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Chinese lidar maker Hesai lands $300M led by Hillhouse, Xiaomi, Meituan

The rush to back lidar companies continues as more automakers and robotaxi startups include the remote sensing method in their vehicles.

Latest to the investment boom is Hesai, a Shanghai-based lidar maker founded in 2014 with an office in Palo Alto. The company just raised over $300 million in a Series D funding round led by GL Ventures, the venture capital arm of storied private equity firm Hillhouse Capital, smartphone maker Xiaomi, on-demand services giant Meituan and CPE, the private equity platform of Citic.

Hesai said the new proceeds will be spent on mass-producing its hybrid solid-state lidar for its OEM customers, the construction of its smart manufacturing center, and research and development on automotive-grade lidar chips. The company said it has accumulated “several hundred million dollars” in funding to date.

Other participants in the round included Huatai Securities, Lightspeed China Partners and Lightspeed Venture Capital, as well as Qiming Venture Partners. Bosch, Baidu, and ON Semiconductor are also among its shareholders.

Another Chinese lidar startup Innovusion, a major supplier to electric vehicle startup Nio, raised a $64 million round led by Temasek in May. Livox is another emerging lidar maker that was an offshoot of DJI.

Lidar isn’t limited to powering robotaxis and passenger EVs, and that’s why Hesai got Xiaomi and Meituan onboard. Xiaomi makes hundreds of different connected devices through its manufacturing suppliers that could easily benefit from industrial automation, to which sensing technology is critical. But the phone maker also unveiled plans this year to make electric cars.

Meituan, delivering food to hundreds of millions of consumers in China, could similarly benefit from replacing human riders with lidar-enabled unmanned vans and drones.

Hesai, with a staff of over 500 employees, says its clients span 70 cities across 23 countries. The company touts Nuro, Bosch, Lyft, Navya, and Chinese robotaxi operators Baidu, WeRide and AutoX among its customers. Last year, it kickstarted a partnership with Scale AI, a data labeling company, to launch an open-source data set for training autonomous driving algorithms, with data collected using Hesai’s lidar in California. 

Last July, Hesai and lidar technology pioneer Velodyne entered a long-term licensing agreement as the two dismissed legal proceedings in the U.S., Germany and China.

Investors race to win early-stage startup deals in India

India may be grappling with the second wave of the coronavirus, rising unemployment, and a dwindling economy, but the South Asian nation’s burgeoning startup ecosystem has never had it better.

High-profile investors in India have long aggressively chased growth-stage, and late-stage deals, pouring record amounts of capital into the country. But in a sign of the growing investor bullishness regarding Indian startups, even early-stage companies that have largely been bereft of much similar attention in recent years are now sharing the limelight.

More than 70 early-stage Indian startups are currently in advanced stages of talks to raise money, according to sources familiar with the matter. The size of the investments vary from a few million dollars to up to $100 million. TechCrunch is reporting some of the more notable deals today.

The usual caveat that many of deals haven’t yet closed, and that their terms could change or the talks may not materialize into an investment applies in our reporting. The deals described below have not been previously reported.

Sequoia Capital India, the most prolific investing firm in the country, is in talks to place capital in over two-dozen Indian startups including Register Book, a firm that operates an eponymous bookkeeping app; Vah Vah, which runs an app to educate people about makeup from artists; SaaS platform BambooBox, and email marketing software provider MailModo.

The firm is also in talks to back, alongside venture fund Nexus, OneCode, a startup that runs an app to connect digital-first brands with sellers. Sequoia Capital India, which launched a dedicated fund for early stage startups called Surge two years ago, is also in talks to invest in Probo, an app that rewards users for sharing their opinion; and Rattle.

Vaibhav Domkundwar, who runs Better Capital, said the early-stage startup scene in India has never been this hot.

“Pre-seed and seed stage momentum is at its peak, but we are also seeing pre-emptive rounds at Series As and Bs now,” he told TechCrunch.

Domkundwar, who has backed over 140 startups including Khatabook and neobank Open, attributed some excitement to the new generation of founders in India, who he said are building product-first and distribution-first companies. “We are seeing the fastest pace of investment in these teams,” he said.

A different investor, who requested anonymity, said second time founders are able to raise on a deck or a Notion doc from elite angels, unicorn founders and microVCs. The pace at which these founders are able to close the deal, the investor said, was “stunning.”

The frantic pace of investments in early-stage deals come as many of the more mature bets have become unicorns in India and many established startups are finally exploring taking the public markets.

India has birthed 14 unicorns this year, up from 11 last year and just 6 in 2019. High-profile investors such as Tiger Global and Falcon Edge Capital have increased their focus on India this year and winning founders with their large size of checks, higher valuation, access to resources, and quick turnaround time.

Many established firms are now chasing early-stage deals.

GSV is in talks to invest in Filo, a startup that operates an eponymous tutor app; and payments stack startup Inai has closed a new round from Better Capital and others and will be part of Y Combinator’s next batch. (Speaking of which, Y Combinator’s previous batch featured its largest cohort of Indian startups in history.)

One-year-old startup BrightCHAMPS, which has built a coding and math platform for kids, is currently in talks with GSV and Tiger Global to raise about $70 million.

Indiagold, a startup that allows people in the South Asian nation to access credit against their gold reserve, is in talks to close a new round with two high-profile foreign investors that have traditionally backed growth and late stage deals.

Germany’s Razor Group is in late stage talks to invest in Upscale, a startup that is attempting to replicate the Thrasio model in India.

Fintech investor RTP is in talks to invest in Fleek, a startup that is building “a payments system for subscription economy.” Falcon Edge’s AWI is in talks to invest in fitness subscription platform Ultrahuman, while SaaS platform AccelData has been approached by Bessemmer and WestBridge.

For high-profile investors with billions in dry powder, there are many rewards for spotting a promising startup in its initial years. One can buy a much larger stake in a startup for lower prices before the valuation of the startup — assuming things work out well — soars. Investing early also reduces the amount an investor may lose should things with the portfolio firm goes south.

But not everyone is happy with the new dynamics.

An investor with a micro fund told TechCrunch — on the condition of anonymity to speak candidly — that involvement of bigger investors in early stage deals has made it tougher for smaller firms to source new deals as the bigger investors are now aggressively trying to close entire rounds by themselves.

The investor said there is an additional competition in the market now: groups of high-profile founders, who tend to collectively back startups.

The investor cited earlier in the story termed these investments as “optionality cheques.” These optionality checks — that usually back second time founders or first time founders who previously worked at a unicorn or soonicorn — started with the Series A crowd such as Sequoia Capital India, Matrix, Lightspeed India Partners, he said. Now, the investor said, Tiger and Falcon / AWI are doing it, too.

There are two implications of these optionality checks, the investor said. “They make life more difficult for microVCs / seed VCs as they cannot compete with the Tigers or Falcons or Series A funds who can cut “smaller” checks with impunity, and perhaps even dilute less.”

But the investor cautioned the founders who are raising such optionality checks. “If the same fund doesn’t back them in the next round, then the negative signal can imperil their chances of raising from other VCs. Second, the excess money that they get can sometimes encourage faster expansion and higher spends.

Lightspeed India Partners, best known for its investments in unicorns Oyo Rooms and e-commerce platform Udaan, is in talks to back Vegrow, a startup that partners with farmers; 100ms.live, which operates an eponymous tool to help developers add video conferencing features to their apps, as well as edtech startup Kalaam Labs.

Dyte, which is building a “Stripe for live video calls,” is in talks with Nexus and Sequoia Capital India. Elevation Capital, which is also in talks to invest in VeGrow, is inching closer to investing in FamPay, which offers credit cards to teens at about $150 million valuation. Bangalore-based Chiratae Ventures is in the final stages of talks to invest in AroLeap and analytics startup Locale.ai.

Fanplay, a platform for social media influencers to monetise via mobile games, has already raised from several American microVCs, but the round hasn’t closed yet. Mumbai-headquartered due diligence and monitoring platform Advarisk has been approached by “several investors” but has yet to close the round.

Trading signals provider Tradex is in talks to raise from Leo Capital. Audio social media app Frnd, radio and podcast aggregator app Kuku FM, and crop management platform Bharatagri are also in advanced stages of talks with investors to raise capital.

Plug and play payments provider Card91 has been approached by several investors, but hasn’t closed the round yet. Tournafest has closed a round from a clutch of angel investors, and so have Easy Eat and Stockgro. Kosh has raised from YC, and VentureSouq among others.

Tech veteran Nandan Nilekani’s firm Fundamentum is in talks to back Bijak, which operates a business-to-business marketplace to trade agricultural commodities, and supply chain startup Reshamandi.

A survey by InnoVen Capital, results of which were published on Thursday, said that over 80% of the investors it had surveyed said their dealflow for early-stage startups had increased this year, compared to last year.

Over 75% of the respondents in the same survey said the valuations in recent deals were on the “higher side” because of the “intense competition for high quality deals and entry of large established VCs in this space.”

“Early-stage investment activity has proven to be resilient despite the pandemic, with bigger transaction sizes and higher valuations, a clear sign of a maturing early-stage ecosystem,” said Tarana Lalwani, Senior Director at InnoVen Capital India.

Lightspeed raises $275 million fund for India

Lightspeed India Partners on Tuesday announced it has closed $275 million from LPs for its third fund as the top American venture firm looks to ramp up its investments in the world’s second-largest internet market.

The new fund, its biggest for India, will enable Lightspeed India Partners to make early stage bets on more than two dozen startups in the region, said Hemant Mohapatra, a partner at the firm, in an interview with TechCrunch.

The announcement comes as the firm, which began investing in India in 2007, has made two high-profile partial exits in the past year from budget-lodging startup Oyo and edtech giant Byju’s that together delivered cash returns of more than $900 million.

Some of its other major bets including backing business-to-business marketplace Udaan, which was valued at more than $2.75 billion last year, local social media platform ShareChat, which is in advanced stages of discussions to raise capital at more than $1 billion valuation, and SaaS startups DarwinBox, Yellow Messenger, and OkCredit.

The firm, which has six partners in the region, closed its first dedicated fund for India, of $135 million, in 2015. In 2018, it closed its second fund for the region, which was $175 million in size. But the venture firm has invested more than $750 million to date.

The Indian arm, which typically invests at early stages of a startup, continues to work with its global mothership for writing bigger checks to support some portfolio startups at later phases. (More than 80% of its investments have been committed to firms at Seed or Series A stages in India.)

“That’s one of the strongest points of differentiation we have. There are not many venture firms that have such a global presence. Our synergy with the global fund will continue,” said Mohapatra. (Lightspeed also has a big presence in China. Last year, its China arm announced a $560 million fund.)

Lightspeed partners in India. From left: Bejul Somaia, Akshay Bhushan, Harsha Kumar, Dev Khare, Vaibhav Agrawal, and Hemant Mohapatra. (Photo credit: Lightspeed)

Lightspeed, which earlier this year closed a $4 billion fund globally, is one of the handful of American venture firms that aggressively scouts for deals in India. Sequoia, its global peer, announced two venture funds, of $1.35 billion in size, last month for India and Southeast Asia. 11 of its early-stage bets have grown to become unicorns in the last 14 years in this region.

Mohapatra said the Indian startup ecosystem has matured in recent years, demonstrating high-scale growth and delivering big outcomes. It’s also seeing more exits than ever before. Earlier this month, Byju’s acquired WhiteHat Jr., an 18-month-old startup that teaches coding to children, for $300 million in an all-cash deal.

Indian startups raised more than $14.5 billion last year — a record for the local community. The coronavirus has decelerated the funding spree in India, like in any other market.

Mohapatra said a fraction of the firm’s portfolio startups has been disrupted by the virus, but noted that most startups are marching ahead unfazed and some have accelerated in recent months.

“Lightspeed believes this is when the best entrepreneurs and companies of the future will emerge. Strong founders are utilizing the tailwinds of India’s digital ecosystem growth to build out a new future and Lightspeed is strongly committed to backing these founders,” the firm said in a statement.

Online catering marketplace ezCater gets another $150M at a $1.25B valuation

In 2007, Stefania Mallett and Briscoe Rodgers conceived of ezCater, an online marketplace for business catering, and began building the company in Mallet’s Boston home, mostly at her kitchen table.

Recently, sitting at that same table, Mallett negotiated with Brad Twohig of Lightspeed Venture Partners the final terms of a $150 million Series D-1 at a $1.25 billion valuation. Lightspeed, alongside GIC, co-led the round, with participation from Light Street Capital, Wellington Management, ICONIQ Capital and Quadrille Capital.

“Raising money or getting to unicorn status, it’s all nice validation but that’s not the purpose, the purpose of being in business is to grow a very successful company with happy customers and happy employees,” Mallett, ezCater’s chief executive officer, told TechCrunch. “We are going to have cupcakes with unicorns on them. That will take us about a half hour, then we will get back to work.”

EzCater co-founder and CEO Stefania Mallett

Mallett compares ezCater to Expedia . The travel company doesn’t own and operate hotels, nor do they create them. EzCater, similarly, works with 60,500 restaurants and caterers around the U.S. to fulfill orders, but at no point do they work directly with food nor make any deliveries themselves.

Since its inception, the ezCater marketplace has grown considerably, expanding 100 percent annually for the last eight years, Mallett tells us. Though, like most unicorns, ezCater isn’t profitable yet.

Both Mallett and Rodgers are software industry veterans, establishing engineering careers prior to tackling business catering. The pair bootstrapped the company until 2011, when they secured a small Series A investment of $2.7 million. That same year, U.S. foodtech startups raised $176 million, per PitchBook. EzCater would go on to raise more than $300 million in equity funding, including its latest round, and VC interest in foodtech would explode. Already this year, U.S. foodtech startups have brought in $626 million after pulling in a whopping $5 billion in 2018.

EzCater has benefited from this boom. The company raised a $100 million Series D just 10 months ago.

“We really didn’t need the money, we have quite a lot of money in the bank from the last round,” Mallett said. “There was so much talk of a funding winter and a recession coming so we said maybe we should try to raise money and then people jumped on it so we thought OK, why not? If there is a funding winter, we’re set; if not, well, we are still set.”

The investment comes hot off the heels of ezCater’s acquisition of Monkey Group, a cloud platform for take-out, delivery and catering. Mallett declined to disclose terms of the deal but said the partnership makes ezCater the indisputable market leader in catering management software. The company will use its recently expanded war chest to accelerate its international expansion and, potentially, continue its M&A streak. As for the future, an initial public offering is amongst the possibilities.

“We certainly are considering it,” Mallett said. “As we’ve grown, we’ve become more sophisticated and mature; that puts us in a good position to continue operating as a successful standalone company or be acquired by a public company or go public if we see an opportunity to do that. We are not wedded to any of these outcomes.”