Investment temperament: Early-stage startups, Indian Onchain ecosystem, financing for marketing industry & MSMEs

Investments in MSMEs and startups are not always in the form of funding. Sometimes, the ecosystem needs support to hone skills or comb out the finer details. For example, MSMEs contributed 45.56% of total exports from April-September 2023 as per the Ministry of External Affairs report. Despite their sizeable share in trade flows, MSMEs often face challenges establishing favourable payment and credit terms with buyers, managing outflows, and obtaining the documentation required by formal lenders.

There are also industries like the affiliate marketing industry, which according to conservative estimates, reached US$14.4 billion in 2023 and will exceed $15.7 billion this year. But it faces challenges such as access to early payout products and long wait for payments.

The Tech Panda takes a look at the investment temperament in the Indian startup ecosystem.

Nationwide program to transform early-stage startups from idea to MVP

In July, Inflection Point Ventures announced the winners of its first ever early stage accelerator program IPV Ideaschool Batch 1.0. The three winners, Bloq Quantum, Medront Datalabs, Telkes Technologies were awarded a seed funding of INR 80 lakhs each.

This six-week nationwide program was designed to transform early-stage startups from idea to MVP. After a rigorous multi-level selection process starting with over 1000 applications, the top 15 ideas made it to the final round. The journey was marked by intensive masterclasses, bootcamps, and mentorship sessions conducted by industry experts. Applications were received from several promising sectors, showcasing a diverse range of innovative solutions.

Mitesh Shah, Co-Founder, Inflection Point Ventures says, “IPV Ideaschool accelerator program was started with a vision to support, nurture, and mentor sustainable and innovative startups that are developing technologies for large use cases but need hand holding to achieve the MVP stage. Through this program, we have received applications from metros to tier 2 towns like Vijayawada in Andhra Pradesh, Samastipur in Bihar, Kollam in Kerala, Kangra in Himachal Pradesh, and Jhalrapatan in Rajasthan. This confirms our thesis that innovation is not restricted to a select few in key startup hubs but today, next-gen founders are also emerging from small pockets.”

Following the success of Batch 1.0, IPV is excited to announce the launch of IPV Ideaschool Batch 2.0 commencing from 1st August 2024.

First tranche of investment to overcome financial challenges for the affiliate marketing industry

MarTech industry company, Mitgo Group, has made the first tranche of investment in its recently launched fintech business, Capy. This investment will be the initial step in a US$20 million dollar investment package planned for the coming 3 years. The first investment tranche will go towards developing the initial version of the platform with a focus on early and accelerated payment solutions.

According to conservative estimates, affiliate marketing spend reached US$14.4 billion in 2023 and will exceed $15.7 billion this year. In the next three years, Mitgo plans to become a conduit for more than 7% of that transaction volume, which can be valued at more than $1.5 billion given the sector’s growth. The investment in Capy is aimed at realizing this plan as soon as possible. The first solutions will be launched in the third quarter of 2024.

According to Neha Kulwal, Managing Director at Mitgo, India and APAC, “The first version of the service will focus on early payout products, one of the biggest growth points in the affiliate industry right now. Despite substantial and ever-growing revenues publishers remain in the underbanked zone, as classic financial institutions lack the expertise to fairly score such customers and can’t offer them a proper variety of products. Financial institutions are missing out on billions of dollars in profits on this customer segment while publishers are unfairly limited in growth acceleration opportunities. Mitgo and Capy will be able to solve both problems through their solutions and mediator role.”

Long wait for payments is another sore spot for the affiliate industry at the moment, so naturally solution to this issue will be the second priority. Capy’s suite of solutions based on embedded finance technology and Mitgo’s 15+ years of experience in this market will reduce payment terms from the current industrial average of 60-120 days to just one day. Implementation of these technologies will lead to explosive growth of the partner market and multiple growth of profits of its participants due to accelerated capital turnover.

Pre-shipment financing solution on TReDS to empower MSMEs

DBS Bank India partnered with Receivables Exchange of India Limited (RXIL), the first RBI-licensed exchange platform under the Trade Receivables electronic Discounting System (TReDS). While the bank already offers post-shipment financing on the TReDS platform, it is now launching a pre-shipment financing solution that will empower Indian SMEs with an additional way of availing trade finance in a credit-light manner.

By using alternative trade lending data from RXIL to build better borrower profiles, the bank will be able to support the supplier’s entire trade cycle, from sourcing raw materials to delivering the end product to the customer. This offering will be particularly relevant for MSMEs and SMEs across India, enabling them to enhance cash flows to fulfill orders even before goods are delivered to buyers.

With the new DBS solution, MSMEs on TReDS will now be empowered through a transparent, simplified process to secure funding against purchase orders from buyers, thereby streamlining cash flows.

Divyesh Dalal, Managing Director & Head – Global Transaction Services, SME & Institutional Liability Business, DBS Bank India, said, “The structure enables us to significantly reduce the time required for credit decisioning and linked documentation, which will greatly benefit time-strapped business owners. DBS Bank India will be the first bank to partner with RXIL to offer end-to-end supplier financing by harnessing platform data to perform credit assessment and sanction limits. The partnership leverages our digital capabilities to facilitate working capital financing for MSME suppliers by helping them unlock value in their operating flows.”

Ketan Gaikwad, Managing Director & CEO of RXIL, said, “RXIL is at the forefront of driving change in the landscape of trade finance. This collaboration holds immense potential in revolutionising pre-shipment financing for MSMEs through a trusted partner like DBS Bank India. Our shared vision entails leveraging a data-driven approach to assist MSMEs in streamlining operations, enhancing liquidity, and facilitating their trade journey as they expand their business. Additionally, this collaboration promises to alleviate the working capital challenges faced by MSMEs, offering tailored solutions to enhance their financial stability and propel their growth trajectory. By leveraging innovative financing mechanisms, we aim to empower MSMEs with the resources they need to thrive in today’s dynamic trade landscape.”

Program to elevate the Indian Onchain ecosystem

Levitate Labs in collaboration with CoinSwitch and Coinbase introduced the “OnChain India” program to elevate the Indian Onchain ecosystem by fostering innovation and providing unprecedented support. The program entails elevating the Indian Web3 start-up ecosystem through grants and funding, ecosystem partnerships, community events, etc. with support from the Base.

“Base is for everyone, and we’re excited for Levitate Labs’ OnChain India program to support and empower individuals, startups, and communities in India’s thriving developer community,” said Sam Frankel, Head of Ecosystem at Base.

Ashish Singhal, Co-Founder, CoinSwitch quoted, “We hope to see several builders explore unique Dapps, as they innovate to bring masses onchain and make Web3 mainstream in India”.

Pratik Magar, Managing Partner of Levitate Labs, remarked, “Our goal is to empower developers and startups to create groundbreaking solutions leveraging Base that can revolutionise industries and improve lives.”

$20 million TON Ecosystem Fund to support early-stage projects

Bitget, a cryptocurrency exchange and Web3 company, announced a $20 million TON Ecosystem Fund in alliance with Singapore-based investment firm Foresight Ventures, aiming to support early-stage projects building on The Open Network (TON).

TON has been gaining significant traction, with $TON price reaching a new all-time high lately. According to Delphi Digital, the ecosystem’s growth is bolstered by Telegram’s massive user base of 900 million, pushing the daily active addresses on TON beyond those of Ethereum.

The Total Value Locked (TVL) in the TON ecosystem has increased more than fivefold over the past two months, reaching $600 million due to the influx of new projects and assets such as STON.fi, DeDust.io, and TON-USDT. According to Tether’s official transparency page, the authorised issuance of USDT on the TON blockchain has grown to approximately $580 million, making it the sixth-largest blockchain for USDT issuance, after TRON, Ethereum, Solana, Avalanche, and Omni.

The $20 million TON Ecosystem Fund aims to fully support the development of projects within the TON ecosystem. By leveraging Telegram’s vast user base, Bitget aligns with its vision of driving mass adoption of cryptocurrency and creating a more equitable future through crypto evolution. The fund will actively seek out and support promising projects, providing them with the necessary liquidity to thrive on the Bitget platform.

Gracy Chen, CEO of Bitget, commented: “We believe in the potential of TON and its ability to create a more equitable future. Our Telegram Signal Bot is just one example of how we are empowering the community and enhancing the user experience.”