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Startups face regulatory heat as ED probes deepen in 2025

EntrackrEntrackr · 1m ago
Startups face regulatory heat as ED probes deepen in 2025
Medial

Startups face regulatory heat as ED probes deepen in 2025 India’s Enforcement Directorate (ED) has intensified its scrutiny of startups in 2025, launching a series of investigations across various sectors, including gaming, fintech, and e-commerce. What started as a few separate investigations has now turned into a larger crackdown, putting a spotlight on how some of India’s top-funded startups follow rules around foreign investment, business structure, and overall compliance. One of the most high-profile targets this year has been opinion trading platform Probo, which came under the ED scanner in July. The agency conducted searches across multiple locations and seized assets worth Rs 284.5 crore, alleging that Probo’s model, where users trade on real-world outcomes, amounts to illegal betting and violates the Prevention of Money Laundering Act (PMLA). While the company has denied any wrongdoing and assured full cooperation with the authorities, on July 15, the Punjab & Haryana High Court heard Probo’s plea to quash the FIR and unfreeze its bank accounts. Though the court declined interim relief, it asked the state to respond regarding partial unfreezing. The matter is now listed for the next hearing on August 26. After the ED intervention, the case has become part of a broader debate over how such platforms are classified and regulated in India’s evolving legal landscape. Around the same time, Myntra, the fashion platform owned by Flipkart, became the subject of a fresh FEMA complaint filed by the ED. The case revolves around alleged misuse of FDI norms to the tune of Rs 1,654 crore. According to the ED, Myntra operated under the wholesale cash-and-carry model, which is eligible for 100% FDI through the automatic route, but was effectively engaged in multi-brand retail by routing goods through a group entity, Vector E-Commerce. According to this structure, ED claims that it has violated caps on intra-group sales and circumvented retail FDI restrictions. The complaint has been placed before the adjudicating authority in Bengaluru. Another startup in the ED’s crosshairs is Simpl, a buy-now-pay-later (BNPL) platform operated by One Sigma Technologies. The agency has alleged FDI violations worth Rs 913 crore, stating that the company misclassified its operations as IT services to raise foreign capital under the automatic route—when in fact, its activities fall under regulated financial services, which require prior government approval. The case underscores a growing pattern where fintech startups offering credit-linked services are being questioned over regulatory arbitrage in FDI filings. In parallel, Paytm and its subsidiaries have come under the ED’s radar for alleged violations of foreign exchange rules. In April 2025, the agency issued a show-cause notice to One97 Communications, Little Internet, and Nearbuy India, citing FEMA breaches worth Rs 611 crore. The matter relates to overseas investments made between 2015 and 2019, which were made before Paytm acquired the entities, without following the RBI’s reporting and pricing norms. While Paytm has maintained that the issue predates its ownership and has no impact on current operations, the case adds to the growing list of startups grappling with retrospective scrutiny over FDI compliance. The scrutiny hasn’t been limited to the domestic startup ecosystem. Global forex trading platform OctaFX is under ED investigation for allegedly laundering nearly Rs 800 crore through unauthorized forex trading in India. The agency claims the firm used fake KYCs, mule accounts, and shell companies to route funds overseas. Assets worth over Rs 292 crore, including a yacht and Spanish real estate, have been attached, with the case ongoing under the PMLA. The ED’s widening crackdown signals a shift from legacy probes to deeper scrutiny of digital-first businesses. For founders and investors, compliance is no longer optional; it’s a live operational risk. The sheer breadth of probes also indicates just how badly tangled with red tape regulations remain in India, pushing everyone to break the rules in one way or another at times. The sheer number of hoops that firms have to jump through, and consequently, the huge amount of time they can save by taking what are sometimes advised as ‘safe shortcuts’, frequently leads to missteps. We have no doubt that, going by the letter of the law, perhaps even ED (which has a terrible conviction record, going more for settlements) will find some overstepping, besides the obvious criminality in some cases. But the larger issue remains the mess that are regulations, and the failure of regulators to address these issues. Regulation in India has been interpreted almost exclusively as a role whose job is to ‘protect’ the end consumer, something where it is easier to pass off tokenism as action. We believe regulators who take a more holistic view, including making life genuinely easier for the firms they are supposed to regulate, will achieve a lot more eventually for the whole ecosystem.

Ixigo’s market cap spikes nearly 80% from pre-IPO round

EntrackrEntrackr · 1y ago
Ixigo’s market cap spikes nearly 80% from pre-IPO round
Medial

Le Ventures Private Limited, the parent company of Ixigo, made a spectacular debut on the National Stock Exchange on Tuesday, opening at a 48.5% premium above its issue price. Ixigo’s issue price was set at Rs 93 but listed at Rs 138.5 on NSE while the firm’s share price on BSE opened at Rs 135, according to data sourced from both stock exchanges. The Gurugram-based firm initiated its public offering with a price band of Rs 88-93 with a minimum bid quantity of 161 shares. It had raised Rs 740 crore through the IPO from anchor and retail investors. Ixigo’s IPO subscription was oversubscribed by 98.3X while the portion of non-institutional investors (NIIs) oversubscribed by 110.5 times. According to RHP, the company will use these proceeds for part-funding working capital requirements, investments in cloud infrastructure and technology, and inorganic growth through unidentified acquisitions and other strategic initiatives as decided by the board. Ixigo’s RHP further explained that Elevation Capital and Peak XV made hefty 13X and 8.2X returns from Ixigo respectively. Micromax Limited also scored 10.88X return on its original investment from the company. As per the data available on NSE, Ixigo’s stock price stands at Rs 165.72 (as of 12.58 PM ) which is 20% higher than its opening price and 78.2% higher than the issue price. The company’s overall market cap stands at Rs 6,420 crore ($773 million) from Rs 3,602 ($434 million) crore in the pre-IPO round. Ixigo demonstrated decent growth during the first nine months of the last fiscal year (FY24). Its operating revenue stood at Rs 491 crore while the firm also made a sizable profit of Rs 65.7 crore in the same period. It is the sharp improvement in the latter that has enthused investors, who clearly expect the firm to build on the performance in coming quarters. Stretched valuations are clearly not an issue for the booming travel sector where supply remains the only constraint.

Rebel Foods raises $13 Mn debt

EntrackrEntrackr · 1y ago
Rebel Foods raises $13 Mn debt
Medial

Cloud kitchen brand Rebel Foods has raised Rs 110 crore ($13.2 million) in debt from Alteria and InnoVen Capital. This is the fifth debt funding for the parent company of EatSure (previously Faasos) after its last equity round in 2021. The board at Rebel Foods has passed a special resolution to issue 11,000 Series G1 non-convertible debentures at an issue price of Rs 1,00,000 per debenture to raise Rs 110 crore, regulatory filings with the Registrar of Companies (RoC) show. Orbis Trusteeship (through Alteria) has invested Rs 65 crore while Vistra ITCL ( via InnoVen Capital) pumped in Rs 45 crore during the debt round. The tenure of paying Series G1 debt is up to 01 May 2027. According to filings, each debenture issued in the debt round shall be entitled to the interest of 13.90% per annum. The interest shall be payable on a monthly basis. In April last year, it raised Rs 75 crore ($9 million) in debt from Catalyst Trusteeship (Northern Arc) and Stride Ventures. In 2022, the Mumbai-based firm received Rs 230 crore across three debt fundings. Rebel Foods operates food brands such as Faasos, Behrouz Biryani, Oven Story Pizza, Mandarin Oak, The Good Bowl, and Slay Coffee with more than 450 kitchens in over 70 cities. It has a portfolio of over 45 brands across multiple countries—India, United Arab Emirates (UAE), Saudi Arabia and the UK. The company is planning to take Oven Story Pizza offline and will open 250-300 outlets over the next two-three years. The Jaydeep Barman-led company entered the unicorn club after a $175 million Series F round led by Qatar Investment Authority in October 2021. The Peak XV-backed company raised its last equity round of $14.5 million in November 2021. Rebel Foods’s operating revenue surged to Rs Rs 1,258 crore in FY23 from Rs 856 crore in FY22. According to startup data intelligence platform TheKredible, its losses jumped to Rs 656 crore in FY23 from Rs 564 crore in the previous year. As per media reports, Rebel Foods is planning for an initial public offering (IPO) by 2025, making it the first firm from cloud kitchen space to list on the Indian stock exchange.

Exclusive: Ather Energy raises $34.5 Mn; co-founders invest over $10 Mn

EntrackrEntrackr · 1y ago
Exclusive: Ather Energy raises $34.5 Mn; co-founders invest over $10 Mn
Medial

Electric scooter maker Ather Energy has raised Rs 286 crore or $34.5 million through debt and equity. This is the first round of investment for the Bengaluru-based company this year. Stride Ventures invested Rs 200 crore via debentures while co-founders of the company Tarun Sanjay Mehta and Swapnil Babanlal Jain pumped in Rs 43.28 crore each via Series F preference shares, its regulatory filings accessed from the Registrar of Companies show. Ather Energy raised its second-largest funding worth Rs 900 crore ($108 million) from existing investors Hero MotoCorp and GIC through right issue in December last year. In the same month, Hero MotoCorp also acquired an additional 3% stake in Ather for Rs 140 crore (approximately $16.8 million). Recently, a media report said that Ather is in talks to raise $95 million in a pre IPO round. Another report added that Ather’s existing backer Sachin Bansal has sold a significant portion of his stake in the company to Zerodha’s co-founder Nikhil Kamath. As per TheKredible, Ather was valued at $750 million during the Series E round in May 2022. However, it has not disclosed its valuation since then. It’s likely to get unicorn status in the upcoming round. Ather has raised around $450 million to date. According to the startup data intelligence platform TheKredible, Hero MotoCorp is the largest external stakeholder followed by Sachin Bansal, Caladium Investment, and Tiger Global. Ather’s revenue from operations surged 4.36X to Rs 1,784 crore in FY23 while its losses spiked 2.5X to Rs 864.5 crore in the same period. The company is yet to file its financial results for FY24. Electric two-wheelers saw a 50% drop in overall sales in April when compared to March. Ather Energy, which sold 17,000 units in March, saw 4,000 units sold in April. Ola Electric sold over 33,000 units, contributing about 50% to the overall sales in the last month.

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