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In today’s newsletter: 

• Zepto raises $1 billion in two months
• Ola Consumer nears 1 lakh daily orders on ONDC
• Defence ministry flags Chinese parts in Indian drones

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Zepto continues to ride the wave of funding euphoria. 

Picture this: For a three-year-old startup that has raised a total of $1.5 billion in capital, $1 billion was raised just in the last 60 days.

Quick commerce startup Zepto closed a fresh round of funding with another $340 million in its kitty. 

• The company is now valued at $5 billion, up 3.6X from its $1.4 billion valuation in August 2023
   
• The latest round was led by new investors General Catalyst, Mars Growth Capital and Epiq Capital
  
  
• Existing backers like StepStone, Lightspeed, DST and Contrary also upped their stakes in the company
  
  
• Zepto has raised fresh funds just about 60 days after closing a massive $665 million round which valued the company at $3.6 billion 

• The company will use the funds to build a cash chest and take on Blinkit, Swiggy Instamart, Flipkart, BigBasket and others

We had first reported all about the round on July 2 and had more on August 14.

The bet on Zepto is one of the biggest for Silicon Valley-based General Catalyst (GC).

• While it has backed startups like Cred, Spinny, Uni Cards and more in India, Zepto is so far its biggest cheque
  
  
• GC also merged with Venture Highway, an early stage investor in India, earlier in the year to increase focus on the country
  

It is also closing in on a $6 billion fund and plans to invest $500 million to $1 billion in India over the coming years. 

“I’ve known Aadit and Kaivalya for several years, and they are truly exceptional founders…(have) personally witnessed their bold vision and unmatched execution…The young founders possess a rare combination of 'out of the box' systems thinking and a mission that has attracted the best industry talent,” said Neeraj Arora, Managing Director, General Catalyst.

Dig deeper

Ola Consumer is making waves in India's e-commerce scene, leveraging the Open Network for Digital Commerce (ONDC).

The company is processing nearly 100,000 orders daily across food delivery, quick commerce, and hyperlocal logistics via the government-backed platform, founder Bhavish Aggarwal told us in an interview.

Of the total orders that Ola Consumer currently clocks on ONDC, food delivery accounts for the largest chunk of the pie.

“On ONDC, our food delivery is largely limited to Bengaluru. We are now almost 20 percent the size of a Swiggy or a Zomato, the unit is fairly sizable,” Aggarwal said.

India's quick commerce sector is hotter than ever, and Ola Consumer is eager to stake its claim. 

• Despite earlier setbacks, the company has re-entered the quick commerce arena, relaunching its services on August 15

Competing with established names like Blinkit, Swiggy Instamart, Zepto, Tata’s BB Now, and Flipkart Minutes, Ola Consumer is taking a distinctive approach.

• Instead of relying on dark stores, Ola Consumer partners with modern trade players like Spar and More for quick commerce deliveries

However, a significant shift is on the horizon: the company plans to launch automated dark stores open to all stakeholders, including kiranas, D2C brands, and manufacturers, by Diwali.

Aggarwal believes that ONDC represents a significant opportunity to democratise e-commerce in India.

“We have the solution, it's called ONDC. It’s an opportunity where we build an alternative e-commerce world, which is open and can benefit the broader ecosystem for everybody, that is ONDC,” Aggarwal said.

Ola Electric plans to leverage ONDC, with plans to start selling its scooters through the platform in the coming weeks.

To foster adoption, ONDC set up a discount fund of approximately Rs 180 crore. 

The rough distribution of this discount burden involves multiple stakeholders: 50% is covered by players like Ola Consumer, 25% by restaurant partners, and the remaining 25% by ONDC.

“A Zomato or a Swiggy takes anywhere between 20-30% as commissions plus ad spends. But on ONDC, the commissions are around 5-10%. A lower commission allows a restaurant to willingly offer customer discounts because they also want an alternate channel,” Aggarwal said.

Dive deeper

In the world of defence, cutting corners with foreign parts can come with a steep price.

The Ministry of Defence (MoD) has advised the industry to exersise caution when dealing with drones made by Mahendra Singh Dhoni-backed Garuda Aerospace, Dhaksha Unmanned Systems, and Sky Industries. 

• Why? The MoD is concerned about the alleged use of Chinese components in drones supplied to the Indian defence forces

In a letter dated June 25, to industry associations the Department of Defence Production flagged these three companies.

• The timing is noteworthy, considering the heightened tensions between India and China

The allegations have prompted responses from the companies involved. 

• Dhaksha Unmanned Systems has denied the claims, asserting that its drones are entirely indigenously developed and manufactured. 

Garuda Aerospace, while acknowledging its involvement in the defence sector, primarily focuses on agriculture and consumer drones.

• The company insists that all its components adhere to stringent regulatory standards

Sources suggest that the Defence Ministry has put a hold on Dhaksha's 2023 order for 200 logistics drones to the Indian Army, pending further investigation.

• While Dhaksha claims to have complied with the Defence Ministry's audit processes, the issue remains under scrutiny.

Find out more

Picture credit: Kalaido.ai

• Meta AI, the AI chatbot of Facebook parent Meta, has more than 400 million monthly active users across its products, chief executive Mark Zuckerberg said.

• Karnataka Prisons and Correctional Services Department is planning to install an AI-powered video surveillance system in Bengaluru's Central Prison to improve monitoring capabilities.

Feeling adventurous this weekend?

For those seeking a real-life thriller, IC 814: The Kandahar Hijack on Netflix is a must-watch.

• This web series recreates the harrowing events of the 1999 hijacking

If you're craving a fantasy epic, The Lord of the Rings: The Rings of Power season 2 on Amazon Prime Video is a perfect choice.

• This series continues the epic saga following Sauron's defeat and banishment

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