I spy WeWork 2.0 (Zepto)
I read/heard this somewhere that Zepto would've become bankrupt had they not raised that capital. They're burning 10 crores a day (almost $400Mn/year) which was WeWork figures at one point in time. And this funding round to me is another 1 year runway. At this point with 2-3 years they would've spent close to 600-750 million which gives them a total of 800 odd million more (out of the total 1.6 Bn cash funding) of runway till IPO.
It is pretty clear that the new round is to fund a 1-2 years of operations and I have a feeling it would be an investor IPO dump next year (because of Motilal Oswal's tendency to push things to IPO). And why not, everyone is jumping on the bandwagon and at this point the only way to make money is to IPO.
They're expecting to reach Swiggy/Zomato valuations and voila, another bubble. I appreciate what the team is doing and the efforts but I feel it is just getting a bit unhealthy at this point. They're looking for stable celebrities like BigB and Tendulkar (who would basically take endorsement stakes, as is usual) and other firms to expand businesses.
I have long puts, but I'm keen to see how this goes.
Talking product sense with Ridhi
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So is their moat is to keep raising money all the time, to give their investors an IPO exit by 2026?
You can't compare a consumer tech company to a real estate company.
Honestly a lot of vc funded companies have seen situations where they only have 1-2 months of money remaining. It's a risky business.
I don't know if they'll succeed or not, but Zomato has atleast shown that even the public markets are ready to fund this type of a business, so it's far from a wework comparison.
I agree. I'm not comparing cross-industry but I'm comparing investor behaviour and the frequency/magnitude of funding. They're rocketing their valuations for a massive burn rate. A firm which had an alarming burn rate was WeWork, where I drew parallels.
I agree. Risk follows returns. They don't talk in percentages but multiples, such is the business.
For Zomato, the business was there for ~13 years and then they decided to get public. It was one of its kind buzz, fuelled by the pandemic bull run. I'd say it was a unique instance, not something you'll find for a lot of startups later, until ofc COVID 2.0/WW3 or the upcoming depression in the late 20s. Zomato had a ₹45 valuation correction as well. They've reinvented and done well for themselves. They have drawn a lot of criticism, but such is the business.
The main point I was making was that wework was valued incorrectly by private investors. They valued a 2x PS company as a 50x PS company.
That's not the case with Zepto. It might be valued at a higher amount than the scale it currently has, but that's the risk taken by their investors. It's not like they are misrepresenting themselves as something completely different.
What happens going forward? Who knows. 10 min delivery hasn't worked anywhere in the world till now. I guess. So sometimes this is just how it looks before we find a conclusion to if all this was sustainable. Then we can start our I told you so's. I'm sure smarter people might have a better opinion here.
They are both very different industries bro, it's not an apple to apple comparison
WeWork India is profitable too btw
100% agree, but I'm talking about the background and behaviour. The sudden rise, frequency and size of funding, etc.
Yup, I'm referring to the WeWork during IPO, before India business was sold to embassy reits.
I agree with this, the spends are exorbitantly high in marketing and customer acquisition, but there are a lot of things which being outside seems foolish but will sum up for something great. Fingers crossed.
I understand marketing and consumer spends, but there is no publicly accessible figure for that tbh. Are you open to share what's the good stuff that's brewing?