Japanese conglomerate SoftBank has never been shy of betting big on Indian startups, having invested more than $10 Bn in the last few years across sectors such as ecommerce, mobility and hospitality. This year the Masayoshi Son-led tech fund may be looking to diversify its interests, with talks of big ticket investments in Faasos, vehicle-sharing marketplace Drivezy and healthtech startup PharmEasy.
On Monday (March 25), a Livemint report surfaced that SoftBank is in talks to invest nearly $100 Mn in epharma startup PharmEasy. At the same time, a Business Standard report said that SoftBank may lead a $75 Mn-$100 Mn funding round in cloud kitchen startup Faasos. Another report said that SoftBank and ecommerce giant Amazon are reportedly in talks to lead a $100 Mn equity financing round in Bengaluru-based vehicle-sharing marketplace Drivezy.
PharmEasy: Good Fit For SoftBank?
Founded in 2015 by Dharmil Sheth and Dhaval Shah, PharmEasy caters to the chronic care segment and offers a range of services such as teleconsultation, medicine delivery, and sample collection for diagnostic tests. It also has a subscription-based service, which is currently live in a few cities.
The company has raised over $75 Mn from investors such as Eight Roads Ventures India, the proprietary investment arm of Fidelity International Ltd (FIL); F-Prime Capital; Fundamentum Advisors, an investment firm backed by Nandan Nilkeni and Sanjeev Aggarwal; and San Francisco-based hedge fund Think Investments.
Talking to Inc42, PharmEasy spokesperson denied any such funding plans. A SoftBank spokesperson also declined to comment on speculation.
This is not the first time SoftBank is exploring an investment in healthtech. In one of its Indian investments, PolicyBazaar, SoftBank has been trying to leverage its Chinese investment. In August 2018, it was reported that PolicyBazaar plans to work with China’s Ping An Insurance Group, which owns and operates Ping An Good Doctor — the world’s largest healthcare portal backed by SoftBank — to strengthen its healthcare product DocPrime.
However, India’s healthcare space, specifically epharmacies, have been under a state of limbo since October 2018, when the Madras High Court announced a ban on the online sale of medicines. This was followed by a similar ban by the Delhi High Court. However soon after the Madras High Court put a stay on its order while the Delhi High Court’s ban still stands. Due to the conflicting but equal judgements, the legality of epharmacies is still a gray area.
The matter is now scheduled for hearing on May 9 in the Delhi High Court. Both courts have directed the central government to make its stand clear on the rules regarding epharmacies and the sale of medicines online in their judgements.
SoftBank Peeks Into Faasos’ Kitchen
Pune-based food maker and delivery app Faasos was founded by Jaydeep Barman and Kallol Banerjee and sells its products via food delivery companies like Swiggy and Zomato as well as independently through its app.
On March 13, Inc42 reported that Faasos has raised INR 110.6 Cr ($15.9 Mn) from Lightbox, Sequoia and Evolvence in its ongoing Series D round. The company is exploring international growth at the time when industry is coming to terms with the market potential of cloud kitchens.
The founders are reportedly looking to raise about $75 Mn – $100 Mn in funding which would be push its valuation to $400 Mn valuation. The filings showed that the company was last valued at $198.7 Mn (INR 1,416.33 Cr) on September 30, 2018.
In response to Inc42’s query on the funding report, Faasos said: “The reports doing the rounds currently are something we neither confirm nor deny. Given these reports are from sources anonymous, at this stage we decline to comment on any developments, or lack thereof.”
Faasos has nine in-house brands such as Oven Story, Firangi Bake and Mandarin Oak. The company currently has 175 cloud kitchens across 12 cities in India and receives almost 30K daily orders. In FY18, the company delivered same kitchen sales growth of 75% compared to the industry average of 10% to 15% same-store sales growth.
A Faasos spokesperson told Inc42 in an email statement, “The reports doing the rounds currently are something we neither confirm nor deny. Given these reports are from sources anonymous, at this stage we decline to comment on any developments, or lack thereof.”
Softbank has had the uncanny knack of picking some of India’s most promising startups and pushing them into the big league of unicorns.
After months of speculation that SoftBank may invest in larger foodtech players Zomato and Swiggy, its investment in Faasos and PharmEasy may make for an interesting bet for the Indian startup ecosystem.
SoftBank: Spotting India’s Soonicorns
SoftBank, with its massive bets, has been a leader in creating unicorns of the Indian startup ecosystem. Most of the startups, it has invested in, which includes Flipkart, OYO, Ola, PolicyBazaar, Grofers have gained valuation above $1 Bn, thanks to SoftBank’s big installment or across continued investments.
Beyond Delhivery, which raised $400 Mn funding round from SoftBank and joined unicorn club this year, it has also committed $396 Mn to baby products retailer Firstcry. Also, one of the Inc42’s soonicorns Grofers raised nearly $60 Mn in a fresh Series F funding round from Masayoshi Son-led SoftBank Vision Fund (SVF).
In India, SoftBank with its $100 Bn Vision Fund has led to several new entries in the unicorn club in the past few years. It has already roughly deployed over $10 Bn in Indian startups to date, out of its $65 Bn-$70 Bn active investments out of the vision fund.