Tata Neu to receive US$2 billion in funding as India’s first super app fails to gain traction
- Should a deal materialize, Tata Group’s funding will go through Tata Digital over two years.
- The fresh capital could help Tata Neu strengthen its digital offerings, fix technical glitches, and meet new spending needs.
- Tata Group wants Tata Digital to look for ways to boost the valuation of the super app.
Super apps are umbrella mobile applications under which companies offer many services, and India welcomed its first super app, Tata Neu, in April last year. The super app from Tata Group, which has garnered over seven million downloads within seven weeks of its launch, went live after several delays and months of testing by company employees.
Despite that, many claim Tata Neu to be a mess, even though it has been available to the general public for almost a year. The app houses the company’s brands across industries such as e-commerce, financial services, airline tickets, grocery, medicines, and hotels. Frankly, the Tatas have had a strong offline presence across various sectors.
However, until relatively recently, consumer tech remained an untapped market. So a few years ago, to compete with tech giants like Amazon and Walmart-owned Flipkart, Tata started building its digital profile by acquiring startups like Alibaba-backed online grocery firm BigBasket and medicine delivery startup 1mg, along with an investment in health-and-fitness startup cult.fit.
Fast forward to today, Tata Group is considering injecting another US$2 billion of fresh capital into its super app venture, according to Bloomberg, as the salt-to-software conglomerate seeks to bolster its digital business. Quoting people familiar with the matter, Bloomberg said Tata Digital Pvt would receive the additional funding over two years should a deal proceed.
“The fresh capital could help online platform Tata Neu, which went live last April, to strengthen its digital offerings, fix technical glitches and meet any new spending needs,” one of the people told Bloomberg.
How is Tata Neu doing?
As part of the fresh round cash injection, Tata Group has asked Tata Digital to also look for ways to boost the valuation of the super app. Since the deal remains unclear, the size and timeline have not been formalized. “Any fresh capital would come as Tata Digital is reviewing its strategy and fending off entrenched e-commerce rivals such as Amazon.com Inc. and Walmart Inc.’s Flipkart,” the report reads.
Frankly, since Tata Neu was launched, it ran into technical glitches and received numerous customer complaints soon. Tata Neu is expected to meet just half the sales target in its debut year. The super app will see sales of about $4 billion in the year to March 31, compared with the US$8 billion target set at the beginning of 2022, Bloomberg News reported in January.
So far, it looks like Tata Neu is an underwhelming performance of a project that Tata Group Chairman Natarajan Chandrasekaran championed as the future of the US$128 billion conglomerate. Unfortunately, the group hasn’t yet been able to raise cash from investors and fund its plans.
After all, the pressure is on Tata Group to get its super app on the right track before conglomerates led by Gautam Adani and Mukesh Ambani — Asia’s two wealthiest men — launch similar ventures.
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