ETtech Deals Digest: With funding hard to come by, startups look at convertible notes

Post-festival season gloom for Indian startups is here, and looks like it's here to stay. Yet another week has gone by with the funding drought still continuing for startups. Investors, both institutional and angels, are looking more hesitant than ever, in backing new ventures. The current global macroeconomic climate seems to be a cause of the depletion in funding, with energy prices soaring because of geopolitical volatility and the West facing a recession.

Startups have been moving towards finding new ways of raising money, and doing it through convertible notes is one such hack. This week, B2B e-commerce startup Udaan raised $120 million through convertible notes, while delaying its IPO plans.

What are convertible notes? To put it simply, a company raises money through convertible notes by taking a short-term loan in exchange for the promise of equity at a later time. This exchange of equity happens typically during a later funding round or IPO. Recently, edtech giant Byju’s also raised $250 million through convertible notes.

Boat picks up $60 million in funding from Warburg Pincus, Malabar Investments: The D2C audio products and wearables brand has raised $60-million, or about Rs 500-crore, financing through convertible preferred stocks notes from existing investor Warburg Pincus and new investor Malabar Investments, and has formally withdrawn its listing plans. Boat has put a minimum valuation cap of around $1.2 billion as part of this funding.

Udaan raises $120 million through convertible notes: Business-to-business (B2B) ecommerce startup Udaan has raised $120 million through convertible notes and debt from existing shareholders and bondholders. Sources said that $30-50 million is expected to come in another tranche.

WhatsApp chatbot startup WATI raises $23 million in funding led by Tiger Global: Hong Kong-based customer engagement platform WATI (WhatsApp Team Inbox) raised $23 million in series B funding led by Tiger Global.Existing investor Sequoia Capital also participated, while DST Global Partners and Shopify came in as new investors.

Devtron, a DevOps startup, raises $12 million: Gurugram-based DevOps startup Devtron has raised $12 million in funding led by the New York-based private equity firm Insight Partners, along with participation from Leo Capital and other angel investors.