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Info Edge Writes Off Investment in Indian Startup Bijnis
Info Edge, the largest shareholder in Bizcrum Infotech, the holding firm of Bijnis, has written off its entire investment in the Indian startup, citing “principles of conservatism and prudence,” in the latest drastic market correction in the fast-growing South Asian ecosystem grappling with the weakening global economy.
About Bijnis
Bijnis is a Series B-stage startup founded in New Delhi that aims to be the “operating system for factories,” helping the plants procedure supplies and also generate demand from buyers and other retailers alike. Bijnis has raised over $43 million to date and counts Sequoia India, Matrix Partners India, Waterbridge, and Westbridge among its backers.
Reasons for Write-off
Info Edge had invested about $9.3 million in Bijnis, but it wrote off the investment following the “principles of conservatism and prudence and after due consideration of factors including continuing cash burn, limited availability of cash in proportion to unspecified liabilities with respect to buyback obligations (including liquidation preference) of the company towards investors under the shareholders agreement.” However, Info Edge assured to continue to evaluate the position and work with other shareholders to remedy the situation.
Technical Write-off
Rishabh Katiyar, Principal at Info Edge Ventures, said that the write-off in Bijnis was “a technical write-off due to the unspecified liabilities” that may materialize “owing to the buyback obligations in the existing shareholders’ agreement signed between the company and the investors”. He added that this liability is contingent in nature and has not factored in based on the conservative accounting policies followed by the company in compliance with IndAS accounting standards. The contingency would only materialize if the company is unable to provide an exit to the key investors via other exit mechanisms like third party sale, listing, among other mechanisms captured in the agreements by a specified date in future and all the key shareholders together choose to exercise the buyback right as an exit mechanism.
Implications for Info Edge
The announcement follows Info Edge disclosing on Friday a loss of $33.4 million in 4B Networks, another startup it wrote off recently. As a result, Info Edge reported an overall loss of $8.4 million for the financial year ending March 2023, a sharp departure from the $1.55 billion profit it had posted the year before. As the Indian news and analysis website The Arc pointed out, this is the first net loss for Info Edge in six years.
FAQs
What is Bijnis?
Bijnis is a Series B-stage startup founded in New Delhi that aims to be the “operating system for factories,” helping the plants procedure supplies and also generate demand from buyers and other retailers alike. Bijnis has raised over $43 million to date and counts Sequoia India, Matrix Partners India, Waterbridge, and Westbridge among its backers.
Why did Info Edge write-off its investment in Bijnis?
Info Edge wrote off its entire investment in Bijnis following the “principles of conservatism and prudence and after due consideration of factors including continuing cash burn, limited availability of cash in proportion to unspecified liabilities with respect to buyback obligations (including liquidation preference) of the company towards investors under the shareholders agreement.”
What is the impact of the write-off on Info Edge?
The write-off resulted in an overall loss of $8.4 million for Info Edge in the financial year ending March 2023, a sharp departure from the $1.55 billion profit it had posted the year before. As the Indian news and analysis website The Arc pointed out, this is the first net loss for Info Edge in six years.
What is the reason behind the write-off in Bijnis being a technical write-off?
Rishabh Katiyar, Principal at Info Edge Ventures, said that the write-off in Bijnis was “a technical write-off due to the unspecified liabilities” that may materialize “owing to the buyback obligations in the existing shareholders’ agreement signed between the company and the investors”.
What liability is contingent in nature?
The liability that is contingent in nature arises due to the buyback obligations in the existing shareholders’ agreement signed between Bijnis and the investors and has been factored in based on the conservative accounting policies followed by Bijnis in compliance with IndAS accounting standards. This liability would only materialize if the company is unable to provide an exit to the key investors via other exit mechanisms like third party sale, listing, among other mechanisms captured in the agreements by a specified date in future and all the key shareholders together choose to exercise the buyback right as an exit mechanism.
Conclusion
The write-offs of Bijnis and 4B Networks have resulted in a net loss for Info Edge for the first time in six years. The situation in the South Asian ecosystem is challenging due to the weakening global economy. However, it is important to note that the write-off in Bijnis was a technical write-off and not a reflection of the company’s financial performance, market opportunity, and value proposition. Info Edge will continue to evaluate the position and work with other shareholders to remedy the situation, showing its commitment to the startup ecosystem.
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