D2C pins big hopes on small packs; Zeta valuation surges to $2B

Hello,

Peak XV is set to say farewell to a couple of high-level executives.

In what will be a big blow to one of India's biggest VCs, Peak XV’s Managing Directors Abheek Anand and Shailesh Lakhani are leaving the venture capital firm, almost two years after it broke ties with its US partner, Sequoia Capital. 

The development comes months after the VC cut the size of its biggest and latest fund and signalled a cautionary stance on further growth-stage investments.

Meanwhile, PhysicsWallah is poised to become India’s most valuable edtech firm with about a $25 million pre-IPO secondary funding round led by existing backer WestBridge Capital, pushing its valuation to $3.7 billion, people aware of the matter told YourStory.

The Noida-based firm, preparing to go public this year, is expected to file its draft IPO papers next month.

ICYMI: The FIITJEE fallout, explained. 

Lastly, computer engineer James Howells, who lost a stash of around 8,000 Bitcoins, wants to buy the landfill where he believes it was buried, BBC reports.

Today, the value of the lost treasure is close to $770 million!

The story began in 2013 when Howells’ ex-girlfriend mistakenly chucked out a hard drive containing the Bitcoins. What followed was a long battle with the city council for access to the landfill, which reportedly contains over 1.4 million tonnes of waste. 

It’s a tough quest!

In today’s newsletter, we will talk about 

• D2C pins big hopes on small packs
• Zeta valuation surges to $2B
• Will third time be the charm for Shein?

Here’s your trivia for today: Whose autobiography is titled Long Walk to Freedom?

In-depth

D2C pins big hopes on small packs

Slowing consumption in urban India, cautious consumer sentiments, and high inflation have prompted personal care and FMCG brands to shift gears and focus on smaller stock-keeping units (SKUs) and compact versions of their products to entice consumers and retain them. 

An industry analyst tracking FMCG notes that, for many legacy brands, packs priced between Rs 5 and Rs 10 contribute over 50% of overall sales. Now D2C brands—including mCaffeine, Mamaearth, Bombay Shaving Company, and Sleepy Owl—are taking a leaf out of their playbook, launching compact, low-priced versions of their products to appeal to price-sensitive urban consumers. 

Pocket-friendly:

• While the focus is on ‘small’, D2C brands do not want to compromise on their ‘premium’ look and feel. Here’s where packaging solutions companies like The Packing Company come in.
• With urban demand uncertain, many FMCG and D2C brands are also fast-tracking their rural expansion plans, rolling out smaller sachets and lower-priced offerings to attract first-time buyers.
• Some industry observers believe a higher take-home pay could encourage consumers to upgrade to larger packs, particularly for essentials. However, others argue that spending caution will persist among consumers and smaller SKUs will be in demand for the foreseeable future.

Fintech

Zeta valuation surges to $2B

Banking technology provider Zeta raised $50 million in a strategic investment round from American healthcare company Optum, valuing the company at $2 billion. The latest valuation marks a 1.7X increase from its prior round in 2021 when the company secured $250 million from SoftBank Vision Fund 2 and other investors at a pre-money valuation of $1.15 billion.

Key takeaways:

• Zeta’s SaaS offerings aim to help banks and fintechs replace legacy systems with modular, API-driven tools for launching products such as credit cards and digital banking services.
• “Clients are rapidly adopting our modern stack,” said Zeta’s Global CEO and Co-founder Bhavin Turakhia. The company’s cloud-native platform, Tachyon, currently supports over 25 million accounts, with another 25 million expected to be added through existing contracts, he said.
• The company employs over 1,700 people, with more than 70% of its workforce in technology roles across the US, Middle East, and Asia.

In-depth

Will third time be the charm for Shein?

About five years after its ban in India, Chinese global fast fashion retailer Shein, earlier in February, made its third attempt to enter the country’s fast fashion landscape. This time around, it has partnered with Reliance Retail. 

According to media reports, Reliance has agreed with Shein to manufacture in India and supply products under the Shein website in return for a licensing fee. However, no other details of the partnership were revealed. The question is: Can Shein replicate its success in the current Indian fast fashion landscape?

New chapter:

• While Shein can heavily rely on its Chinese supply chain for its business in the rest of the world, the equation is a little different with India. “They [Shein] will not be able to rely solely on imports… they'll have to build some Indian supply chain,” an investment analyst in the consumer space told YourStory.
• In the global markets, especially in the US, Shein operates in the ultra-value segment. Ultra Value brands, which count names like Zudio, Yousta, and Newme, among others, in India, are a keen playground for fast fashion players.
• Since fast fashion brands cater to GenZ as their target group—a cohort that increasingly buys online, is open to trying the latest trends, and is price conscious—it is crucial for companies to sell affordable products that appear premium along with an image they are not only riding the trend wave but are ahead of it.

News & updates

• Wiped: Indian stocks have lost about $180 billion in market value in the two days since US President Donald Trump said he would slap reciprocal tariffs on several countries, with many analysts saying the world's fifth-largest economy could be the worst hit. The blue-chip NSE Nifty 50 and BSE Sensex indexes sank 1.32% on Tuesday and have tumbled a shade over 2% in the past two sessions. 
• No deal: Sam Altman, CEO of OpenAI, the maker of ChatGPT, has rebuffed a $97.4 billion bid to take over the firm from a consortium of investors led by Elon Musk. His attorney, Marc Toberoff, confirmed he submitted the bid for "all assets" of the tech company to its board on Monday.
• Cyber safety: Instagram said Tuesday that the platform is introducing its teen accounts feature, which has extra protective measures for safety for users in India, one of its biggest markets with over 350 million users.

Whose autobiography is titled Long Walk to Freedom?

Answer: Nelson Mandela 

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