{"id":40139,"date":"2024-05-01T14:05:24","date_gmt":"2024-05-01T14:05:24","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/05\/01\/new-growth-markets-for-it-firms-stride-ventures-closes-third-fund\/"},"modified":"2024-05-01T14:05:24","modified_gmt":"2024-05-01T14:05:24","slug":"new-growth-markets-for-it-firms-stride-ventures-closes-third-fund","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/05\/01\/new-growth-markets-for-it-firms-stride-ventures-closes-third-fund\/","title":{"rendered":"New growth markets for IT firms; Stride Ventures closes third fund"},"content":{"rendered":"
\"New<\/div>


\n<\/p>\n

Indian IT firms are seeing rapid growth in new geographies amid a slowdown in their established North American market. More on this in today\u2019s ETtech Top 5.<\/p>\n

Also in the letter:<\/span>
\u25a0 Telcos\u2019 enterprise play
\u25a0 FirstCry CEO\u2019s pay drops
\u25a0 Amazon triples quarterly profit<\/p>\n

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IT companies log strong revenue growth outside key North America market<\/p>\n

<\/div>\n

Indian IT majors are finding faster revenue growth<\/a> in new markets like Europe, the Middle East & Africa (MEA), and Asia Pacific (APAC) compared to the slowdown in their established North American market.<\/p>\n

Why it matters? <\/span>For most IT services firms, North America currently contributes 50-60% to total revenue, followed by Europe at around 30%. The regional markets still constitute a small portion of the total revenue pie.<\/p>\n

Yes, but: <\/span>\u201cFor the last two quarters, the Middle East and Japan have grown faster than Europe. But before the last two quarters, Europe has grown faster than North America for 10 straight quarters,\u201d Peter Bendor-Samuel, founder and CEO of research firm Everest Group, told ET.<\/p>\n

\"it<\/div>\n

Growth path: <\/span>On a quarterly basis, TCS\u2019 revenue growth during the January-March period was led by regional markets. For Infosys, while India revenue shrank over 15%, its Europe and Rest of the World (APAC and MEA) markets reported growth. HCLTech, the country\u2019s third largest IT player, is seeing growing demand in Europe and Japan.<\/p>\n

US market woes: <\/span>Analysts said that US clients, especially in BFSI and retail, are sceptical about making discretionary spending due to high inflation and interest rates. India, the Middle East and the UK, on the other hand, are continuing to see investments in technology, making it attractive to IT companies.<\/p>\n

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Stride Ventures closes third fund at $165 million<\/p>\n

\"Ishpreet<\/div>\n

(L-R) Stride Ventures managing partners Ishpreet Singh Gandhi and Apoorva Sharma<\/em><\/p>\n

Venture debt firm Stride Ventures, which has backed startups such as Zepto, Rebel Foods, Sugar Cosmetics and Mensa Brands, has announced the final close of its third fund at $165 million. <\/a>

Capital deployed: <\/span>Stride Ventures said it has already provided capital to startups such as BlueStone, Moneyview, Foxtale, NewMe, Nat Habit and Agrostar from its third fund, through which it will primarily focus on consumer, financial services and cleantech sectors.

Missed target: <\/span>The third fund had made its first close at $100 million in May 2023. However, the firm\u2019s final close for its Fund-III has fallen short of its initial target of $200 million.<\/p>\n

\u201cWe thought about the fund in late 2022 and then the rate of growth of venture capital also defines the rate and growth of venture debt…over the last 18 months, the venture capital hasn’t really picked up momentum and the deployments are still less than what it was in 2021 and 2020,\u201d said Apoorva Sharma, managing partner at Stride Ventures.

Previous funds: <\/span>Stride Ventures said it has returned its first fund, which was $50 million in size, and was raised in 2019, in its entirety. The firm\u2019s second fund, raised in 2021, had a $200-million corpus.<\/p>\n

The venture debt firm had also backed online vehicle service platform GoMechanic, which was offloaded in a distress sale in May 2023.<\/a><\/p>\n

\"Recent<\/div>\n

Recap:<\/span> In recent months, several funds, including those disbursing venture debt, have raised capital. On April 30, early-stage investor IvyCap Ventures closed its third fund at Rs 2,100 crore<\/a> ($250 million). Capria Ventures, too, concluded the fundraising for its India Opportunity Fund<\/a> at Rs 153 crore ($19 million) earlier in the month.<\/p>\n

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GCCs emerge as key cog in telcos\u2019 enterprise play<\/p>\n

\"Waters<\/div>\n

India’s leading telecom companies are increasing focus on serving the business needs of offshore units<\/a> of multinational corporations (MNCs) by investing in leased lines, fiber optic networks, secure data connections and high-speed internet access for them.<\/p>\n

Driving the news: <\/span>Over 47 new units, popularly known as global capability centres (GCCs), have emerged in India in 2023 alone. Telcos are seeking tailored solutions and strategic partnerships with them, expecting enterprise revenue to touch Rs 30,000 crore in FY24, growing 16% on year, according to analysts.<\/p>\n

Currently, GCC contribution is only 4-5% of a telco’s enterprise business, but that is expected to rise sharply.

Rising numbers: <\/span>GCCs have been mushrooming in India over the past few years, with over 1,580 now in operation with an installed talent base of over 1.66 million, according to a joint study by technology industry body Nasscom and Zinnov, especially in tier-II and tier-III cities. <\/p>\n

This has translated into high-speed connectivity and densification of networks in lesser populated cities and towns.<\/p>\n

Tell me more: <\/span>The growth of GCCs is also fuelling the data storage and processing needs of enterprises which require robust fibre networks for high capacity and low latency data transfer between the cloud and on-premise.<\/p>\n

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FirstCry CEO Supam Maheshwari took 49% monthly pay cut in Apr-Dec 2023<\/p>\n

\"Supam<\/div>\n

Supam Maheshwari, CEO, FirstCry<\/em><\/p>\n

IPO-bound FirstCry\u2019s cofounder and CEO Supam Maheshwari saw a 49% drop in monthly remuneration to Rs 8.61 crore <\/a>for the first nine months of FY24, according to the company\u2019s draft red herring prospectus (DRHP).<\/p>\n

Tell me more:<\/span> Maheshwari’s total remuneration for the nine months until December 31, 2023, was Rs 77.5 crore, down from Rs 200.7 crore for the whole of FY23. Sanket Hattimattur, also a cofounder, saw a drop in pay to Rs 8.33 crore in the same period, from Rs 18.57 crore in FY23.<\/p>\n

Share transaction: <\/span>Before filing for the IPO, Maheshwari sold 6.2 million shares of the company, and currently holds 28,893,347 equity shares (5.94% stake) in FirstCry.<\/p>\n

\"key<\/div>\n

IPO goals:<\/span> FirstCry aims to raise $218 million (Rs 1,815 crore) through a fresh issue of shares, with existing investors planning to sell 54 million shares. The IPO, expected in July, is projected to be valued at around $500 million (Rs 4,163 crore), combining primary and secondary share sales.<\/p>\n

Sebi\u2019s intervention: <\/span>Backed by SoftBank, FirstCry was directed by the Securities and Exchange Board of India (Sebi) to refile its DRHP due to insufficient disclosure<\/a> in key performance indicators (KPIs).<\/p>\n

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Amazon triples quarterly profit as cloud biz surges<\/p>\n

\"FILE<\/div>\n

Ecommerce major Amazon on Tuesday reported robust numbers for the January-March quarter<\/a>, riding on the growth in its cloud computing unit and new advertising money from its Prime Video streaming service.<\/p>\n

Numbers:<\/span> \u201cIt was a good start to the year across the business, and you can see that in both our customer experience improvements and financial results,\u201d Amazon CEO Andy Jassy said in a statement.<\/p>\n