Just a few weeks ago, social media was abuzz about Zomato and Swiggy, but most users didn’t have good things to say. The debate was about platform fees — rising from INR 1 per order in August last year to INR 6 in July 2024 — and how this has weakened the food delivery proposition. 

But platform fees are only going to rise in the future. This is the price that consumers have to pay to get the convenience of food and quick commerce deliveries. And with no real competition in sight, Zomato and Swiggy pretty much follow each other’s moves when it comes to pricing.

We have seen the likes of Amazon, Uber Eats and Ola try to disrupt the duopoly, but Swiggy and Zomato continue to all-but split the food delivery market. The others just couldn’t expand beyond Bengaluru and other top cities, while keeping up with the discounts that Swiggy, Zomato offered. 

But now, things might be changing. Large players such as Ola and Paytm are increasingly leaning on the Open Network For Digital Commerce (ONDC) to gain ground and disrupt Zomato and Swiggy with more attractive pricing. 

To be clear, this is a battle that’s largely being fought on pricing thus far. ONDC-backed food delivery players such as Ola or Paytm do not have the operational expertise nor the resources to pull off food delivery on a consistent basis. In particular, Ola has leveraged ONDC to quickly mount a challenge, and take another shot at food delivery after its past failures. 

In other words, ONDC has opened the doors to competition for Swiggy and Zomato. But can Ola and others banking on ONDC truly outpace Zomato and Swiggy? 

Ola Dreams Food Delivery Again

Ola founder Bhavish Aggarwal has a fascination with food delivery. The company has attempted food delivery thrice through the Ola app, before the latest ONDC tryst.

When Ola and Aggarwal first experimented with food delivery through Ola Cafe in 2015, the idea was to build an instant delivery model through a restaurant network.

Unlike Zomato or Swiggy, which allowed consumers to browse through the entire menu of a restaurant, Ola limited itself to select few items from a handful of restaurants in the consumer’s vicinity. The company banked on its fleet for delivery, but the differentiated product did not go down well with consumers, and Ola Cafe was shut down within a year.

For act two, Ola acquired Berlin-based FoodPanda from Delivery Hero for $50 Mn in 2017, to again take on Swiggy, Zomato, as well as Uber Eats (eventually acquired by Zomato). The company wanted to replicate Uber Eats’ early success in India at the time, but once again, Ola fell short of the mark when it comes to user experience on Ola FoodPanda.

In 2022, Ola moved away from the restaurant aggregator model, and looked to leverage cloud kitchens to enter the space. Here, it was looking to emulate the likes of Rebel Foods, CureFoods, Box8, among others. Even though Ola put cofounder Pranav Jivrajka in place to lead this vertical, the business proved tough to scale up. Jivrajka quit the company just before the Ola’s third attempt failed.

But this time around, the company is hoping that ONDC will help it achieve its food delivery dreams, starting with Bengaluru. The company is also building a delivery fleet with EV bikes to improve the user experience, which was severely lacking in previous attempts. 

According to ONDC seller apps such as Magicpin and uEngage, which bring restaurants on board, Ola has seen good user traction on account of efficient operations and in-house logistics.

“Food delivery orders work on crucial delivery timelines which is why if a company has been in the business for many years, it will have better efficiencies as it can manage sensitive peak hours, will have prior experience of tie-ups with restaurants,” owner of a Bengaluru-based cafe told Inc42. 

In Ola’s case, a number of cloud kitchen brands and other infrastructure it was running until 2022 is likely to come in handy as it begins to scale operations to the other states. But it will not be easy to compete with juggernauts such as Swiggy and Zomato. 

Swiggy is on the verge of an IPO to raise cash before expanding further, and Zomato is cash rich after its profitable stint in FY24. Given these developments, how far will Ola’s discounts-heavy play work? 

Can Ola-ONDC Eat Into Zomato, Swiggy Share? 

There is one advantage to Ola’s strategy of offering high discounts through ONDC. It expands the base of food delivery consumers who are wary of the higher prices and extraneous fees on Zomato and Swiggy. This means Ola can attract customers who were either on the food delivery fence or who have abandoned the two primary apps. 

“Competitors like Zomato and Swiggy have entirely different business ambitions now compared to 2022. They aren’t looking to burn cash anymore which will definitely give more room to Ola to acquire more users through better user experience and discounts,” uEngage founder Sameer Sharma said. 

Sources told Inc42 that Ola’s Aggarwal is feeling bullish about eating away at market share by offering heavy discounts. In fact, Ola has also reduced take-rates from restaurants by 50% in comparison to Zomato and Swiggy, which has at least worked out in Bengaluru.

“When Ola begins charging delivery fees, it will be still another revenue source for the company. I think Bhavish is fully prepared to do the heavy lifting for ONDC in the food delivery space this time,” the source quoted above said.

Ola’s discounts in food delivery as per Inc42’s analysis are staggering. Ola is offering 70-80% cheaper food delivery than Swiggy, Zomato and even other ONDC buyer apps like Paytm or Magicpin.

In fact, sources tell us that Ola is also providing free deliveries for every order, which has doubled its order volumes in the past couple of months. 

Susmit Patodia, associate partner at early-stage venture capital firm Antler, believes that ONDC cannot dictate the pricing or discounts even though that was the case during the first two years. Now it’s left entirely up to the participants to decide the pricing for every order. 

Bengaluru-headquartered Antler has built a thesis around investing in startups that are building on the ONDC protocol. “We need to reinforce the idea that ONDC is an open protocol where the network participants will play a huge role in the price determination, the waiver of delivery charges. This includes even the merchants or sellers who are now realising that ONDC is a viable option,” Patodia said.

He added that although ONDC has taken giant steps in the initial years, and that cash burn is not a big problem for the moment. “The ecommerce giants have grown and scaled up after burning cash for about 5-7 years, including Zomato and Swiggy. The total cash burn under the ONDC model is not comparable to that, at the moment,” Antler’s associate partner added.

In both cases the idea is the same: get consumers habituated to ordering online, and gradually taper down the discounts. The big question is can Ola even scale up to the extent where it can take its foot off the discounts pedal? 

For that, it needs to build the leadership and the network effects that Zomato and Swiggy have. Both platforms offer a robust system for restaurants to manage online orders and also help in advertising and marketing, albeit this comes at a cost. How far can Ola replicate this on its ONDC-linked platform? 

ONDC’S Food Delivery Menu

Ola, Paytm and others on ONDC’s food delivery bandwagon are also banking on the network adding familiar features to ease onboarding of consumers and merchants. 

For instance, popular Bengaluru eateries are in the process of setting up QR codes that will enable consumers to place orders through ONDC-enabled apps on their smartphone. 

In fact, ONDC launched the interoperable QR code system on Tuesday (July 30), which allows sellers to generate a unique QR code that consumers can scan using an ONDC-registered buyer app, starting with magicpin and Paytm. 

This will soon be expanded across the entire network after initial testing. 

Within food delivery, this could help increase visibility of ONDC buyer apps as they look to take on Swiggy and Zomato. 

Neither of these two food delivery giants have such QR codes displayed inside restaurants. It must be understood, however, that the QR codes solve a problem that is unique to ONDC. 

While QR codes will be added soon, ONDC’S food delivery order volume has almost tripled to 14 Lakhs per month in June 2024 from 5 Lakhs per month in March this year. 

Currently, Zomato and Swiggy may together command close to 90% of the market in Delhi and Bengaluru, where ONDC has launched. But is the open network eating into this duopoly?

“Swiggy and Zomato are great companies. But this market is so huge that there is definitely room for other players which offer seamless user experience, cheaper alternatives especially if the hotels, restaurants are themselves willing to discount the end user without the aggregator,” uEngage founder Sharma added .

On the flip side, one does wonder, will ONDC see a decline in food delivery volumes when the discounts are taken off the table, especially if participants actually want to turn profitable. 

Currently, Ola ONDC charges anywhere between 5% to 10% in commission on each order besides nominal delivery charges. But not everyone wants to splurge on discounts to chase the food delivery high. 

PhonePe-backed Pincode and Paytm, which offered as much as INR 100 discount on each food order and free deliveries, are changing their tune.  

Sources claim Pincode has found it hard to navigate through the fragmented ONDC landscape of partners such as third-party logistics players, customer support companies, payments partners and more. 

Paytm took its foot off the discounts accelerator due to headwinds in its core UPI and merchant payments businesses. The fintech giant has turned the focus away from food delivery discounts, prices on Paytm are closer to Swiggy and Zomato prices than Ola. 

Lessons From The Past

Of course, Ola’s potential success in the future will only serve to attract other players to the ONDC space. Amazon has long held ambitions to scale food delivery beyond Bengaluru, while Flipkart is also considering early moves for ONDC-based food delivery. 

Flipkart and Amazon India were well positioned to foray into food delivery and leverage their existing user base, as well as logistics to make a dent. But there is pressure on both these giants to move towards profitability. This curtailed any food delivery ambitions held by Amazon and Flipkart never made a serious move into the space. 

Can Ola’s ONDC success lure these players in?

“Amazon is also in a wait-and-watch mode to see the traction enjoyed by Ola and other such ONDC apps. It may enter the space if Ola can prove that ONDC works for food delivery,” the owner of a popular cloud kitchen brand told us on the condition of anonymity. .

Antler’s Patodia added that one cannot ignore the challenges that being faced by merchants and restaurants in getting on board ONDC buyer apps. He acknowledged that the platform needs to remove the hurdles in the way. 

“Perhaps we will see founders and startups building products that will solve the impending issues associated with seller integrations and make them swifter and simpler. ONDC is too young right now but it is off to a good start. Scaling to 10 Mn transactions a month in two years is no easy feat,” Patodia added.

[Edited By Nikhil Subramaniam]

The post Can Ola’s ONDC Food Delivery Bet Match Swiggy, Zomato? appeared first on Inc42 Media.

VerSe Innovation is struggling to keep its Josh going.

After bagging $805 Mn in 2022 — the biggest cheque that year — and raising nearly $1.5 Bn in its lifetime, the Josh and Dailyhunt parent company is still stuck on the one question that most startups go through even one day one i.e. monetisation.

The revenue challenge is particularly hard on Josh, VerSe’s short video app that had all the momentum on its side just two years ago. The startup raised the money and acquired users to take short video platform Josh to the top of the pile of Indian short video apps over the past few years.

But Josh is now yet another example of an Indian short video app falling short of the mark.

The optimism around short video apps, which boomed in 2021 and fizzled out soon after, has proven to be misplaced. We have seen the situation at Sharechat’s Moj, Trell, Roposo, Mitron, Chingari and half a dozen other short video apps, all of which faced massive monetisation challenges. 

But Verse was bullish about Josh even through this downturn. In February 2023, VerSe’s cofounder Umang Bedi said the company is aiming to take Josh to the public markets in the next few quarters saying that the platform has started making money.

However, Inc42 learnt from sources that Josh has considerably scaled down its operations, letting go of 50-70 employees in the last two months even as monetisation continues to pose a challenge. 

While VerSe Innovation did not respond to our questions, sources close to management said these were a part of a routine performance review, with various employees asked to put down their papers. 

As per sources, the layoffs impacted senior employees who were drawing higher salaries than others. We were also told that team leaders often spoke about VerSe’s soaring losses, as a result of various initiatives that were shunted. 

“However, amidst this restructuring the company continued to hire freshers and others at junior positions,” one source told us. 

The retrenchments occurred after VerSe announced the acquisition of US-based magazine subscription platform Magzter in April 2024, as it looked to strengthen the content delivery business of Dailyhunt and One India. But none of these verticals are profitable, and therein lies the big problem for VerSe. 

Josh, which requires the most marketing dollars, is the heaviest weight around the company’s shoulders. 

In FY23, VerSe Innovation managed to cut its losses by 25% to INR 1,909 Cr from INR 2,563 Cr even as the startup’s operating revenue zoomed 51% to INR 1,456.5 Cr in FY23 from INR 964.7 Cr in FY22. Dailyhunt contributed more than 70% to this revenue, while Josh’s standalone revenue was INR 300 Cr. 

Given that VerSe raised more than $800 Mn (INR 6,700 Cr) Mn just over two years ago, these revenue figures make for lacklustre reading. It’s unclear whether VerSe has managed to scale up its revenue and profitability in FY24. 

So the question is will Josh also join the long list of dead short video apps in India or is there some life left in VerSe’s short video bet? 

How Josh Lost The Game Of Algorithms 

Most Indian short video apps — including Sharechat-backed Moj, Trell, MX TakaTak, Chingari and others — fizzled out due to their inability to retain advertisers and users for a long period. Advertiser attrition hurts the only source of revenue i.e ads, while de-growth on the user side means the virtuous cycle of engagement and content was broken. 

Sources say Josh has gone through all of these challenges in the past year. In addition, some key initiatives and customer acquisition strategies did not work out for the parent company. 

As per data sourced from Data.ai, Josh’s monthly downloads have fallen by nearly 80% — from around 6 Lakh in July 2023 to 1.1 Lakh in June 2024. Similarly, the monthly active user (MAU) base has also fallen by more than 50% from 20 Mn in July 2023 to 9.4 Mn in July this year.

Sources alleged the quality of content on Josh, as well as content moderation was substandard. Secondly, due to poor recommendation algorithms, engagement was always an issue, particularly on trending topics where Instagram, and Youtube Shorts have the edge.

“The user experience on Josh has deteriorated considerably since 2022 with algorithms no match to Instagram, Youtube which have better AI/ML algorithms and such platforms have almost captured all the viral, trending themes. Sometimes such organic trend content shows up on Josh days later,” another source claimed, adding that daily and monthly active users have seen a consistent slide in the past two years.

Another source well versed with Josh’s operational execution alleged that the platform was home to numerous bots (automated accounts) following some of the more popular creators and influencers. This resulted in some reputational damage for Josh among creators as well. The tactic attracted brands for some time, but most caught on eventually. 

“The inherent problem with such platforms is that old content is being pushed consistently to engage audiences from tier 2, 3 towns and this was combined with fake followers and fake views. But this is bound to flop as everyone will find out soon enough,” according to Pranav Panpalia, founder of Delhi-based influencer marketing agency Opraahfx. 

Brijesh Awasthi, founder & CEO of another homegrown social network platform Netclan Explorer, believes that building social media platforms has proven to be a capital intensive exercise which can only be sustained for some time, and organic user acquisition is key for the long run.

Cost Cutting Squeezes Out Creators

Besides the alleged fake followers, creators were also not seeing a revenue upside with Josh.

Nearly a year ago, Josh launched Creator Pro programme in a strategic shift to pay creators based on the engagement they can drive, instead of a fixed sum per month, which was roughly around INR 10,000 for smaller creators. 

“The shift to engagement-linked payouts turned out to be a disaster because the payouts were negligible. Creators could collect diamonds for a certain number of likes, but this was only equivalent to 1 paise or 1/100th of a rupee. So the creators were paid a meagre amount for the work they put in to get the likes and followers,” another person who was until recently a part of the community engagement at Josh, told Inc42. 

When it comes to brand campaigns, micro-creators (between 1K to 10K followers) are paid between INR 10,000 and INR 30,000 per video post, whereas those with higher follower counts were paid INR 50,000 per post. 

“In these campaigns, brands allocate some budget to pay creators and platforms get their commission too. Right now, Josh has around 3,000-5,000 micro creators who don’t charge much for content,” said another source who is well versed with the content management at Josh.

The person quoted above claimed that influencers with huge following Sameesksha Sud (60 Mn+ followers), Vishal Pandey (43 Mn+ followers) are paid up to INR 30 Lakh per year by Josh as a retention strategy. 

Influencer agency founder Panpalia said other platforms don’t have to pay such hefty retainer fees. YouTube, for instance, only shares revenues with creators that can get good engagement and the rest of the income that the creators draw is from brands or minimal ad-sharing from YouTube.

“However, there is a huge difference in the payouts between some of these Indian platforms and YouTube which has also led to influencer exodus from these short video apps,” he added.

No Country For Short Video Apps

This is a far cry from how VerSe Innovation catered to creators after it had raised funds in 2022. Many were given perks such as travel expenses, verified accounts and fixed pay to get them glued to the platform. All these have vanished slowly.

Josh also tried on-ground activation activities to draw in more creators and users in different states of the country.  The Josh Ambassador programme also saw VerSe Innovation splurge to retain creators and get them to refer other creators for bonus payouts. Both on-ground events and Josh Ambassador programmes have now been wound down to cut costs.

With many of these creator-centric activities now shelved, Josh is back to square one in many ways. Revenue is still heavily dependent on ads. And while Josh does get its fair share of regional language ads and political ads (for the 2024 General Elections), these are unlikely to go a long way in solving the revenue problem. 

“For instance,  a popular FMCG brand may want to target the Bihar market and Josh will provide them with a structured advertising campaign deal to target audiences in the region, saying that they have a fixed number of creators and influencers in Bihar for content creation,” another source at Josh told us. 

Our sources added that revenue from regional language ads has so far kept Josh running, but the revenue upside for campaigns in niche markets is low. To build on this scale, the company needs to crack other avenues of monetisation. 

User revenue is sorely missing for Josh and other apps of its kind. 

Ultimately, the demise of the Indian short video space is largely due to the fact that these platforms do not have the luxury of a long road to monetisation like early platforms such as Facebook or Twitter. 

For instance, neither Facebook nor Twitter had major sources of monetisation for a long time after their inception, but that was a different era, where a category was being created. The likes of Josh do not have the same luxury, and as such had to crack monetisation much faster than their western counterparts. 

We have not seen stickiness to any of the gamification features or subscription products launched by many of these platforms. And almost all of them are plagued by below-par experience for both users and creators, so is it any surprise that India’s short video ocean is littered with sunken ships? 

[Edited By Nikhil Subramaniam]

The post VerSe Innovation’s Josh Is Fizzling Out appeared first on Inc42 Media.

Even as markets regulator Securities Exchange Board of India (SEBI) had indicated earlier this month that it was concerned about the rapid growth in India’s derivatives trading market, no one anticipated the big changes for short-term and long-term capital gains that the finance ministry would come down hard on the futures & options trading and securities markets in India in the Union Budget 2024. 

Earlier today, finance minister Nirmala Sitharaman hiked the short term and long term capital gains tax on financial and non-financial assets. 

The LTCG has been hiked from 10% to 12.5% whereas the STCG tax on some assets will be 20% now. Further, the securities transaction tax (STT) has hiked from 0.062% to 0.1% on options trading and from 0.0125% to 0.02% on futures trade.

These announcements did not jolt the stock markets heavily, but analysts reckon there may be a dramatic turn in the coming weeks as investor sentiments have certainly been impacted by the changes. 

Sonam Srivastava, CEO and founder of investment research firm Wright Research, said that the announcements have sent some shockwaves in the derivatives markets, particularly among short-term traders who look to book profits regularly. Srivastava claimed this will have a ripple effect on the trading volumes on NSE and BSE since there was a huge surge of futures and options (F&O), intra-day traders after the pandemic, which contributed to the trading turnover. 

As per the latest SEBI’s monthly bulletin, the equity derivatives volumes of the two bourses saw a whopping 71% YoY growth to INR 9,504 Lakh Cr in May 2024. 

Srivastava added that there is also a likelihood of short term investors like derivative traders now looking to invest in long-term investment tools as mutual funds which will attract comparatively less taxes.

Online discount broking platform Angel One’s senior vice president Aamar Deo Singh told Inc42 that the budget sprang a surprise in the form of hiking LTCG, STCG & STT on derivatives. ”While LTCG would have an impact on the long-term investors, STCG would primarily impact the trader community. Hiking the STT on derivatives will lead to higher transaction charges for the derivatives traders and it will be interesting to see how that impacts the overall volumes on the exchanges.” 

Will Zerodha, Groww Face The Heat?

While F&O and intra-day traders will now have to shell out more taxes, this group of investors also contributed to the revenue and user growth (more than 80%) for discount broking such as Zerodha, Groww and Angel One.

Brokerage fees from active retail traders (flat fees for each F&O trade and intraday order and  equity delivery) has been one of the major sources of profits for brokers such as Zerodha, Groww and Angel One, particularly as the number of active retail traders has grown exponentially in the past year. 

Zerodha’s operating revenue grew 37% to INR 6,832 Cr in FY23 from INR 4,977 Cr in the previous year. Fees and commission charges accounted for 84% of the revenue at INR 5,727.2 Cr.

Groww’s operating revenue more than tripled to INR 1,277.8 Cr in FY23 from INR 351 Cr in the previous fiscal year. At 95.9%, a majority of its revenue came from subscriptions and commissions fees in FY23.

For Angel One, broking fees constituted 65% of its overall revenue in Q1, FY25  which increased marginally  QoQ to INR 1,405 Cr.

Inc42 reached out to Groww, Upstox for comments on how the tax changes impact revenue. Our article will be updated as and when these startups respond. 

However, Zerodha cofounder and CEO Nikhil Kamath tweeted earlier in the day that the hike on STT would have up to 66% impact on tax collections. Zerodha collected INR 1,500 Cr through STT from its users last year, and if trading volumes don’t drop, Kamath expects this to go up to INR 2500 Cr annually, from October. 

Though Kamath did not elaborate on how the increase in various taxes for an active retail trader will affect the trading activity on Zerodha or decline in user base, analysts we spoke to said that discount brokerages have seen a huge bump from the surge in F&O, intra-day trading. 

“Zerodha contributes 20% to the retail trading volumes of stock exchanges in India. Groww’s active user base was more than 11 Mn in June. If the idea of the budget was to slow down the momentum of retail trading activity, then not only the stock exchanges, but also the broking companies which have the highest market shares will get hit,” a Bengaluru-based wealth management executive told Inc42 on the condition of anonymity. 

[Edited By Nikhil Subramaniam]

The post Budget 2024: Traders Reel Under Capital Gains Tax Shock; Will Zerodha, Groww Take A Hit? appeared first on Inc42 Media.

In a yet another setback to BYJU’S, the beleaguered edtech startup has been locked out of more than 100 BYJU’S Tuition Centre (BTC) locations across the country. 

Documents accessed by Inc42 show that owners of the commercial properties housing these BYJU’S centres have evicted the company for unpaid rent and electricity dues over the last 2-3 months. 

BYJU’S Tuition Centre locations in UP, Bihar, Jharkhand, West Bengal are already closed due to such evictions. In other locations, the company is being locked out by the landlords. 

As per the documents seen by Inc42, BYJU’S has not paid water, electricity and garbage collection bills for the tuition centres that are still functional, whereas the rent for these centres is also pending for several months now. 

Queries sent to BYJU’S over the closure of tuition centres didn’t elicit any response. The story will be updated as and when the company responds. 

In March this year, BYJU’S denied the reports of tuition centres shutting down. The company claimed that 262 such tuition centres out of a total of 292 were functional after more than two years of operations. 

As Inc42 reported at the time, under the BYJU’S 3.0 strategy the company had looked to rationalise the costs associated with operating the offline and online learning business. Several BTCs were transformed into hybrid learning centres and the teaching staff was told to take a pay cut and new teachers were hired at low salaries. 

However, sources now claim that this has severely deteriorated the quality of learning and teaching at many of these centres. The rate of new enrollments has slowed down and the company is seeing high student attrition rates as parents have asked for refunds due to the quality concerns and the company being locked out of the tuition centres.  

What This Means For BYJU’S

The BYJU’S Tuition Centre business was launched with much bullishness in February 2022, and at the time, the company claimed it would be investing $200 Mn to expand this vertical. But just over two years later, it seems this bet has failed to bring in the results expected. 

In the past year, offline or hybrid learning has become the lifeline for many edtech companies, including BYJU’S, Unacademy, Vedantu and PhysicsWallah. These unicorns looked to expand their offline presence in test prep and K-12 learning. 

This at a time when the sector has seen a slump in the demand for online courses after the pandemic boom. 

As such, the disruption in the offline business and the BTCs is a massive blow for BYJU’S which is already under the strain of cash crunch, a battle with investors, insolvency cases and unpaid vendor and employee dues. If BYJU’S is forced to scale back from key cities, it would be a crippling setback as the company is already struggling to keep up with its monthly payments, as reported over the past several months. 

Incidentally, just as Inc42 learnt about the disruption in the BYJU’S Tuition Centres business, the National Company Law Tribunal (NCLT) admitted the plea by the Board of Control for Cricket In India (BCCI) for initiating insolvency proceedings against BYJU’S on Tuesday (July 16).

[Edited By Nikhil Subramaniam]

The post Exclusive: Crisis-Hit BYJU’S Locked Out Of Over 100 Tuition Centres Over Unpaid Rent appeared first on Inc42 Media.

Hospitality giant OYO has come to the IPO table twice and left without a bite. While the company will refile the draft prospectus for its much-anticipated initial public offering soon, the focus has turned to OYO’s efforts to refinance debt ahead of the public listing. 

According to sources, the OYO IPO is likely to be pushed back by six months to a year, especially as the company awaits the terms of the refinancing deal for the $660 Mn Term Loan B availed by founder and CEO Ritesh Agarwal to buy back shares from investors in 2019. 

The IPO postponement is largely because of the material implications on OYO’s financials from this refinancing of this loan, which was already restructured in 2022. 

OYO is said to be actively looking for a pre-IPO placement round cumulatively raising $100 Mn – $150 Mn from various fund offices, HNIs  albeit at a much lower valuation than its last fundraise, when it commanded a valuation of close to $10 Bn. Top sources privy to the ongoing funding developments within the company said that the company has raked in $100 Mn from a clutch of investors and the announcement is likely to happen next week.

While Inc42 could not verify the deal structure, it is said to involve a secondary share sale even as the company’s largest investor SoftBank planning to hold on to its 46% stake in the hospitality startup.

OYO’s Turnaround Towards Profits

The refinancing of around $660 Mn (approx INR 5,300 Cr) of the pending Term Loan B amount  which is $450 Mn will help the company save INR 124 Cr – INR 141 Cr  per annum and will have material implications on the FY25 financial performance. 

“The refinancing will reduce interest rate from 14% to 10%, lead to considerable annual savings and extend the repayment date to 2029. OYO’s operating costs improved to 14% of top line revenue in FY24, from 19% in FY23. Costs were cut across the board, which also led to layoffs,” as per our sources close to the company management.

This is in line with company’s claims of turning around the INR 1,000 Cr net loss in FY23 to INR 100 Cr net profit in FY24. OYO is said to have significantly cut down its employee costs by laying off nearly 600 employees even as lease related costs shot up. 

CEO Agarwal further said that the company had logged eight consecutive quarters of profitability in FY23 and FY24, and had cash reserves of INR 1,000 Cr. While OYO is yet to file its audited financial statements for FY24, the company seems to have turned things around in a major way. 

Yes, the debt restructuring is a challenge that is yet to be overcome, but from a business model and revenue perspective, the turnaround is evident and nothing short of a remarkable feat for OYO, where there have been questions for years about profitability. 

So what really worked out for OYO in FY24?

Sharp Focus On Spiritual Tourism

In January 2024, Ritesh Agarwal was one of the few startup founders, officially invited for the Ram Mandir consecration ceremony in Ayodhya. The invitation came after OYO signed up more than 60 new properties and homestays in the temple town to cater to the influx of tourists. 

This is not an isolated incident but a concerted push by OYO to cater to the millions of travellers who visit places of spiritual or religious importance. 

Besides Ayodhya, OYO has targetted Katra (in Jammu & Kashmir) as well as holy sites in Uttarakhand and other spiritual hotspots in the past year. In January this year, OYO announced that it will add 400 properties in popular destinations for spiritual travel including locations such as Puri, Shirdi, Varanasi, Amritsar, Tirupati, Haridwar, and the Char Dham route by the end of this year.

The sharp focus on spiritual travel has shown big returns. “The pilgrim stays don’t need much of a facelift since pilgrims require basic facilities to stay for 3-5 days when they are on the move. Religious tourism has been a key driver of growth for OYO especially this year,” a hospitality sector analyst told us.

As further proof, the company claimed a staggering 350% increase in searches for Ayodhya on OYO over the past year. 

Sports Tourism & Corporate Bookings Grow

Cricket is often called a religion in India and OYO seems to have cashed in on the holy sites for cricket fans around the country. 

India hosted the ICC World Cup in 2023 and OYO increased its presence in the host cities with the addition of 400 hotels across the country strategically situated near the host stadia. 

“In 2022, OYO did delist many hotels from the platform due to tiffs with hotel partners and since there was revision of contracts. However more hotels were onboarded in 2023 and 2024,” a source, who is privy to the company’s strategy, told Inc42.

Besides sports travel, corporate travel bookings have also shot up last year and this year leading to expansion in medium budget hotels. The company said earlier that it saw a 20% growth in the revenues in H1 2023 on the back of adding nearly 2,800 corporate clients in the same period. 

Sources within the company stated that OYO has onboarded 15,000 corporate accounts and more than 10,000 travel agents, which has significantly improved the revenue mix for OYO, and allowed the company to rely on two separate growth engines. 

Tapping First-Generation Hoteliers 

In 2023, OYO launched the inaugural cohort of its accelerator programme under which the company partnered with the first-generation hoteliers. The company is today running 1,000 hotels under the project. In March, 2024 OYO tied up with JP Morgan to offer a credit facility for these entrepreneurs.

Besides helping these hotels scale up and grow, OYO earns extra commissions from these hotel partners and it also helps them avail credit facilities which also comes with a revenue component. 

“One of the reasons why OYO has been successful in tying up with first generation hotel owners is that the operations are running far more smoothly than the legacy hotels. There are less conflicts of interests and better revenue sharing percentages in this tie-up and each entrepreneur is running 2-3 hotels under the programme,” a source added. 

Restructured Inventory, Focus On Branded Hotels

OYO’s brand is built around its proposition for the budget traveller. But in FY23, the company shed a lot of its inventory of rooms to focus on profitability. As per our sources who are privy to the internal business and revenue strategy of OYO, the company delisted thousands of hotels in FY23 following conflicts of interest and tussles with hotel partners. 

“The first shift was to restructure its hotel inventory in India. It stopped chasing growth in terms of the number of hotels. The culled its low-performing and low-customer experience hotels. A large part of this clean-up played out in FY23 where its hotel count decreased from 12,000 to 8,000,” the source mentioned above added.

Despite a massive drop in the number of hotels, OYO’s gross booking value or top line revenue increased substantially to INR 3.9 Lakh per hotel in FY23 from INR 2.19 Lakh per hotel in FY22.

“There was increased focus on customer reviews and hotels were accorded Super OYO tag based on customer ratings. This also led to an increase in the footfalls for Super OYO hotels. This is akin to the Superhost tag on Airbnb,” the source added. 

Following this, the company increased the number of hotel partners in FY24, but the updated GBV numbers for FY24 are not available yet. Those in the know told us that the premium category drives revenue growth, but this space was largely captured by legacy hotels. OYO zeroed in on some properties to onboard them and improve visibility and also launched new brands. 

According to a Hotelivate report, the branded and organised hotel sector in India closed 2023 with decade-high numbers for occupancy of 66.1%, average daily rate of INR 6,869 and revenue per available room (or RevPAR) of INR 4,537, which is nearly double of FY23. 

For instance, in April 2024, OYO launched a joint venture with lead investor SoftBank under the luxury hotel chain brand ‘Sunday’. These properties have been launched in Jaipur, Vadodara and Chandigarh, with more cities lined up. 

Improving Take Rates With Revenue Sharing Strategy

Several years ago, OYO onboarded thousands of hotels with a minimum guarantee for revenue, but at the time its focus was on expansion. 

Now, the focus is on revenue, which means the company has turned to a revenue-sharing strategy with the onus now on hotels to improve the infrastructure, even as OYO will give them a broader access to the consumer base, marketing tools and technology. 

It charges partner hotels 30% on average in commission these days, with the revenue sharing varying according to hotel’s frequency of bookings and how much value it is offering the platform. 

While the earlier minimum guarantees posed challenges such as cash burn and reckless spending on low quality hotels, the new revenue sharing model allows the company to target more premium hotel chains for partnerships. 

Sharpening Focus On Overseas Markets

The final piece of the puzzle seems to be OYO’s focus outside India. 

Sources close to OYO claim the company has scaled down overseas from 80 geographies to 35 today. This also means a bigger focus on the markets that are bringing in revenue and where the company does not have to go up against big competition. “OYO set up nearly 400 rooms in major Chinese cities. However it has driven its focus away from China to the UK and few cities in the US now,” sources further added. 

OYO faces stiff competition in Europe and many large cities in the US in the vacation homes segment , but this is less of a problem in Nordic countries, Southeast Asia as well as parts of the UK and US which regulate platforms like Airbnb. These markets have come to the fore for OYO in the past two years.

Further, there has been a 21% increase in the overseas travel from India compared to 2019 with a greater uptick in the first quarter of 2024, according to the MasterCard Economics Institute’s latest report on the back of larger demand from middle class families. 

“Surprisingly, markets such as the US and UK also grew, perhaps due to the strong South Asian and Indian diaspora in the hotelier business in these countries and the value hunting by customers due to the tepid economy,” sources privy to OYO’s business growth told us. 

Can OYO Refinance In Time?

While the sharper focus on the unit economics, business model and strategy have seemingly delivered the results from a financials perspective, the next big challenge for OYO will be to show that its past indebtedness will not be a major long-term problem. 

Profitability is the biggest demand by public markets investors, and many new-age tech companies such as OYO which wanted to list in 2021 spent the last two years figuring out the answer. It seems OYO is ready now, but the final hurdle will be the terms of the refinancing. 

The timing cannot be better for OYO with the IPOs of TBO Tek and ixigo this year showing that investors have a lot of appetite for new-age stocks, but almost all of these companies came to the IPO table with a consistent record of profitability. 

Now, OYO has to prove that its turnaround in the past year was not a flash in the pan and that profitability can be sustained for the foreseeable future.  

[Edited By Nikhil Subramaniam]

The post Booking Profits: How IPO-Bound OYO Turned Things Around In FY24 appeared first on Inc42 Media.

Quick service restaurant (QSR) chain KFC has become the latest food company to join the Open Network For Digital Commerce (ONDC), Inc42 has learnt. 

KFC has roped in Magicpin to help it with tech integration, catalogue assortments, and logistics capabilities for joining the government-backed network, sources said. 

The QSR chain has begun a pilot programme in Gurugram on ONDC and the nationwide roll out is expected soon. 

“More than 1,000 KFC stores are expected to join the ONDC network within the next one month,” one of the sources said. 

Query mails sent to ONDC, Magicpin, and KFC on the development didn’t elicit any response till the time of publishing this story.

The development comes at a time when a number of big brands are joining ONDC amid an uptick in orders on the network. Earlier this year, Domino’s and McDonald’s went live on ONDC. 

Meanwhile, Zomato-backed Magicpin was among the first few big names to join ONDC. It has since then helped multiple food companies like Rebel Foods, McDonald’s, Burger King, Wow! Momo, Pizza Hut, Nirula’s, Krispy Kreme, Taco Bell, Barbeque Nation, Barista integrate with ONDC.

Amid all these, a number of large restaurants are also mulling joining ONDC to scale up their online business due to the increasing take rates of food ordering giants Zomato and Swiggy, the aforementioned sources said.

“The take rates of buyer applications on ONDC still remain much lower compared to those of Swiggy and Zomato, despite the surge in order volumes on ONDC,” an industry source said. 

ONDC Plans Sharp Reduction In Discounts 

A large number of restaurants and food chains began joining ONDC last year as the latter introduced a slew of discounts for network participants like Paytm and Pincode for food orders. These discounts, which are revised every few months by ONDC, have helped attract customers.

The discounts are offered to network participants based on the number of orders. These discounts are then used by the participants to run promotional schemes.

However, ONDC recently told participants that it plans to reduce the incentives offered to them by about 75%. It also asked the participants to not adjust the discounts for tax calculations.

“The Buyer apps are free to structure the pricing interventions but shall not adjust these for the purpose of tax calculation, especially GST. Thus, GST shall be computed by each participant in the transaction at the gross value i.e. value without adjusting such transaction level discounts, cart level discounts, subsidised delivery etc,” ONDC said in a letter to the network participants, as reported by Moneycontrol. 

However, the reduction in incentives offered to network participants is not expected to have any major impact on the number of food orders, the sources said. They added that the buyer side apps on the network are charging low take rates currently to grow their user base, making their offerings cheaper compared to Zomato and Swiggy.

ONDC recorded 1 Cr monthly transactions in June, including 14 Lakh in the foods and beverages category and 8 Lakh in the grocery category, the sources added. The number of transactions on the network doubled last month from 50 Lakh in December 2023. 

The post Exclusive: Now, KFC Marks ONDC Foray With Pilot In Gurugram appeared first on Inc42 Media.

Prosus, one of the most active investors in the Indian startup ecosystem, is gradually undergoing a shift in its India strategy. The Dutch investment major’s focus has turned from large bets and buyouts in India to seed and early stage investments. 

Notably, Prosus has poured in more than $7 Bn into Indian startups so far, according to data from Inc42 and Tracxn, mostly through large ticket sizes and investments in unicorns such as Swiggy, Meesho, Pharmeasy, The Good Glamm Group, Urban Company among others.  

The investment giant’s volume of large deals has fallen consistently since 2021 from 10 deals to five such deals in 2022 and then 3 in 2023, and just the one late stage deal in 2024. In contrast, Prosus had invested in more Series A rounds in the past few years than ever before — two in 2021, five in 2022 and another deal in 2023. 

In February 2023, Prosus took a seed stage bet for the first time in India, when it invested in Bengaluru-based Kratos Studios in an INR 160 Cr round. Prosus also participated in the $26 Mn seed round for Gurugram-based lifestyle platform Lyscraft, where Peak XV was the lead investor.

The VC giant has also turned its focus to investments in AI platforms such as EMA, where it invested in a $35 Mn seed round along with Accel and others. Besides India, Prosus also entered seed stage deals in Australia and the US, with a total of six seed stage deals since February 2023.

This apparent shift in strategy comes on the heels of Prosus having rejigged its top brass in India with Ashutosh Sharma (since April 2024) now overseeing investments in India and Southeast Asia.

The investment group is also undergoing a leadership change for its global operations, as iFood chief executive Fabricio Bloisi took over as CEO and head at Naspers and Prosus in May, 2024. Incidentally, iFood is part of Prosus’ portfolio in Brazil and reported $96 Mn in operating profits in FY24.

Prosus’ Large Bets Tank

It’s not just Prosus, of course. We have written about marquee investors such as Tiger Global, Accel and Peak XV Partners going through a similar downturn in their respective portfolios. While Peak XV has seen plenty of exits from public listings, it must be noted that the majority of the startups in its portfolio are still loss-making. 

Just like Tiger Global and Peak XV, Prosus too has taken a shine to early-stage investments, competing and collaborating with other early-stage investors. 

In contrast to the success of some of its non-Indian bets such as iFood and OLX Group, Prosus is having a tougher time in India. 

The biggest dent in Prosus’ India plans has come from BYJU’S, a $500 Mn+ investment which has now been written off. Besides this, the likes of Swiggy, Pharmeasy, Meesho, The Good Glamm Group and others in its India portfolio are grappling with losses, with Urban Company being an exception of sorts.  

The $118 Mn investment in Pharmeasy, as per an earlier statement, has also been marked down, and Prosus was left with no option other than to participate in Pharmeasy’s rights issue this year which valued the company at a 90% discount.

Fashion ecommerce marketplace Fashinza, where Prosus co-led a $100 Mn funding round in 2022, is now reportedly planning to return money to its investors after its business model found no footing. 

The investor also wrote off its $38 Mn investment in Zestmoney last year, when the company shut down due to operational challenges.

Further, Prosus’ only agritech bet in India, Dehaat in which the investor holds a 11.1% stake, is challenged with cash flow, internal control issues with losses having soared by 94% to INR 371 Cr in FY23  as the overall B2B marketplaces witness a sluggish growth. 

Hopes Rest On IPOs

Coming back to Prosus, the investment giant will be eagerly looking forward to the IPOs of Swiggy, Eruditus and PayU India as a silver lining in these dark clouds. However, it must be noted that neither of these three companies are profitable as of their last reported financials. 

Prosus’ interim CEO Ervin Tu had earlier stated that PayU India was IPO-ready and looking to list on stock exchanges in the latter half of 2024. The Dutch investor is also banking on PayU-operated LazyPay’s lending biz in India which is looking to pilot SME loans besides the existing consumer loans vertical. 

Swiggy, which has gone for a confidential pre-IPO filing route, is also expected to list by the end of the year. The food delivery and quick commerce giant is expected to cross INR 10,000 Cr (~$1.25 Bn) in revenue for FY24, as reported by Inc42 earlier, but the company is likely to remain in losses despite this revenue milestone. Swiggy has claimed that its food delivery business turned profitable in FY23.

Prosus also holds around 12% stake in Singapore-domiciled edtech startup Eruditus which is in the process of reverse flipping to India before a potential IPO. The edtech firm has reported a revenue of $400 Mn in FY23 with improvement in adjusted EBITDA losses to INR 422 Cr in FY23 from INR 1,288 Cr in FY22.

As per investors and fund managers that we spoke to, the thesis for late-stage investments is built around exit horizons of 4-5 years. This is in stark contrast to early-stage investing, which is often called patient capital. 

For any large investor like Prosus, the stakes are considerably higher when it comes to such late-stage bets. Particularly because exits through secondary sales are less feasible at this stage. So the dependence on public listing is higher for investors such as Prosus.

Pratekk Agarwaal, founder and general partner at GrowthCap Ventures, believes institutional investors such as Prosus, which typically holds more than 10% stake in a startup, are bound to protect their capital interests by pushing for exits. 

In fact, Swiggy (where Prosus owns a 33% stake) was given an IPO deadline for 2024, which led to a series of cost-cutting measures in FY23 and FY24, including layoffs, restructuring of verticals, and curbing of marketing expenses. 

Unlike Swiggy, which is close to turning around its losses as per sources in the company, the likes of BYJU’S and Pharmeasy are the more bitter pills that Prosus has to swallow. Here, the path to an IPO has been delayed indefinitely as these startups will first look to keep their business afloat, improve their cash flow health, before even considering a public listing.

“The times are tough for founders and large investors alike. With late-stage deals, there has to be a good amount of conviction around the certainty of exit options. The value erosion in companies coupled with weak public market sentiments for loss-making startups have delayed IPO timelines. And at the same time there were questions posed around their profitability and corporate governance lapses,” Mitesh Shah, cofounder of Inflection Point Ventures and partner at Physis Capital, added. 

According to him, when these companies were raising large amounts of capital in Series C, D rounds during the funding peak of 2021, investors were convinced they would also reach profitability on the back of growing behaviour of online consumer consumption of products and services. But the downturn of the past two years and the consequent drop in consumer spending outside the metros changed this tune.

FOMO Comes Back To Bite VCs

In the case of Prosus, the firm turned its focus from China to India due to overriding regulatory concerns in China in 2022 trying to divest its 25% stake in Chinese ecommerce giant, Tencent. Prior to that Prosus listed on Amsterdam and Johannesburg stock exchanges in 2019 with Naspers as a majority shareholder and the rest owned by the public investors. 

But as GrowthCap’s Agarwaal pointed out that markets have changed drastically in a period of 2-3 years. “In each sector today, we have one or two major players who now have more than 80% of the market share and revenue. This wasn’t the case in 2020 or 2021. Funds which had raised plenty of capital in the post-Covid zero interest rate policy regimes looked to bet big on dozens of deals. You can say there was a FOMO among investors back then, which is gone now,” he added. 

Indeed, there has been plenty written about corporate governance lapses, reckless expansion and acquisitions fuelled by VC money and even fraud which have dented the investor faith in late-stage bets to some extent. 

According to Navin Honagudi, founder and managing partner of growth stage fund Elev8 Partners, identifying profitable companies for VCs was a herculean task back in 2021. The market was uncertain and there was a likelihood that many of the companies that raised funds would break through and turn profitable. 

But now, there is a demand-supply gap in the late-stage startup ecosystem with companies chasing capital and investors staying away from uncertain business models. 

As one founder of a growth-stage B2B ecommerce marketplace sheepishly told us, fund managers are being pressured by their limited partners to take cautious bets and they would rather have VC firms sit on the accumulated dry powder, than enter large ticket deals quickly. 

The alternative for large VC funds is early-stage investing, or chasing emerging areas in India such as AI development, semiconductor manufacturing and other deeptech segments.  

Besides Prosus, we have seen the likes of Tiger Global, Peak XV Partners, Accel and others jump into the early stage bandwagon. While Peak XV has Surge, Accel has launched Accel Atoms — dedicated platforms for early-stage investments. Prosus or Tiger Global do not have such platforms but their early stage deal volume has grown significantly in India from 2022.

According to some fund managers we spoke to, large VCs are now averaging out their losses by building larger portfolios rather than banking on select founders or startups for returns.

“The bigger VCs are testing early-stage markets and writing $3 Mn-$5 Mn cheque sizes for 20%-25% stake in startups, where they can stay invested for the long term. They are hedging bets between early and late investments,” GrowthCap’s Agarwaal added. 

Elev8 Partners’ Honagudi believes this swing to the early stage is part of a market cycle, where larger funds managing billions of dollars in AUMs look to have the right kind of mix in their portfolios. “This happens once in 2-3 years when markets evolve,” he added.

Others believe that early-stage deals offer far more flexibility to investors who can double down on emerging technology and startups in these areas. This also allows funds to direct operations or business models which is not always possible with late-stage firms. 

“As an investor, your ability to take risk at an early stage is much higher. Plus we can manoeuvre around any risk in the business model and in case of success, the returns will be much higher. You also can derisk your portfolio by betting on more startups rather than focussing on the handful of late stage startups in the portfolio, which may not deliver the right kind of returns,” IPV’s Shah added. 

The New Playbook

One thing is for certain: investment playbooks are constantly evolving. In 2023 and 2024, deliberations between investors and founders have stretched over term sheet points, profitability metrics and other legal clauses in contracts. 

“Because of extended due diligence processes, the timelines are delayed which is why the late stage funding has seen a lull. Currently I know of funds who are looking to invest only into profitable companies. Investors are definitely pushing big startups towards IPO. Moreover, startups are expected to have absolute clarity on their IPO timelines,” Honagudi of Elev8 Partners told Inc42. 

Similarly, GrowthCap’s Agarwaal pointed out that protection of investor rights over dilution and corporate governance lapses such as revenue inflation or over-indebtedness have become pivotal for lead investors. 

This is especially true for investors such as Prosus or other large VCs who go on to acquire more than 10% stake in late stage companies. “At that level, you want to protect the capital you are investing, and hence investors now wish to scrutinise every detail minutely, which is only fair. We have seen many conditions now being put into discussions while signing big cheques, such as founder exit or IPO conditions, specific hiring and acquisition strategy, and sharing data with investors,” he said.  

Critically, vanity metrics such as gross merchandise value (GMV) or downloads or pageviews have been now replaced by more dependable metrics — revenue, monetisable user base, cash reserves, cash flow among others. 

Even as VCs shift their focus to early-stage bets, late-stage deals are slowly springing back to life. Flipkart raised a large round from Google; Zepto is on a funding spree, while Meesho, Lenskart, PocketFM, Rapido have also raised large rounds. 

Pertinently, some of these large rounds have come after 12-24 months of hardships for many of these startups, which included layoffs, cost-cutting and scaling back from loss-making verticals. Plus, many of these companies have outlined plans to list publicly by 2026. 

What will be interesting to watch is how Prosus and other VCs with billions of dollars in dry powder move forward as more and more startups turn their loss-making ships around. Will 2025 see the return of large VCs signing mega deals after the lull of the past two years?  

[Edited By Nikhil Subramaniam]

The post Stung By Unicorn Losses: BYJU’S, Swiggy Backer Prosus Takes A Fancy For Early Stage Bets In India appeared first on Inc42 Media.

In 2022, physics teacher Mayank Kumar moved from his home in Uttar Pradesh’s Bijnor to Kota in Rajasthan. An edtech unicorn offered him an annual package of INR 32 Lakh per year and free accommodation in Kota, renowned as the coaching centre capital of India.

Kumar, who taught physics to engineering aspirants, said several teachers like him made the journey from their home towns to coaching hubs in 2020–21 and even in 2022-23. Kota, in particular, became a battleground for teachers as edtech companies and other legacy players looked to on-board ‘star’ educators. 

“The salaries being offered touched sky-high levels and the teachers were literally being poached from local coaching institutes. Some friends of mine even became celebrities on social media and “crorepatis in no time,” he told Inc42.

The edtech poaching wars had also intensified as startups looked to compete with legacy coaching institutes in test prep space. Some teachers even earned as much as INR 1 Cr per year, as we reported back then. 

But the hype has now well and truly fizzled out. Academicians like Kumar have returned to their hometowns and are back on the job hunt as edtech startups cut costs across the board. “Today, even annual pay of INR 10 Lakh is good enough,” Kumar says. 

50% Decline In Edtech Salaries

Data sourced from talent recruitment firms Xpheno and CIEL HR Services shows that the salaries of most key edtech roles across various departments have seen as much as a 50% drop from the highs of 2020-2021.

“The salary packages in edtech have since 2022 undergone corrections and calibrations to return to normalised scales. The workforce optimisation and continued cost shedding has seen job offer packages shrink by 30% to 80% compared to the previous high of 2021 and early 2022,” Prasadh MS, Workforce Research and Communications Specialist at Xpheno said. 

Since the peak of edtech funding in 2021, startups have had to pivot to hybrid models from online-only learning. The pivots forced startups to review the high employee costs and other customer acquisition spends. 

The cash crunch due to lack of growth on the online learning front resulted in nearly 15,000 layoffs and dozens of shutdowns. Startups such as Lido, Udayy, SuperLearn, DUX Education, Frontrow, Crejo.fun among others shut down operations. 

“As projections over commercial prospects for the sector spiked and valuations climbed, edtech ventures went all out to hire and hoard talent at high costs to create capacity for expansion. The overall buoyancy in hiring across sectors saw offer packages grow and multiply in value and volume,” Prasadh added.

According to Inc42 data, edtech startups raised a mere $283 Mn in 2023, compared to $2.4 Bn in 2022 and $4.73 Bn in 2021.

Notably, edtech unicorns like BYJU’S, Unacademy have accounted for a majority of the layoffs, with both giants having to scale back in verticals. The layoffs meant increased the talent supply in the edtech market with thousands of job seekers now ready to work at 50%-60% lower salaries than what they drew before. 

Salary Corrections Across Edtech Roles

BYJU’S problems are well publicised and Inc42 has also reported exclusively on the startup rejigging its hiring strategy specifically from a cost perspective. Besides this, even Unacademy is reviewing costs associated with its sales team, as we reported. 

Even as hiring remains muted, recruitment firms say it has not come to a total halt. When it comes to sales or business development (BD) functions salaries have seen nearly 80% drop. 

Aditya Narayan Mishra, CEO of CIEL HR, believes that the companies are extending their runway by cutting costs wherever possible. “Secondly, the talent market has understood the ground reality and is open to salary rationalisation; salary expectations of candidates while changing jobs have significantly come down as well. These dynamic forces have been able to support the new benchmarks in salaries,” he added.

Besides this, salary packages in finance have dropped by 30%-50%, whereas marketing roles are seeing offer letters with 40%-60% lower salaries, according to data shared by Xpheno. Similar drops have been observed in salary for teachers, engineering roles and sales. 

Prasadh added that this much needed rebalancing and correction has stabilised talent costs in the edtech sector for now and hiring has come down to record lows. “At the peak of the buoyancy, we had edtech players rolling out offers that were highly competitive and clearly to gain an edge over the offers that IT services and SaaS players were rolling out.”  

In particular, salaries for front-end engineers, one of the most in-demand roles in edtech, have seen more than 70% drop since 2021. As the slowdown in edtech began, front-end engineers were being paid around INR 12 Lakh to INR 26 Lakh per year in 2022, which has now dropped to INR 10 Lakh to INR 18 Lakh per year.

“At one point, BYJU’S, which has seen huge value erosion, was called a workforce giant with a strength of 50,000 employees paying very good packages, enviable bonuses which raised the bar in the industry. However, as companies like BYJU’S collapsed, so did the high salary trend and talent demand throughout the industry,” the founder of a skill development startup added. 

Edtech Salaries To Remain Flat?

Far from the over-optimism that the founders and investors placed on online only mode of learning, a hybrid model across K-12, test preparation and upskilling verticals is now assuming significance. Edtech firms like Unacademy, Physics Wallah, BYJU’S owned Aakash have in fact strengthened their offline business models which now contribute to a major portion of revenues. 

Other edtech startup founders also agreed that there is an industry-wide correction going on. “This shift is largely due to limited funding and an increased focus on revenue and profitability. Startups are placing the right value on talent and normalising the previous ‘pay highs’ and include variable pay components linked to the performance,” according to Anil Nagar, CEO of test prep platform Adda247. 

The Adda247 founder added that the changes reflect a more sustainable and stable approach within the industry, ensuring long-term growth and success for both companies and employees.

Recruitment experts say annual compensation or increments will not see a significant increase for the next few quarters. As layoffs continue, salaries will remain flat. “The negotiation bandwidth on new offers has returned to the 25%-35% range and in line with the pre-pandemic period,” Xpheno’s Prasadh said. 

It’s been a challenging time for edtech startups in the past two years, but there is also some optimism that the pain will give way to fortunes in the long run. “We see a silver lining on the horizon. One of our recent studies among startups shows that 65% of companies are planning to increase hiring in the coming 6 months [July-Dec],” CIEL HR’s Mishra added.

[Edited by Nikhil Subramaniam]

The post Edtech Startup Salaries Plummet By 50% In 2024 As Deep Cuts Continue appeared first on Inc42 Media.

Cash-strapped BYJU’S has reduced the fixed pay for new sales hires by a massive 90%, multiple sources said, after linking salaries of sales staff to their performance last month. 

Inc42 has reviewed offer letters offered to various inside sales associates in the past few weeks and the overall compensation being offered to inside sales associates is INR 4 Lakh per annum, which includes variable pay. The offer letters show fixed pay of INR 1.15 Lakh per annum, and variable pay (performance-linked) as a maximum of INR 2.8 Lakh per year. 

This effectively means that the in-hand salary of inside sales associates every month will be close to INR 10,000, compared to INR 35,000-INR 40,000 for the same profile till December 2023. 

BYJU’S has several openings for inside sales associates on its website, where it mentions the annual gross salary as INR 4 Lakhs, but this does not clearly state that the bulk of the salary is dependent on sales performance. 

In comparison, just six months ago, the Inside Sales Associate job postings on platforms such as LinkedIn mentioned annual compensation of INR 7 Lakhs, with INR 4 Lakh as fixed pay. Essentially both fixed and performance-linked variables have been reduced in the new offer letters.

When it comes to Business Development Associates (BDAs), BYJU’S has reduced the annual gross salary from INR 10 Lakh in late 2023 to INR 7 Lakh now. This includes INR 4 Lakhs per year as fixed pay and the rest as variables. as per the company website.

BYJU’S Goes Heavy On Cost-Cutting

The changes in the hiring budgets come amid the edtech giant’s push to get leaner under the BYJU’S 3.0 programme as we reported earlier. As part of this, last month, cofounder and CEO Byju Raveendran told 1,500 sales associates and managers that the company is moving to a performance-linked salary model under which monthly pay-outs would be linked to the sales brought in. The CEO also hinted that this could become the new way forward for the BYJU’S sales team, instead of a short experiment for May. 

In line with this, the company is said to have paid the May 2024 salaries of sales employees from the revenue collections it made in the month. 

However, BYJU’S still has salary and last due obligations for thousands of its former and current employees. This includes those who were let go in February and March 2024, as well as PF contributions for some of these employees for the months prior to their dismissals. 

BYJU’S had earlier claimed that it expects to clear all PF dues by June, but thus far, there has been no progress on that front. 

It remains to be seen whether the company continues its performance-linked pay system for June and the months ahead. Even though going by the annual pay offered to new hires, that seems to be the case. 

The company did not respond to Inc42’s questions on the new pay scale for sales hires. The story will be updated if and when the company responds. 

Besides cost cutting, BYJU’S is looking to push its sales numbers by lowering the prices of its courses. Sources further added that across the board there has been a 30-40% drop in pricing under this change.

It has significantly slashed the prices of various products including the BYJU’S Learning app subscriptions, tuition fees for BYJU’S Tuition Centres as well as the fees for online courses. 

BYJU’S has also integrated the educators team for online classes and BYJU’S Tuition Centre verticals. It has also hired educators at lesser salaries who now teach in a hybrid mode, as we reported in late April. 

Meanwhile, the company is still stuck in a legal tangle with its investors, vendors, and lenders. Raveendran, who is currently in the UAE (as per speculations), has shown a lot of optimism about turning things around, but the state of hiring and the low budgets paint a grim picture of austerity at BYJU’S. 

Harpreet Singh Saluja, president of the Nascent Information Technology Employees Senate or NITES, told Inc42 that BYJU’S new salary structure is a glaring example of capitalism gone wrong. He added that a fixed salary of INR 1.15 Lakhs is simply not enough to live on in many Indian cities. 

“With low salaries and uncertainty around bonuses, employees are in a tough spot financially. This race to the bottom in pay hurts everyone. It discourages talented people from working in such firms and pushes them to look for jobs in other countries. The government needs to take stricter measures to ensure companies adhere to minimum wage guidelines and offer fair compensation to workers,” Saluja added.

The post BYJU’S Slashes Salaries For New Sales Hires By More Than 90% appeared first on Inc42 Media.

Edtech giant Unacademy is accused of having changed its hiring terms for several candidates after floating offers letters for the role of business development associates (BDAs) and senior business development associates, multiple candidates told Inc42. 

The candidates were given offer letters as part of the startup’s extensive hiring drive for sales positions in March and April this year, but the terms of employment were changed soon after these initial offers were made.

Inc42 learnt that Unacademy issued revised fresh offer letters to several such candidates on the joining date, and added a seven-day training programme as a final round for screening candidates even after they had seemingly been given the offer letters.

Notably, this clause was absent from their original ‘Letter of Offer’ sent to candidates.

Inc42 has seen both the offer letters (original and the revised), along with the email communication, issued to the candidates who failed to clear the graduation mock call (GMC).

As per the new offer letters, the training programme concluded with the GMC test, and only those candidates who cleared this test would be offered the jobs for the BDA position, and even paid for the “time devoted towards passing the GMC”.

Some candidates Inc42 spoke with said they were puzzled to see on their joining date that they were not yet selected for the jobs and their employment hinged on them passing the GMC test. 

“There were several batches of 30-40 candidates who were earlier selected for BDA, senior BDA positions but were later asked to take a 7-day training (which was paid) and a GMC test thereafter… There was no such clause in the first offer letter. Eventually they [Unacademy] selected only 2-3 candidates from each batch,” a candidate said. 

The candidates added that Unacademy’s HR department was unresponsive when approached with questions about the GMC test.

Unacademy did not respond to questions on the changes in hiring terms for BDAs.

Some candidates also alleged that while many of them were selected for the inside sales vertical, the startup later told them that they would have to do field sales too. 

Many candidates, who were initially selected by Unacademy for the sales roles, were former employees of troubled edtech startup BYJU’S who were laid off earlier this year.

“Even the packages being offered now across the sales positions in edtech are almost 50% lower than what were being offered a year ago. BYJU’S laid off employees en masse, which has flooded the edtech market with job seekers,” according to the founder of a Bengaluru-based HRtech startup.

It is pertinent to note that Unacademy has also faced a fair share of problems amid the ongoing funding winter and the slowdown in the edtech sector over the last couple of years. Earlier this month, Unacademy-owned PrepLadder fired 150 employees as the company rejigged its sales strategy.

It’s not clear why the company has taken this step, but in recent months, Unacademy’s focus has primarily been on the offline learning space, where it competes with PhysicsWallah, Vedantu, BYJU’S-owned Aakash, Allen and other major players. The startup appointed Pratik Dalal as the CFO for the offline business and elevated Jagnoor Singh to the COO of the vertical. It currently has centres in 20+ cities across the country.

Unacademy’s Cost-Cutting Spree 

Amid the slowdown in the edtech sector, Unacademy, like many other edtech startups, laid off employees in multiple restructuring exercises over the last couple of years. As per Inc42’s layoff tracker, the startup downsized its workforce by over 2,000 employees during this period. 

The edtech giant also saw multiple exits of top-level executives over the past year or so. The following are some of those who left the startup:

• Arnab Dutta – Senior Vice President Strategy
• Vivek Sinha – Chief Operating Officer
• Abhyudaya Singh Rana – Chief of Staff, Chief of Compliance Officer
• Subramanian Ramachandran – Chief Financial Officer
• Siddharth Manchanda – General Counsel
• Tina Balachandran – Senior Vice President, Talent and Culture
• Sachin Aggarwal – Head Franchisee Business (Offline Centres)
• Karan Shroff – Partner & Chief Operating Officer
• Ashish Arora – Senior Vice President & National Head Academics

The aforementioned layoffs resulted in an improvement in the bottom line of the SoftBank-backed startup. In FY23, Unacademy’s loss reduced to INR 1,678.1 Cr from INR 2,847.9 Cr in the previous fiscal. Meanwhile, operating revenue rose 26% to INR 907 Cr during the year from INR 719.2 Cr in FY22. 

It must be noted that Unacademy previously poached educators/ trainers from rivals Allen Career Institute and Aakash Education Services, among others, at exorbitant salaries as part of its offline push.

However, in FY23, employee costs dropped 28% to INR 1,281.2 Cr in FY23 from INR 1,771.6 Cr in the previous fiscal year. The startup also brought down the payment to educators by 31% to INR 564.2 Cr during the year from INR 814.2 Cr in FY22.

In December 2023, Unacademy group CEO and cofounder Gaurav Munjal said that the startup’s cashburn reduced by 60% in 2023, and it had enough cash for a runway of more than four years.

The post Exclusive: Unacademy’s New BDA Hires In A Fix Over Mandatory Training & Quick Termination appeared first on Inc42 Media.

Paytm is on the cusp of losing its lead in the merchant payments and lending business. Even though it has over 40 Mn merchants registered on its platform at the end of FY24, the company has seen a drop in the number of transactions, the merchant loan business and is at risk of losing out to the likes of PhonePe, BharatPe, Google Pay and others in this space.

A look at the quarter-on-quarter numbers for Paytm vis-a-vis its merchants’ business indicates that a major problem is brewing for the Vijay Shekhar Sharma-led company.

The number of merchants only grew marginally by 3%, the lowest sequential growth in all of FY24. Plus, the value of loans disbursed fell by 63% QoQ and 58% YoY, along with a 4% drop in merchant transactions. Further, the active device (PoS machines, soundboxes) base fell by 1 Mn in Q4.

And all the while, competition is snapping at the heels to grab market share at Paytm’s expense.

The numbers make for bad reading, but analysts told us that Paytm can expect several quarters of tepid growth even in FY25. Winning back merchants and most importantly the confidence of lending partners will be critical for Paytm’s merchant business to get back on track.

Losing A Major Advantage

“Without Paytm Payments Bank by his side, VSS has lost a significant advantage in this battle. It was vital for merchant retention since many of them had savings accounts with the payments bank, thereby allowing the company to more easily upsell loans and other products,” a former business head at an NBFC lending to Paytm told us.

The person added that while Paytm transitioned merchants to other banks in the past two months, this was enough time for rivals to poach some of these merchants for their own subscription services and devices.

Not only was Paytm impacted because of merchant attrition, but it also had to migrate the auto-repayment or NACH mandates for merchants who were repaying loans through Paytm Payments Bank account.

This also led to some fear among Paytm’s lending partners who are said to have deployed their own collections and recovery teams. Notably, out of 30 million merchants base on the platform, around 60 Lakh merchants had savings accounts with PPBL.

Paytm Walks Away From Loan Recovery

Those familiar with Paytm’s merchant lending business claim NBFCs and banking partners were concerned about Paytm’s ability to recover or collect the loans adequately.

In fact, the consequences of this are already evident in Paytm’s Q4 disclosures. Paytm said that it has ended the collections side of lending for postpaid and personal loans verticals and is reassessing collections on the merchant loans business.

Instead, the company will focus only on loan distribution and is adding partners only for this model. Under this model, Paytm will not earn any collection or recovery fee but will also have to bear lower risk if there are any defaults.

In this case, the lender collects, and therefore, Paytm does not have to allocate capital for loan default guarantees.

Several industry executives we spoke with told us that merchant loan collections had slid before the RBI’s action on PPBL earlier this year, and with the suspension of the payments bank, a major channel of EMI collections has been blocked.

Thanks to the Paytm Payments Bank licence, Paytm could sign up merchants with an ACH mandate for its in-house bank. This helped it easily recover loans through auto repayment of EMIs by merchants.

Paytm Payments Bank had 0.83 Mn ACH debit transactions in September 2023, which fell to 0.64 Mn in December and then was at 0.66 Mn in January and February 2024, before disappearing from NPCI’s data.

According to industry experts, having its own payments bank was an advantage for Paytm, as it allowed it to bargain with lenders for higher collection commissions. But this advantage disappeared after February 2024.

So when Paytm hit a pause on its merchant lending business in February and March, its lending partners immediately deployed their own teams for EMI collections.

“It was not just about loan disbursals anymore. RBI had cautioned banks, NBFCs on asset quality deterioration in December and all lending partners were doubtful of Paytm resuming its loan business. So they activated their field collection teams. Even a two-month pause in lending has a substantial impact on their revenue,” a fintech focussed VC and a former NBFC top executive said.

Another Pune-based NBFC executive told us that the pause in merchant loans not only hit collections, but also made them rethink their business relationships with Paytm, which found itself on the wrong side of regulations

This means even as it resumes its merchant lending business, Paytm is likely to have to settle for lower commissions from banks and NBFCs even for the loan distribution. And it is also foregoing the additional revenue of commissions on the collections side.

A former Paytm senior employee claimed the company was being seen as having a very risky borrower base or low asset quality and this impacted negotiations on commission rates with lenders.

To its credit, Paytm claims in its Q4 disclosures that, “Asset quality for merchant loans has remained stable as GMV on these merchants was not impacted as they were our most engaged merchants, and we prioritised them for retention.”

But other experts believe banks were already in an advantageous position in these negotiations and companies like Paytm stand to lose any leverage they have if there are issues in their operations.

“The larger scrutiny by the RBI on digital unsecured loans may cast some impact on the margins earned by LSPs [such as Paytm] and this will also increase the competition among LSPs as the NBFCs and banks have incrementally reduced the growth into the digital loans segment after regulatory action of increase in risk weights on these loans” said Anil Gupta, senior VP and co group head for the financial sector at the credit ratings agency ICRA.

Decline In Merchant Devices

What worsens things for Paytm is that it is seeing a decline in the active device base i.e official QR codes, PoS devices and soundboxes. While Paytm was looking to transition many of the merchants using these devices to other banks, this also complicates the future growth of the merchant loans business.

A merchant with an active device linked to a Paytm Payments Bank account is not only a prospective loan customer for Paytm, but also is easier to lend to since recovery or collections happened through the same PPB account.

“Many lending platforms don’t consider the credit history of the merchant or the business when disbursing loans. Instead, they focus on the sales or transactions on the PoS devices. This also helps them recover loans more easily. Consequently, as the disruption happened across Paytm’s QR codes and PoS devices, this in turn impacted EMI repayments,” the analyst quoted above told us.

They added that with fewer active devices with a deep transaction history, the number of potential merchants that Paytm can lend to in the future also shrinks. We are yet to see the impact of this change and it will only be clear after the first two quarters of FY25.

Paytm’s Leadership Vacuum

What doesn’t help Paytm is that negotiations with banks and the growth of the merchant business were dependent on business leaders who quit the company in recent months.

Paytm has seen a spate of exits recently, which include Ajay Vikram Singh (CBO of user growth and UPI), Bipin Kaul (CBO of the offline payments business) and Sandeepan Kashyap (chief business officer of the consumer payments vertical) and most importantly Bhavesh Gupta who was the company’s COO.

Chairman and CEO Sharma who has taken a more central role in recent weeks has hinted at the appointment of top industry executives at leadership positions.

“The biggest thing that I’ve learned is that many times your teammate and adviser may not be getting it correct. And it is important for you, yourself to be taking care of it versus just letting a teammate or an adviser suggest what it should be,” Sharma said in March 2024 months after the RBI’s action on PPBL.

Experts feel Paytm needs to bring on board some credible names in the finance industry to help the company return to its growth trajectory, and most importantly rebuild relationships with banks, NBFCs.

“It cannot be denied that Bhavesh Gupta, in particular, was instrumental in helping Paytm secure major lender partnerships. Even though the company is trimming down its workforce now, it has to bring in a replacement who is a reputable name in financial services and brings his own individual credibility to Paytm,” another top executive at a Paytm lending partner said.

Paytm said its focus will be on corporate governance with the appointment of subject matter experts as advisors or independent directors to ensure the right leadership for corporate governance.

But the fresh leadership will also have quite a task on its hands even beyond governance. Paytm needs to win back the confidence of merchants, lenders and while it does so, the payments business has to pick up the slack. Here too, the company faces tough competition from well-entrenched players.

The super app formula will be critical for Paytm to improve its revenue mix and extract as much revenue as it can from each user, but the likes of PhonePe, Google Pay, Groww, CRED and others are also vying for the same piece. Can Paytm find its lost spark in FY25 and regain its lead in the fintech race?

[Edited by Nikhil Subramaniam]

The post From Loans To PoS Devices: Can Paytm Revive Its Hot Merchants Biz? appeared first on Inc42 Media.

There seems to be no end to BYJU’S woes. Ace investor TV Mohandas Pai and ex-SBI Chairman Rajnish Kumar will step down from the edtech major’s advisory panel next month.

The two will leave the advisory committee once their year-long tenure ends on June 30. In a statement, a BYJU’S spokesperson said that the edtech giant as well as Kumar and Pai have “mutually” decided not to renew the contractual agreement between them.

Meanwhile, in a joint statement, Kumar and Pai also claimed that their “engagement” with the company was only on a fixed-term basis for a year.

“Our engagement with the Company as advisors was always on a fixed term basis for a year. Based on our discussions with the founders, it was mutually decided that the tenure of the advisory council should not be extended. Though the formal engagement concludes, the founders and the company can always approach us for any advice. We wish the founders and the company the very best for the future,” Kumar and Pai said in a joint statement.

Commenting on their departure, BYJU’S cofounder and CEO Byju Raveendran added, “Rajnish Kumar and Mohandas Pai have provided invaluable support in the past year. The ongoing litigations by a few foreign investors have delayed our plans but their advice will be relied upon in the ongoing rebuild which I am personally leading”.

Meanwhile BYJU’S negated media reports that termed Pai and Kumar’s departure as a setback to the edtech firm.

“Characterising a routine move as “a setback” is exaggerated and attention-seeking. TLPL values the engagement with the Advisors and greatly appreciates all their efforts in navigating the company through turbulent times,” as per the company’s official statement.

Notably, in July 2023, after multiple board members including representatives of PeakXV Partners, Chan Zuckerberg Initiative and Prosus resigned from the board, BYJU’S had now appointed Rajnish Kumar and TV Mohandas Pai as members of its advisory council.

The troubled edtech firm had then said that the advisory council will guide the board and chief executive officer (CEO) Byju Raveendran in matters related to the company to bolster corporate governance guardrails.

However, the two industry veterans seem to have called it quits after just two months at the edtech firm. This comes at a time when the edtech major continues to grapple with a long list of issues. The company is under fire for a slew of reasons including delayed salaries, mass layoffs, a looming debt crisis, mounting losses and delayed financials.

For context, BYJU’S net loss surged 81% YoY to INR 8,245.2 Cr (close to $1 Bn) in FY22 even as operating revenues also rose over 120% to INR 5,014.6 Cr during the year under review, largely on the back of coaching arm Aakash.

The latest departures come amid the exit of key senior executives including India CEO Arjun Mohan and other C-Suite executives.

Not just this, the backers also banded together and held an extraordinary general meeting earlier this year to oust Raveendran and his family from the company. This came right after BYJU’S undertook a $200Mn rights issue at a valuation cut of from 99% from $22 Bn at which it raised capital during the last fundraise.

The investors have also filed insolvency cases against the edtech giant in the National Company Law Tribunal (NCLT).

Meanwhile, edtech seems to have formulated a new strategy, BYJU’S 3.0 to chart a new path ahead with its lean structure and fewer headcount to cut costs and chart a path to profitability.

The post Mohandas Pai, Rajnish Kumar To Step Down From BYJU’S Advisory Council appeared first on Inc42 Media.

Early stage VC fund 9Unicorns has rebranded itself to 100Unicorns and launched its second fund, 100Unicorns Fund II, with a corpus of $200 Mn to invest in 200 early stage startups. 

In a statement, 100Unicorns said that the new fund will also have a green shoe option of $100 Mn.

Apoorva Ranjan Sharma, cofounder of 100Unicorns and managing director of Venture Catalysts, told Inc42 that the new fund will follow the Y Combinator model in India and aims to provide support to startups right from the ideation stage.

“We aim to become the Y Combinator of India and will follow its accelerator model… From the current $200 Mn fund, we have already invested into 4-5 startups across robotics, healthcare verticals and a new groundbreaking business model… (We) will look to invest across other industries such as EV, defence, D2C ecosystem, SaaS , travel, fintech and others,” Sharma said. 

He said that most of the successful technology companies in the US were backed by Y Combinator and hence, it is imperative to have an accelerator in India on the similar lines which writes the first cheques for startups with strong business pitches. 

“In the US markets, global VCs like Y Combinator have generated more than 200 unicorns in the past few years. 100Unicorns wants to tap into this existing market in India to create the next unicorns,” Sharma said. 

The veteran investor said that around 60% of the fund’s corpus will be used to make first investments of $2,50,000-$3,00,000 in startups, while the remaining amount would be used for making follow-on investments of up to $3 Mn in portfolio startups. 

“We typically will help the startups across the first three rounds of funding and as they scale and raise large growth capital, we will help them connect with large VCs,” Sharma added. 

The fund also intends to use 15% of the fund capital to invest in startups based in the US, Middle East, Africa, and Asia.

Earlier, 100Unicorns (then 9Unicorns) closed its first fund at $100 Mn. It has invested in startups like VideoVerse, Trunativ, Zypp Electric, and Renee Cosmetics. 

Overall, the early stage VC fund invested in more than 140 startups across sectors like fintech, deeptech, enterprise SaaS, fintech, media, insurtech, and D2C from the first fund. Nearly 70% of the capital committed in the first fund has been deployed so far.

It counts VC firms including Peak XV Surge, Y Combinator, A91 Partners, Motilal Oswal Private Equity, Matrix Partners, Yournest & Lightbox among its coinvestors.

Focus On Corporate Governance

At a time when the Indian startup ecosystem has been hit by a number of cases of corporate governance lapses and frauds, 100Unicorns has roped in law firm Nishit Desai & Associates to advise its portfolio companies on corporate governance, Sharma said.

“The issue of corporate governance cannot be ignored  even in the early stages. The learning has been that even if you scale a company but its corporate governance is in shambles, it will suffer a fall. Hence, the focus is on roping in law firms for startups to establish a self-governance framework,” Sharma added.

The cofounder of 100Unicorns said that the new fund will also tie up with founders of various unicorns and soonicorns to mentor startups for building sustainable business models and getting the fundamentals right. 

Responding to a question about the rising use of AI, Sharma said that AI has become an imperative tool for startups to adopt and will not fade away. “I strongly believe that AI is not a hype and is similar to the Y2K boom which changed the internet economy forever. So, from a VC perspective, it is definitely a part of our focus,” he added.

The launch of the new fund comes at a time when a number of new funds have been announced to invest in Indian startups, despite the ongoing funding winter. Just last week, Inc42 reported that GrowthCap Ventures is looking to close its maiden fund at INR 50 Cr in the next couple of months.

Last month, Caret Capital and Ev2 Ventures came together to launch a new $50 Mn fund to invest in early stage Indian startups. Recently, Norwest Venture Partners also closed its 17th fund, which has India as one of the focus markets, at $3 Bn. 

The post 9Unicorns Rebrands to 100Unicorns, Launches Second Fund With $200 Mn Corpus appeared first on Inc42 Media.

GrowthCap Ventures, an early stage venture capital (VC) fund launched by former BharatPe chief business officer Pratekk Agarwaal, is looking to close its maiden fund at INR 50 Cr in the next couple of months.

“We have already raised 50% of the fund corpus and will close this in the next two months. We are looking to write 10-12 cheques this year in early stage startups (seed to pre-Series A),” Agarwaal told Inc42.

The fund will allocate 60% of its corpus for fintech investments, 30% for investing in SaaS startups, and 10% for deeptech startups.

Launched in August last year, the SEBI-registered Category-II single general partner-led alternative investment fund (AIF) marked its first close at INR 20 Cr in February this year.

The fund has already invested in Advance Mobility, a sustainable mobility startup, which mainly provides fleet services to ride-hailing giant Uber. 

Agarwaal said that it is an invite-only fund so that there is greater scrutiny on who will be the limited partners. GrowthCap Ventures boasts of limited partners like Beerud Sheth of Gupshup, Shankar Vailaya of Sharekhan, Naresh Naik of Irep Credit Capital, former chief digital officer of Kotak Mahindra Bank Deepak Sharma, Ankur Jain of InCred, Sanjit Nagarkatti and Gaurav Bhojak of IIFL.

Agarwaal said he is also aiming to launch a growth stage VC fund, ‘Winners Fund’, with a corpus of INR 250 Cr next year. The fund will aim to invest $2 Mn-$3 Mn in growth stage startups in fintech, SaaS, and deeptech sectors.

GrowthCap Ventures is an operator-driven fund. Besides providing equity and debt capital, it aims to provide mentorship, networking opportunities, and industry expertise to founders of portfolio startups.

In simple terms, operator-driven VC funds are those funds, which are led by those who have experience in the startup or the tech ecosystem in an operational role. Over the last few years, a number of operator-driven VC funds have been launched in the Indian startup ecosystem.

The Rise Of Operator VC Funds

The former BharatPe executive, who has also made investments and mentored startups, including Decentro, Vegapay, Klub, Karmalife, Fundly, Transbnk and Coverself, highlighted the emerging trend of top industry executives launching their own VC funds. 

According to Agarwaal, what is fuelling this trend of operator-led VC funds is that several executives, like him, want to associate with more than one startup. Such VC funds provide them the opportunity to not only invest but also mentor innovative startups.

He added that the Indian startup ecosystem has capital in abundance right now. However, founders are more tilted towards operator-driven funds as they want to be mentored by the ones who have already been there and done that. Therefore, founders are today seeking mentorship to scale products, identify product-market fit, and strategise executions.

Notably, former Freshworks CEO and founder Girish Mathrubootham launched the $85 Mn Together Fund in 2021 to invest in edtech and fintech firms.

Despite the perceived funding winter observed in the startup ecosystem since 2023, several new funds led by former CXOs have emerged. For instance, in April this year, former JSW Sports CEO, Mustafa Ghouse, launched an INR 350 Cr sports tech and gaming fund, Centre Court Capital.

Additionally, former Reliance Industries Limited executives, Rajiv Vaishnav and Abhishek Prasad, introduced a B2B enterprise tech-focussed fund with a corpus of $200 Mn last month.

More recently, former BharatPe CEO Suhail Sameer and former COO Dhruv Bahl launched their early stage VC funds to invest in seed stage and Series A funds.

The post Ex-BharatPe CBO Pratekk Agarwaal’s GrowthCap Ventures To Close Maiden INR 50 Cr Fund In 2 Months appeared first on Inc42 Media.

Swiggy seems to be racing against time to show decent numbers as it gets ready for a mega $1.2 Bn IPO, comprising a fresh issuance of $450 Mn and an offer for sale (OFS) component worth $800 Mn.

According to industry sources keeping a close eye on the foodtech giant in the run-up to the company’s public listing, the Swiggy management and investors engaged in several discourses in the last few months to reach a consensus over the company’s valuation.

Unlike the company’s largest shareholder, Prosus, which as per our sources wants to pound the IPO table with a higher valuation, the management and investment bankers are looking at a discount from Swiggy’s last valuation of $10.7 Bn. But then, it is only natural for Prosus to ask for a sky-high valuation as it holds 33% of the company and plans to offload a majority of its stake in the firm. 

According to multiple media reports, Swiggy is looking at a pre-IPO round and offering various high-net-worth individuals (HNIs) shares at a 20% discount to the last valuation or even steeper. This is despite Baron Capital’s and Invesco’s optimism in the business and their subsequent valuation markups for Swiggy. 

Last month, US-based fund manager Invesco marked up Swiggy’s valuation to $12.7 Bn, a 19% increase from its last markup in October 2023.

Nevertheless, what has turned up the heat for the Bengaluru-based foodtech major before its stock market debut is its Gurugram-based rival Zomato’s impressive run on the bourses, its back-to-back profitable quarters and a positive outlook by brokerages. 

At a time when Swiggy has taken the confidential route to file its IPO papers, let’s understand the key factors that will bolster Swiggy in making its $1.2 Bn IPO a grand success.  

Swiggy To Say No To A Saucy Valuation

Instead of shooting for the moon in terms of valuation, the foodtech giant could target a modest valuation, something similar to its last funding round. 

This projection by industry experts is despite the company’s claims that its food delivery business is already profitable and it has been able to cut losses in the quick commerce business, Instamart.  

Over the course of the financial year 2023-24 (FY24), Swiggy was able to reduce its marketing expenses and employee costs. Further, in a bid to reduce its operational costs, the company integrated Swiggy Mall and InsanelyGood with Instamart this year.

The company could also consider maintaining a realistic valuation, especially since it has ceded the first-mover advantage in the quick-commerce sector to Zomato’s Blinkit and Zepto. 

Zomato listed on the bourses at a $8.6 Bn valuation in 2021 and currently has a market capitalisation of nearly $20 Bn.

Notably, Swiggy’s CEO Sriharsha Majety targeted an annualised $1 Bn in gross merchandise value (GMV) for Instamart in 2022, but the vertical continues to be Swiggy’s Achilles heel.

For the first three quarters of FY24, Swiggy’s Instamart vertical posted a total loss of $207 Mn.

The investment management firm Wright Research cofounder, Sonam Srivastava, sees a realistic valuation of new-age companies paving the way for a successful public market debut. 

“Markets are already aware of the overvalued tech startup IPOs of 2021 and 2022. Hence, it would be folly for the likes of Swiggy, Ola and others to price their IPOs higher. I am sure the investment bankers will look at the previous trends. This is a better year for the IPOs, but Swiggy will have to get the timings right too,” she added.

Further, as per market analysts, the April to June quarter of FY25 will prove to be crucial for Swiggy to turnaround the market sentiments and show that the company is near to becoming contribution margin positive on a consolidated basis.

Institutional Investors To Save The Day

A significant trend noted in the 2023 IPOs across different sectors was the oversubscription of offerings by institutional investors, resulting in strong responses from the public. 

Towards the end of 2023, we saw the institutional investor portion of several companies get oversubscribed. However, the retail portions were either fully subscribed or near to it. 

For instance, the institutional investors portion of Mamaearth was subscribed 11.5X whereas its retail portion got subscribed by a mere 1.35X. Some other notable names are SAMHI Hotels (1.7X), HMA Agro Industries (0.96X), Mankind Pharma (0.92X), and Avalon Technologies (0.88X).

Nikhil Kishore, a Mumbai-based market analyst said that the IPO-bound Swiggy should tap into the foreign institutional investors’ (FII) capital, which will negate any aberrant response from retail investors. 

It’s worth noting that with robust economic growth and favourable quarterly performance by companies, FIIs are anticipated to bolster their investments in India’s equity markets in FY25, extending the trend observed in FY24.

Moreover, a noticeable trend of FIIs strengthening their positions in new-age companies has occurred over the past two years. Notably, as of December 2023, FIIs held more than 63.7% stake in Paytm, 62.7% in Delhivery, and over 50% stake in Zomato.

On the domestic front, Kishore said that IPOs have been receiving significant interest from asset management companies (AMCs) on the back of a sudden uptick in the appetite of mutual funds investors in India.

Overall, this paves the way for Swiggy’s healthy stock market debut.

Swiggy To Cash In On Zomato’s Success 

Despite Swiggy trailing behind in market share (46%), experts suggest that this shouldn’t necessarily raise alarm bells for the Bengaluru-based firm.

A public markets analyst, who specialises in advising startups on IPOs, told Inc42 that Swiggy stands to benefit as investors see it aping Zomato on the Street.

“With few players in this market, especially retail investors will closely monitor how Zomato achieved profitability over a year after its listing, focussing on operational execution and improving unit economics. There’s no reason why Swiggy can’t replicate its rival’s success,” the analyst said.

He added that Zomato’s recent 260% surge in stock price last month (April 2024) has prompted analysts to reconsider their perspectives on the instant delivery model, which could work in Swiggy’s favour.

Zomato’s current market capitalisation of INR 1.7 Lakh Cr is also expected to significantly influence investors considering Swiggy’s IPO.

Quick Commerce Vertical To Emerge As The Dark Horse

A recent report from Goldman Sachs, estimating Zomato’s quick commerce valuation to be $13 Bn higher than its core food delivery business, has sparked enthusiasm in the markets.

Consequently, several investment banks and brokerages, including HSBC and Citibank, have raised their price targets for Zomato.

In its report, Goldman Sachs highlighted India’s rapid progress toward adopting the quick commerce industry, citing factors such as a sizable unorganised grocery sector, high population density in urban areas, and favourable delivery cost-to-average order value ratios.

The target addressable market for the quick commerce industry was $150 Bn as of 2023, with Blinkit, Swiggy Instamart and Zepto being the biggest players.

Blinkit as per a report from Elara Capital captured a 45% market share in the vertical followed by Instamart with a 27% share and Zepto at 21%.

According to Kishore, quick commerce has succeeded in turning into a convenience-led habit-inducing vertical in Tier 1 towns and metros of India.

“As against food delivery, improving operational efficiencies and enhancing both average order value and order volumes are crucial factors for the growth of the quick commerce industry. While a significant portion of Swiggy Instamart’s deliveries have focussed on groceries, which typically yield lower margins, players like Blinkit have expanded into electronics and non-food item deliveries within the quick commerce vertical for higher margins. This strategy will be adopted by other players too,” Kishore said.

Strengthening Revenue Streams To Boost Investor Sentiment 

At a time when industry experts attribute Zomato’s faster revenue growth and profits to its B2B vertical, Hyperpure, Swiggy is in early discussions to enter the space with its eye on boosting its revenue streams.

Notably, Zomato’s Hyperpure contributes over INR 2,000 Cr to Zomato’s annual revenue. According to Kishore, Hyperpure has provided Zomato with an advantage, increasing revenues from restaurants by supplying raw materials and serving as inventory and infrastructure for Blinkit.

“This has been a crucial aspect missing in the Zomato-Swiggy competition so far. Swiggy can capitalise on this opportunity and focus on improving execution,” the analyst said.

Swiggy’s acquisition of restaurant booking platform Dineout in May 2022 for $120 Mn has started to bear fruits. The vertical contributed INR 77 Cr to the company’s total FY23 revenue of INR 8,625 Cr. 

Meanwhile, it has ventured into the events business through Dineout and recently launched the Swiggy Dineout Great Indian Restaurant Festival, attracting participation from 7,000 eateries. 

With this, Swiggy aims to lock horns with Zomato’s on-ground food events business, Zomaland, which offers a combination of dining and entertainment experiences across multiple Indian cities.

While anticipations run galore, analysts see Bengaluru-headquartered Swiggy to make a significant impression on the bourses, despite its struggle to turn a profit.

[Edited by Shishir Parasher]

The post The Crucial Five: Decoding Swiggy’s Roadmap To A Blockbuster $1.2 Bn Public Listing appeared first on Inc42 Media.

• September 2023: BYJU’S Appoints Arjun Mohan As India CEO
• April 2024: BYJU’S India CEO Arjun Mohan Steps Down

From a major battle with investors to multiple legal tussles, a lot has happened at BYJU’S during the aforementioned time period, including the reins of the edtech’s India business finally going to Byju Raveendran now.

However, before we delve into how Raveendran plans to salvage its troubled venture, let’s hark back a little.

Seven months ago, Mohan’s appointment was seen as a major positive for BYJU’S. After all, he was one of the earliest employees at the company having joined BYJU’S in 2008, and rose up to the position of chief business officer when he quit for the first time in 2020. 

Incidentally, Mohan was reportedly eyeing the top post at Aakash Educational Services, which BYJU’S acquired in April 2021. Aakash is one of the only profitable ventures in the BYJU’S umbrella, but former Pearson MD Deepak Mehrotra was named as the CEO of the offline coaching giant.

As the India CEO, Mohan was expected to bring a turnaround for the Byju Raveendran-led company which was once India’s edtech crown jewel. But seven months down the line that narrative has come undone. If anything, BYJU’S is going through yet another transformation as BYJU’S 3.0 has come into the picture. 

The development coincides with the company getting shareholder approval for its $200 Mn rights issue, which is still in limbo due to the company’s court battles with some shareholders in its investor group.

What Is BYJU’S 3.0

Under this programme, the company has announced a leaner structure and consolidated some of the verticals. 

Multiple sources within the company told Inc42 that BYJU’S 3.0 is just an attempt at reducing expenses. And the edtech wants to do this by consolidating its verticles, along with keeping the count of its total workforce at roughly 5,000 employees.

This is just 10% of the 50,000-employee base that BYJU’S had in 2021, according to these sources. And while media reports claim that BYJU’S workforce currently is somewhere between 10,000-13,000 employees, several current and former BYJU’S executives claim this is an exaggeration. 

Sources within the HR department told us that BYJU’S is also actively hiring despite having laid off thousands of employees in the past two years. 

“Hiring hasn’t stopped, but the packages being offered have drastically reduced to INR 2 Lakh to INR 5 Lakh per annum. This is the standard in BYJU’S 3.0. The HR team has been told to retain employees with pay of under INR 6 lakh per annum across academics, sales, finance, and HR, and let go of the rest,”one source added.

The rationalisation comes amid apprehensions among employees that another round of layoffs is imminent for those drawing INR 6 Lakh per year and above across academics, sales and customer service departments. Various profiles, including academicians (tutors), sales executives and various account positions which commanded an average salary of INR 8-12 Lakh per year, are now being offered half the remuneration. 

Sources said that the company is hiring freshers or people with 1-2 years of experience to fill up the positions to ensure business continuity.

“There are no performance parameters now. It is only a matter of how much salary you were drawing. If it is in the higher bracket, you will be fired,” another current employee said.

Sources said that although sales functions were already led by former CEO Mohan, the company is now opting for a nimbler structure.

Inc42 reached out to BYJU’S with multiple queries on the new dynamics at BYJU’S including the workforce count , the new standardised salary structure and vertical integration.The story will be updated as and when the edtech firm responds.

“This reorganisation marks the start of BYJU’S 3.0 – a leaner and more agile organisation ready to quickly adapt to evolving market dynamics, especially in the realm of hyper-personalised education,” Byju Raveendran, cofounder and group CEO, said in an earlier statement. 

He added that by focusing on our core strengths with three specialised business units, the company is looking to unlock new growth opportunities while continuing to focus on profitability.

Integrating Online And Offline Channels

The cutbacks extend to the BYJU’S branded offline coaching centres as well as on the online learning side. 

Inc42 spoke to five BYJU’S teachers posted in Bihar, Delhi and Kolkata who claimed that educators at the BYJU’S Tuition Centres (BTCs) in these regions have been let go. Those drawing large packages were fired at the beginning of this year, and replaced with new faculty which is drawing a lower remuneration. 

Further, we were told that these newly roped-in educators work for longer hours and also have to do online lessons in addition to offline coaching.

Sources claimed that management is looking to integrate the online learning platform called BYJU’S Neo with the BTCs. “Earlier if a teacher was taking 2-3 offline classes, now they are also taking online classes at lower salaries,” one such educator told us.

Sources also said that BYJU’S Neo was one of the major revenue channels for the edtech company until a few years ago. However, this channel lost steam and was superseded by offline learning post the pandemic.  

The last reported results of BYJU’S indicate that the sale of its edutech products which have online courses loaded and streaming services constituted a chunk of its total revenues of INR 5,014 Crore.

Given the higher workload, sources claim the company is seeing fewer applications for admissions across online and offline classes, especially because the quality of teaching has suffered. “We would easily see five to six students enrolling in orientation every week at BTCs. But no new admissions are happening,” a Delhi-based academician said. 

Another academician from Bihar said that the demand for course cancellations also increased as teachers were fired. Given that customer support and sales teams are short-staffed, parents from low economic backgrounds are unable to avail loan facilities to get admissions. 

Besides this, many of BYJU’S partner lenders have reportedly cut ties with the beleaguered edtech giant. Many partner NBFCs including Avanse as per a Ken report had already severed their ties with BYJU’S especially after RBI’s First Loss Default Guarantee ( FLDG) guidelines came into effect. This was because it increased the exposure of banks, NBFCs to any loan defaults especially if the lending is done to people from low-income families which was the case with BYJU’S.

“The new sales may not be coming, the focus is to ensure the business continuity for now,” a former BYJU’S finance operations manager told us.

In terms of infrastructure, we have been told that the majority of the BYJU’S offices across the country have been shut down, including its corporate headquarters in Bengaluru. However, most of the BTCs are still functioning despite the reduced workforce.

“They have shut 50-55 tuition centres all over the country. The sales and finance teams are working from home, but some of them do work from the academic centres,” sources revealed.

Furthermore, two key subsidiaries Aakash Educational Services and Great Learning are now believed to be hiring separately from BYJU’S.

Aakash is controlled by Manipal Education and Medical Group chairman Ranjan Pai who is further looking to extend his stake in the company. As for Great Learning, the founders are overseeing the day-to-day operations and they are actively hiring too, sources claimed.

Can BYJU’S 3.0 Save The Ship?

What makes matters worse is that thousands of employees who have been fired in the past year are still awaiting their full and final settlements. Even many current employees have not been paid salaries for February and March with the company stating that the money from the rights issue is yet to be received.

Although BYJU’S has also claimed that it has partly cleared such dues, many former employees who were laid off in March 2024 claimed that their final dues have not been cleared. “Our February salaries are still awaited and we were asked to leave in March,” one such employee told us. 

BYJU’S however has partly cleared salaries of its employees for March with sources saying that CEO Raveendran took personal  debt to pay March salaries to its employees.

 Notably, the edtech firm has maintained that these layoffs are a part of the major restructuring exercise that the company undertook under former CEO Mohan in October last year. 

In October 2023, BYJU’S announced that it will lay off 4,000 employees over a few months. However, sources claim that the number of employees fired since then is more than double of that figure. 

BYJU’S has also repeatedly missed deadlines for payments of statutory dues such as provident funds to its employees since late last year and will be looking to clear these once it can access funds from its rights issue. That’s if the court rules in its favour in the battle against investors. 

For now, cofounder Raveendran is looking to sustain the company on a shoestring budget and using minimal resources. The company is heavily banking on offline business to provide some cash flow for operations, but the changes on the educator side are a big challenge in achieving these growth targets. 

So the debate is centred around whether BYJU’S 3.0 will actually make a difference in the long run, or whether the cost-cutting will just prove to be a temporary step to keep the company afloat?

[Edited by Nikhil Subramaniam]

The post BYJU’S 3.0: Can Byju Raveendran’s Latest Plan Save The Edtech Giant? appeared first on Inc42 Media.

Last week, news aggregator Inshorts announced a major change in its leadership structure. While cofounder Azhar Iqubal stepped away as CEO to become chairman of the 11-year-old company, the other founder Deepit Purkayastha took over at the helm.

The company’s statement said Purkayastha would lead the company into “the next phase of growth” but the route is certainly not going to be scenic, as Inshorts will have to take a number of tough decisions along the way.

That’s because, in the background, the Delhi NCR-based company itself is morphing from being a news aggregator to a full-fledged social media content platform by roping in influencers and creators. With this Inshorts, which made a name as a news aggregator, risks losing a part of this core identity.

The app is also aggregating social media posts by individual users, where publishing unverified claims from social media platforms as news could lead to legal trouble.

According to sources close to the company, Inshorts is testing a new feature within its app akin to X (FKA Twitter) or LinkedIn, aimed at original content generated by some of the biggest influencers in India. The app is said to be luring top influencers and podcasters from LinkedIn, X and YouTube for the launch.

With this, Inshorts is directly taking on the likes of Sharechat, Sharechat’s Moj (short video), Dailyhunt’s Josh, Inmobi’s Roposo and others in the social media space, not to mention X, Instagram, Snapchat, YouTube and other behemoths.

This is an incredibly tight field for a new app with a similar offering, and moreover we have seen the Indian social media thesis has not resulted in monetisation at scale. The examples of Sharechat and others have been well reported.

The First Decade Of Inshorts

It all started as a Facebook page in 2013. Iqubal, an IIT Delhi third year student, dropped out to startup with two fellow IIT students. The Facebook page showed a snappy summary of the major news stories of the day and its success spurred the launch of Inshorts or News In Shorts.

The first funding round came three months later as Inshorts had seemingly struck a goldmine with its product idea, which was entirely new for the Indian market.

The app grew in popularity and so did the valuation of the company, which was around $550 Mn at the last funding round of $60 Mn which came in July 2021. The startup is backed by the likes of Lee Fixel’s Addition, Tiger Global, SIG, A91 Partners and Tanglin Venture Partners.

According to Statista, Google News currently occupies 55% of the market share in the news-aggregator space, followed by Dailyhunt (35%) and Inshorts (17%).

Amid this growth, it’s hard to deny that Iqubal is the face of the company in many regards.

The 31-year-old former CEO’s public image is undoubtedly helped by his appearance on Shark Tank India, where he is the youngest of the celebrity investors.

Inshorts is pretty much one of the standout examples of the Indian startup ecosystem’s growth. The app primarily targetted users in the age group of 20-35 years who found it more convenient to read short-form news content on the go, rather than online articles or print media.

In a recent interaction with podcaster and angel investor Raj Shamani, Iqubal said that Inshorts and its sister app Public (hyperlocal user-generated video news) content have a combined base of 10 Mn daily active users.

But getting there has not come cheap. Inshorts reported a 3X increase in losses to INR 309 Cr with operating revenue rising by nearly 9% to INR 147 Cr.

Dailyhunt, Inshorts’ closest rival in the news aggregation space, reported a net loss of INR 1,907 Cr in FY23. However, Dailyhunt’s parent company VerSe Innovation cut its losses by 25% as revenue grew by as much as 51% to INR 1,456 Cr.

In the case of VerSe, it made a string of acquisitions to strengthen its news and short video platforms. Dailyhunt, as per sources, may acquire microblogging platform Koo soon. It also has a majority stake in online news portal OneIndia and other hyperlocal content platforms.

Inshorts, on the other hand, has not made any major acquisitions. It has relied on pure-play digital advertising, word of mouth, distribution deals with smartphone OEMs and also built a separate video product called Public in house.

Unlike Dailyhunt’s acquisitions, which brought in inorganic user and influencer growth, Inshorts is trying to build something from scratch. And at the same time, it’s looking to do so without burning too much cash.

Plus, becoming a social media intermediary will also come with its fair share of regulatory headaches for Inshorts. Even in its current state, the model of aggregating news and social media content means the startup is running the risk of violating sections of the Information Technology Act, 2000.

The New Inshorts: News + Social Media

So far, Inshorts has primarily operated as a news aggregator, posting 60-word summaries of the important stories of the day. News aggregators are governed by the guidelines and Digital Media Ethics Code under the IT Rules, 2021.

Which brings us to the problem around aggregating social media content, such as posts from X, LinkedIn and other platforms. These are part of Inshorts’ regular news feed, even though in many cases these are opinions of individuals.

As per the definitions under the rules, “Publisher of news and current affairs content’ means an online paper, news portal, news aggregator, news agency and such other entity called by whatever name, which is functionally similar to publishers of news and current affairs content but shall not include newspapers, replica e-papers of the newspaper and any individual or user who is not transmitting content in the course of systematic business, professional or commercial activity”.

The definition clearly mentions that individuals who are not disseminating information as a business cannot be classified as publishers.

For instance, this post referencing an opinion stated by Deepak Shenoy, founder of SEBI-registered portfolio adviser Capital Mind.  Swiping left to go to the source, takes the user to X, where we can see that Shenoy is commenting on a Reuters report.

There’s no mention on Inshorts about the Reuters article on the gold repatriation. Instead, Inshorts’ post makes it look like a statement by Shenoy. Plus, the post on Inshorts itself contains language that’s either modified or edited, when compared to the original post on X.

Given the fact that social media posts are routinely deleted, edited or even taken down after fact-checks, Inshorts is running the risk of carrying outdated information or misinformation when aggregating social media posts.

Over the past few weeks, Inc42 noted several posts on Inshorts that were marked as news but took us to social media platforms instead of verified news publishers.

Worryingly, the aggregated social media content is not labelled as user-generated content from other platforms, but is part of the regular ‘news’ feed, which is blurring the lines between the opinions of individual social media users and publishers

It must be noted that the Digital Media Ethics Code has been challenged by media groups as well as individual publishers for infringing on the freedom of expression. And while many of these legal challenges have seen interim stays in the past couple of years from the high courts of Delhi, Bombay, Calcutta, Karnataka, Kerala, Orissa and Madras, the final verdict is still pending.

In late March 2024 for instance, the Supreme Court transferred the multiple petitions challenging the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 to the Delhi High Court.

“The solution could be labelling these social media posts as “user-generated content”, and not simply as news,” a Linkedln creator who was approached by Inshorts told us.

As per Section 3(1)(B)(v) of the contentious IT Rules, 2021, intermediaries need to make reasonable efforts to not display or store information that “deceives or misleads the addressee about the origin of the message or knowingly and intentionally communicates any misinformation or information which is patently false and untrue or misleading in nature”.

With social media posts of individual users being shown as news, Inshorts is running the risk of displaying misleading information, since individual user posts could carry misinformation or half-truths.

Focus Turns To Influencer Content

Further, besides publishing news snippets, Inshorts also hosts content created by social media influencers on other platforms such as YouTube or Linkedin. This content is being branded as Shorts.

Sources privy to the development told us that Inshorts is trying to rope in major influencers from LinkedIn, X and other platforms as well as popular podcasters and is likely to have an in-app profile for their social media content with follow functionality for other users.

This is akin to the model followed by X or LinkedIn. However the key concern is whether a “news aggregator” as per Indian law can also publish unverified claims and posts on social media and label them as news, or show these posts in the very same app which claims to be a news app.

Further, we have also seen posts on LinkedIn about Inshorts’ efforts to bring in creators for collaborations.

It was not immediately clear whether Inshorts is also paying influencers to post content on the platform or whether it is just looking to serve its 10 Mn users through these influencers.

Inc42’s detailed questionnaire to Inshorts remained unanswered till the time of publishing. Our report will be updated as and when Inshorts responds.

The Tiger Global-backed startup is said to be testing various monetisation models in addition to advertising and branded content channels for influencers.

This is also a different approach from the current news aggregation model at Inshorts where it has partnerships with publishers to aggregate their content.

Industry sources say that large media houses are terminating partnerships with news aggregators such as Inshorts, and have revised their payout terms as they look to cut costs. This greatly explains why Inshorts is trying an influencer-driven platform rather than continuing to pay publishers.

Who’s Moderating The Content?

Of course, the pivot to quasi-social media comes with concerns around data privacy, copyrighted content, moderation of content and misinformation.

Fake news is already a major concern and publishing content without clear classification as news or user generated would just add to online misinformation.

“Even if these models are in beta mode, Inshorts already has a huge readership which could perceive simple social media posts as news posts and this could invite regulatory action,” a senior media activist told us.

As the news aggregator tries to grow through influencer-driven user onboarding, it will have to tackle the challenge of fact-checking content being dished out as “news”.

We have noticed several instances of social media posts and content being aggregated as news on Inshorts.

For now, concerns about fake news, misinformation and clickbait are a big challenge for the company and compromise the news aspect of Inshorts.

User Retention, But At What Cost?

Currently, advertising accounts for more than 95% of Inshorts revenues. Influencers bring in users who in turn bring in the advertisers. Further, Inshorts also earns money through branded content partnerships.

But user growth has slowed down. Inshorts’ monthly downloads have fallen 35% from September 2023 to November 2023, before rising by 18 % in February 2024.

It sees an average of 3.1 Lakh downloads per month, as per Similarweb. On the other hand, Dailyhunt sees something like 13 Lakh downloads per month, 4X higher than Inshorts.

Iqubal had earlier said that branded content is a small part of Inshorts’ business, compared to the volume of non-branded news articles. He also said that the platform tries to stick to facts even while publishing sponsored content.

Fast forward to 2024, the cofounder and now chairman said in a video podcast that sponsored posts (which is clearly marked as promoted content) helps the company earn almost double the revenue compared to normal advertisements. He added that losses have flared up due to investments in other products that the company is trying out. Iqubal further said that the core business at Inshorts remains profitable.

But brands would only continue to pay Inshorts if the app retains users or adds more quality users every month. Which is why Inshorts is morphing into a social media platform rather than a news aggregator, but it won’t be easy to bring in influencers without a capital infusion.

Inshorts’ organic and cost-effective approach is a big gamble in the current environment where creator income has also plummeted.

Iqubal believes that stickiness or user retention remains a key metric for any social media app, more than downloads. But retaining users through influencer content while also masquerading as news is a tricky balance, and Inshorts cannot afford to fall short in this regard.

Edited by Nikhil Subramaniam

Update Note: April 18, 2024 | 18:15 PM

• Added details about publishers and publisher bodies challenging the Digital Media Ethics Code in various high courts and the interim stays received in this regard

Update Note: April 29, 2024 | 17:00 PM

• Due to concerns raised by readers and Inshorts, Inc42 has revisited portions around the IT Rules, 2021 for news aggregators. Based on conversations with legal experts, we have clarified language around potential violations of IT Rules, 2021 in relation to Inshorts aggregating social media posts by individual users, which could carry misinformation or half-truths

The post Inshorts ‘Pivots’ From News To Influencer Content In Push For Growth, Engagement appeared first on Inc42 Media.

Listed stockbroking firm Angel One is currently in the final leg of setting up an asset management company (AMC), following which the company will launch a passive mutual fund. 

Chief growth officer of Angel One, Prabhakar Tiwari, told Inc42 that with the market regulator’s (SEBI) green light, Angel One will be locking horns with Zerodha and Groww in the highly underpenetrated passive mutual funds space in India. Notable, Angel One rivals, Zerodha and Groww, forayed into the market last year.  

It is imperative to mention here that the share of exchange-traded funds (ETFs) or passive mutual funds in overall retail assets under management (AUM) is currently at a mere 2%.

However, the silver lining is that the same is on the rise. According to Motilal Oswal Financial Services, the share of exchange-traded funds stood at INR 9,700 Cr in FY23, growing at a CAGR of 56% since FY19, largely driven by online distributors.

In addition to venturing into the passive mutual funds space, Angel One has also clinched a five-year deal as one of the official partners for the Indian Premier League. 

Reportedly, Angel One outbid rival Groww by paying INR 380 Cr to the BCCI in the online stockbroking category for the IPL’s sponsorship.

Without divulging the price details of the IPL deal, Tiwari stated that the stockbroking firm aims to reach out to at least 500 Mn Indians through on-ground advertisements as well as digital and print channels as IPL’s official partner.

While Groww and Zerodha have been making headlines with their monthly active user bases, Angel One has secured the third spot, according to the NSE data. 

Tiwari mentioned that crucial revenue metrics such as average daily orders placed on the platform, new account openings, and SIPs in mutual funds have witnessed substantial growth for the company. Meanwhile, the company is also planning to enter the lending and insurance space soon.

Here are the edited excerpts:

Inc42: Congratulations on securing the IPL sponsorship in the stockbroking category. Sports tournament deals seem to be a huge draw for many digital-first platforms. How important will this deal prove for Angel One? 

Prabhakar Tiwari: Thank you! We have been able to secure the official IPL sponsorship title in the stock broking/fintech category. With this sponsorship, we aim to get several advantages like on-ground visibility, boundary rope branding, digital parameter branding, and screen branding, among others. Seventy-four matches are being played in the IPL this year, and the number of matches may increase in the next few years. 

We hope to reach out to the stadium audience, broadcast viewers and the viewers who watch the matches on digital devices. That is the kind of visibility our brand will have through this sponsorship.

We are aligning our business growth goals with the marketing campaigns we will launch through IPL and other activities. We aim to reach out to at least 500 Mn potential customers through this deal. 

Our three decades of existence (Angel One was incorporated as Angel Broking in 1996), combined with the adoption of technology, makes us a trusted brand for customers. We are hoping the IPL sponsorship will have an impact on our revenue funnels, acquisition channels, and reactivation of inactive users. 

The IPL sponsorship will be a yearly payout, which will be in addition to other print/TV/ digital ad spends. However, this does not mean that we will compromise on profitability like some venture capital-funded businesses. Depending on our requirements, we will keep scaling (up or down) our marketing expenses.

Inc42: Your closest competitors, Zerodha and Groww, have captured the limelight because of the active user base debate. How is Angel One positioned in the stockbroking industry?

Prabhakar Tiwari: We are an important contributor to the overall stock broking industry on various metrics. In terms of userbase, we have 21 Mn users, and we keep adding 2 Mn users every quarter. In the March quarter, we have added 1 Mn users every month. 

Further, we also gauge our performance on other important monetisable revenue metrics. For instance, the daily average orders (DAO) placed in March was 7.3 Mn, up 65.5% YoY. Similarly, our unique Mutual Fund SIPs stood at 4.2 Lakh in February 2024, up 942.3% YoY.

Being a listed company, we do release monthly and quarterly data on all such important metrics, also highlighting how the company’s revenue channels have strengthened.

We also take pride in the fact that we are counted among the top three players with the largest monthly active user base. 

Inc42: From an offline broker to embracing a digital avatar, what kind of growth you have witnessed?

Prabhakar Tiwari: The confidence mature retail investors and young users have shown in us is because of the brand value that we have created in the last 30 years. Through our digital transformation, we have only made sure that we become more accessible and convenient for our customers.

The digital embrace has helped us reduce downtimes, enhance the speed of operations and increase security to protect user interests. 

In any financial services category, the power of brand holds much value, and we have very well leveraged the brand that we have created over the years.  

Inc42: Two of your competitors have already announced their foray into the passive mutual fund space. Are you planning a similar move?

Prabhakar Tiwari: Passive investments are a worldwide trend and have picked pace in developed economies more than in India. I think India is not yet where countries like the US and China are when it comes to passive funds. We are in the final leg of fetching an AMC license from market regulator SEBI.

Inc42: What are some of the other wealth tech opportunities that Angel One is looking at?

Prabhakar Tiwari: Besides the mutual funds business, we are also conducting beta testing for a lending business and exploring insurance distribution. 

[Edited by Shishir Parasher]

The post Angel One Bets On A New Passive Fund, IPL Sponsorship To Take On Groww, Zerodha appeared first on Inc42 Media.

AI-powered video creation startup Rephrase.ai’s cofounder Shivam Mangla believes that Indian GenAI startups will have to cater to both domestic and global markets to effectively leverage the GenAI boom.

Speaking at Inc42’s GenAI Summit, Mangla said that building applications on top of existing AI models that solve challenges faced by both local and overseas businesses will be key to creating revenue streams. 

Indian GenAI startups need to build apps on top of existing AI models that solve local problems faced by Indian enterprises as well as the challenges faced by the businesses in the US. These will be key areas where revenue streams will come from, said Mangla.

He made the comments during a panel discussion on the topic, “First Movers In India’s GenAI Revolution”. The panellists also included Portkey AI cofounder and CTO Ayush Garg, Humantic AI founder and CEO Amarpreet Kalkat, and Stellaris Venture Partners’ partner Alok Goyal.

While decoding the potential of the emerging technology on the homegrown startup ecosystem, the panellists agreed that SaaS platforms have an edge over their peers in terms of GenAI adoption owing to the large swathes of data they have at their disposal.

However, Mangla, in a word of caution, said that GenAI startups will initially face challenges in finding the right set of clients as large enterprises may take a long time to decipher where GenAI could be used to optimise their operations.

Notwithstanding the longer timeline, Kalkat said that wary enterprises still want more control when it comes to GenAI products as there are “many risks” involved. In response to a question about what the enterprises are looking to focus on when it comes to Gen AI products, he said that compliance, control, privacy are on top of their list.

Meanwhile, Goyal said that Indian GenAI startups are well placed to race ahead of large enterprises in disrupting the ecosystem. He asserted that smaller players have always driven change in the arena of a disruptive technology despite the capital and resources of enterprises.

“Whenever we have seen new disruptive technology, it is always the startups or smaller companies which have been the drivers of the change even as the large enterprises have capital and resources at their disposal… Ultimately innovation will come from small companies. They have the focus, passion, and mission, and aren’t subject to bureaucracy like large enterprises,” Goyal added. 

The comments come as the GenAI revolution continues to sweep the country and the globe. As per Inc42 data, the country is home to more than 100 native startups (as of October 2023) that have raised $600 Mn+ since 2019.

Presented by Inc42 and Microsoft, co-presented by Invideo and QX Lab AI and supported by partners such as Venture Catalysts, Google Cloud, Mobavenue, MongoDB, and Peak XV, The GenAI Summit took place in Bengaluru on April 3rd. 

The post Build Products For Both India & The World To Leverage GenAI Mania: Rephrase Cofounder appeared first on Inc42 Media.

At a time when the number of startups focussed on generative artificial intelligence (GenAI) are on the rise in the country, venture capitalists believe that these startups can raise big funding only if they can solve India-specific problems.

During a panel discussion on the topic, “Fuelling GenAI: What Investors Think About The Revolution?”, at Inc42’s ‘The GenAI Summit’,  investors highlighted that very few Indian startups have succeeded in bagging big cheques from VCs.

Lightspeed India partner Hemant Mohapatra, Bharat Innovation Fund cofounder and partner Ashwin Raguraman,  and Accel partner Prayank Swaroop were among the panellists. The discussion was moderated by  Exfinity Venture Partners’ managing partner Chinnu Senthilkumar.

Talking about the ticket size for funding, Swaroop said it is the US-based GenAI startups and companies which are drawing cheques in the range of $100 Mn and above since they are building foundational models.

“Unlike the US, I haven’t yet come across many companies in GenAI space in India across multiple verticals. We are still in the AI research and building models stage. However, enterprises are beginning to understand here how important it is to include AI in their operations,” Swaroop said.

Mohapatra likened the current GenAI trend to a hype cycle which may look uncertain. However the seasoned investor expects more clarity to emerge in the GenAI space in the coming years.

In terms of opportunities for GenAI startups in India, Mohapatra said using the technology to reduce the country’s dependence on China and the US for semiconductor and manufacturing can be an interesting use case.

“For instance, if we use GenAI to design the chips in India and overall in computing space, which hasn’t seen much disruption over the past few decades…That is one area where Indian native GenAI startups can focus on,” Mohapatra said.

It is pertinent to mention that Lightspeed led a $41 Mn investment round in the then five-month-old Bengaluru-based GenAI startup Sarvam AI in December last year.

Talking about the IndiaAI Mission, which has an outlay of over INR 10,000 Cr, Swaroop said there isn’t much clarity yet on how these funds will be deployed.

“For founders, I think they should build the products by thinking through the needs of Indian consumers and businesses. A few can go on building iterations on say GPT model,” Swaroop added.

Talking about the innovative use cases of GenAI, Raguraman cited an example of a startup which used AI to evaluate the emotional quotient of people and then monetised the same by selling the data it had at its disposal to advertisement companies.

Raguraman added startups and developers in India will require support from the government and industry bodies like NASSCOM to grow.

The GenAI Summit brought together who’s who from the GenAI space to discuss funding opportunities, impact of the technology on various sectors, among others.

Presented by Inc42 and Microsoft, co-presented by Invideo and QX Lab AI and supported by partners such as Venture Catalysts, Google Cloud, Mobavenue, MongoDB, and Peak XV, The GenAI Summit took place in Bengaluru on April 3rd. 

The post Indian GenAI Startups Need To Solve Niche Problems To Secure Big Cheques, Say VCs appeared first on Inc42 Media.

At a time when the country’s fintech sector is under the scrutiny of the Reserve Bank of India (RBI), experts believe this provides opportunities for startups focussed on generative artificial intelligence (GenAI) to develop solutions to help fintech startups comply with the regulations.

During a panel discussion on the topic, “How GenAI Will Shake up Indian Fintech Products?”, at Inc42’s The GenAI Summit, speakers discussed a slew of topics, including use cases of GenAI in fraud detection, consumer data privacy, customer services efficiency, and bank statement analysis.   

While much of the discussion revolved around the  changing regulatory landscape in financial services industry of India, Hyperface Technologies COO Aishwarya Jaishankar said that building technology for regulatory compliance is a big opportunity.  

“As a financial services provider, being complaint should be in your DNA. On top of that, building technology to improve efficiency can be done,” Jaishankar said.

She said if a AI-focussed startup is able to provide solutions that can ease compliance, then banks will be willing to use such solutions. 

Talking about the ways banks are leveraging AI, Open Financial Technologies cofounder and CEO Anish Achuthan said that while banks traditionally used AI voice assistants for customer facing processes, they are increasingly using the technology for other functions as well.

“However, now AI models are being used to improve efficiencies across lending operations, bringing multiple systems as ERP, financial systems, and human resources together with the banks. Corporates on the other hand will also leverage AI models to improve financial accounting challenges like bank statement reading, among others,” Achuthan said.

Fintech SaaS unicorn Perfios’ CTO Sumit Nigam said AI can also assist banks in improving financial inclusion. “We are talking about the huge data repositories which are getting ready with digital public infrastructure and ONDC. The same data can be used to underwrite loans to the unbanked population with use of compliant AI tools,” he said.

The panelists opined that banks and other financial services institutions should not be building in-house AI technology currently as it is evolving rapidly. They said that these institutions should rather outsource the task of developing such technologies.

Jaishankar said that startups providing GenAI solutions to enterprises will have to create separate products for different industries as the issues and challenges are different for every sector. 

“I don’t think that a generalised LLM model will be much in demand. For instance, SME  loan frauds can be different from the challenges faced by retail company when they deal with banks. Hence, the need is for precise targeted AI models to attract banks and other financial institutions,” Jaishankar said.

It is pertinent to note that banks as well as fintech startups are leveraging GenAI to offer personalised experience, underwriting insurance, improving customer processes, among others.

Presented by Inc42 and Microsoft, co-presented by Invideo and QX Lab AI and supported by partners such as Venture Catalysts, Google Cloud, Mobavenue, MongoDB, and Peak XV, The GenAI Summit took place in Bengaluru on April 3rd. 

The post GenAI Can Help Fintech Sector Comply With Evolving Regulations, Say Experts appeared first on Inc42 Media.

Indian startups have started using large language models (LLM) in niche languages to solve real world problems especially in the Indian context, Rohini Srivathsa, chief technology officer at Microsoft India and South Asia said during the inaugural session of Inc42 Gen AI Summit in Bengaluru today.

Srivathsa said during the panel discussion with Inc42 co-founder and chief executive officer Vaibhav Vardhan and Sangeeta Bavi, executive director-Digital Natives, Microsoft India that AI in India has started to become mainstream with its integration in different industries and that “we haven’t even scratched the surface of this evolving technology.”

“I believe that India will have a huge role to play in India’s $10 Tn economy. Apart from helping the consumer, workforces we also have seen startups building their toplines by using AI. Besides technologists and developers, even the business leaders in large corporates and startups are now interested in finding out how the revenues of the company will grow using Gen AI,” Srivathsa said at the summit.

While replying to a question as to how the tech giant like Microsoft is working with native Gen AI startups, Sangeeta Bavi said that Microsoft has now begun paying startups who are working with the tech firm using LLM models in niche models.

Bavi said that for both B2B SaaS and B2C startups, AI will be an important futuristic tool which will either disrupt existing applications and help in customer retention ( B2C).

“The existing app ecosystem stakeholders will have to first think AI first or they will get disrupted by the new technology. Things are moving at the speed of weeks in Gen AI, so I suggest app developers to move at that intensity,” Bavi added.

Microsoft India’s CTO explained that there are startups which are working in both small and large language models where native cultural and dialects are used and this could unlock further opportunities for a market like India.

“I also see AI’s huge use cases in real estate, financial services and healthcare sector,” Srivathsa noted.

Microsoft’s top executives also delved on the talent gap that may exist because of demand in Gen AI technology. “Microsoft has already begun skilling the workforce under various training programmes looking at paradigm shift.Similarly there are AI tools readily available which could be used by corporates 

Microsoft’s CTO also added that the corporates and startups will have use AI to leverage the data created because of digital public infrastructure, ONDC, Aadhar success.

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In the world of social media where platforms thrive on their users’ craving to fetch more likes and comments on their profiles, photos or videos, US-based social media networking and messaging platform Snap Inc. claims to be an antidote. 

The managing director of Snap’s India arm, Pulkit Trivedi, on Wednesday (March 20) said that unlike “its rival platforms, Snapchat frees its users from the constant chase of likes, comments and trolls and gives a more personalised experience to its users.

Currently, the US social media giant claims to have a monthly active user base of 200 Mn in the country versus its rival Instagram which has an MAU of 362 Mn, as per Statista. 

Speaking at Snapchat’s debut event in Bengaluru, Trivedi said that the social media platform’s business strategy in India is getting the brands to sell to young Indians by advertising on the social media platform. It hopes to achieve this by giving a distinctive AR-based virtual experience to both advertisers and users.

Speaking with Inc42, on the sidelines of the event, Trivedi said that for the last four months, Snapchat is focussed on expanding the team size in Mumbai, Delhi and Bengaluru and has doubled the workforce strength this year.

Notably, the past 2 to 2.5 years have been all about aggressive growth for Snapchat in India. During this time, the company also roped in former Meta India head Ajit Mohan to head its Asia-Pacific business. Trivedi joined the social media firm as India head in August 2023. He was earlier working with Google as the director, Google Play, India business team.

The Indian unit of Snapchat, Snap Camera India, reported a 20% increase in revenue to INR 79 Cr for FY23 compared to INR 65.7 Cr in FY22. 

Snapchat Has GenZ In Focus

During his surprise visit to India in November last year, Snap Inc.’s global CEO Evan Spiegel said that the company was bullish on the younger Indian population and would attract a higher user base through the app’s face filters and location-based features.

Much like other markets, Snapchat in India is sharply focussed on building a GenZ userbase (13 to 25 years) with offerings like its high-tech augmented reality (AR) enabled camera filters, which differ it from its rivals. Trivedi, too, believes that the company’s AR-enabled camera has been the USP of the social media platform. 

“Our commitment is to deepen our connection with Young India, making Snapchat their go-to platform for authentic self-expression, real connections, and innovative brand interactions,” Trivedi said in a statement. 

“India is home to 20% of GenZ [population] worldwide, presenting an unmatched opportunity for brands and businesses to tap into the priorities and technological engagements of this influential demographic. Snapchat offers a unique platform for engaging these young audiences in creative ways, standing out as a vibrant hub for dynamic users who are not readily accessible on other platforms,” the Snapchat India head added. 

Snapchat’s advanced AI-based virtual messaging, AR lenses, location-based feeds (timelines), and short video content (Spotlight) are particularly meant to engage young users.

Trivedi said that the company is uniquely positioned, as it distinguishes itself with a predominantly young audience that holds considerable influence over buying or purchase decisions, not only for themselves but within the household. 

“With India accounting for 20% of the global Gen Z population, the potential for businesses to engage with this demographic is substantial. This becomes particularly pivotal as the youth, born into the digital era, transition into adulthood and the workforce, wielding considerable purchasing power and influencing household decisions. Brands and businesses are looking for ways to engage with the young audience to drive sustained growth for their businesses,” Trivedi told in response to Inc42’s question.

Eyeing India’s Rising Digital Ad Market

India’s corporates and startups are not shying away from spending on digital-first platforms to draw revenues through direct advertising, influencer marketing and other strategic tie-ups. 

The Snapchat India head told Inc42 that the Indian digital advertising space was a $10 Bn market opportunity in 2023, which is projected to more than double by 2028, driven by growth in online commerce, online video consumption, and the rise of influencer marketing led by content creators. 

“Brands and businesses are looking for ways to engage with the young audience to drive sustained growth for their businesses. Additionally, the design of our app contributes to a positive user experience, reflected in heightened receptivity to ads compared to other platforms,” he added. 

The Snapchat India head said that one of the company’s key objectives and plans is to lead the shift in the advertising industry towards pioneering visual commerce and enabling brands to create engaging experiences and drive brand preference and purchase intent among users.

For this, the social media platform engages with young influencers and creators, providing monetisation opportunities through brand partnerships and promotions.

With the digital advertising revenues of both companies increasing at an impressive rate, it will be interesting to see how Snap captures a juicy pie of 900 Mn+ smartphone user base in India.

[Edited by Shishir Parasher]

The post How Is Snapchat Building Its India Growth Story? appeared first on Inc42 Media.

Be it a 30% tax on cryptocurrency sales, 1% TDS on crypto transactions above INR 10,000, or the RBI’s hawkish stance condemning crypto, who isn’t aware of the miseries of an average Indian cryptocurrency investor? However, things took an unexpected turn for crypto enthusiasts this week when Bitcoin soared to break all its records.

With Bitcoin touching its all-time high of $72K on March 13 and then $73K on March 14, Indian crypto investors seemed to be frolicking on back-to-back jackpots. Pertinent to mention that Bitcoin last touched its record high of $65K in November 2021.

According to crypto experts, despite the turbulence that the Indian cryptocurrency market experienced over the past two years, the demand of cryptocurrencies has increased exponentially since February and trading volumes on some major exchanges have shot up in the range of 150-250%. 

Amid this bull run, cryptocurrency analysts told Inc42 that Telegram and WhatsApp channels are being floated as was the case during the bull period of 2021, with new investors ready to take a plunge into the world of virtual assets, even though this could be just a phase and the growth may taper off. 

“Overall 2024 has brought back some cheer to those young investors in India who are more inclined towards making profits quickly and do not prefer the equity markets or other traditional methods,” an analyst said. 

Meanwhile, many homegrown crypto trading platforms have started floating incentives, along with new ETFs, to woo new investors to their platforms.

A case in point is Bengaluru-based crypto trading platform Mudrex, which has launched its Bitcoin spot ETFs for Indian investors with a minimum investment of $5,000. The launch came on the back of various US stock exchanges accepting Bitcoin-based ETFs from January 2024. 

The CEO of Mudrex, Edul Patel, told Inc42 that the exchange expects a growing participation of Indian retail investors in the spot Bitcoin ETF market in the coming months.

“At Mudrex, we have seen a surge in trading activity, with a 192% increase from December to January, followed by a 270% surge from January to February. We onboarded 42,000 new users in February and expect to onboard 1 lakh news users by the March end,” Patel said. 

He added that Mudrex platform has also seen significant number of user onboarding since FII’s ban on foreign crypto exchanges. 

Another cryptocurrency major, CoinSwitch, claimed that it has become the first exchange in India to cross 2 Cr users. 

“The milestone comes amidst a strong resurgence in user activity in India, as investors turn bullish in the wake of the Bitcoin ETFs in the US, the possible approval of Ethereum ETF, and the scheduled Bitcoin halving event,” CoinSwitch cofounder and CEO Ashish Singhal said in a statement.

 Singhal added that since the turn of 2024, user registrations on CoinSwitch have grown by 5X as compared to the daily average user growth in 2023. In just last two weeks, the crypto trading volumes on CoinSwitch platform, he noted.

To attract new crypto investors, the platform is giving away Bitcoins worth INR 20,000 every hour to select users.

CoinDCX, CEO Sumit Gupta told Inc42 that trading volume on his platform has spiked by 150% compared to January 2024.

“There is an overall positivity in the crypto ecosystem. While Bitcoin ETFs and halving have provided the initial push needed to kickstart a positive trajectory after more than two years of a crypto bear market, several important events are driving the market in the right direction. One of them is the pending approval of an ETH ETF by the SEC. Besides, what is exciting is the growing belief of traditional investment players in blockchain technology,” Gupta said.

Meanwhile, WazirX, which relocated its headquarters to Dubai in 2022, also saw aggressive growth in cryptocurrency transaction volumes by as much as 300% in March compared to January 2024.

“This surge can be attributed to the rise in overall crypto prices as Bitcoin has surged to reach its highest since 2021,” Rajagopal Menon, vice president, WazirX told Inc42.

Will Crypto Market Revival Bring Back Overseas Capital?

According to a study conducted by a Delhi-based technology think tank, the new crypto taxation rules introduced in 2022 led to $3.8 Bn worth cryptocurrency trading volume to move to foreign exchanges.

The finance ministry’s FIU in December last year identified various foreign cryptocurrency exchanges, which were found to be violating the country’s anti-money laundering laws. Some of the overseas exchanges whose URLs were banned in India included Binance and Kucoin, among others. 

The government also mandated both foreign and home-grown cryptocurrency exchanges to register with FIU as “reporting entity”. They are obligated to adhere to the stipulated requirements mandated under the Prevention of Money Laundering Act (PMLA) of 2002.

Industry leaders say that these steps have further given a boost to India-based crypto platforms to work with the regulators for sustaining their operations and attract Indian investors to the homegrown exchanges, hence restricting the outflow of capital.

“The shift of millions of user base to overseas exchanges to escape tax deductions as well as the exchanges moving out of India to cities like Dubai has become a trend. However, a slew of changes by the regulators in overseas markets and better regulatory clarity in India towards virtual digital assets will benefit the Indian markets,” a founder of a Bengaluru- based blockchain technology startup said. 

Chiming in, CEO of another Indian crypto currency exchange is of the view that the government’s motive of culling money laundering and preventing millions of young investors from losing their hard- earned money through volatile assets cannot be achieved by a blanket ban, especially when the global economies are turning more receptive towards digital assets.

While the current rally may have provided a boost to the Indian crypto market, there is no telling as to how long will this fad stay. However, for now, industry leaders expect the authorities concerned to regulate this space in a more balanced way so that outgoing crypto transactions could be kept at bay. 

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