Automotive

Upcoming Indian Unicorns: Logistics Startups Driving Towards Growth

by Sandeep Kumar

In India, over 72 startups have gained unicorn status as of November 2021. The count of these billion-dollar companies is expected to reach a total of 76, by the end of the year 2021. Unicorns in the country are currently valued at $168 Bn approximately. The pace with which these companies are gaining valuations is truly remarkable. India’s pace of unicorn growth has surpassed that of China. The Indian economy is capitalizing on a host of international and national factors that are expected to create many more such companies.

We aim to identify and bring out such companies at an early stage so that the secondary’s investors can churn out greater returns. In this edition of Indian Soonicorns, we bring out some companies in the logistics space that have complete potential to reach the billion-dollar mark in the future.

A Hope for Growth in a Highly Fragmented Logistics Market

The size of the Indian logistics industry is estimated to be about $215 Bn, growing at a CAGR of 10.5%. Even though the market is highly fragmented with a large number of organized players, companies are working to make a mark in the industry through the adoption of technology such as Artificial Intelligence, Internet of Things, automation, cloud computing, blockchain, etc. In 2020, the Indian logistics tech market secured over $460 Mn investments, despite the pandemic. Delhivery is one of the successful logistics startups that is looking forward to go public through an IPO this year.

Let us have a look at potential soonicorns that are likely to give high returns to their investors in the longer run.

1. FarEye

Rationale: FarEye, an Indian SaaS start-up that helps firms globally optimize their supply chain and logistics operations and process over 100 Mn transactions each month. The start-up works with over 150 e-commerce and delivery companies globally, including popular names such as Walmart, UPS, DHL, Domino’s, and Amway. The company clocked 280% growth for the FY21 compared to the previous year and 78% of the revenue comes from the market outside India. FarEye has raised a new financing round, it’s third since the pandemic broke last year. The new capital will be used to expand its software platform capabilities, drive expansion in Europe and North America, and explore inorganic growth opportunities.

2. Locus.sh

Rationale: Locus is an intelligent decision-making and automation platform for logistics. It uses deep ML and proprietary algorithms to offer supply-chain solutions. The start-up operates in North America, South Asia, Europe, and the Indian subcontinent, says it has helped its customers save over $150 Mn in logistics costs. The platform is popular among GMGC, retail, and e-commerce firms as well as distribution partners. The company is aiming for a revenue potential of $3–5 Bn between 2023 to 2025 and will be focusing to improve its geographic reach and build its R&D team to expand its product line.

3. Xpressbees

Rationale: They are the fastest-growing express logistics service provider in India catering to end-to-end supply chain solutions. Their logistic solutions across B2B, BTC, Cross-border, and the third party comes with an edge of speed, accuracy, and scalability. It has grown 4X in the last three financial years, from FY18 to FY21. Xpressbees presently has over 100 hubs across India, a storage capacity of 10 lakh sqft, and 52 cargo airports. Fully automated, technology-driven workflows and material movement procedures are used in 75% of Xpressbees’ operations. The team is now working on AI/ML technologies to develop the next generation of smart and intelligent systems.

4. ElasticRun

Rationale: The Pune-based ElasticRun develops an online system that improves the reception of orders from customers and the dispatch of delivery drivers. According to The Economic Times, its current revenue rate is around $350 Mn and is expected to cross $1 Bn over the next 6 months. The company’s focus on using deep technology to address the need for commerce marketplaces has helped them scale rapidly, delivery much broader distribution for consumer product brands, while also creating a level playing field for Kirana stores, given them parity with competing e-commerce players in terms of reach and product selection.

5. Porter

Rationale: Porter offers an end-to-end logistics platform that helps businesses with last mile and first mile deliveries. It helps its customers save on logistics costs and provides support services such as on-demand transportation, real-time visibility, supply chain management. It is said to be one of the only logistics models that is 100% asset-light. The intra-city logistics company that saw a 5x valuation growth in its last funding round, is looking forward to expand its operation to enter the top 35 cities of India by 2023.

6. LEAP India

Rationale: LEAP India provides integrated, end-to-end customized pooling solutions to its customers. The company’s consolidated revenue in FY20 was marked at about $23 Mn and has been estimated to be grown at a CAGR of 47% during FY17 — FY20. According to India Ratings and Research, the company has a fairly stable investment outlook with a rating of ‘IND BBB+’. With only a few players in the palletisation sector, LEAP India is already a leader in the country, having a market share of over 70%.

Logistics Gaining Investors Interest to Seek Higher Valuation

The initial months of the pandemic did slow down the sector, however, it has started to gain momentum. The large but fragmented logistics sector is emerging as a trustable opportunity for investors. The digital transformation that has come up recently is reviving the $200 Bn logistics industry in India, and more so as these startups are keen on using technology to bring down the logistics costs in the country. With greater government support on infrastructure and an expected rise in the B2C and B2B trade in the coming years, logistics companies are set to grow. The third-party logistics segment alone is expected to experience growth by $10.74 Bn during 2021–2024. With investors’ money, the logistics space will become more robust in the near future. We try to spot some startups in this space that are soon expected to join the likes of Delhivery, Rivigo, and Blackbuck.

If you are an investor interested in getting access to these and similar opportunities, please reach out to us for understanding the investment process better. If you are a shareholder or an ESOP holder of any such company and are looking for liquidity solutions, feel free to connect with us as well. Our platform will provide you with seamless financing and investment journey. Follow us for more such updates.

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This article has been co-authored Tamanna Kapur and Vivek Kumar who is in the Research and Insights team of Torre Capital.

The Pre-IPO Startup Equity Market

by tradmin

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“Listing gains are likely to be capped by reputational concerns around an otherwise enviable product stack”

Palantir IPO: Exercise extreme caution, may not be as smooth sailing as other recent tech IPOs

We believe that Palantir might continue to make winning bids for government contracts and maintain/increase its revenue share. However, future growth and share price will be driven by Palantir’s ability to acquire and grow large corporate customers, and not govt. contracts.
Palantir has not seen a single year of profits since inception 17 years ago. It is not clear to us how this situation will change in the coming year.

We firmly believe that their data mining software is industry leading. But we’re not convinced that this alone is enough for widespread corporate consumption.
Palantir has the first-mover advantage to offer specialised, customer-specific, use-case data analytics software. It needs to become price competitive to capture market share.
Given the negative public image and governance concerns, we don’t think Palantir would repeat the success of a Snowflake or Unity. Listing gains maybe limited, long term investors may want to back the company.

The success of Foundry- Palantir’s enterprise SaaS platform will be the primary driver of its growth. However, in the near term, it will be out shadowed by its negative public perception and unethical use of private data. The stock is likely to underperform, atleast compared to more straight forward SaaS companies. Download the report for an in-depth analysis of this tech giant.

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