How does FTX escape the world’s smartest investors?

Two curious aspects – among many – of the FTX collapse are the sheer amount of investment capital the cryptocurrency exchange was able to raise, and the quality of the investors it fell to.

In total, FTX has raised $1.9 billion from 80 investors in just two years. The bankrupt company cap table now reads like the list of venture capital, private equity and hedge funds of the world.

Sequoia, SoftBank, Tiger Global, Temasek, Ribbit Capital, and Blackrock, among others, have all invested in FTX and FTX US — some as recently as January 31, 2022.

The New York Times reported on November 11, citing sources, that FTX founder Sam Bankman-Fried (SBF) has left little room for negotiation in meetings with potential investors over the past year. FTX was his company, [SBF] Tell them, and plan to manage it with little supervision. Interested investors should “back it up and watch,” the investor who heard the pitch idea told the New York Times.

And they responded by providing $400 million to FTX early this year at a value of $32 billion.

Major institutional investors in FTXs

Sequoia: In a now-deleted 13,000-word article on its website, the venture capital fund recounted how its partners were greatly influenced not only by SBF’s ideas and vision, but the fact that he was playing the League of Legends video game while wowing them with the saying. Seeing during a Zoom meeting.

Sequoia went on to invest $210 million in FTX. Last week, it cut the value of its stake in the cryptocurrency exchange to zero after rival platform Binance withdrew its bailout offer.

SoftBank: The Japanese powerhouse, which invested in FTX through Vision Fund 2, revealed on November 11 that it had put less than $100 million into the company. Like Sequoia, it has since set the investment down to zero.

Tiger Global: Billionaire hedge fund Chase Coleman was another stellar investor in FTX. She was among a group of investors in the cryptocurrency exchange’s Series C round in January 2022 who valued the company at $32 billion. It also participated in an estimated $25 billion Series B round for FTX.

Tiger didn’t say the size of its investment in FTX, but Michele Cellarier of Institutional Investor, an international company-to-company publisher, reported, citing a source, that the hedge fund put about $38 million into the company.

OTPP: In October 2021, the Ontario Teachers Pension Plan, one of the largest pension plans in the world with approximately $242.5 billion in assets under management, invested $75 million in FTX. In January 2022, I invested another $20 million. This week, it said it would reduce its $95 million investment to zero.

Model: The crypto/web3-focused investment fund has pumped $278 million into FTX, according to a letter it sent to its limited partners last week, making it the largest single investor in the company. On Tuesday, co-founder Matt Huang said the company was “shocked” by the recent revelations and deeply regretted its decision to invest in FTX.

Temasek: On Thursday, the Singapore state-owned investor said it had cut its total investment of $275 million in FTX, “regardless of the outcome of FTX’s bankruptcy protection filing.”


The Economic Times Startup Awards 2022

Winners Are 2022

After months of anticipation, the day is finally here as the biggest and brightest stars in the Indian startup world will be crowned in Bengaluru at the 8th edition of The Economic Times Startup Awards 2022.

Union Cabinet Ministers Piyush Goyal and Ashwini Vaishnau and Chief Minister of Karnataka Basavaraj Bommai will be the guests of honor in a splendid ceremony.

A high-profile panel including startup founders, CEOs and investors will discuss how companies can balance profitability and growth amid the ongoing technology downturn, the biggest downturn the world has seen since the dotcom crash of 2000.

In the run-up to the awards ceremony, we spoke to some of this year’s winners, asking them to reflect on their journey, reveal the perfect recipe for a great startup, and reveal their ambitions for the future.

Razorbay

Razorpay, winner in the prestigious Startup of the Year category, is looking to go public over the next two to three years and doesn’t need to raise capital even as it continues to grow revenue 100% annually, founders Harshil Mathur and Shashank Kumar tell us. Kumar also said that Razorpay wants to announce its new payments, credit and banking story, and its international and offline payments as well.

Click here to read the full interview

Phalguni Nayar

A year after her company went public, Falguni Nayyar, founder and CEO of Nykaa — adjudicated as ‘CEO of the Year’ at The Economic Times Startup Awards 2022 — says her next big focus is achieving profitability with her modular approach. Business to business (B2B) with reasonable growth rates, even after the company’s stock underwent a correction amid a broader rout in tech stocks globally and in India.

Click here to read the full interview

Shekhar Kirani

Shekhar Kirani, partner at Accel India, known for his early bet on Nasdaq-listed Freshworks, has been awarded the Midas Touch. He told us that companies must show earnings for at least two quarters before they go public. Kirani said the second half of 2023 will see some companies in India attempt to go public, while the same remains uncertain for the US.

Click here to read the full interview


E-commerce index ET

We’ve launched three indicators—E-commerce ET, profitable e-commerce ET, and unprofitable e-commerce ET—to track the performance of recently listed technology companies. Here’s how they’ve fared so far.

ET Ecommerce Tracker


technology policy

Data protection bill

In August, the Union Government withdrew the Personal Data Protection Bill, 2021 after working on it for five years. It said it would soon replace it with a “comprehensive legal framework,” designed to address “all contemporary and future challenges of the digital ecosystem.”

On Friday, the government passed the Digital Personal Data Protection Bill, 2022, which drops non-personal data and social media from its remit.

The draft is now open for public consultation and stakeholders can submit their views on it by December 17. However, comments and submissions will not be made public “to enable people who submit comments to submit the same comments freely”.

On November 16, we reported on a new draft data law — renamed the Digital Data Protection Act — that would contain provisions seeking to regulate non-personal data and social media, and would allow data to be stored and transferred in “trusted” jurisdictions, which It will be determined by the government from time to time.

Two days later we reported that the revised bill calls for severe financial penalties for organizations that fail to contain data breaches or report such incidents to users and the government.

Read also | New rules in data billing to ease the concerns of big companies


Recruitment and layoffs

Layoffs

Tech giant Amazon has begun laying off employees in an effort to cut costs, increase operating margins and boost profits amid a tech winter and fears of an imminent recession.

On Tuesday, it said it would lay off about 260 workers at various facilities that employ data scientists, software engineers and corporate workers. The job cuts will be effective from January 17.

Amazon has not specified the number of layoffs in the near future other than those confirmed through California’s Alert Act.

We reported on November 16th that Amazon is likely to lay off workers in India as well, which could affect at least a few hundred employees across divisions.

With dismissals spreading across big tech companies like Meta and Twitter — which recently fired about 11,000 and 3,700 employees, respectively — executives of Indian or Indian descent, especially those operating outside the US, are experiencing acute anxiety.

Meanwhile, Meeta announced on Thursday that Sandhya Devanathan will succeed Ajit Mohan as its President in India. Mohan stepped down earlier this month and joined rival social networking company Snap.

Read also | Infosys will roll out variable pay of 65% for the second quarter


Pay Semiconductor in India

Semiconductor manufacturing

The Indian government has been betting heavily on domestic semiconductor manufacturing as the diplomatic struggle between the US, China and Taiwan is nowhere near over. Seeing the available opportunity, the center launched India Semiconductor Mission to tap the huge potential of the market which is dominated by China and Taiwan.

Information Technology Minister Rajeev Chandrashekhar said at the 25th Bengaluru Technology Summit that the government plans to fund semiconductor design in India and has allocated Rs 1,000 crore for the purpose.

He also said that the government wants to design and build the next generation of devices and products in India. The minister said that by the end of 2023, three out of the six machines will be used to run Indian cloud servers.

Mumbai-based ISMC Analog, one of the applicants under the government’s plan to set up semiconductor manufacturing units in the country, is close to closing a debt deal with a consortium of five banks led by State Bank of India (SBI) for US$3. Billion project near Mysuru, several sources told us.

They said the consortium of lenders has given approval “in principle” to extend a loan of up to Rs 2,500 crore for the project.

“The consortium could be led by the SBI. Other senior bankers could also join it, given that the viability of the project has been established, and the applicants are big names,” a source told Us.


Cryptocurrencies explode

Cryptocurrency

The collapse of FTX, which was among the world’s largest cryptocurrency exchanges, while unlikely to deter retailers in India from investing in digital currencies, is expected to put centralized exchanges in the spotlight, as investors seek more cash. Much of the information from these exchanges is about their reserves and liabilities, according to several of the people we spoke to.

“This is the time to be very careful. Events like this, which have happened before too, have an impact on how much investors trust the exchanges. There is an old saying in crypto – ‘Not your keys, not your crypto.’” Abhigyan Arora, 30, told us. , an independent music producer and cryptocurrency investor based in Mumbai, said that exchanges should make it a norm for exchanges to report proof of reserves and liabilities.

Indian crypto exchanges, which have been seeking regulatory oversight, tend to agree.

Vikram Soporaj, Co-Founder and CEO of Chennai-based Giottus, told us that the exchange will start offering proof of reserves to its clients. It is time for all exchanges to disclose proof of reserves. Regulators should also make proof of reserves mandatory as part of compliance filings.

However, other crypto exchanges are losing faith in digital assets as the ripple effect of the FTX bankruptcy continues to bring a daily barrage of negative news.

On Monday, cryptocurrency exchange AAX suspended withdrawals while users on another exchange, Bitcoke, were experiencing withdrawal problems. Crypto lender Blockfi has suspended withdrawals, and even Crypto.com has been handling mass withdrawals.

Read also | Ex-FTX CEO Sam Bankman-Fried Plans Escape to Dubai: Report


in other news

Mindtree CEO Debashis Chatterjee

LTIMindtree to focus on real estate, cost and revenue synergies: The CEO of LTIMindtree, the entity formed through the merger of Larsen & Toubro Infotech (LTI) and Mindtree, said it will focus on long-term real estate, cost and revenue synergies. The company, which has become the fifth largest IT services provider in India by market capitalization, may seek to rationalize properties in case of duplication within the same cities.

India boosts Airbnb: Airbnb saw total overnight bookings by Indians grow nearly 50% in the third quarter, while domestic overnight bookings increased by about 80% over the same period before Covid. “India has been one of our most significant and fastest growing geographies,” co-founder and chief strategy officer Nathan Plecharczek tells us in an exclusive interview.

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