Lab first encountered Pegasus on a smartphone of human rights activist Ahmed Mansoor.
September 2018: The Citizen Lab published a report that identified 45 countries in which Pegasus was being used. As with the latest revelations, the list included India.
October 2019: WhatsApp revealed that journalists and human rights activists in India had been targets of surveillance by operators using Pegasus.
July 2021: The Pegasus Project, an international investigative journalism effort, revealed that various governments used the software to spy on government officials, opposition leaders, journalists, activists and many others. It said the Indian government used it to spy on around 300 people between 2017 and 2019.
ETtech Explainer: What is Pegasus spyware and how it works
Onesto Labs gets $2.5 million from Sanjay Nayar, others
Onesto Labs cofounder Rohit Chawla
Onesto Labs, the parent company of direct-to-consumer personal care brands Chemist at Play and Bare Anatomy, has raised about $2.5 million in a funding round led by 72 Ventures, the family office of KKR India chairman Sanjay Nayar.
Existing investors Sauce VC and Arihant Patni of Patni Family Office also participated in the fundraising, as did angel investors Ramakant Sharma (Livspace founder), Suhail Sameer (BharatPe CEO) and Rajeev Chitrabhanu (Magnetic founder).
The fresh capital will be used for strengthening the company’s R&D capabilities, hiring, and branding and marketing.
In other deals news…
■ Jungle Ventures has raised $225 million in the first close of its fourth fund as the venture capital firm seeks to replicate its successes in startups across Southeast Asia and India.
■ BetterPlace, a technology platform for blue-collar workforce management, has raised $24 million in a Series C funding round led by CX Partners and Jungle Ventures. The capital will be used to invest in technology to support growth and aggressively pursue inorganic growth opportunities.
■ Infosys and Microsoft have signed a multi-year strategic deal with Ausgrid to accelerate the cloud transformation of the largest electricity distributor on Australia’s east coast. As part of this strategic engagement, Infosys and Microsoft are helping Ausgrid address challenges by modernising its application landscape and optimising the IT infrastructure.
■ Dutch chipmaker NXP Semiconductors has selected India’s biggest IT services firm Tata Consultancy Services to help accelerate its digital transformation. TCS will drive NXP’s integrated IT strategy across apps, IT infrastructure and workplace services spanning enterprise, manufacturing and engineering functions.
Today’s ETtech Top 5 newsletter was curated by Arun Padmanabhan in New Delhi and Zaheer Merchant in Mumbai.