The Indian online real money gaming industry is used to being in the eye of the storm. From periodic bans by various state governments to uproar from a section of society, the homegrown online gaming industry has somehow always endured and made its way through choppy waters.

While the regulatory shenanigans are nothing new, what came as a bolt from the blue was the GST Council’s decision to impose 28% Goods and Services Tax (GST) on the sector, sending all stakeholders in a tizzy.

The move thrusted the entire online real money gaming ecosystem in a state of flux as the focus suddenly turned from fearing adverse regulations to a long bill of tax evasion. What followed was a bloodbath that left many jobless and brought down the shutters on many gaming companies.

The aftermath was largely in line with what industry stakeholders predicted as the looming taxation challenges and a flurry of notices took the sheen away from a sector that once basked in glory. And all of this happened in a span of a few months, courtesy a single order from the GST Council.

The Council, in July this year, announced its decision to impose a 28% GST on the amount being paid at the entry level for online gaming. In August, amendments to the Central Goods and Services Tax (Amendment) Bill, 2023 and the Integrated Goods and Services Tax (Amendment) Bill, 2023 were approved by the GST Council. Later, the Parliament approved these amendments.

Finally, real money gaming platforms entered the new tax regime on October 1. While some states are yet to amend the GST law, they would apply the amendment retrospectively from October 1.

In line with the predictions, the increase in taxation seems to have an immediate impact on the online real money gaming industry and startups in the sector are reeling due to squeezed margins, decline in user spending, and no clarity about the future path.

Poker Bears The Brunt – Most Impacted Sub-Segment 

While at least a full quarter is needed to understand the complete impact of the changes in GST law, its effects are visible in the revenue margins and user spending of gaming platforms within a month of the changes coming into effect, according to industry stakeholders.

Platforms that offer online poker games are the most impacted by the changes in taxation, as per industry sources. The reason behind this is that the platform fee for poker used to be lower, at around 3-4%, as against 10%-15% for rummy and above 15% for many fantasy gaming leagues. 

While poker platforms are absorbing some of the impact of the increase in GST rate for now, they have started passing on some of the increase to the users by charging 4%-5% higher platform fee. As a result, many of the platforms have not only seen a 10%-20% decline in their user base but also a 20% fall in their user margins.

It must be noted that online poker platform Spartan Poker  fired 125 employees or 40% of its total workforce after the new tax regime kicked in. It was not immediately clear which departments were impacted by the company’s retrenchment move. 

Rummy is the second most affected segment in real money gaming, as per the industry sources. 

Meanwhile, the ongoing men’s cricket World Cup seems to be acting as a shield for fantasy gaming platforms, as they have not seen any impact of the new tax regime so far. However, it seems it is only a matter of time before these platforms too begin to feel the heat. For now, the prominent fantasy platforms, many of which are well funded, are absorbing the increase in cost, but this is, of course, not a long-term solution.

Disappearing Offers & Bonuses Impact User Sentiment

An official of an online rummy platform pointed out that the current practice of absorbing the increase in costs is not a sustainable solution.

The decision to tax online real money gaming platforms at 28% on full face value will hit the bottom line of all the players in the industry, no matter how well funded they are, he explained. He added that the impact of the new tax regime is already visible as not only has the number of users depositing money on these platforms decreased but also the quantum of deposits for the platform he works with.

To recap, under the new regulations, a flat 28% tax applies to the total value of bets for online games, irrespective of whether they are games of skill or chance. Previously, a lower 18% GST was levied, specifically on the platform fee for skill-based games. For instance, with a platform fee of 20% on a INR 100 bet, the GST under the previous tax regime would be INR 3.6 (18% of INR 20), which has now shot up to INR 28.

“There is a percentage of users out there who are just not happy with this new regime. If we are subsidising this 28% tax, the kind of offers and bonuses that the industry used to provide players cannot be provided any more. Users are not happy with this and there is a clear drop there,” the aforementioned official said.

Revenue Estimates Revised Downwards

The real money gaming sector has been a key revenue driver for the overall Indian gaming industry. However, as the new GST regime begins showing its impact on the online real money gaming sector, the overall growth projections for the Indian gaming industry are being revised downwards.

In a recent report, Lumikai, a gaming-focused venture capital fund, which last year said the Indian gaming industry would have a revenue of $8.6 Bn by the end of FY27, said it now expects this number to be at $7.5 Bn by the end of FY28.

The Indian online real money gaming industry, which generated a revenue of $3.1 Bn in FY23 and grew at a robust 33% during the year, is likely to see a sharp slowdown in growth as recent taxation policies are anticipated to impede further expansion, it said.

“Growth in RMG over the coming years is expected to be muted due to recent tax policies and industry consolidation,” the report added. 

Inc42 earlier reported that a consolidation wave in the online gaming industry is expected due to the new tax regime. However, the landscape has shifted, with major industry players now facing show-cause notices for alleged tax evasions. 

Such has been the impact of the move that Dream Sports, which runs fantasy gaming platform Dream11 and is among the few profitable players in the segment, is also considering diversifying into sectors like sports commerce, content, fitness, among others. 

Additionally, there has been no update on the regulatory front so far despite the industry filing applications for self-regulatory organisations (SROs) in July. As such, the future of the sector seems to be hanging in balance.

The post Doom And Gloom In Real Money Gaming Industry As New GST Regime Begins To Show Effects appeared first on Inc42 Media.

The year was 2015 and Reliance Jio was emerging as a potential game changer. Reliance had tried to become a telecom player in the first 2G wave, even though this proved to be only a limited success. In 2015, Reliance Jio revisited its device-plus-network strategy from 2004, this time for 4G. And this time around, it worked wonders.

The Indian tech ecosystem, as we know it today, would arguably not be possible without Jio’s cheap mobile internet and affordable 4G devices.

Buoyed by this success, Reliance Jio has evolved beyond a mere telecom operator today and Reliance itself is changing from a petrochemical giant to a tech behemoth in so many ways. Alongside Reliance Jio, there’s Reliance Retail with its many massive marketplaces and an array of brands and Jio Financial Services, which is set to disrupt banks and the fintech ecosystem.

With eyes on the hardware manufacturing ecosystem (especially affordable smartphones and mobile devices), the Mukesh Ambani-led company has created a unique stack — from infrastructure and a mobile network to consumer and enterprise services across ecommerce, retail, financial services, entertainment, and most large sectors.

While the ‘Reliance Jio Stack’ is not just about Jio, the moniker fits because everything is centred around Jio and the internet that is powering the machine.

At the same time, however, one cannot ignore the elephant in the room. Today, Jio, Reliance Retail and JFS have become key competitors for major startups and tech companies in India. From enablers to rivals, the role of Reliance has changed just as it has transformed itself. And all of this has happened in less than a decade.

With Mukesh Ambani stepping aside from key companies such as Jio and Reliance Retail to pass on the baton to the next generation, there’s a lot at stake even for Reliance. Akash Ambani and Isha Ambani will lead the company into the next phase, as it looks to cross the 10 Lakh Cr mark for revenue in FY24.

Through conversations with key players in the industry as well as those who have seen the early days of Jio, we were able to piece together a picture of the grander vision of Reliance and Jio, and what it means for startups in the long run.

Reliance Jio did not respond to our questions about the organisational structure and how the various companies work together. 

The Starting Point: Reliance Jio & 4G

It’s no surprise that it all began with 4G. Even though the timing of Reliance’s 4G launch was fortunate, it did not have the 3G baggage of Airtel, Vodafone, Idea and others. It forced players to not just consolidate but focus on retaining subscribers rather than network expansion.

With its deep pockets, Reliance Jio forced many of these players to become 4G first and start again. For India’s internet companies though, Jio’s entry brought a whole generation of users online.

“Anyone who has seen India’s internet ecosystem mature knows that Mukesh Ambani tried this before with CDMA in 2000, but this time around it was a different market altogether. The mobile industry had evolved; consumer internet was changing and businesses were going digital for the first time; it was the right time for 4G,” recalled Elevation Capital partner Mayank Khanduja.

Khanduja, who began taking investment decisions in 2015 as a principal at venture capital firm Elevation Capital (then SAIF Partners), saw first-hand the emergence of the early stage ecosystem, startups that are today unicorns or value creators in the Indian market.

Between 2016 and 2019, Reliance Jio 4G spread like wildfire, and pretty much cast the competition aside. Reliance Jio added 90 Mn subscribers in 2019 to sit at a total of 370 Mn subscribers in just a matter of three years. Today, it commands a huge lead in the market with 439 Mn subscribers as per its FY2023 disclosures.

And somewhere along the way — between 2018 and 2020 — it began pressing home this market share.

The company’s net profit jumped to INR 5,297 Cr in Q2 FY24. Jio Platforms, the umbrella entity created around Jio, had a quarterly revenue of INR 26,875 Cr (roughly $3.3 Bn).

Targeted Acquisitions: Building The Reliance Jio Stack

“One of the things about Reliance is that it saw waves early on and acquired companies to fill those gaps. When these acquisitions happen, they seem small, but they can snowball,” according to an entrepreneur and investor, whose startup was acquired by Reliance (RIL) in 2019.

In 2019, Reliance Industries signed eight acquisition deals, including the likes of retail tech startup Fynd, marketing SaaS platform Haptik, and digitalisation enabler Nowfloats among others.

The acquisitions in 2019 and since form the backbone of Reliance’s growing prowess in the SaaS space.

The entrepreneur quoted above believes there’s no entity like Reliance anywhere in the world. “Amazon has ecommerce and AWS [besides OTT], Microsoft and Google have a huge array of services; Meta has social media power and Apple rules hardware, but Reliance has the capability to enter each of these spaces. And let’s face it, most of them, in India, they have to work with Reliance,” the entrepreneur added.

The acquisitions laid the foundation for what was to come. While RIL was using its years of profits to buy these companies, eventually they moved to a new umbrella entity encompassing all the digital services and products.

The Age Of Jio Platforms 

“Jio gave Reliance the pipeline through which it can feed all these services in the future,” added another Mumbai-based investor, who was a key figure at Jio for nearly six years when Reliance acquired these various startups and raised the funding from marquee names.

After acquiring these companies, the next big challenge was integrating them into one central vision. And this is where Jio Platforms came into the picture.

“The launch of Jio Platforms is not only a corporate structure, but it also was the first step in the transition of leadership from Mukesh Ambani to Akash Ambani. We then saw a similar thing with Reliance Retail and Isha [Ambani], so these new companies are not just an evolution of Reliance but a passing of the baton in many ways,” added the Mumbai-based investor, who did not wish to be named as they are close to the Reliance group.

Set up in late 2019, Jio Platforms was launched to encompass Reliance-owned digital businesses including Reliance Jio which offered the 4G telecom service, and key B2B and B2C apps and products such as JioMeet or JioCloud.

In 2020, Jio Platforms raised nearly $16 Bn from Google, Facebook, General Atlantic, KKR, ADIA, Mubadala, Qualcomm, Intel Capital among others. This fundraising spree not only gave Jio a capital boost, but also got it ready for a future IPO. But most importantly it signalled a new dawn for Jio and other Reliance companies.

Because, soon after, Reliance Retail began its fundraising spree and became a piece of the Reliance Jio Stack as well.

A majority of Jio’s investors lined up to back what is India’s largest retail operator now. Reliance Retail had raised close to $6 Bn in the year from strategic and financial investors, and went on its own spree of acquisitions.

From A Retail Giant…

It would be folly to think that Reliance has only emerged as a retail force in the last few years. In fact, the seeds were sown more than two decades ago with the launch of Reliance Fresh, Reliance Digital and other retail chains.

Reliance Retail also signed exclusivity deals with a host of renowned brands and labels to bring them to India. Reliance also has a grip on the FMCG segment with a number of private labels that leverage not just its own store network but also non-native retail channels.

The below graphic does not include brands such as Marks & Spencer, for which Reliance Retail had a JV which has now been dissolved. 

Interestingly, a number of international brands that may be more popular on other marketplaces are also owned by Reliance Retail in some way or the other.

“The retail scale is mind-boggling. Most people would not know that Reliance has a piece in bringing such brands to India. This allows the company to really get a huge share of the wallet and when it comes to retail, it’s hard to look around and not see a Reliance brand,” according to Ankur Bisen, a senior partner at Technopak.

..To Building An Ecommerce Empire

The ecommerce opportunity presented after Jio’s internet revolution meant that Reliance also had to double down on marketplaces and online-first brands.

Reliance began its ecommerce journey with AJIO in 2016, followed by JioMart in 2020 and added Tira in 2023. It also entered new areas through acquisitions such as epharmacy Netmeds, Urban Ladder, Just Dial, Milkbasket, lingerie maker Clovia and Alia Bhatt’s D2C brand Ed-a-mamma between 2020 and 2023.

For many years, AJIO was the lone horse battling the likes of Myntra, Nykaa, Flipkart and Amazon. Besides this, Reliance put up its brands on marketplaces to get the right revenue mix.

The addition of JioMart and Tira as channels will prove critical for Reliance in the long run because native revenue is any day more profitable than non-native channels.

Analysts believe that having an array of exclusive brands will be advantageous for fashion through AJIO or beauty and personal care through Tira in the long run, since Reliance can create a walled garden effect.

On the horizontal marketplace side, JioMart is expected to face stern competition not just from Tata-owned BigBasket, Amazon or Flipkart, but also quick commerce players that have emerged as real disruptors in the metros.

Talking about the Reliance Jio Stack, Bisen added that when Jio entered telco, it disrupted lives for existing players.

Reliance’s track record in establishing and nurturing new platforms is evident from its experience with AJIO, which it supported for many years. Additionally, its ability to attract the best talent and provide exposure to new platforms gives it a competitive edge. Those watching Reliance expect a similar strategy to be adopted for Tira, which is the latest platform to emerge from Reliance Retail.

The Tira offline store is expected to have technology-enabled features such as virtual try-on rooms, skin analyser, personalisation engines and smart assistance. This is said to be its key differentiation in retail.

“For Tira, a big chunk of revenue will initially go towards marketing and customer acquisition, at least for the first couple of years, as it is a new brand. More than marketing, Reliance will look at discounting more prominently. Reliance will try to give higher discounts compared to other players,” according to Karan Taurani of Elara Advisors.

Reliance’s Media Dominance Growing

It’s hard to believe that JioCinema, a service that did not exist till late 2022, is the biggest OTT platform in India today. With Disney+ Hotstar expected to be acquired by JioCinema, it would also very soon be the biggest streaming platform for live sports in India.

In the past one year, JioCinema has snatched the digital streaming rights for the IPL and other marquee properties from Disney+ Hotstar. JioCinema is today billing itself as the home of Indian cricket, which naturally brings in millions of subscribers.

Analysts now expect JioCinema to turn on the monetisation pipeline. It has already launched a subscription tier and is likely to put IPL 2024 behind a paywall of some kind. In just under eight months after its launch, JioCinema has 221 Mn monthly active users as of June 2023, according to reports.

Of course, beyond OTT and streaming, Reliance has the might and reach of Network18 with its various TV channels and digital publications, as well as production houses for motion pictures, and Mumbai Indians, which has won the IPL five times. These form a key part of the distribution side of the Reliance Jio Stack as well.

They help drive Reliance’s empire of products and services, as was evident during the IPL 2023, when Reliance products such as Tira and AJIO featured heavily during ad breaks.

JioCinema has the potential to become a very cost-effective sales funnel for Reliance platforms in the long run. Reliance can leverage the scale to succeed at formats such as live commerce, which have so far failed to take off due to the lack of vertical integration.

“The Reliance Jio Stack, or whatever you want to call it, is all about unlocking this vertical integration across all segments, unlike ever done before,” says the Mumbai-based investor quoted above.

The Final Frontier: Financial Services

While we expected Reliance to do something about fintech in the long run, the launch of Jio Financial Services this year was still something of a surprise. From payments to insurance to investment tech, JFS is set to disrupt several key fintech segments and pose a significant threat to existing players — both startups as well as legacy BFSI companies.

At launch, JFS is the world’s highest capitalised financial services platform and this safety net is a key to success for Jio’s fintech ambitions.

“The cost of fintech is still very high in India, whether you look at payments or insurance broking or any other service which relies on commissions. Having capital means JFS can be bullish on expansion. It can acquire some customers very easily due to Reliance Jio and Reliance Retail,” according to the founder of a Delhi-based B2B and B2C lending tech startup.

What works out for JFS is the fact that Reliance Jio boasts of over 439 Mn subscribers, while Reliance Retail has close to 250 Mn registered customers and 3 Mn merchants. These will be the anchors for scaling up Jio Financial Services over the next few quarters as it looks to push personal loans and consumer durable loans.

All this makes ominous reading for India’s fintech startups, which have so far banked on Reliance Jio’s internet services as a growth ladder. But now, startups not only have to solve the revenue puzzle that has plagued fintech for long, but also compete with a giant such as JFS, backed by Reliance’s technological prowess, retail network and significant reach across sectors.

As is evident from Reliance’s journey in the past eight years, the company looks to dominate the verticals it enters with a mix of capital-led growth and inorganic acquisitions.

Will we see a similar burst of acquisitions for JFS? It’s very much on the cards given the wider problems in the fintech space. Startups are struggling with revenue growth and JFS could use its deep pockets to acquire some of these ailing startups.

Even established players such as Paytm, Zerodha, Groww, PhonePe, Policybazaar, Lendingkart and others are very likely to see JFS as a challenge in payments, investment broking, insurance and other areas.

Startups have faced regulatory headwinds, a funding winter and Reliance’s mega entry means another massive player to compete with. A potential consolidation wave of fintech startups cannot be ruled out, which brings us to the final point about this “Reliance Jio Stack”.

Reliance Jio’s Big Tech Avatar

By all indications, Reliance is not about to halt its juggernaut any time soon.

Jio Financial Services is only the latest piece of the empire, which may soon include automotives and electric vehicles besides hardware manufacturing. Reliance is essentially aiming to become an everything-tech company.

And for many startups that have so far leaned on Reliance for growth, this is a scary proposition. There are fears about a monopoly in certain segments such as streaming as well as retail, but more ominously, entrepreneurs and other ecosystem stakeholders are worried about potentially having to cede ground to Reliance in other areas as well.

“No one can dispute that Reliance has taken Indian tech to a new place, but at the same time, there needs to be a check on where this is going. We have seen cases in CCI about monopolistic practices of foreign giants like Google or Meta, and the same argument can be extended to Reliance in many areas,” says the Delhi NCR-based entrepreneur and investor quoted first in this story.

Others pointed out that the Future Retail battle with Amazon shows that as Reliance tries to stretch further it will attract more such opposition. The potential Disney+ Hotstar deal will be an acid test for these concerns. Will there be some opposition to the fact that Reliance would pretty much be in a dominant position in the digital media space?

On the JFS front, many fintech founders have raised concerns in the past few weeks. “JFS will earn the fruits of our years of working with regulators and banks to form this foundation we have today,” the Delhi-based lending startup founder added.

Their primary contention is that Reliance gets an unfair advantage of having seen regulations evolve and mature, which are headwinds that fintech founders have fought back. Similar concerns were raised about Reliance Retail using its financial muscle in the Future Retail saga.

There’s little doubt eight years ago, Reliance Jio changed India forever and gave new wings to Indian tech. Today, in late 2023, the clear signs of the Reliance Jio Stack threaten to do it once again. How will it change Indian tech next?

The post The ‘Jio Stack’: The Making Of Reliance’s Digital Empire appeared first on Inc42 Media.

After a distasteful 2022 in terms of Indian startups embarking on the stock market route, the ongoing year has done a slightly better job. Well, against the three startups that went public in the year infamous for breeding the funding winter, 2023 has seen five startups floating their IPOs so far.

However, had it not been for the sharp correction in the stock prices of the listed tech giants like Paytm, Zomato, and PB Fintech last year, 2023 could have mirrored 2021 when as many as 11 new-age tech startups got listed on the Indian bourses.

Not to mention, these sharp corrections, triggered by the subdued sentiments of investors, forced the likes of OYO, Navi, GoDigit, PayMate and many others to reassess their decisions to commence their journey on the D-Street. The list excludes startups like ixigo, Droom, Snapdeal, PharmEasy, Capillary and MobiKwik who have either delayed or withdrawn their IPO plans since 2022.

The current dilapidated state of Indian startup IPOs is independent of the revival witnessed in the broader IPO market in 2023, particularly around June-July, after Mankind Pharma’s stellar debut.

The Indian IPO Oxymoron?

While, on the one hand, many Indian tech startups were seen fighting shy of getting listed due to multiple reasons, including witnessing the bloodbath of their peers, an EY report suggests that India has emerged as the global leader in terms of the number of IPOs year-to-date in 2023. Quite an oxymoron, if you will.

As per BSE data, the year so far has seen a total of 92 IPOs, including 40 mainboard listings, compared to 90 IPOs in 2022 with 38 mainboards.

Moving on, in Q3 2023 there were a total of 21 IPOs in the Indian main market, a sharp jump from just four in the same period of last year. Even the proceeds raised during the quarter amounted to $1,770 Mn, a 376% rise from $372 Mn in Q3 2022, the EY report notes.

Meanwhile, no one sector is dominating the Indian IPO space, as a diverse mix of companies are going for public listings. 

As Sunil Nyati, MD of Swastika Investmart pointed out, the Indian IPO market has started witnessing a significant diversification in the IPO landscape in contrast to earlier times when a single sector typically dominated the mainboard IPOs.

“Various sectors, including small finance banks, biotechnology, supply chain management, apparel, jewellery, infrastructure, and cable manufacturing, have been active participants in this IPO surge,” Nyati said, adding that companies are racing to file for IPOs ahead of 2024 general elections, as there is a remarkable demand for these offerings.

So, what continues to pull back some of the top tech startups from taking the public route?

The Tale Of Startup IPOs In 2023

Some of the market experts Inc42 spoke with opined that though the IPO market and the sentiment towards tech startups have revived, there continues to be a sharp focus on profitability. Hence, loss-making entities might find themselves in trouble even if they decide to go public now. This is probably why we are witnessing many Indian startups deferring their IPO plans.  

Besides, after the examples set by Paytm and Life Insurance Corporation (LIC) last year, retail investors would hardly subscribe to any public issues with very high valuations.

Given the market is cautious about these two factors (vanity valuations and profitability), it was rather wise for several of these tech startups to go slow on their public listing plans this year, analysts believe.

Speaking on the matter, Prashanth Tapse, research analyst, senior VP (research) at Mehta Equities said that several tech startups have delayed their IPOs looking at the market sentiment, and till the end of this year, there is no chance of more new-age, loss-making businesses entering the Indian market. 

These tech startups will not take any risk of going public right now, he said, pointing at the low subscriptions of Mamaearth’s IPO.

We must note that while many held back, two prominent names – Mamaearth and Yatra – made their debut on the Indian bourses this year, but their entries were rather cold.

Traveltech major Yatra listed on the BSE and the NSE at sharp discounts of 8.5% and 10.2%, respectively. Meanwhile, the recent debut of D2C unicorn Mamaearth was flat on the BSE and at a mere 2% premium on the NSE.

However, it is worth noting that in July, drone startup ideaForge listed at a 94% premium on the bourses. 

Though this emerging tech startup IPO can only be deemed as “stellar” this year, compared to its startup peers, shares of ideaForge have already witnessed a sharp correction of over 30% since its listing.

At a time when the focus remained on the public market debuts of the high-valuation startups, blockchain and IT development firm Yudiz Solutions made its entry at an over 12% premium on the NSE SME platform.

Meanwhile, another mainboard IPO of fintech SaaS startup Zaggle saw a muted response as its shares were listed at a 1.2% discount on the BSE and made a muted entry on the NSE. However, it is pertinent to note here that while Zaggle’s IPO wasn’t hyped as much as some of the others, its shares are trading 40% higher than their listing price.

Amid concerns over valuation and profitability, OYO reduced its IPO size earlier this year to $400 Mn-$600 Mn from $1.2 Bn earlier. 

Additionally, in pursuit of turning profitable, OYO has carried out several restructuring measures in the last one year. Interestingly, OYO claimed to have achieved its first-ever profitable quarter in Q2 FY24, with a projected profit of INR 16 Cr. However, there is still no clarity on the IPO, which was expected to happen around Diwali this year.

On the other hand, in March this year, insurtech unicorn GoDigit refiled its DRHP with SEBI but is yet to receive the green light from the regulator. 

Navi and PayMate’s IPO timelines also remain unclear.

While startup IPOs have been few and far in 2023 when compared to the overall momentum in the Indian IPO market, the situation is, of course, much better than in 2022. 

A major reason behind this shift is the change in investor sentiment towards new-age tech companies in 2023, as several listed loss-making companies turned profitable or are aggressively marching towards their profitability targets.

Will 2024 Be Any Better?

Next year is expected to be even more interesting for the startup IPOs.

This is because several prominent startups from diverse sectors, including electric mobility major Ola Electric, Zomato’s rival Swiggy, Prosus-backed digital payments giant PayU, and Peak XV Partners-backed co-working space Awfis are eyeing public listings in 2024. And this is besides the pending IPOs mentioned above.

In fact, Ola Electric is reportedly eyeing a market capitalisation of $10 Bn following the IPO, raising somewhere between $800 Mn-$1 Bn. However, its filing with the market regulator was expected by October end, which is yet to take shape.

Meanwhile, foodtech decacorn Swiggy has also started preparing for its debut on the public market with an IPO size expected at around $1 Bn.

As per a recent report, Awfis is also likely to file its DRHP soon for an IPO worth $100 Mn-$125 Mn. PayU, too, is expected to file DRHP with SEBI in February next year for a $500 Mn IPO.

Amid the IPOs of unicorns and decacorns, there is a possibility that some smaller tech startups make humble public market debuts next year.

Recently, agri-drone company AITMC Ventures also filed its DRHP with the market regulator to list on the NSE’s SME platform.

Mehta Equities’ Tapse opines that valuation is the most sensitive metric that will decide the fate of IPOs in the current market scenario. He added that the companies that have listed at valuations lower than INR 10,000 Cr are doing much better.

“This is a market where companies should create shareholders’ value and not value for themselves. Tech startups have burnt cash significantly and now they want to get listed to get brand coverage and other advantages but valuations for these loss-making entities should be decided extremely carefully,” he added.

Echoing similar sentiments, Swastika Investmart’s Nyati also said, “Investors, understandably cautious after some recent disappointments, appear reluctant to commit to these high valuations, especially in the backdrop of an environment marked by elevated interest rates.”

Meanwhile, on the back of achieving profitability, Zomato’s valuation has almost doubled. Also helped by lowered losses, Paytm’s market cap has surged over 40% since May this year. The rally is also seen in shares of Nykaa, PB Fintech, MapmyIndia, and others.

Considering the substantial increase in the share prices of listed tech startups, could a more thoughtful valuation approach simplify the path for upcoming new-age tech IPOs? 

[Edited by Shishir Parasher and Vinaykumar Rai]

The post Decoding The Startup IPO Sentiment On D-Street appeared first on Inc42 Media.

Wish You A Very Happy Diwali From Everyone Here At Inc42. Here’s To Another Great Year Ahead For You And Us! 

We are taking a short break from our regular publishing cycle from November 11-13, which is why this Inc42 Weekly Brief is different from what you are used to seeing every Sunday. Team Inc42 will be back on Tuesday, the 14th, recharged and ready for the months ahead! Hope you have a great festive season! 

Every Diwali for the past few years, conversations in North India tend to go to pollution before parties. In fact, the daily AQI is the predominant ice-breaker at startup events these days, with the talk often turning to how pollution has changed Delhi or about how everyone’s leaving town.

Unfortunately for one critical part of the startup ecosystem — i.e gig workers — escaping the pollution or other infrastructure problems is far from possible. Not only in Delhi but also in Bengaluru and Mumbai where rains and bad roads have become a permanent hurdle for gig workers to jump over.

Even as offices shut for the festive season, and everyone is at home with their families, thousands of gig workers still have to be on the road to make sure that the celebrations go on. In many ways, the convenience of ecommerce, quick deliveries has come at a high cost for gig workers, especially in the smog season in North India.

We can bemoan firecrackers and stubble burning practices all we want, but it has not changed the status quo. So we wanted to dedicate this Sunday’s piece to the smoggy Diwali for gig workers. As with every Diwali, it’s time to clean up the mess that has become a huge burden over the years and has piled on the problems for gig workers, besides the stress of their everyday jobs.

No City For Gig Workers 

While the month of November brings the focus on Delhi NCR and air pollution, the reality is that gig workers have to deal with bad roads, accidents and other infrastructure gaps on a daily basis in any city. Delivery workers faced hardships due to floods and waterlogging in Bengaluru in August and September, and deaths related to gig workers have been reported in Noida and Hyderabad this year.

“There are so many issues affecting gig workers and platforms have known about all of them for a number of years. Pollution is not new, and as usual, companies will talk about EVs, but not directly address the problems,” says Shaik Salauddin, the national general secretary and cofounder of the Indian Federation of App-based Transport Workers.

He added that in the past, health problems among gig workers were never addressed with real measures. The talk about pollution comes around every winter, but gig workers are out in the open all year long.

Salauddin believes that most companies resort to PR rather than taking actual steps. For instance, when it comes to pollution, platforms such as Swiggy, Zomato, Zepto and others talk about their transition to an electric vehicle (EV) fleet. However an EV does not change the air that the worker is already breathing.

“Covid was an outlier and there was a real threat to life and the government had mandated masks. But now even masks may not be enough for some parts of Delhi,” added the founder of a NCR-based last-mile delivery firm.

Inc42 reached out to Zepto, Zomato and Swiggy for responses on how they are looking to tackle the smoggy Diwali for gig workers. But none of these companies — two unicorns and a listed giant — sent us a statement in relation to our questions, or any clarity on their health policies for gig workers when it comes to air quality.

According to Salauddin, when seasons change, we tend to forget what happened in the months prior. He bemoaned the uncertainty around the Social Security Code for gig worker safety and insurance, which is yet to be implemented by the government.

“There is a heatwave, which then becomes monsoon and now it’s pollution, but there’s no solution for any of the concerns that gig workers have. They spend hours on the road, often unsheltered and in the midst of traffic snarls. Air pollution or floods, the situation is the same in any city.”

The Pollution Problem

It’s impossible to address pollution and how gig workers are exposed to the health risks without asking serious questions about what’s happening on the farmlands in north India.

The stubble burning before the change of season and crop results in vast quantities of smoke being released into the air. This smoke combined with the still air in Delhi NCR during this time of the year creates a smog box. Efforts have been ongoing for the past half a decade to curb stubble burning, but the practice continues unabated.

An agritech founder from Mohali told us that technology solutions as alternatives to stubble burning have failed to take off due to the low ROI for such innovations. “You cannot do this at scale unless the government steps in and makes such tools mandatory. Innovation can be private, but the enforcement of its usage still comes down to the government. Private companies cannot make a dent by themselves,” the founder added.

Indeed, there is some evidence that private intervention is slow and has low efficacy. This past week, Mahindra Group chairman Anand Mahindra claimed that regenerative agriculture is the solution to the stubble burning problem, but his post on X on November 7, 2023 is almost exactly the same as his tweet in November 2021.

Meanwhile, in the two years between those posts, not much has changed. The fact is that solutions have been offered, but none of them have made a dent in the problem.

Are Things Improving?

A Delhi NCR-based founder of a listed company believes that no one wants to hear about children or gig workers falling ill because of pollution, but that things are gradually improving, even if there seems to be no real progress.

“Just think about our roads and highways 15 years ago; things are improving in India for all businesses. Of course, pollution is one of those problems that cannot be solved just by stopping stubble burning. There are many parts to it, so I think governments are doing what they think is possible in the short-term,” the founder added.

Privately, some seasoned entrepreneurs are mulling making representations to government bodies about the recurring infrastructure problems and potential health hazards not just for gig workers but other daily wage labourers as well.

“If schools and colleges are shut and offices are coerced to take steps to reduce emissions, the situation is not good for anyone. But with each Diwali, our reliance on gig workers is increasing.”

In many ways, gig workers are the unheralded brand ambassadors for platforms and services giants. It’s time gig workers get a chance to celebrate Diwali like the rest of India.

With that, we hope you have a great festive season, and stay safe.

The post A Diwali For Gig Workers? appeared first on Inc42 Media.

In India, faith is quite a profitable line of work, and it is this emotional state of humans that is fuelling the growth of many startups in the not-so-mystical realm of spiritual tech.

The statement stands true especially when the country today is witnessing a wave of startups that in some way or another are disrupting the ages-old devotion market with new-age tech.

According to a study, as of 2023, the Indian faith market stands at a whopping $58.56 Bn with religious / pilgrim tourism accounting for a major share in this sector. The industry players Inc42 spoke to for this story estimate that the startups can easily capture 10% of the burgeoning religious economy of India.

Only a decade ago, telecom service providers like Airtel, Vodafone, Idea, and Jio used to offer astrology, and horoscope services by allowing the customers to dial a particular number and charging them on a minute basis. Gradually the spiritual tech sector is trying to almost replicate the same with modern technological tools.

The spiritual tech market has also deployed evolving technology including AI, and live streaming to enhance their offerings ranging from astrology, numerology, tarot card reading, e-visits ( darshans) to temples, online Puja, e-kundalis, raashis and selling gemstones.

As a society where faith is deeply embedded in our culture, technology is significantly propelling the growth of spiritual tech startups, with many reporting robust profit margins, substantial revenue growth, and VC funding. Marketing has also been at the heart of the sudden boom in the spiritual tech industry.

If you are a regular Instagram hopper, you would have come across many advertisements where a priest/ astrologer is seen in a conversation with a person seeking to address his problems.

“Just recently, during the ongoing Cricket World Cup, a group of Indian cricket team fans organised e-puja through our application and donated INR 25 Lakh to seek God’s blessings,” a spiritual tech startup’s cofounder said, requesting anonymity.

He added that monetisation in the space is not a concern because of the way Indians donate in the name of faith, devotion and spirituality, and some of the prime areas comprise astrology, numerology, tarot card readings, virtual temple visits (darshans), online pujas, e-kundali, zodiac consultations, and the sale of gemstones.

“We have seen an NRI tech founder and his family spend INR 7 Cr on temple darshans and astrology services in the past few years,” the CEO quoted above said.

On the back of growing demand, market players anticipate more VC funds entering the market, higher margins, increasing users and even companies going public in the not-so-distant future.

Meanwhile, multiple industry leaders we spoke with have made a very interesting revelation — spiritual tech startups are drawing more than 70% of their revenue share from younger users (25-35 years).

Why The Sudden Boom In The Spiritual Tech Arena?

There are multiple factors behind the sudden rise of the Indian spiritual tech space. The UPI revolution, cheap internet, the rise of the app culture, and, of course, the unwavering and undented Indian faith are some of the major tailwinds for this interesting Indian startup sector.

“Being a technology-first platform, our substantial growth is primarily attributed to UPI, as it facilitates numerous microtransactions. Next is the penetration of 4G and 5G services. We see a lot of traction on the live streaming feature, which has been possible with a high-speed mobile internet connection,” Anmol Jain, the cofounder and chief business officer of Astrotalk said.

The price factor has also been instrumental in attracting younger age groups. A case in point is the online special puja, which can be attended for just a few hundred rupees charges at half or one-third of the conventional prices. This kind of setup is especially helpful for people who cannot travel to places but need a medium to connect with their deity’s place of worship. And this is just one of the many examples.

Besides online darshan and puja, astrology and allied services, too, have dominated this recession-proof industry. If an astrologer has asked you to undergo some religious rituals for better fortunes then some apps help you do that too.

“For instance, an astrologer informs someone that they are under the influence of “Kaal Sarp Dosh”, requiring an individual to undergo a Kaal Sarp Dosh ritual priced at INR 3,000. Subsequently, the same individual discovers on the VAMA app that every 15th of the month, a group Kaal Sarp Dosh puja takes place in a revered temple, and the cost for participation is only INR 700,” said Mannu Jain, the cofounder of VAMA.

On the astrology front, some apps provide you with a list of astrologers, who charge anywhere from INR 5 a minute to INR 50 a minute to read birth charts (kundali). Such startups are now bringing astrologers online, expanding their scope of work.

Stars Of Spiritual Tech Players Are Shining Brightly?

While still in its infancy, startups in the spiritual tech space are showing promising growth. Take, for example, Astrotalk, a startup specialising in online astrology services, which recently reported an almost twofold increase in revenues for FY23, reaching INR 282 Cr, with profits surging fourfold YoY to INR 27 Cr.

Sources suggest that the startup is on the brink of concluding a $30 Mn Series B round led by a global private equity fund.

The cofounder of Astrotalk told Inc42 that the company currently commands an 80% market share in the astrology tech space and is experiencing rapid growth.

“In terms of the number of users, we have grown about two and a half times. In terms of revenues, we would have grown similarly. Our daily transacting user and monthly transacting user base would have grown similarly,” Jain said.

Astrotalk, which boasts of 2-2.5 Lakh transacting users every month, aspires to get listed by 2026, we were told.

Meanwhile, VAMA’s Jain said that the startup is in final talks to raise $2-2.5 Mn in a seed round. VAMA boasts an annual revenue run of $1 Mn.

“This is the only space where people will burn a lot of money. This is a highly monetisable space,” the VAMA cofounder said.

With profitability not a challenge for these players, the impressive user stickiness adds to their shimmer. Astrotalk, for instance, claims that 80% of its revenues come from repeat customers.

Interestingly, the spiritual tech space is getting a massive boost from young individuals in the age group of 25-35 years. Also, a substantial number of NRIs have turned to these apps to stay connected with their culture and faith. There is also a huge chunk of Non-Resident Indians ( NRIs) who have turned to India’s spirituality-focussed apps to stay connected to the temples, astrologers, and priests of their choice.

“Temples are not just places of worship but also centres for guidance and wisdom. Many people seek solace, blessings, and advice from temple priests. Online consultations, through video calls or chat services, have become an alternative for people who are unable to visit temples in person,” said Giresh Vasudev Kulkarni, the founder of Temple Connect app.

Festive Season Spurs The Growth

Being the land of devotion, India has started witnessing a rise in the number of individuals using spiritual tech apps around the festive season. Technology has however removed many barriers when it comes to observing the traditional spiritual practices leading to a particular increased demand during the festive season. VAMA app recently livestreamed the historic Red Fort, Delhi Ram Leela on its app during Dussehra.

“We also provide daily predictions during the festive period. We have seen good traction with regards to e-puja, and this segment has grown by about 70%,” Jain of the VAMA app said. He added that the startup also organises specific Durga puja rituals and livestreams religious events.

Echoing similar sentiments, Kulkarni of Temple Connect said that e-pujas gain a lot of traction during the festive season.

“E-pujas allow devotees to request specific pujas to be conducted on their behalf, with priests performing the rituals using video conferencing platforms,” he said.

Meanwhile, the cofounder of Astrotalk said that although the demand for online astrologer consultations does not see any significant spike during the festive season, e-pujas are fetching the platform a monthly revenue of INR 25 Lakh.

Peering Into The Crystal Ball 

According to the VAMA cofounder, there was a time when Indian telecom operators raked in hundreds of crores of annual revenue just by offering astrology services.

“The market has grown manifolds since then, thanks to affordable mobile data and smartphone adoption. The market currently stands somewhere around INR 5K Cr and is only poised to move up from here,” VAMA’s Jain said.

Estimates of the cofounder of Astrotalk, too, are on similar lines. “I think it’s a multi-billion-dollar industry for sure. Mangalam camphor alone is an INR 600 Cr brand, and then we have ITC Mangaldeep agarbatti, which is again an INR 800 Cr brand… And there are INR 1,000 Cr businesses built on only products. So, the potential of the devotion market of India is huge,” he added.

Meanwhile, the cofounder of Astrotalk sees the company’s revenues touching  INR 2,000 Cr in the next two to three years. “Following this, we envision ourselves going public,” he asserted.

While it remains to be seen which part of the aforementioned predictions holds going ahead, one cannot ignore the tailwinds that the sector is receiving right now on the back of tech advancements, digital inclusion, the country’s rich demographic dividend, and an individual’s quest for spirituality.

The post Decoding The Cosmic Rise Of Indian Spiritual Tech Startups appeared first on Inc42 Media.

The ongoing funding winter has brought about a significant transformation in the country’s startup ecosystem. The scarcity of capital compelled new-age tech companies to shift their focus from pursuing growth at any cost to achieving profitability. This also meant cutting down the cash burn, which resulted in companies taking aggressive cost-cutting measures, including pay cuts and layoffs.

According to Inc42’s layoff tracker, Indian startups have laid off more than 29,000 employees since the onset of the funding winter in 2022. 

While these drastic measures helped some startups turn profitable or reduce their losses, most of the startups still continue to be saddled with losses. As per Inc42’s ‘FY23 Financial Tracker’, 39 of the 54 new age Indian tech companies that have filed their financial statements for the year reported a combined loss of INR 25,905.21 Cr. 

Amid all these, it’s natural for one to ask that if the employees are losing their jobs and taking pay cuts, have the founders of the new-age tech companies also seen a decrease in their remunerations? To answer this question and keep our readers up to date with the remunerations earned by the founders, Inc42 has launched the ‘Founder Salaries FY23 Tracker’. 

The tracker will keep you informed about the remunerations earned by the founders in FY23, the percentage increase/decrease in their salaries compared to FY22, and more.

Editor’s Note: This list is not a ranking of any kind, we have placed companies alphabetically. This is a running list and will be updated periodically. 

Founder Remuneration Tracker FY23

Companies are placed in alphabetical order | Data has been sourced from MCA filings, annual reports, and DRHPs | The remuneration Includes salary, wages, & bonus

Nitish Mittersain | Nazara Technologies

Nitish Mittersain, CEO and cofounder of publicly listed Nazara Technologies, was one of the highest-paid founders in the year under review. Mittersain took home INR 4 Cr as remuneration in FY23. His remuneration increased 21% from INR 3.3 Cr he earned in the previous fiscal year. 

Meanwhile, the Mumbai-based company reported an operating revenue of INR 1,091 Cr in FY23, a jump of 75% from INR 621.7 Cr in the previous fiscal year. Net profit rose 21% to INR 61.4 Cr from INR 50.7 Cr in FY22. 

Vijay Shekhar Sharma | Paytm

Vijay Shekhar Sharma, the founder of Paytm and the poster boy of the Indian fintech sector, took home INR 4 Cr as remuneration in FY23. Sharma’s annual remuneration increased 8% from INR 3.7 Cr in FY22. 

On the other hand, Paytm reported a 1.6X jump in operating revenue to INR 7,990.3 in FY23 from INR 4,974.2 Cr in the previous fiscal year. Net loss reduced 26% to INR 1,766.5 Cr in FY23 from INR 2,396.4 Cr in the previous fiscal year. 

Dinesh Agarwal | IndiaMART

Dinesh Agarwal, the founder of publicly listed B2B ecommerce marketplace IndiaMART, took home the second highest salary in FY23. Agarwal, who founded IndiaMART in 1999, took home INR 3.8 Cr in salary, an increase of 11.8% from INR 3.4 in the previous year. 

The company reported an operating revenue of INR 985.3 Cr in FY23, an increase of 31% from INR 753.4 Cr in the previous fiscal year. Profit, however, dipped around 5% to INR 283.8 Cr from INR 298 Cr in FY22. 

Sahil Barua & Kapil Bharati | Delhivery

Sahil Barua, the cofounder and CEO of Delhivery, was fourth on the list with an annual remuneration of INR 3.1 Cr in FY23. This was a 11% increase from INR 2.88 Cr that he took home in the previous fiscal year. 

Kapil Bharati, the CTO of Delhivery, was fifth on the list with a remuneration of INR 3 Cr in FY23, an increase of 24% from INR 2.42 Cr in FY22.

Meanwhile, Delhivery reported a 5% jump in operating revenue to INR 7,225.3 Cr in FY23 from INR 6,882.2 Cr in the previous fiscal year. Loss was almost flat at INR 1,007.7 Cr in FY23 as against INR 1,011 Cr in FY22. 

Bhanu Chopra | RateGain

Bhanu Chopra, the cofounder of RateGain, took home INR 3 Cr as an annual compensation in FY23. While his remuneration was unchanged from FY22, Pratap also received bonus and incentives worth INR 3.1 Cr in FY23. His bonus and incentives stood at INR 3 Cr in FY22.

The traveltech SaaS startup reported a whopping 714% jump in its net profit to INR 68.4 Cr in FY23 from INR 8.4 Cr in the previous fiscal year. The Delhi NCR-based company saw its revenue from operations jump over 54% to INR 565 Cr from INR 366 Cr in FY22. 

The post Founder Salaries Tracker FY23: Amid The Funding Winter, How Much Did Startup Founders Earn? appeared first on Inc42 Media.

There’s a new wave of reality TV in India and it’s all about startups. The wild success and popularity of Shark Tank India has spawned a number of ‘clones’.

Shark Tank India is clearly SonyLIV’s crown jewel, and the premier reality show for startup pitching. But it’s been joined in recent times by Indian Angels, JioCinema’s latest big bet. Besides this Mission StartAb, an upcoming Amazon Prime Video show, is expected to also cast a spotlight on the journey of being an entrepreneur.

Despite being just two seasons old, Shark Tank India has gripped the attention of programming heads at major OTT platforms. Since its launch in December 2021, the show’s popularity has grown like wildfire. Not only has the Indian version of “Shark Tank” become one of the topics of discussion at the Indian dinner table, but it has also made startups a household name.

It’s no surprise then that so many new shows are now vying for the viewer’s attention, and looking to replicate the Shark Tank magic.

While one cannot debate that such reality shows have turned the spotlight on the startup ecosystem and the entrepreneurial mindset among Indians, we also have to wonder whether these shows or platforms are actually helping founders or creating unrealistic expectations around how arduous the actual process of raising funds is.

And as we have covered in the past, Shark Tank India has become as much a platform for the investors or sharks as it is for the founders and startups pitching. The celebrity ‘shark’ culture has been criticised by many observers especially because many of the investors on the show do not run profitable businesses themselves.

With the launch of new shows along the same lines, is there a risk of these concerns getting amplified and snowballing into bigger problems?

Shark Tank Clones: Old Wine In New Bottles

Rival streaming platforms are looking to put their unique spin on the format, but Shark Tank’s format of an eye-catching pitch and a jury of investors or sharks remains the most popular.

Produced by Digikore Studios and streamed on Jio Cinema, Indian Angels is billed as the world’s first angel investment show on an OTT or streaming platform.

Indian Angels follows the same format as Shark Tank, with entrepreneurs and angel investors such as Ajinkya Firodia, MD of Kinetic Group; Ankit Agrawal, founder & CEO of InsuranceDekho; Aparna Thyagarajan, cofounder of fashion brand Shobitam; Kunal Kishore, founder of PR firm Value 360; Rikant Pittie, cofounder of listed travel platform EaseMyTrip and Shreedha Singh, CEO & cofounder of The Ayurveda Co.

So far two episodes of the show have aired, and the response has been tepid and unlike Shark Tank, no viral memes have come out of Indian Angels so far.

One of the judges/investors on the show told Inc42 that there’s only so many ways that shows can experiment on the main concept popularised by Dragon’s Den and Shark Tank globally. Instead the differentiation for Indian Angels comes from the fact that the investors on the show have been working to build businesses out of the typical spotlight.

“We [Indian Angels] have the likes of Rikant [Pittie] and Ankit [Agrawal] who have built huge businesses. EaseMyTrip is a listed company already and growing in value, so in my opinion, these investors are different from what we saw on Shark Tank when it launched,” one of the six investors on Indian Angels told Inc42.

Season 3 of Shark Tank India was launched with great fanfare and a litany of high-profile investors. This year, six new guest ‘Sharks’ have been added to the show including Zomato CEO Deepinder Goyal and OYO CEO Ritesh Agarwal. Besides this, the controversies surrounding Ashneer Grover and BharatPe in the first year also gave Shark Tank a big boost.

So far Indian Angels has remained relatively muted in its promotions, but it will be interesting to see whether it prefers to remain the more reserved version of Shark Tank India for too long. But JioCinema does have a wider reach than SonyLIV with 221 Mn monthly active users as of June 2023, according to reports. This could be a big advantage for Indian Angels as a platform.

Setting Unreal Expectations

Unlike Indian Angels, which follows the Shark Tank Way, Amazon Prime Video’s Mission Start Ab is taking a different route.

The show which has roped in Alia Bhatt as an ambassador hopes to follow the journeys of different entrepreneurs as they build their startups. Amazon has partnered with the Principal Scientific Adviser (PSA) of the Indian government to create the show, which is billed as a series “that will showcase India’s grassroots innovators as they turbo-charge their business growth”.

It will focus on the scaling-up journey of made-for-India innovations and offer entrepreneurs a series of challenges before giving them an opportunity to raise funding.

Mission Start Ab claims ambitiously that the show is a search for India’s next unicorn, even though such a thing usually takes many years and is certainly not something that happens just because a startup is being promoted on a streaming platform.

Indeed, we have seen many such shows come and go in the past, as seen in our graphic below.

According to a second Indian Angels investor, the short lifespans for reality TV shows that came before Shark Tank India is because they did not have the branding power to stay for long.

Keen observers might recall The Vault, which had a short stint on TV in 2016 or MTV Dropout which aired for a single season in 2017. Neither could sustain despite having the same model and a similar format.

The longevity of the Shark Tank brand and the localisation of Shark Tank for different geographies has garnered the show a cult following. This is something flash-in-the-pan efforts cannot hope to match, said the second Indian Angels judge we spoke to.

Who’s to say whether Indian Angels or Mission Start Ab will stay the course and compete for many years with Shark Tank India? “Ultimately, this is reality TV and here content will win. It’s not about the quality of investments or startups,” said the first Indian Angels judge.

Investors In The Spotlight

Of course, unlike Shark Tank in the US, where judges earned fame for being on TV, in India sharks were already popular in the mainstream to some degree.

The meteoric rise in Shark Tank’s popularity brought a lot of spotlight for the businesses that the judges have built. For instance, Aman Gupta, cofounder of boAt, has claimed that his appearance on the show has helped the company cut marketing costs significantly.

IPO-bound OYO’s Agarwal and listed giant Zomato’s Goyal would be looking for something similar for their companies too in the upcoming season.

But at the same time, being on the show means investors run the risk of making a hasty decision that they might not otherwise make in the real world.

The camera and the editing of the pitch do seem to add some drama and pressure to the dealmaking, which might bring sentiments or emotions into the equation. Investors usually tend to take a cold hard look at businesses in the real world, as opposed to on the small screen.

“Being on the show means making a decision in an hour versus the many months it takes in real angel investing. There’s definitely some pressure and a good pitch can sway you as well. I had to force myself to not invest in some startups on Indian Angels that made a great pitch, and then we went back to these founders to discuss a potential deal again,” said the first investor we spoke to.

Of course, not all founders are happy with the way these shows cut short their pitches or edit their narratives for dramatisation, a critical part of reality TV. Other founders have bemoaned the lack of response or delay in dealmaking by ‘Sharks’, something we have covered in detail here.

Many have called Shark Tank India the TV version of funding festivals where founders are often taken for a ride or where investors disappear after making commitments. That may be a bit too harsh given that we have seen sham events like the ‘World Startup Convention’, but the commoditisation of Shark Tank can potentially bring the same risk factors to reality TV.

“Because of Shark Tank India, a lot many Indians now know what a startup is. But the show is only successful because it has done things in one way for a number of years. This consistency will be key for any show looking to become the new Shark Tank,” said a Delhi NCR-based founder who pitched on the show in season one in early 2022.

Another aspect of Shark Tank India that cannot be overlooked is the outcome beyond TRPs and viewership data. What we cannot deny is that the show has made startups a bigger part of the public consciousness and its audience gets to see one side of the entrepreneurial journey up close.

But building a startup is more than just a pitch, and that’s something that no reality TV show has so far managed to capture well.

Shark Tank India is definitely the north star for any show looking to replicate the magic. Now the question is can any other show assert its own brand identity and not just remain a Shark Tank clone.

The post The Rise Of The Shark Tank India Clones appeared first on Inc42 Media.

In a landscape teeming with buzzwords like disruption, innovation and scalability, the stark reality of numbers often tells a different story. While 64 leading new-age tech companies in India have released their FY23 financials, the performance figures offer a cautionary tale. 

Despite a cumulative operating revenue of a staggering INR 1.75 Lakh Cr, 42 of these companies reported a combined loss of INR 28,226.31 Cr in FY23. In contrast, the rest managed to eke out a collective profit of INR 5,493.7 Cr. The divide becomes more intriguing considering 19 of these companies have the additional scrutiny that comes with being publicly listed. 

We are over seven months into FY24, but a majority of Indian startups are yet to release their financial numbers for FY23, leaving many to wonder what lies beneath the surface. In the ongoing fiscal year, Inc42’s Indian Startup Financials Tracker FY23 aims to be your eyes and ears, updating you on the financial performance of startups.

It’s important to note that FY23 was far from smooth sailing for the Indian startup ecosystem. Faced with dwindling funding, startups resorted to mass layoffs. In addition, various Indian startups adopted restructuring measures, including elimination of some business units and reductions in marketing budgets, to navigate the downturn.

While the capital crunch was painful and humbling, it also pushed startups to control their expenditure and focus on profitability. As such, FY23 financials are more than numbers. They reveal how Indian tech companies navigated the funding winter and showed resilience while continuing to push for growth. Now, let’s delve deeper into the financial performance of Indian startups.

Editor’s Note: This list is not a ranking of any kind, we have placed companies alphabetically. This is a running list; we will be updating it periodically.

Inside The FY23 Financials Of Indian Startups

Note: All amount in INR Cr

Acko’s FY23 Loss Jumps To INR 739 Cr

Bengaluru-based fintech unicorn Acko saw its operating revenue rise 32% to INR 1,758.6 Cr in FY23 as compared to INR 1,334.4 Cr in the previous year. Loss jumped over 50% to INR 738.5 Cr during the year under review as against INR 482.3 Cr in the previous fiscal year. Earlier this year, the startup received the licence from the Insurance Regulatory and Development Authority of India (IRDAI) to commence life insurance business.

Read: Acko Earned INR 1,759 Cr By Selling Insurance In FY23

Apna’s Revenue Jumps 3X

Tiger Global-backed professional networking platform Apna’s revenue from operations surged nearly 3X to INR 180.2 Cr in FY23 from INR 63.8 Cr in the previous fiscal year. 

The startup incurred a loss of INR 120.3 Cr in FY23, an increase of 7% from INR 112.5 Cr in FY22.  The Nirmit Parikh-led startup’s total expenses also rose 73% to INR 308.4 Cr in FY23 from INR 178.3 Cr in the previous fiscal year.

Read: Tiger Global-Backed Apna’s FY23 Revenue Nearly Triples To INR 188 Cr

Ather Energy’s Revenue Quadruple In FY23

Bengaluru-based two-wheeler electric vehicle (EV) manufacturer Ather Energy’s operating revenue jumped 4.3X to INR 1,783.6 Cr in FY23 from INR 408.5 Cr in the previous fiscal year. Despite this, the Hero MotoCorp-backed startup’s net loss surged over 150% to INR 864.5 Cr from INR 344.1 Cr in FY22. 

The two-wheeler EV manufacturer’s total expenses more than tripled to INR 2,670.6 Cr from INR 757.9 Cr in FY22

Read: Ather Energy’s Loss Shoots Up 2.5X To INR 865 Cr IN FY23

BankBazaar’s Loss Falls 15% To INR 37 Cr

Fintech startup BankBazaar’s net loss narrowed over 15% to INR 36.71 Cr in FY23 from INR 43.23 Cr in the fiscal year ended March 2022. The startup’s operating revenue stood at INR 158.69 Cr in FY23, up from INR 95.52 Cr in FY22.  

Eight Roads-backed BankBazaar’s total expenditure zoomed 40% YoY to INR 196.93 Cr in FY23.

Read: BankBazaar Trims FY23 Loss By 15% As Top Line Jumps 66% To INR 158.69 Cr

Beardo Slips Into The Red, Posts INR 6.1 Cr Loss In FY23

Marico-owned men’s grooming D2C brand Beardo slipped into the red during the financial year under review. The Ahmedabad-based D2C brand reported a net loss of INR 6.1 Cr in FY23 as against a net profit of INR 75.5 Lakh in the previous fiscal year. 

Beardo’s revenue from operations rose 12.3% to INR 106.6 Cr in FY23 from INR 94.8 Cr in FY22, as per Marico’s annual report for the year ended March 31, 2023.

Total expenditure stood at INR 115.3 Cr in FY23, a rise of 20% from INR 96.1 Cr in FY22. 

Read: Marico-Owned Beardo Slips Into The Red, Posts INR 6.1 Cr Loss In FY23

BigBasket Crosses INR 16,000 Cr Revenue Mark 

Tata-owned BigBasket reported a total revenue of INR 16,903 Cr in FY23, a jump of 8.4% from INR 15,593 Cr in the previous fiscal year. 

The combined B2C and B2B business of BigBasket incurred a net loss of INR 3,320 Cr in the financial year 2022-23 (FY23), a 79% increase from INR 1,853 Cr reported in the previous fiscal year.

BigBasket spent INR 770 Cr for advertisement and promotional expenses during the year under review.

Read: BigBasket B2C Arm’s Net Loss Surges 89% To INR 1,535.2 Cr In FY23

Bira 91’s Sales Inch Closer To INR 1,000 Cr Mark

Delhi NCR-based beer brand Bira 91 reported an operating revenue of INR 824.3 Cr in the year ended March 31, 2023, an increase of 15% from INR 718.8 Cr in the previous fiscal year. 

Bira 91’s net loss increased 12% to INR 445.4 Cr in FY23 from INR 396 Cr in the previous fiscal year. Total expenditure increased 14% to INR 1,282.4 Cr during the year under review from INR 1,122.5 Cr in FY22.

Read: Bira 91 Incurred Loss Of INR 445 Cr From Sales Of Beers In FY23

BlueStone’s Expenses Dip 45%

Jewellery startup BlueStone’s operating revenue increased over 1.6X to INR 770.7 Cr in FY23, an increase of 67% from INR 461.3 Cr in the previous fiscal year. 

The startup’s loss plunged 86% to INR 167.2 Cr from INR 1,268.4 Cr in FY22 on account of a one-time non-operating expense in the previous fiscal year. The jewellery startup’s total expense declined 45% to INR 955.1 Cr in FY23 from INR 1,739 Cr in FY22. 

The startup is in the process to raise $65 Mn from Nikhil Kamath’s office, Deepinder Goyal, Amit Jain, and Ranjan Pai

Read: Ratan Tata-Backed BlueStone Earned INR 771 Cr By Selling Jewellery In FY23

CarTrade Back In The Black In FY23

CarTrade, which recently acquired OLX’s India business, returned in the black in the financial year ended March 31, 2023. The Rajasthan-based startup reported a net profit of INR 40.4 Cr in FY23 as compared to a loss of INR 121.3 Cr in the previous year. 

Operating revenue rose around 16% to INR 363.7 Cr in FY23 from INR 312.7 Cr. 

The auto marketplace also reported an over 300% rise in profit after tax at INR 13.5 Cr in the first quarter of the financial year 2023-24 (FY24) from INR 3.3 Cr posted in the year-ago quarter. 

Read: CarTrade’s PAT Jumps 4X YoY To INR 13.5 Cr In Q1

Amazon-Backed Cashify’s Revenue Crosses INR 800 Cr Mark

Delhi NCR-based recommerce startup Cashify’s sales jumped 67% to INR 815.9 Cr during FY23 from INR 497.9 Cr in the previous fiscal year. 

Despite the rise in revenue, Cashify’s net loss increased in FY23. Its net loss grew 49% to INR 147.9 Cr during the year under review from INR 99.3 Cr in FY22.

The Amazon-backed startup saw its expenditure grow 61% to INR 973.4 Cr in FY23 from INR 603.1 Cr in the previous fiscal year.

Read: Cashify Earned INR 816 Cr By Selling Refurbished Phones, Laptops In FY23

Classplus’ FY23 Loss Widens To INR 257 Cr

The Tiger Global-backed edtech startup’s net loss rose 57% to INR 256.6 Cr in FY23 from INR 163.5 Cr in FY22. Operating revenue jumped 4X to INR 102.04 Cr in FY23, compared to INR 25.9 Cr in the previous year.

Earlier this year, Classplus faced legal trouble when Saarthi’s cofounder, Chiraag Kapil, and its investors filed a lawsuit against it in the Delhi High Court (HC) for alleged cheating and criminal breach of trust.

Read: Tiger-Backed Classplus Spent INR 4 To Earn Every INR 1 From Ops In FY23

Flipkart-Owned Cleartrip’s Loss Doubles 

Flipkart-owned online travel aggregator Cleartrip witnessed a 90% surge in its loss to INR 676.5 Cr in FY23 from INR 356.5 Cr in the previous financial year. The startup’s operating revenue declined 10% to INR 50 Cr, whereas expenses jumped 63% to INR 773.2 Cr in the financial year. On a unit economics level, the startup spent INR 15 to earn every INR 1 from its operations. 

Read: Flipkart Owned Cleartrip Spent INR 15 To Earn Every INR 1 From Ops In FY23

Kunal Shah’s CRED’s Revenue Jumps 250% In FY23

Kunal Shah-led fintech unicorn CRED’s total revenue jumped over 3.5X in the financial year ended March 31, 2023 to INR 1,484 Cr from INR 422 Cr in the previous fiscal year. 

While the loss grew 5% to INR 1,347.4 Cr in FY23 from INR 1,279.5 Cr in the previous fiscal year, the startup’s total expenditure jumped 1.6X to INR 2,831.9 Cr in FY23 from INR 1,702.1 Cr.

CRED, which is known for splurging on advertisements, reduced its marketing costs by 26% to INR 713.4 Cr from INR 975.7 Cr in FY22.

Read: Kunal Shah-Led CRED’s Revenue Jumps 3.5X To INR 1,484 Cr In FY23

Delhivery Sees Meagre Uptick In Revenue

Logistics company Delhivery saw a 5% YoY jump in operating revenue in the financial year ended March 31, 2023. The Lee Fixel-backed startup reported an operating revenue of INR 7,225.3 Cr in the financial year under review as compared to INR 6,882.2 Cr it had reported in the previous quarter. 

The startup also reported a loss of INR 1,007.7 Cr in FY23, a 0.3% dip as compared to the loss of INR 1,011 Cr it had reported in the previous year. 

However, the logistics startup reported almost a 78% decline in net loss at INR 89.5 Cr in the first quarter of FY24 from INR 399.3 Cr reported in the last year’s quarter.

Read: Delhivery’s Q1 Loss Narrows 78% YoY To INR 89.5 Cr On Strong Growth Across Verticals

DroneAcharya Witnesses 700% Jump In Profit

Of the listed companies, Pune-based drone startup Droneacharya reported the highest jump in profit on a YoY basis. The company reported a profit of INR 3.4 Cr in FY23, a jump of over 700% from INR 0.4 Cr it had reported in the previous fiscal. 

The startup’s operating revenue also increased by over 429% to INR 18.5 Cr in FY23 as compared to INR 3.5 Cr it had reported in the previous fiscal year. 

Read: DroneAcharya’s FY23 Profit Jumps Over 700% YoY To INR 3.42 Cr On Increase In Offerings

Dunzo’s Loss Quadruples

Reliance-backed Dunzo’s loss nearly quadrupled in the financial year ended March 31, 2023. The Bengaluru-based hyperlocal delivery startup’s loss surged to INR 1,801 Cr in FY23 from INR 464 Cr in the previous fiscal year. 

Meanwhile, operating revenue increased 317% to INR 226.6 Cr in FY23 from INR 54.3 Cr in FY22. The startup’s total expenses ballooned 286% to INR 2,054.4 Cr in FY23 from INR 531.7 Cr in the previous fiscal year

Read: Dunzo Spent INR 9 To Earn Every Single Rupee From Operations In FY23

EaseMyTrip Nears INR 500 Cr Mark in Sales

Prashant, Nishant, and Rikant Pitti-led online travel aggregator – EaseMyTrip – reported a 91% jump in operating revenue in the year under review. The Delhi-NCR-based startup reported an operating revenue of INR 448 Cr in FY23, an almost 2X jump from INR 235.3 Cr it had posted. EaseMyTrip also reported a profit of INR 134 Cr in FY23, a 27% jump from INR 106 Cr it had reported in the previous fiscal.

However, the startup’s profit declined by 22% YoY to INR 26 Cr in the first quarter of financial year 2023-24 (FY24).

Read: EaseMyTrip’s Q1 PAT Declines 22% YoY To INR 25.9 Cr On Deep Discounts

Flipkart’s B2B Arm’s Loss Jumps 42%

Flipkart India, the B2B arm of Flipkart, saw its standalone net loss balloon over 42% to INR 4,845.7 Cr in FY23 from INR 3,404.3 Cr in FY22. 

Operating revenue increased a mere 9.7% to INR 55,923.9 Cr in FY23 from INR 50,992.5 Cr in the previous fiscal year.  Total expenses rose 11.5% to INR 60,858.5 Cr in FY23 from INR 54,580 Cr in FY22.

Read: Flipkart’s B2B Arm’s FY23 Loss Surges 42% To INR 4,846 Cr

SaaS Unicorn Fractal Posts INR 194 Cr Profit 

New York-based AI intelligence unicorn Fractal turned profitable in FY23, posting a profit of INR 194.4 Cr as against a loss of INR 148.4 Cr in FY22. 

Operating revenue increased 53% to INR 1,985.4 Cr in FY23 from INR 1,295.3 Cr in the previous fiscal year. Total expenditure surged 52% to INR 2,225.2 Cr from INR 1,461.5 Cr in the previous fiscal year. 

Read: Exceptional Gain Helps SaaS Unicorn Fractal Post INR 194 Cr Profit In FY23

Fino Reports 50% PAT Jump In FY23

Mumbai-based Fino reported a 166% increase in its operating revenue to INR 95 Cr in FY23 as compared to INR 35.6 Cr it had reported in the previous fiscal year. The payments bank further reported a 52% increase in net profit to INR 65 Cr in FY23 as compared to INR 42.7 Cr it had reported in the previous financial year. 

The payments bank reported an 85% YoY jump in its profit after tax (PAT) to INR 18.7 Cr in the June quarter (Q1) of the financial year 2023-24 (FY24) as compared to a PAT of INR 10.1 Cr on a revenue of INR 289 Cr in Q1 FY23.

Read: Fino Payments Bank’s Q1 PAT Jumps 85% YoY To INR 18.7 Cr; To Apply For Small Finance Bank Licence

Groww Turns Profitable In FY23

Bengaluru-based stock broking platform Groww’s parent entity Billionbrains Garage Private Limited turned profitable in the financial year ended March 31, 2023. It reported a net profit of INR 448.7 Cr in FY23 as against a net loss of INR 239 Cr in the previous fiscal year. 

Operating revenue jumped over 3X to INR 1,277.8 Cr in FY23 from INR 351 Cr in the previous fiscal year. Groww’s expenses increased by a muted 41% to INR 932.9 Cr in FY23 from INR 663.6 Cr in the previous fiscal year

Read: Groww’s Revenue Crosses INR 1,000 Cr Mark, Posts Profit Of INR 449 Cr In FY23

HomeLane’s Net Loss Jumps Over 15% 

Home interior startup HomeLane witnessed a 1.1X increase in net loss in the financial year ended March 31, 2023. The Bengaluru-based startup reported a net loss of INR 173.5 Cr in the financial year 2022-23 (FY23), a 15% increase from INR 150.8 Cr in FY22. 

The MS Dhoni-backed startup saw its total expenses increase over 1.3X to INR 757.2 Cr in FY23 from INR 581.7 Cr in the previous fiscal year. 

Read: HomeLane’s Loss Widens 15% To INR 173.5 Cr In FY23

ideaForge’s Profit Dips In FY23

Listed in 2023, drone manufacturing startup ideaForge saw its profit drop in the financial year ended March 31, 2023. The company reported a 28% drop in profit to INR 32 Cr in FY23 from INR 44 Cr it had reported in the previous fiscal year. 

The Mumbai-based startup’s operating revenue rose 17% to INR 186 Cr in FY23 from INR 160 Cr it had reported in the previous fiscal year. 

Moreover, in the first quarter of the ongoing fiscal year, the company saw over 50% decline in profit to INR 18.9 Cr as compared to INR 41.2 Cr it had reported in the corresponding quarter last year. 

Read: ideaForge’s PAT Declines 54% YoY To INR 18.9 Cr In Q1

iD Fresh Food’s Loss Halves In FY23

Ready-to-cook food maker iD Fresh Food’s net loss narrowed over 50% in FY23. The Bengaluru-based startup, which sells idli batter and parota, incurred a loss of INR 328.8 Cr in FY23, a 53% decline from INR 703.7 Cr in the previous year. 

Operating revenue increased 26% to INR 479.2 Cr during the year under review from INR 381.6 Cr in FY22. The startup’s expenses grew 14% to INR 517.1 Cr in FY23 from INR 453.9 Cr in the previous fiscal year. 

Read: iD Fresh Food Earned INR 479 Cr By Selling Idli & Dosa Batter In FY23

IndiaMART Nears INR 1,000 Cr In Sales

The only new-age publicly listed ecommerce marketplace, IndiaMART, witnessed a slight improvement in its revenue in the financial year ended March 31, 2023. Dinesh Agarwal-led B2B ecommerce marketplace reported an operating revenue of INR 985.3 Cr in FY23, a 31% increase from INR 753.4 Cr it reported in the previous fiscal year.  

The company’s profit dipped around 5% to INR 283.8 Cr in FY23 as compared to INR 298 Cr it had reported in the previous fiscal year. 

In Q1 FY24, it reported a consolidated revenue of INR 282.1 Cr, up 25.65% YoY. 

Read: IndiaMART At 52-Week High Following Q1 Results

Indifi In The Black In FY23

Lendingtech startup Indifi Technologies turned profitable in the financial year ended March 31, 2023. The Delhi NCR-based startup reported a net profit of INR 5.1 Cr in FY23 as compared to a loss of INR 32.8 Cr in FY21. 

Revenue from operations jumped over 2X to INR 197.9 Cr in FY23 from INR 96.29 Cr in the previous fiscal year. 

The startup’s total expenditure stood at INR 202.8 Cr in FY23, an increase of 1.4X from INR 138.4 Cr in the previous fiscal year. 

Read: Alok Mittal Led Indifi Reports INR 5.1 Cr Profit In FY23

INDMoney’s Operating Revenue Doubles 

Investment tech startup INDmoney reported a 7.7% rise in its net loss to INR 73.9 Cr in FY23 from INR 68.6 Cr in the previous fiscal year.

The startup’s operating revenue  increased to INR 40.6 Cr during the year from INR 21.8 Cr in FY22.

INDmoney’s overall spending grew 1.5X to INR 200 Cr in FY23 from INR 133.4 Cr in the prior fiscal year. 

Read: INDmoney’s FY23 Net Loss Widens To INR 73.9 Cr, Revenue More Than Doubles

Info Edge In The Red In FY23, Revenue Crosses INR 2,000 Cr Mark

Sanjeev Bikhchandani-led Info Edge, the first Indian internet company to go public, reported a 47.6% jump in operation revenue to INR 2,345.7 Cr in FY23 from INR 1,589 Cr it had reported the previous year. However, the company slipped in the red in FY23. 

The parent entity of Naukri.com reported a net loss of INR 70.4 Cr in FY23 as against a net profit of INR 1,288.2 Cr in FY22. It must be noted that Info Edge wrote off investment worth INR 276 Cr in Rahul Yadav led 4B Network during this period. 

However, it reported a profit of INR 147.4 Cr in the first quarter of FY24. 

Read: Info Edge Back In The Black With INR 147.4 Cr Net Profit In Q1

InsuranceDekho Narrows Loss To INR 51.5 Cr 

InsuranceDekho, the insurance arm of CarDekho, managed to narrow its net loss by 29% to INR 51.5 Cr in FY23 from INR 72.2 Cr in FY22, on the back of a strong growth in its business.

The Haryana-based insurtech startup’s operating revenue doubled to INR 96.4 Cr during the year under review from INR 47.9 Cr in the previous fiscal year. The startup’s total expenses rose 25% to INR 151.8 Cr from INR 121 Cr in FY22

Read: InsuranceDekho’s Net Loss Narrows 29% To INR 51.5 Cr In FY23

Justdial’s Profit More Than Doubles In FY23

Reliance-acquired hyperlocal search engine Justdial reported a 130% jump in profit in the financial year ended March 31, 2023. The Mumbai-based company reported a net profit of INR 162.7 Cr in FY24, a 2.2X increase from INR 71 Cr it had reported in the previous financial year. 

The company reported an operating revenue of INR 844.7 Cr in FY23, a 30.5% increase from INR 647 Cr it had reported in the previous year. 

Even in the first quarter of the ongoing financial year, the company reported a net profit of INR 83.4 Cr, a 72% increase from INR 48.4 Cr it had reported in the corresponding quarter of previous fiscal year. Operating revenue stood at INR 247 Cr in Q1 FY24.

Read: Justdial’s User Traffic Crosses 17 Cr Mark In Q1, Posts Record Revenue Of INR 247 Cr

LEAD School’s Loss Narrows 

Mumbai-based edtech startup LEAD School’s net loss declined 18.5% to INR 321.9 Cr in FY23 from INR 395.3 Cr in FY22 on strong growth in business and reduction in cash burn.

The startup’s revenue from operations increased by more than 2X to INR 273.1 Cr in FY23 from INR 132.3 Cr in the previous fiscal year, as per its filing with the Ministry of Corporate Affairs.

Total expenses increased over 14.7% to INR 617.4 Cr in FY23 from INR 538.1 Cr in FY22. 

Read: LEAD School’s FY23 Loss Narrows 18.5% to INR 322 Cr

Licious Narrows Loss By 38% To INR 529 Cr

Bengaluru-based meat delivery startup Licious witnessed a marginal rise of 9.5% in its operating revenue to INR 748 Cr in FY23 from INR 682.5 Cr in the previous fiscal year.

Meanwhile, the startup managed to decrease its net loss by over 38% to INR 528.5 Cr in FY23 from INR 855.6 Cr in the previous year due to reduction in its cash burn. 

Licious’ total expenses rose 9.8% to INR 1,309.2 Cr in FY23 from INR 1,191.4 Cr in the previous fiscal year. 

Read: Licious Sold Meat Worth INR 748 Cr In FY23 But Growth Plateau

Mamaearth Slips Into The Red 

IPO-bound D2C unicorn Mamaearth slipped into the red with a net loss of INR 151 Cr in FY23 as against a net profit of INR 14.4 Cr in the previous fiscal year on the back of a one-time loss of INR 155 Cr.

The startup reported an operating revenue of INR 1,492.7 Cr in FY23, a jump of 58% from INR 943.4 Cr in the previous fiscal year. Total expenditure surged 59% to INR 1,501.6 Cr in FY23 from INR 942 Cr in the previous year, in line with the increase in its operating revenue.

Read: Goodwill Impairment Hits IPO-Bound Mamaearth, Posts INR 151 Cr Loss In FY23

MapmyIndia’s Profit Crosses INR 100 Cr Mark

Geotech startup MapmyIndia saw a 40% jump in operating revenue to INR 281.4 Cr in the financial year ended March 31, 2023 from INR 200 Cr in the previous fiscal year. Besides increase in operating revenue, the startup reported a jump of 32% in profit on a YoY basis to INR 107.5 Cr in FY23. 

In Q1 FY24, it reported a 32.2% YoY rise in consolidated net profit to INR 32 Cr.

Read: MapmyIndia Q1 Net Profit Zooms 32.2% YoY To INR 32 Cr

Matrimony Sees Dip In Profit In FY23

Indian online matchmaking site Matrimony saw its profit after tax slip 13% to INR 46.6 Cr in  FY23 from INR 53.5 Cr in the previous financial year. The matrimonial site’s operating revenue rose just 5% to INR 455.7 Cr in FY23 from INR 434.4 Cr in the previous fiscal year.

Matrimony saw a 18% increase in profit to INR 4.16 Cr in the first quarter of FY24 as against INR 11.95 Cr it had reported in the corresponding quarter in previous year. 

Read: Matrimony’s Q1 PAT Rises 18% YoY To INR 14 Cr

Fintech Giant MobiKwik Narrows Loss To INR 83.8 Cr

Delhi NCR-based fintech unicorn MobiKwik’s net loss fell 35% in the financial year ended March 31, 2023. The startup reported a net loss of INR 83.8 Cr in FY23 as against a loss of INR 128.1 Cr in the previous fiscal year. 

While the startup reduced its expenditure to INR 617 Cr in FY23 from INR 652.5 Cr in the previous fiscal year, MobiKwik’s operating revenue remained almost flat at INR 539.4 Cr in FY23. 

Read: MobiKwik’s FY23 Loss Declines 35% To INR 84 Cr, Operating Revenue Flat

Moglix’s Revenue Crosses INR 4,000 Cr Mark

Rahul Garg’s B2B ecommerce startup Moglix reported an operating revenue of INR 4,664.7 Cr in FY23, a jump of 83% from INR 2,554.6 Cr in the previous year. The Bengaluru-based startup saw its loss increase 12% to INR 196 Cr from INR 175.3 Cr in FY22. Total expenditure jumped 80.5% to INR 4,941 Cr in FY23 from INR 2,736.8 Cr in FY22. 

Earlier this year, the Tiger Global-backed startup laid off around 40 employees. 

Read: Moglix FY23 Revenue Jumps To $560 Mn, Founder Sells Shares Worth $10 Mn

Nazara’s Sales Zooms Past INR 1,000 Cr Mark

Nitish Mittersain-led gaming company Nazara Technologies saw a sharp increase in revenue in the financial year ending on March 31, 2023. The Mumbai-based technology company reported an operating revenue of INR 1,091 Cr in the financial year under review, a 75% jump from INR 621.7 Cr it had reported in the previous year. Profit jumped 21% to INR 61.4 Cr from INR 50.7 Cr in FY22. 

In the first quarter of FY24, the company saw its operating revenue jump to 14% to INR 254.4 Cr during the quarter under review from INR 223.1 Cr in the year-ago quarter.

In Septmeber 2023, the gaming giant also raised INR 510 Cr from Zerodha founders and SBI Mutual Fund.

Read: Nazara Tech’s Q1 Net Profit Soars 31% YoY To INR 20.9 Cr

NeoGrowth Turns Profitable In FY23

Mumbai-based non-banking financial company (NBFC) NeoGrowth turned profitable in the financial year ended March 31, 2023. The NBFC reported a profit of INR 17.2 Cr in FY23 as against a net loss of INR 39.4 Cr in FY22. 

The Lighrock-backed NBFC reported an operating revenue of INR 380.8 Cr in FY23, a meager 5.3% increase from INR 361.5 Cr in the previous year. Meanwhile, it saw a 13.7% decline in expenses to INR 357.4 Cr from INR 414.5 Cr in FY22. 

Read: NeoGrowth In The Black In FY23, Posts Profit Of INR 17.2 Cr

Nykaa Reports 50% Dip In Profit In FY23

Beauty fashion giant Nykaa, which listed on the bourses in 2021, reported an operating revenue of INR 5,143.8 Cr in FY23, a 36% increase from INR 3,773.9 Cr it had reported in the previous fiscal year. 

The Falugni Nayar-led ecommerce startup saw its profit dip by around 50% to INR 21 Cr in the year under review as compared to INR 41 Cr it had reported in the previous fiscal year.

Employee benefit expenses jumped to INR 492 Cr in FY23 from INR 326.4 Cr in FY22. Of late, the company has also seen several top-level exits.

However, the Mumbai-based company posted a net profit of INR 5.4 Cr in Q1 FY24 as compared to a profit of INR 5 Cr in the same quarter of previous fiscal year. 

Read: Nykaa Q1: Net Profit Rises 8% YoY To INR 5.4 Cr

OfBusiness’ Revenue Crosses INR 15,000 Cr Mark

Delhi NCR-based B2B marketplace OfBusiness’ revenue from operation crossed the INR 15,000 Cr mark in FY23. The unicorn marketplace reported an operating revenue of INR 15,342.5 Cr in FY23, an increase of 115% from INR 7,139.5 Cr in the previous fiscal year.

Net profit surged 130% to INR 463.2 Cr in FY23 from INR 201.1 Cr in the previous fiscal year. 

Total expenditure more than doubled to INR 15,037.4 Cr during the year under review from INR 6,993.5 Cr in FY22

Read: OfBusiness Posts INR 463 Cr Profit In FY23, Revenue Crosses INR 15,000 Cr Mark

OneCard’s Operating Income Jumps 6X

Credit card startup OneCard reported a 6X increase in its operating revenue to INR 541.1 Cr in FY23 from INR 83.7 Cr in the previous fiscal year. 

Meanwhile, loss more than doubled to INR 405.6 Cr in FY23, an increase of 122% from INR 182.7 Cr in FY22. 

Total expenditure rose 3.5X to INR 999.5 Cr in FY23 from INR 280.6 Cr in the previous fiscal year. 

Read: Fintech Unicorn OneCard Spent 60% Of Its Operating Revenue On Advertising In FY23

Oxyzo’s Profit Triples In FY23

Fintech unicorn Oxyzo’s profit after tax almost tripled to INR 197.5 Cr in the financial year ended March 31, 2023 from INR 69.3 Cr in the previous financial year. 

Oxyzo’s revenue from operations increased by over 82% to INR 570 Cr in FY23 from INR 313 Cr in the previous financial year. 

The company also reported a 1.7X jump in employee benefit expense to INR 78 Cr in FY23 from INR 46 Cr in the previous year. 

Read: Fintech Unicorn Oxyzo’s FY23 PAT Jumps Over 2.8X To INR 198 Cr

OYO’s Loss Declines 34% To INR 1,287 Cr 

IPO-bound hospitality unicorn OYO reported a 34% decrease in its net loss to INR 1,286.5 Cr in FY23 from INR 1,941.5 Cr in the previous fiscal year, as expenses declined marginally despite growth in business. 

The SoftBank-backed startup’s operating revenue grew 14% to INR 5,463.9 Cr in FY23 from INR 4,781.3 Cr in the previous fiscal year. Total expenditure fell 3% to INR 6,799.6 Cr from INR 6,985.3 Cr in the previous fiscal year. 

Read: IPO-Bound OYO’s Loss Declines 34% To INR 1,287 Cr In FY23

Paytm’s FY23 Loss Drops By 26%

Vijay Shekhar Sharma-led Paytm improved its financial performance in FY23. The Delhi NCR-based fintech giant reported a 1.6X jump in operating revenue at INR 7,990.3 in FY23 from INR 4,974.2 Cr in the previous fiscal year. 

Its net loss also reduced 26% to INR 1,766.5 Cr in FY23 from INR 2,396.4 Cr in the previous fiscal year. 

Even in the first quarter of FY24, the startup reported a revenue of INR 2,342 Cr, a 39% jump from INR 1,680 Cr it reported in the previous quarter.

Read: Paytm Q1 Net Loss Declines 45% YoY To INR 358.4 Cr But Jumps 113% QoQ

PB Fintech’s Operating Revenue Jumps To INR 2,558 Cr

Mumbai-based insurtech startup PB Fintech saw its operating revenue jump over 80% to INR 2,557.8 Cr in FY23 from INR 1,425 Cr in the previous fiscal year. Despite the startup’s advertisement expense jumping 1.6X to INR 1,357 Cr in FY23, PB Fintech reduced its net loss by 41.4% to INR 488 Cr from INR 832.9 Cr in FY22. 

In the first quarter of FY24, the startup managed to reduce its loss by over 94% to INR 11.9 Cr from INR 204 Cr in the year-ago quarter.

Read: PB Fintech’s Q1 Net Loss Narrows 94% YoY To INR 11.9 Cr

Porter’s FY23 Revenue Crosses INR 1,700 Cr Mark

Intra-city logistics service provider Porter reported a 2X jump in operating revenue on a YoY basis in the financial year ended March 31, 2023. The Tiger Global-backed startup reported an operating revenue of INR 1,753.5 Cr in the year under review as against INR 847.6 Cr in the previous fiscal year. 

Porter’s net loss jumped over 43% to INR 157.7 Cr in FY23 as compared to INR 122 Cr in the previous year. The startup, which has raised $132 Mn in funding so far, spent INR 185 Cr on employee benefit expenses, a 75% increase from INR 106 Cr in the previous year. 

Read: Logistics Startup Porter’s Operating Revenue Doubles To INR 1,753 Cr In FY23

RapiPay’s Loss Doubles In FY23

After raising $15 Mn in 2022, fintech startup RapiPay saw its net loss jump over 2X in the financial year ended March 31, 2023. The Noida-based startup incurred a net loss of INR 93.3 Cr in FY23 as against a loss of INR 40 Cr in the previous financial year. The significant rise in startup’s loss could be attributed to an increase in service and commission charges, which grew to INR 360.8 Cr in FY23 from INR 322.2 Cr in the previous year.

The startup’s revenue from operations also rose to INR 439.2 Cr in FY23 as compared to INR 371.4 Cr in the previous fiscal year. 

Read: Fintech Startup RapiPay’s Net Loss Jumps 2.3X To INR 93.3 Cr In FY23

RateGain’s Profit Jumps Over 700%

Traveltech SaaS startup RateGain reported a whopping 714% jump in profit to INR 68.4 Cr in FY23 from INR 8.4 Cr in the previous fiscal year. The Delhi NCR-based company saw its revenue from operations jump over 54% to INR 565 Cr from INR 366 Cr in FY22. 

In Q1 FY24, the company tripled its profit after tax to INR 24.9 Cr from INR 8.4 Cr in the previous year. The company reported an 80% YoY increase in operating revenue to INR 214.5 Cr in Q1 FY24.

Read: RateGain Q1 PAT Almost Triples YoY To INR 24.9 Cr On Robust Travel Demand

Recykal Slips Into The Red 

Morgan Stanley-backed waste management marketplace Recykal slipped into the red in FY23, reporting a net loss of INR 25.7 Cr as against a net profit of INR 1.2 Cr in FY22. 

However, the Hyderabad-based startup’s operating revenue jumped 291% to INR 745.1 Cr in FY23 from INR 190.4 Cr in the previous fiscal year. 

Read: Morgan Stanley-Backed Recykal Slips Into The Red, Posts INR 25.7 Cr Loss In FY23

Rupeek’s Loss Declines 23% 

Gold loan startup Rupeek reported a 22.7% narrowed loss of INR 281.6 Cr in FY23 from INR 364.4 Cr in FY22. The Bengaluru-based startup’s revenue from operations dropped 27.7% to INR 88.9 Cr in FY23 from INR 122.9 Cr in FY22.

Total expenses fell one-fourth to INR 376.9 Cr in FY23 from INR 499.4 Cr in the previous fiscal year.

Read: Fintech Startup Rupeek’s FY23 Loss Declines 23% To INR 282 Cr, Sales Slide 28%

Spacetech Startup Skyroot’s Loss Doubles 

Indian spacetech startup Skyroot Aerospace saw its standalone net loss widen to INR 55.2 Cr in FY23 from INR 23.7 Cr in the prior fiscal year.

While the startup’s operating revenue rose to INR 44 Lakh in FY23 from INR 1.5 Lakh in the previous year, its expenses surged to INR 63 Cr during the year under review from INR 24 Cr in FY22.  

Read: Skyroot Aerospace’s FY23 Net Loss Jumps Over 2X To INR 55 Cr

Tata 1mg’s Sales Cross INR 1,600 Cr Mark

The online pharmacy, owned by the Tata Group, saw its net loss jump over 2X to INR 1,254.8 Cr in FY23 from INR 526 Cr in FY22. 

However, operating revenue jumped over 2.6X to INR 1,627 Cr in FY23 from INR 627 Cr it reported in the previous fiscal year. Unlike most startups, Tata 1mg reduced its marketing expenditure by 25% to INR 135 Cr in FY23 from INR 180 Cr in FY22. 

Read: Tata 1mg’s Net Loss Soars 2.3X To INR 1,259 Cr In FY23

Testbook’s Loss Almost Triples In FY23

Government job test prep startup Testbook’s loss surged 2.7X to INR 129.8 Cr in FY23 from INR 48 Cr in FY22.  The Mumbai-based startup’s revenue from operations rose 59% to INR 56.1 Cr in FY23 from INR 35.2 Cr in the previous fiscal year. 

Testbook’s expenses rose a whopping 2.2X to INR 186.7 Cr during the year under review from INR 81.4 Cr in the previous year, with employee benefit expenses climbing 200% to INR 95 Cr from INR 31.8 Cr in FY22. 

Read: Testbook Spent INR 3.3 To Earn Every Rupee From Operations In FY23

Tracxn Reports Profit In FY23

The Bengaluru-based market intelligence startup turned profitable in the financial ending on March 31, 2023. In FY23, Tracxn reported a net profit of INR 33 Cr as opposed to a net loss of INR 4.4 Cr it had reported in the previous fiscal year. Tracxn’s operating revenue stood at INR 78.1 Cr, a 23% increase from INR 63.4 Cr it reported in the previous fiscal year. 

However, Tracxn’s net profit declined 18% to INR 0.69 Cr in Q1 FY24 from INR 0.84 Cr in the year-ago quarter. 

Read: Tracxn’s Q1 Net Profit Halves QoQ To INR 69 Lakh, Revenue Slips 2.5%

True Balance’s Profit Jumps Over 17X 

Softbank-backed digital payments and lending platform True Balance saw its profit jump over 17X in the financial year 2022-23 (FY23). The Delhi NCR-based fintech startup reported a net profit of INR 59 Cr in the year under review, a 1,600% jump from INR 3.4 Cr it reported in the previous fiscal year. 

True Elements’ Spent INR 84 Cr To Earn INR 57 Cr

Marico-owned healthy snacks brand True Elements’ net loss jumped 37% to INR 18.6 Cr in FY23 from INR 13.6 Cr in FY22. 

While the startup’s operating revenue saw a 25% jump to INR 57.3 Cr in FY23 from INR 45.8 Cr in FY22, expenditure increased over 44% to INR 84.2 Cr in FY23 from INR 58.4 Cr in the previous fiscal year. The startup’s biggest expenses, cost of materials consumed, increased over 43% to INR 36.5 Cr in FY23 from INR 25.5 Cr.

Read: True Elements Spent INR 84 Cr To Earn INR 57 Cr From Selling Healthy Snacks In FY23

Udaan’s FY23 Revenue Declines 43%

Bengaluru-based B2B ecommerce startup Udaan’s operating revenue declined 43% to INR 5,609.3 Cr in FY23 from INR 9,897.3 Cr in the previous fiscal year. Its net loss also fell 33.5% to INR 2,076 Cr in FY23 from INR 3,123.4 Cr in the previous fiscal year.

As per some media reports, Udaan is in discussions to raise around $250 Mn in  fresh round of funding. 

Read: Udaan’s Operating Revenue Drops 43% To INR 5,609 Cr In FY23

Uniphore’s Net Profit Quadruples

Uniphore, one of the few profitable unicorns, saw its net profit rise further in FY23. The startup’s profit jumped over 4X to INR 142.7 Cr in FY23 from INR 33.4 Cr in FY22. This was the second consecutive profitable year for the startup after it reported a net loss of INR 281.8 Cr in FY21. 

However, operating revenue fell 28% to INR 488.4 Cr and overall expenses also dropped 29% to INR 492.7 Cr in FY23. 

Read: Uniphore’s FY23 Profit Quadruples To INR 143 Cr As Revenue From India Soars 272X

Urban Company’s Employee Expenses Drops 15%

Delhi NCR-based consumer service startup Urban Company saw its net loss drop by 39% to INR 312.4 Cr in FY23 from INR 514 Cr in the previous fiscal year. The Dragonner-backed unicorn reported a net operating revenue of INR 636.5 Cr in FY23, a 45% jump from INR 437 Cr it had reported in the previous financial year. 

Interestingly, the company reduced its employee benefit expenses by 15% to INR 377 Cr in FY23 from INR 443.8 Cr in the previous fiscal year. Since the beginning of this year, the startup has been facing a series of protests from its partners over permanent blocking of their IDs due to a sudden increase in the required customer rating to continue working with the platform.

 Read: Urban Company’s India Biz Achieves Adjusted EBITDA Breakeven In Q1 FY24

Wakefit’s Operating Revenue Crosses INR 800 Cr Mark

D2C furniture and mattress startup Wakefit’s net loss widened by 37% to INR from INR 107 Cr in the previous fiscal year. 

Revenue from operations increased 28% to INR 813 Cr during the year under review from INR 632.5 Cr in the previous fiscal year.  Total expenses grew 30% to INR 965.6 Cr in FY23 from INR 743.5 Cr in the previous fiscal year.

Read: After Spending INR 96 Cr On Advertising, Wakefit Incurs INR 146 Cr Loss In FY23

Xpressbees’ Loss Surges Over 6X 

Logistics unicorn Xpressbees’ net loss widened over 500% to INR 180.4 Cr in FY23 from INR 27.1 Cr in FY22. Operating revenue increased a mere 1.3X to INR 2,531.5 Cr during the year under review from INR 1,904.4 Cr in FY22.  

The TPG-backed startup’s total expenses grew 42% to INR 2,784.7 Cr in FY23 from INR 1,957.1 Cr in the previous fiscal year. 

Read: Logistics Unicorn Xpressbees’ FY23 Loss Surges Over 500% To INR 180 Cr

Kamath Brothers’ Led Zerodha’s Revenue Inches Closer To INR 7,000 Cr Mark

Bootstrapped stock-broking platform Zerodah, led by Nithin and Nikhil Kamath, reported a total income of INR 6,875 Cr in FY23, an increase of 38% from INR 4,964 Cr in the previous fiscal year. 

The Bengaluru-based unicorn, which is valued at $3.6 Bn, saw its net profit jump 39% to INR 2,907 Cr from INR 2,094.3 Cr in FY22.

Read: Zerodha’s FY23 Net Profit Rises To INR 2,907 Cr As Revenue Nears INR 7,000 Cr Mark

Zomato’s Loss Under INR 1,000 Cr

Delhi NCR-based food delivery giant saw its consolidated revenue surge over 68% to INR 7,079.4 Cr during the year under review. In the previous financial year, the startup had reported an operating revenue of INR 4,192.4 Cr. Zomato, which completed the acquisition of quick commerce delivery startup Blinkit in FY23, saw its net loss drop by 20.5% to INR 971 Cr in FY23 from INR 1,222.5 Cr in FY22. 

In the first quarter of FY24, the startup reported an operating revenue of INR 2,416 Cr as against INR 1,413.9 Cr in Q1 FY23. The startup also reported its first-ever profitable quarter. It posted a consolidated profit after tax (PAT) of INR 2 Cr in Q1 as against a consolidated net loss of INR 186 Cr in the corresponding quarter of the previous fiscal. 

Read: Zomato Turns Profitable, Reports INR 2 Cr PAT In Q1

Edited By: Vinaykumar Rai
Last Updated: 10th November, 21:30 PM IST

The post Indian Startup FY23 Financials Tracker: Tracking The Financial Performance Of Top Startups appeared first on Inc42 Media.

A hedge against inflation, an investment and a symbol of wealth, gold indelibly holds a special place in the hearts and minds of Indians. The borderline obsession has been well documented, during the Diwali season, the affinity for gold reaches new heights. 

In 2022, the demand for gold in the country surged to 265 tonnes, valued at $15.3 Bn, marking a significant increase from the 120 tonnes recorded in 2020.

Despite generational shifts, the country’s enduring inclination towards gold has remained undeterred. However, the evolving landscape of the new age calls for fresh bets, and the Indian gold startup ecosystem can be broadly categorised into two segments — investment and lending.

Notably, startups operating in these areas cater to the growing demand for diversified gold-centred products and offerings among Indians. 

“The gold startup landscape in India is currently undergoing a notable transformation. The traditional Indian preference for tangible assets, such as physical gold, is encountering competition from the burgeoning digital gold sector, which has been gaining substantial momentum, primarily among a younger demographic,” said Suraj Bathija, the cofounder and chief sales officer at AlgoBulls.

A Sea Of Gold Startups

The proliferation of technology and rapid adoption of new-age business models and tools has spawned a bevy of new players with their own set of differentiated offerings all catering to the gold needs of the Indian consumer. 

Traditionally, both the gold lending and gold investment industries have been dominated by state-backed and private banks. The only competition they had was legacy giants like Muthoot Finance and Manappuram Finance, which trace their origins back to the mid-20th century. 

But as the Reliance Jio-fuelled internet boom of 2016 shored up the penetration of digital financial services in the country in successive years. Subsequently, many small startups emerged from all parts of the country to tap into the burgeoning demand for gold and allied products. 

Making the first major headway were digital payments giants like PhonePe, Paytm and Google Pay, which built gold marketplaces, enabling users to buy and sell digital gold. 

Sensing the opportunity, players such as Jar, Spare8, and Digigold, among others, began offering differentiated investment offerings embracing gold. 

From simply investing substantial amounts in gold earlier, users could now pitch in small amounts as low as INR 10, which would then be auto-invested in the commodity. These platforms also offer the attractive proposition of liquidating investments quickly without any lock-in period.

The differentiated offerings also include connecting users with financial institutions to provide the former with more accurate information about their gold’s worth. But, it appears that gold loan startups are the ones truly disrupting the space. 

Besides, fintech startups such as Oro Money, Yellow Metal, Rupeek and Bold Finance have evolved to offer users loans against gold in a hassle-free and paperless manner.

Opportunity Aplenty

As per the RBI data, gold loan disbursals nearly doubled to INR 80,617 Cr in September 2022 compared to INR 46,791 Cr during the same month in 2020. However, this market has largely been led by unorganised players (almost 65%), who offer loans for gold.

The remaining 35% market share is contributed by organised and regulated entities such as NBFCs, which have deployed technology and ground networks to help users avail lending options. 

Despite such a huge size, a report by Systematix notes that India’s overall gold market is still grossly underpenetrated at a mere 7%. With nearly three-fourths of Indian households owning gold in some amount, the country cumulatively holds an estimated 27,000 tonnes of gold, worth nearly $1.4 Tn.

As a result, the homegrown gold market appears to be sitting on a huge opportunity, which could be leveraged by fintech startups to offer both credit and investment offerings. 

What’s Making Indian Gold Startups Shine?

The allure of gold has largely been led by how the accumulation of the yellow metal is a safe investment bet. While the thirst of Indians for gold only appears to be growing, Indian startups, too, are not behind in carving a niche. 

Interestingly, these are some of the key steps that these startups are taking to stay ahead in the game — be it propelling gold investments or lending.

• Using Transparency To Build Trust: Unlike pawnbrokers and moneylenders that charge exorbitant interest rates in the range of 25% to 50%, Indian fintech startups offer a more transparent pricing and interest structure. This has helped build trust among the masses.
• Procurement In Minute Increments: Unlike traditional players, users can just go online and purchase digital gold for as low as INR 10 with no upper ceiling. 
• Convenience & Cost-Effectiveness: Customers can buy digital gold online in small amounts without worrying about storage, as fintech companies handle secure gold storage on behalf of investors, reducing costs and ensuring convenience. 
• The Bulk Advantage: In the case of digital gold marketplaces, they can procure the commodity at a slightly cheaper rate owing to bulk purchases. While traditional retailers buy gold in small quantities, these fintech platforms purchase the price-sensitive commodity in kilos, enabling them to pass on some of the benefits to the end customer.
• Simplicity Of Use: Digital gold offers comparatively modest transaction costs, is simple to acquire and is easy to divest. Coupling this with the ability to monitor gold valuations in real-time and value appreciation, online transactions offer the comfort of buying gold from the comfort of one’s home. 
• Strict Govt Oversight: The attractiveness of gold startups also comes from its now digital nature, which brings in more transparency, owing to strict regulation by the RBI. With KYC norms and strict regulatory guardrails in place, users have the comfort of knowing that they can bank on these new-age platforms.
• Plethora Of Options & Future Scalability: The startups offer a slew of diversified offerings to customers. Players such as Indiagold, Ruptok and Dvara SmartGold enable customers to both invest in gold and avail credit based on gold. As fintech penetration grows further, more and more startups are expected to offer differentiated products ranging from SIPs to gold trading.

“The digital gold startup arena is poised for continued expansion in the foreseeable future. As an increasing number of Indians become acclimatised to digital financial services and investment practices, and as these platforms diversify their offerings, it is anticipated that they will garner heightened patronage,” Bathija claims. 

Numerous Challenges In The Gold Startup Arena

While most founders that Inc42 spoke with expressed confidence that the sector was poised for growth and further expansion, the space continues to be marred by its own set of challenges. 

A founder at a gold savings startup, requesting anonymity, said that there still exists a gaping hole between digital and conventional gold markets and that it is imperative to establish a seamless connection between the two. 

He also flagged mounting competition, lack of consumer education, and regulations as other key challenges.

Flagging regulatory challenges, another founder told Inc42 that different state associations set different prices every day and it becomes complicated for startups to keep track of data to ensure their rates are on par with local rates. 

“Owing to the small margin nature of the gold industry, we have to reach out to as many people as possible to effectively scale up the platform. Additionally, more distribution channels and ground partners complicate the process further as the latter expect a higher margin product when it is not in reality,” said a founder, highlighting another challenge. 

He also noted that the affinity for physical gold also poses a major challenge and could only be fixed by a certain age profile (younger demographic attuned to tech and ecommerce) and a certain mindset.

Speaking with Inc42, the cofounder of Dvara SmartGold Jaydeep Banerjee said that the overall gold startup ecosystem, too, has been hit by the ongoing funding winter.  

Another founder said that the valuation bubble created by other sectors has burst but the gold startup ecosystem has emerged as collateral damage, despite having positive growth, a sensible business plan and positive unit economics.

He also flagged gold startups offering gold-linked savings plans for as low as INR 1 per day, saying that companies offering ‘loose change kind of goal’ may be doing a disservice to the end customer. 

Notwithstanding the challenges, Banerjee believes that the Indian gold startup ecosystem is a revolution in the making, which will eventually help bring down the country’s import bill by a big margin, bring more transparency to the ecosystem and make the entire process digital. 

Meanwhile, Bathija claims that the gold startup landscape in India is currently in flux and digital gold is gaining ascendancy as a convenient and cost-effective investment avenue. As per a July 2023 report, India was home to 16 companies that offered digital gold products and had an estimated 5 Mn to 6 Mn active gold accounts.

As per a KPMG report, the Indian digital gold market size is projected to become a $100 Bn market opportunity by 2025, largely driven by the increasing adoption of fintech platforms and growing awareness of gold as an investment option among the young.

The post India’s Gold Rush: How Startups Are Reimagining Gold Investment And Lending Landscape appeared first on Inc42 Media.

OpenAI, the leader in AI innovation, continues to revolutionise the tech landscape with each new update. Following its recent high-impact keynote event in San Francisco, the tech world finds itself in a state of both anticipation and apprehension.

During OpenAI’s DevDay organised on November 6, the Sam Altman-led company unveiled a series of new updates. It released GPT-4 Turbo, boasting a remarkable context length increase to 1,28,000 markers, 16 times that of GPT-4. New speech synthesis and image processing features were also introduced. Moreover, the company initiated copyright protection for API and ChatGPT Enterprise Edition for users, committing to customer support in legal matters.

Moreover, an Assistants API, offering session thread support, code interpretation, and a sandbox environment was also introduced during the event. The ChatGPT product now includes GPT-4 Turbo, streamlining interactions by removing the model selector and allowing web browsing, code execution, data analysis, and image processing.

Furthermore, OpenAI also said that over 100 Mn users are now using their tools weekly. Additionally, the company revealed that their API has attracted over 2 Mn developers who are actively building innovative solutions and applications using OpenAI’s technology. The numbers underscore the impact OpenAI has had on today’s tech landscape.

However, post the event, numerous industry experts raised concerns globally, expressing apprehensions that the new updates could spell trouble for smaller AI startups, potentially jeopardising their competitive standing in the field.

The updates introduced by OpenAI may pose challenges for smaller companies in the AI sector, making it imperative for them to constantly adapt or innovate to stay relevant.

Now, before we dive any deeper into discussing opportunities and threats, here is a quick sneak peek into OpenAi’s key updates.

GPT-4 Turbo

OpenAI introduced the GPT-4 Turbo during its developer event, offering an enhanced version of the popular GPT-4 model. This release comes in two variants, one for text analysis and another for understanding both text and images.

The pricing structure for the text-only model of GPT-4 Turbo is set at $0.01 for every 1,000 input tokens and $0.03 for every 1,000 output tokens. Additionally, for image processing, GPT-4 Turbo is available at $0.00765 per 1080×1080 pixel image.

While these developments are impressive, industry experts see OpenAI becoming a threat to smaller AI startups. This is because the pricing structure and capabilities of GPT-4 Turbo have the potential to outdo anyone in the competition.

The larger context window and updated knowledge cut-off give OpenAI a significant advantage, potentially making it harder for smaller players to carve out their space in the AI market.

Text-to-Speech APIs

OpenAI introduced an Audio API for text-to-speech conversion, offering six preset voices and two generative AI model options. Pricing starts at $0.015 per 1,000 input characters. This feature promises more natural and accessible app interactions, with applications spanning language learning and voice assistance.

Unlike some tools, OpenAI doesn’t provide direct emotional control over the generated audio, as factors like capitalisation and grammar can influence the voice’s emotional tone. However, results vary based on internal tests, the company clarified. According to industry experts, this may impact many startups that are working in the Speech-AI domain.

GPTs For Users And A New GPT Store

OpenAI has unveiled GPTs, enabling users to create their own versions of ChatGPT. “GPTs are tailored versions of ChatGPT for a specific purpose,” OpenAI CEO Sam Altman said at the OpenAI DevDay event in San Francisco.

Beyond personal use, there’s a plan to introduce the GPT Store, allowing users to publish their creations and potentially earn income.

“We designed GPTs so more people can build with us. Involving the community is critical to our mission of building a safe AGI that benefits humanity. It allows everyone to see a wide and varied range of useful GPTs and get a more concrete sense of what’s ahead,” OpenAI said in a blog post.

Assistants API

During OpenAI’s inaugural developer day event, the company introduced the Assistants API, enabling developers to create their own “agent-like experiences”.

OpenAI’s Assistants API will enable customers to construct customised “assistants” with precise instructions, the ability to access external information, and the capacity to use OpenAI’s generative AI models and tools for various tasks.

The potential applications are wide-ranging, from creating natural language-based data analysis applications to developing coding assistants.

OpenAI has launched the beta version of its Assistants API, which is now accessible to all developers. Usage of the API will incur charges based on the selected model’s per-token rates, with “tokens” representing individual components of raw text.

Why Startups And VCs Are Seeing Troubles Brewing For Startups

OpenAI’s introduction of smaller, specialised GPT models poses a threat to small AI startups that have built products by wrapping OpenAI’s API, according to many experts. These startups may find themselves outpaced and overshadowed by OpenAI’s similar offerings.

Moreover, the growing use of OpenAI’s GPTs may divert search traffic from Google and niche websites for specific queries, potentially impacting these platforms’ user engagement and revenue.

OpenAI’s plans to launch a GPT marketplace and a feature to create a GPT are expected to further intensify the above trends. This development could empower users to access and deploy GPTs with even greater ease.

Startups and venture capitalists speculate about changes in the SaaS landscape as well. They anticipate more cost-effective challenges emerging in various verticals, potentially reducing organisations’ reliance on SaaS for certain functions.

While some foresee the demise of numerous AI startups, others view OpenAI’s developments as an opportunity to unlock new possibilities for entrepreneurs. These tools could significantly lower the barriers to entry, making it more affordable to launch businesses that leverage AI.

Who Is Set To Gain?

OpenAI’s advancements are indeed poised to reshape the AI landscape. While they present a formidable challenge to foundational model providers, they are likely to catalyse the proliferation of consumer-based AI products, according to industry experts.

OpenAI is gradually becoming a foundational platform akin to Android, Apple, or web browsers. Startups focussing on consumer products seem poised to thrive, benefiting from OpenAI’s robust technology stacks. In contrast, those building foundational models, such as an API for image-to-text recognition, may face risk, as OpenAI’s advancements render their offerings less competitive. However, consumer-facing products like a PDF-scanning app appear less vulnerable, indicating a potentially prosperous future for consumer-centric AI innovations.

“OpenAI is a threat to other companies building similar stuff. That is because they have a superior product and most others will not have access to the resources and databases that OpenAI has,” Swapnil Vats, founder of AI-based femtech platform SocialBoat said.

As per an Inc42 report, “India’s Generative AI Startup Landscape, 2023”, the generative AI market in India is poised to see a substantial increase from $1.1 Bn in 2023 to over $17 Bn by 2030, growing at a CAGR of 48%.

India currently boasts over 70 generative AI startups. These startups have collectively secured more than $440 Mn in funding between 2019 and the third quarter of 2023.

The post OpenAI Levels Up; Should Indian AI Startups Be Worried? appeared first on Inc42 Media.

Dunzo’s many problems are not exactly undercover — From severe cash crunch to multiple rounds of layoffs to strikes by delivery partners, and from the resignations of key board members and cofounder Dalvir Suri to the near-retreat from quick commerce, as we have uncovered in the past few weeks 

Dunzo’s downfall pretty much happened in the ongoing fiscal year (FY24) but the company’s FY23 financials released this week show just how the situation went from bad to worse for the Bengaluru-based startup.

Here’s the bottom line: The startup’s loss surged nearly 4X to INR 1,801 Cr in FY23 and operating revenue stood at a mere INR 226.6 Cr. 

The 8x loss-to-revenue ratio shows just how severe the cash crunch was and why the company does not have funds to even pay employees since July this year. 

However, the poor financial performance also indicates an underlying problem with Dunzo’s operations. The fact is that Dunzo’s expenditure, which is on par with most of the rivals, did not result in the revenue push that others have seen. The inability to generate sufficient revenue despite substantial cash outflow tells us in many ways that while Dunzo had the right idea, the failure was in the execution.

Before we delve into the company’s operations, here’s a snapshot of Dunzo’s FY23: 

• The Reliance Retail-backed startup’s operating revenue rose to INR 226.6 Cr from INR 54.3 Cr in FY22.
• Dunzo’s overall expenses jumped over three-fold to INR 2,054.4 Cr in FY23 
• Dunzo’s procurement expenses surged a staggering 9,079% YoY to INR 174.4 Cr, which is direct spending towards quick commerce 
• The startup’s advertising costs ballooned  381% to INR 309.7 Cr 
• Employee costs increased 2.4X to INR 338 Cr from INR 138.3 Cr in FY22 leading to oversized salary bills which went through mega cuts in FY24
• Dunzo spent INR 367.4 Cr on its delivery agents or runners, again pointing to how its operational scale-up on quick commerce came at a dear cost 

What Led To Dunzo’s Rise In Expense

As we can see, Dunzo’s expenses skyrocketed since FY22 largely because of the expansion of its quick commerce operations under Dunzo Daily.

Dunzo Daily was piloted in Bengaluru and Pune before it came to other major regions such as Delhi NCR, but the competition in this space was also intensifying with the entry of Zepto as well as Swiggy’s Instamart and Zomato-owned Blinkit. 

While Dunzo was more or less like a courier startup till 2020, this changed in 2021 as quick commerce became the biggest use case in metros and Tier 1 cities. Dunzo’s earlier model of picking up individual items from retail stores was not quite as hip as quick commerce. Dunzo was more or less compelled to go the quick commerce way and it had the funds to make a big play. But this also led to hockey stick-like increases in expenses.

Besides the major expenses such as advertising and employee costs, the quick commerce foray meant that Dunzo also had to bear procurement costs. 

This is essentially what Dunzo spent in purchasing grocery and other related items from FMCG brands which were then resold or supplied to the dark store partners.  

The procurement cost would have only grown exponentially as Dunzo launched more and more dark stores, which is the reality of the business model, but where others managed to eke out sustainable unit economics to some degree, Dunzo was well under par.   

In FY22, the startup’s revenue from operation increased merely by 1.1X to INR 54.3 Cr from INR 48.8 Cr. In contrast, Zepto, which only entered the conversation in FY22 outperformed Dunzo in terms of operating revenue. 

Zepto, reported an operating revenue of INR 140 Cr in FY22, almost 2.5X of what Dunzo earned. In FY23, the gulf between Dunzo and other competition only widened.  

In FY23, Dunzo reported INR 227 Cr in revenue compared to Zepto’s INR 2,024 Cr and Blinkit’s INR 724 Cr. While Zepto outspent Dunzo considerably, Blinkit’s FY23 expense of INR 1,826 Cr is still lower than Dunzo. 

Dunzo’s Expenses To Outpace Funding

Given that the revenue needle has not moved as much as some of the competition, Dunzo’s reliance on external funds is very high. Indeed, the startup has only earned around 10% of what it spent. And it has exhausted all the VC money it has raised till date.

From the above numbers, it is quite evident that the startup is only generating minimal revenue after spending so much capital.

Since FY20, the startup has raised total funding of $408 Mn and counts backers such as Reliance Retail, Google, Lightspeed, Lightbox, and Alteria Capital among others. 

Incidentally, the startup went on to raise its biggest round from Reliance Retail in January 2022 to fuel its quick commerce operations. Mukesh Ambani-led Reliance Retail has a 25.8% stake in the company.

The investment also meant Dunzo became a delivery partner for Reliance’s JioMart, and incidentally the B2B arm or Dunzo For Business is now cofounder Biswas’s biggest focus. Especially. with its consumer-focussed operations and the linked spending in that regard not paying off. 

B2B operations are asset-light since Dunzo would not need to procure products for dark stores plus it does not have to routinely offer high discounts to businesses that use its service. 

The biggest costs for Dunzo under a singular B2B focus would be employee benefits and delivery partner fees, and the heavy spending on consumer-focussed marketing can be trimmed down significantly as well. 

Dunzo declined to comment on whether it will focus purely on B2B deliveries or continue forward with a mix of consumer deliveries and Dunzo For Business.

On the consumer side, Dunzo offers some of the lowest prices for deliveries. When comparing Dunzo to other package delivery startups such as Pidge, Porter, and Swiggy Genie for a 2.5 Km delivery, we found that Dunzo offered the service at INR 79. 

In contrast, Pidge charged INR 140 for the same service and Porter’s price for the same parcel delivery was INR 95. 

Swiggy Genie was the only player that offered a lower price than Dunzo, charging just INR 65. This can be attributed to Swiggy’s substantial funding of $700 Mn in its last funding round, affording the startup to absorb the cost. In contrast, Dunzo, which is already operating at a loss and currently lacks visible funding prospects, continues to maintain the lower pricing strategy despite it not being profitable.

In contrast to the situation at Dunzo, Blinkit and Zepto have sufficient capital to support their expansion efforts and they have made measurable progress on the unit economics front. Blinkit received a capital injection of $568 Mn from Zomato during the acquisition. In Q2FY24 results, Zomato said that Blinkit turned contribution positive for the first time on a quarterly basis.

Zepto, which recently became a unicorn, got another infusion of $31 Mn this week on top of the $200 Mn it raised in August 2023. 

The Tough Question

Even as its one-time quick commerce rivals are growing, Dunzo is left with a huge bill of overdue salaries, vendor payments and more. 

Compounding Dunzo’s challenges, Reliance JioMart, the biggest client of Dunzo For Business, lowered the rates it paid for last-mile deliveries in June 2023. JioMart accounts for 30-40% of its total business and Dunzo’s gross margins on the B2B fell by 50%-75% after the change.

On the B2B delivery front, Dunzo faces challenging competition from well-established players such as Shadowfax, Xpressbees, Pidge, Porter, Shiprocket and others. These startups are capitalising on their existing customer base and delivery infrastructure for last-mile delivery and many have signed up big retail chains as clients. 

More importantly, most of these players have recently secured funding or in advanced talks to raise fresh funding rounds. Further adding to Dunzo’s woes, Zomato initiated trials of B2B logistics services in May this year, whereas Bhavish Aggarwal-led Ola introduced Ola Parcel last month in Bengaluru. 

Although Dunzo claims to have secured $45 Mn in debt funding, it’s not clear whether this money has hit the bank. 

In a desperate bid to secure the much-needed funding, Dunzo is said to be cutting its expenditure to $300K from September and will also be reducing its employees headcount to 200. As per LinkedIn, Zepto has an employee headcount of around 3,800 and BlinkIt has around 7,000 employees. 

While the startup’s cofounder Dalvir Suri left, Dunzo’s board members – Ashwin Khasgiwala, group chief of business operations at Reliance Retail, and Rajendra Kamath, finance head at Reliance Retail, and Vaidehi Ravindran, a partner at Lightrock India have also resigned this year.

Dunzo is a shell of the company that it once was. At a time when investors want sustainable models and unit economics before writing cheques, the B2B arm could be the messiah for Dunzo. Will it be enough? 

[Edited by Nikhil Subramaniam]

The post Dunzo’s Quick Commerce Folly appeared first on Inc42 Media.

Remember the 2018 video of Barack Obama calling Donald Trump a ‘complete dipshit’ or the 2019 video supposedly featuring Mark Zuckerberg claiming to have ‘total control of billions of people’s stolen data’? 

Well, while those videos were eventually debunked as shams, millions of similar videos and images are doing rounds on the internet today, blurring the lines between what’s real and what’s fake.

What’s even more concerning is the fact that the proliferation and constant evolution of artificial intelligence (AI) has only made matters worse for the world. This is because any piece of original information or data can now be converted into a deepfake to spread misinformation. 

All in all, the recent advancements in the arena of generative AI have only heightened these concerns as internet users face the grim reality of misinformation and fake content online. 

The debate on how some bad apples of society are using AI to spread sham information took centre stage after AI-generated deepfake videos of two Indian actors sent netizens into a tizzy. 

At first, a video featuring what looked like actor Rashmika Mandanna made the rounds on the internet. Hot on the heels of this video getting viral, another deepfake video showcasing the face of Katrina Kaif started doing rounds on the internet. If this was not enough, a morphed image of Sachin Tendulkar’s daughter Sara Tendulkar made its way online.

The impact of these episodes has been such that a majority of us have been astounded by how realistic these deepfakes look. While these instances are only as childish as they can get, AI-generated fake video and audio content has the potential to even trigger a riot and spread disharmony in a country as diverse as India.

Moving on, while Mandanna termed the experience ‘extremely scary’, Amitabh Bachchan called for legal action against those behind such shenanigans. 

Meanwhile, going beyond what has happened in the last few days, we have endeavoured to explain deepfakes in the simplest way possible, so that you can be more alert and selective in consuming information online.

What Is A Deepfake?

A portmanteau of the words ‘deep learning’ and ‘fake’, deepfakes are a byproduct of AI and machine learning. These technologies make use of readily accessible images (facial data) and audio clips to craft artificial, yet highly lifelike, videos or images featuring an individual in scenarios they never actually experienced.

Most deepfakes are made on high-end computers that deploy power graphics cards to process and create replicas of original content. But, how are they made?

Deepfakes often utilise the Generative Adversarial Networks GAN) architecture, which pits two AI algorithms against each other. While one (generator network) creates a manipulated image, another one (discriminator) is tasked with detecting whether the generated image is fake or not. The process is repeated till the latter cannot distinguish between the real and the false. 

For deepfake videos, the cycle has to be repeated for each frame of the video to ensure consistency and more realistic attributes. High-quality deepfakes are generated when more data is fed to AI. This is easily available in the case of public figures and celebrities who have tons of such data available online in the form of photos, interviews, and speeches, making the algorithm even better. 

Why Are Deepfakes Contentious?

While privacy invasion has been flagged as a major flaw of synthetic images and videos, stakes are much higher for public figures whose reputation could take a major hit on account of manipulated content. 

However, the biggest issue appears to be misinformation. Deepfakes can be used to spread false information, which could spread political or social chaos. 

This has been evident in the Israel-Gaza conflict where both sides have deployed AI deepfakes to generate manipulated images to sway public opinion. 

Besides, deepfakes also pose a major threat to national security. While there is no concrete way to differentiate deepfakes from real images, synthetic videos could wreak havoc and cause mass hysteria by the time their veracity can be established. 

Many experts have also flagged that deepfakes can lead to identity theft and fraud.  

Alarm Bells Ringing In Govt Corridors 

The proliferation of deepfakes has also raised concerns in various quarters of the government. Such has been the chaos around the matter that it has even prompted the Minister of State (MoS) for Electronics and Information Technology Rajeev Chandrasekhar to closely look into the matter. 

Terming deepfakes a major violation of law, he said that social media platforms were legally obligated to prevent the spread of misinformation and take down such content within 36 hours.

“Deepfakes are a major violation and harm women in particular. Our Government takes the responsibility of safety & trust of all nagriks very very seriously, and more so about our children and women who are targeted by such content,” MoS Chandrasekhar said. 

While deepfakes specifically are not covered under the ambit of any Indian laws, the Information Technology Act provides certain protections for a person’s privacy and puts the onus of curbing the spread of such content on digital intermediaries. 

If a video is made without the explicit permission of an individual, the said person can approach courts and file their grievances and cases under various provisions of the Indian Penal Code (IPC).

While Section 66 D of the IT Act pertains to punishment for cheating by personation by using a ‘computer resource’, Sections 499 and 500 of the IPC provide recourse in the case of defamation. The former entails a prison of up to three years and a fine of up to INR 1 Lakh.

For legal cases, users have to prove the element of falsity, harm and negligence by the content creator to get relief in the matter. 

Deepfakes could also be covered under the ambit of consumer protection laws in instances where such synthetic content is used for fraudulent purposes and harming consumers. The IT Act also has recourse for deepfake videos that are generated by employing illicit methods such as hacking or data theft.

The Blurred Lines Of Reality & Fiction

While there is no sure-shot way to identify a high-quality deepfake, online users can monitor inconsistencies in facial expressions and lip sync errors to steer clear of such content. Besides, users can also look for blurry edges around a person featured in the video or audio anomalies to ascertain the veracity of such synthetic content. 

Higher digital literacy and prompt action against those deploying deepfakes for malicious reasons can also help build public confidence. 

While much has to be done, efforts are underway to develop sophisticated deepfake detection tools. While Indian authorities are actively looking at the new technology, more needs to be done to devise a robust legal framework to govern the creation and dissemination of deepfake content. 

As generative AI tools become more accessible and such content floods online, it remains to be seen what the future heralds for the Indian digital landscape. While the concerns of the deepfake technology cannot be ignored, a proactive approach is necessary to clamp down on such content to ensure that Indian denizens continue to feel safe online. 

The post From Rashmika Mandanna To Katrina Kaif — Here’s Everything You Need To Know About The Alarming Rise of Deepfakes appeared first on Inc42 Media.

Beerud Sheth, a technology major from MIT and IIT-Bombay, wore many hats. He had an extensive career as a financial industry professional and launched Elance, a services marketplace, before setting up Gupshup in 2004. It started as a conversational engagement platform to change the way brands communicate with people. In the following decades, Gupshup went full throttle, powering companies to manage customer lifecycles through conversations in critical areas like marketing, sales and support.

The platform uses a single API to automate business operations across 30+ channels, including WhatsApp, Instagram, Viber, Telegram, voice, SMS, web and app, among others. It has also launched ACE LLM, which uses generative AI (genAI) to transform customer experience.

Gupshup is now catering to more than 45K customers worldwide and expanding rapidly into various international markets such as the Middle East and the Asia-Pacific, Southeast Asia, Latin America, the EU, the US and Africa. The Mumbai- and San Francisco-based SaaS player entered the unicorn club in April 2021. 

In September 2021, the company forayed into the UAE market and later boosted its presence by acquiring Knowlarity Communications (the target company was operational there) in 2022, which provides cloud telephony, contact centre automation (AI-based voice assistants, chatbots and video solutions) and speech analytics. It served more than 6K customers in 65 countries at the time of acquisition. 

“India is our oldest market and 60% of Gupshup’s business still comes from there. However, the UAE market has contributed nearly 4-5% of our revenue in the past 18 months. Gupshup’s monthly recurring revenue (MRR) has tripled in the MENA region due to the rapid adoption of its products,” said Mukul Yadav, senior director and head of the MENA region. Inc42 had an exclusive conversation with him on the sidelines of this year’s GITEX Global held in Dubai.

According to Yadav, the Middle East is the third-largest market for Gupshup after India and LatAm. Apart from Dubai, where Gupshup has a strong presence, the SaaS provider also operates in the Kingdom of Saudi Arabia (KSA), the Kingdom of Bahrain, the State of Qatar and the State of Kuwait. 

Its most prominent clients in the region include Abu Dhabi Commercial Bank (ADCB), Emaar, Talabat, Bayut, Lulu Exchange, Apparel Group, Sharaf DG and Qatar Islamic Bank, among others. 

Gupshup also works closely with ‘big tech’ companies such as Meta and has set up a GPT-based chatbot for Dubai Electricity & Water Authority (DEWA). The bot helps DEWA customers with quick and intelligent responses to frequently asked questions like bill paying, address change and requirements for new connections. 

“The number of companies using our solutions has grown 3x in the MENA region,” said Yadav. “Our clients range from BFSI, telecom and retail to new-age tech industries like on-demand food delivery. Batelco (Bahrain Telecommunication Company) and Qatar’s Ooredoo, two leading telcos in the region, are our clients.”

The SaaS unicorn is looking to double its growth in the MENA region by FY24. 

Decoding Two Years Of Gupshup Growth In The MENA Region

Although Gupshup has not yet disclosed its consolidated FY23 results, Yadav said that at the group level, its consolidated revenue grew by 55% YoY in FY23 and now stands close to $300 Mn. Gupshup’s total revenue in FY22 (ended March 2022) reached INR 1,140.7 Cr, up 53% from INR 747.6 Cr in the previous fiscal. However, its consolidated net profit narrowed by 24% YoY to INR 39.9 Cr, from INR 52.5 Cr in FY21, due to an expenditure surge. 

Yadav emphasised that 2021 and 2022 (calendar years) were a period of aggressive growth for Gupshup. The company entered new markets like the UAE and invested in as many as five acquisitions – OneDirect, AskSid Technology Solutions, Active.ai, Knowlarity Communications and Dotgo – all of which were successfully integrated. 

Operating in the UAE has its challenges, though. Although earnings are higher in the MENA region, so are the costs, said Yadav. But compared to India, businesses are likely to see a decent hike in revenue.

“While India is a large volume market, the middle east is a high value market. The WhatsApp messaging cost (as offered by Meta) is higher for middle east in terms of dollar value,” he added.

Gupshup’s UAE team has now grown to 10 people and more people are getting hired in Saudi Arabia and other countries of the MENA region.

Strategies And Solutions That Strike Gold

The MENA region boasts a large number of ultra-high-net-worth individuals (UHNWI), family offices and global business groups like Emaar that look to benefit their close-knit communities in concrete, quantifiable ways. When Gupshup entered the market, it realised that other companies in the region were already offering similar solutions and most of them had long-term contracts with their existing customers. 

“Breaking into that community posed a major challenge, but we also realised something vital. We know by now that India is more price-sensitive, while the UAE is more product-sensitive,” said Yadav.

Besides, the Dubai government is eager to embrace the latest technology trends such as predictive and generative AI. (For context, ChatGPT is just one component of the humungous genAI ecosystem.) The authorities here have allocated funds and different departments are carrying out the implementation. Dubai has an AI minister, quite a rarity, and it is always planning five to 10 years in advance, he added. 

That the UAE is diving deep into innovation makeover was evident at Gitex Global 2023, where Inc42 interacted with H.E. Omar Sultan AlOlama, the UAE’s minister of state for AI, digital economy and remote work applications, and the chairman of Dubai Chamber of Digital Economy. AlOlama pointed out that the UAE and India have historical ties across different fields. Today, both countries are building many bridges on the AI front, and the Emirates can collaborate with India on critical AI fields. 

He also believes there are very few use cases which AI cannot solve today. However, the question here is how one can use AI responsibly.

Given these ground realities, the Gupshup team cracked the market dynamics before long and developed strategies that worked in its favour in the past 18 months. Here is a look at the company’s business principles:

Pushing the product, not the price: According to Yadav, when Gupshup started operating aggressively in the region, it never pushed the pricing or offered a basic product (to match customers’ pricing criteria). Instead, potential customers were asked to try its solutions first.

To add value to simple messaging solutions, Gupshup offered 20 additional features, such as AI chatbots and multiple journeys on WhatsApp chat. Plus, it kept pushing customised and innovative products to meet customer requirements across industries. Gupshup is also working with Meta on entirely new solutions and features, and Meta will soon launch these. 

Adopting a community-led approach: When in Rome, do as the Romans do. The company remembered the adage and adopted it to increase traction. When the team bagged more than 10 customers, it approached them to become Gupshup’s advocates, and soon, it managed to reach out to hundreds of companies in the MENA region. 

“That’s what is different from India. Sizewise, India is huge. So, it is difficult to leverage that community thing, which works in the UAE. We used that community to [kind of] push our products in the best way possible. That’s how everything changed in the past two years,” said Yadav.

Betting big on new-age tech solutions works: As the UAE and the entire MENA region are aggressively adopting new-age technology solutions, Gupshup’s WhatsApp and AI bet worked like a charm. For instance, its offerings around conversational marketing and conversational support are in great demand among ME customers. 

Companies primarily look for Gupshup’s services to build brand/product awareness, generate leads, engage with existing users, offer personalised deals and discounts, provide 24×7 support and streamline operations using AI.

Yadav mentioned an interesting use case for ticket booking on WhatsApp. Gupshup worked with a leading amusement park operator in Dubai to enable easy ticket booking for popular activities, thus ensuring greater visitor convenience.

“WhatsApp came to India first (2012), and we have been using it for almost a decade. But in the Middle East, especially in the UAE, the pick-up started only two and a half years ago. Now, people are quite tech-savvy and they want these solutions. They might have started late, but they are moving really fast,” he added.

The Growth Ahead

The company aims to accelerate its newfound growth trajectory across the MENA region in the near future. As Yadav emphasised, Dubai-based businesses are expanding their operations in Abu Dhabi, Qatar, Saudi Arabia and other countries, providing Gupshup an excellent opportunity to grow its global footprint further.

Besides, the UAE has a huge expat base, making it easier for companies to build an open culture. Having its solutions in more than 30 languages also adds to the many advantages Gupshup has in the region. 

The SaaS player also claims it has entered China as part of its ongoing effort to grow globally.

To sum up the growth potential, Yadav cited what Gupshup CEO Beerud Sheth said at a recent conference in Mumbai. 

“There is a difference between an autorickshaw and a car. An autorickshaw can get you from point A to point B, but when you get in the car, you can go on the highway, switch on the AC and drive in cruise mode. You can do so many extra things. People get excited about it. They want more. That’s the thing with this market. And that’s what Gupshup is offering them.”

The post Decoding How SaaS Unicorn GupShup Cracked The Middle East Market appeared first on Inc42 Media.

The exponential rise of investment tech platforms like Zerodha and Groww in the last few years has proven but one thing — there was immense headroom for innovation and disruption in the Indian stockbroking arena, which the legacy players took a while to realise.

Nevertheless, the damage was done and retail investors, both young and old, flocked to these platforms in hordes for reasons galore — ease of trade, user experience, fee, convenience, word of mouth, and we have barely scratched the surface here.

It is also worth mentioning that the Covid-19 pandemic gave a booster shot to the two investment tech unicorns, as a great tide of new users embarked on the stock market route to make riches when the Indian economy was trying to recover after multiple lockdowns.

Interestingly, new-age retail investors have since been embroiled in the Zerodha Vs Groww debate, which we intend to conclude in this article today.  

However, before we delve deeper into the discussion, it is imperative to note that the two platforms command 40% of the stockbroking market share in terms of active users in India, as per NSE data.

It’s All About Numbers… Or Is It? 

An early bird in the Indian investment tech space, Zerodha (incorporated in 2010) checks every box essential for being one of the biggest stock brokers in the country. Moreover, it currently holds a 20% share of the NSE’s total trading volume.

Notably, towards the fag end of September this year, the Zerodha CEO, Nithin Kamath, took to Twitter (now X) to announce that the firm was valued at INR 30,000 Cr, or about $3.6 Bn.

In the same week, the Bengaluru-based fintech unicorn reported that its total revenue for the financial year ended March 31, 2023, crossed the INR 7,000 Cr mark. The bootstrapped unicorn’s net profit during the period under review stood at INR 2,907 Cr, up 39% YoY, largely on the back of strong growth in business and other key metrics. 

 Meanwhile, the Tiger Global-backed fintech unicorn, Groww, surpassed Zerodha in terms of active investors at the end of September 2023. As per the National Stock Exchange (NSE) data, Groww had 6.63 Mn active investors at the end of September 2023 as against Zerodha’s 6.48 Mn.

Notably, any individual who trades even once on the platform is an active user of these platforms. And if one goes by this logic, then Groww has already dethroned Zerodha, and we all can now stop reading this article and go back to running our daily errands. But there’s a catch. The metric has too many moving parts. 

Nevertheless, Groww’s active user base of 6.6 Mn against Zerodha’s 6.4 Mn may not look much, but the rate at which the former has been able to increase its users from 4.1 Mn in FY22 to 6.6 Mn in FY23 is quite a progress. On the contrary, Zerodha’s user base slipped from 6.5 Mn in FY22 to 6.4 Mn in FY23.

As per NSE data, Zerodha had 3.4 Mn customers in March 2021, whereas Groww had 0.78 Mn. Zerodha’s user base has only doubled, growing at a steady pace and even stagnating over the last couple of years, Groww saw its customer base surge by an impressive 750%.

Importantly, Groww ventured into stock trading as recently as 2020. Before that, it operated solely as a mutual fund distribution platform. Furthermore, its expansion into loans and consumer payments didn’t happen until this year.

Moving on, just like its bootstrapped opponent, Groww, too, is profitable. However, the profitability was only achieved in FY23 as revenue from operations tripled to INR 1,227.8 Cr. The startup posted an FY23 net profit of INR 448.7 Cr against a net loss of INR 239 Cr a fiscal ago. 

The Battle For Passive Investors Is On, But Why?

The double whammy of global macroeconomic headwinds and improving fixed deposit (FD) rates has particularly led to the highest-ever exit of active retail investors from the public markets in the recent past.

In FY23 and FY24 (so far), retail participation has been paltry compared to FY21 and FY22. On the NSE, the share of retail investors against the total trading turnover dropped from 45% in FY21 to 36.5% in FY23. Similarly, the number of active retail investors fell from 11.7 Mn in January 2022 to 8 Mn in March 2023.

Further, cumulative net outflows (people selling stocks or ditching intra-day trade) in April and May 2023 were the highest in the last seven years.

This is the reason why a lot of companies, which earlier did not see much participation from passive investors, have now started launching passive funds, and Zerodha and Groww are no exceptions.

Zerodha, which relies on active retail investors for 90% of the company’s total revenues, announced the launch of two passive mutual funds, Zerodha Nifty LargeMidcap 250 Index Fund and Zerodha ELSS Tax Saver Nifty LargeMidcap 250 Index Fund, last month.

A passive mutual fund comes at a lower expense ratio compared to an active mutual fund but doesn’t guarantee as much returns to the fund investors as an active one. Kamath highlighted the same by stating that Zerodha will be a passive only AMC to avoid the conflict of promoting what generates higher income (active funds). By focussing only on index products, we can hopefully help spread the idea of passive funds in India, Kamath said while announcing Zerodha’s two AMCs.

This is ofcourse a distant approach from what Zerodha has been focussing on for the past decade

The funds were launched under Zerodha Fund House, an asset management company (AMC), which it formed in a joint venture with Sequoia-backed smallcase.

Similarly, in September, Groww received approval from SEBI to launch its first index fund, Groww Nifty Total Market Index Fund, paving the way for its entry into the mutual fund space. Earlier this year, Groww acquired the mutual fund business of Indiabulls Housing Finance for INR 175.6 Cr.

In a report, ratings firm ICRA highlighted that Groww generated 80% of its revenues from F&O trading in FY23.

According to market experts, at a time when F&O traders are bleeding losses, with a SEBI report suggesting that 90% of these investors faced losses, passive trading will continue to be the norm for some time.

As per Motilal Oswal Financial Services, retail AUM in Exchange Traded Funds/passive funds stood at INR 9,700 Cr in FY23, growing at a CAGR of 56% since FY19. This growth has been driven by a thrust from online distributors. 

Additionally, the share of ETFs in total retail AUM is a meagre 2%, which means the market is ripe for disruption. 

Traditionally, stock brokers steered away from passive funds because of lower commissions, fees and less return on investments.

“A reason why the retail investors will turn to passive funds offered by discount brokers is that the space is dominated by AMCs or banks, which charge a heavy broking fee and maintenance charges. This upsets individual investors. However, discount brokers like Zerodha and Groww take minimal to zilch maintenance charges,” said a Bengaluru-based analyst.

On the other hand, Zerodha and Groww will move towards passive funds whose performance typically depends on how indexes perform, in order to bring down their operational expenses, the analyst added. 

Calling A Spade A Spade: Groww’s Active Users Not Enough To Crush Zerodha

According to industry experts, the increase in the number of Groww’s active users may not give it an edge over Zerodha. This is sheer because of the strong technology stack and the trader community-driven approach Nithin Kamath-led firm has built since its inception.

A report by HDFC Securities mentions that Zerodha has an overall customer base of 12 Mn users, of which 6.5 Mn are active users. Further, of the total active users, 2.5 Mn are F&O traders.

The research states that nearly 50% of the 2.5 Mn F&O traders at Zerodha are sticky, semi-professional, and place strategy-based trades. In addition, the top 35% of customers account for 70% of Zerodha’s revenues. 

The bottom 50% of the F&O traders meanwhile churned within the last year, as per the report.

This is what Nithin Kamath said in a blog post earlier that a small community of very active intra-day and F&O traders are maximising the revenues for discount brokers.

Additionally, Zerodha has various offerings. Its products like the Kite app for active traders and Coin for passive mutual fund investors have given the investment tech platform the leverage to target niche audiences.

“Zerodha believes that the user base of the two apps is diverse and needs to be targeted separately. While the typical user of Coin is a passive investor in MFs and does not want to be bothered with regular market updates, the Kite app is targeted at a customer who needs regular stock or trading-related notifications. Passive products such as Ditto Insurance are likely to be launched on the Coin app,” according to an HDFC Securities analysis.

Meanwhile, Sonam Srivastava, the founder and CEO of Wright Research points out that the kind of tech products that Zerodha has developed for its users are unparalleled in the stockbroking industry.

“It is a completely evolved technological infrastructure. The algo solutions, urgent alerts for entry/exits to the active retail investors (intra day/F&O), the varied products and its B2B product Kite Connect which offers other fintech platforms access to Zerodha’s products, technology, and user stickiness has worked tremendously in favour of this firm,” Srivastava said.

Zerodha still has a share of 20% of the overall trading volumes in India, almost 70% higher than Groww, which is a huge gap to close for the latter, Srivastava added.

The Nithin Kamath-led stockbroking firm has also doubled down on its education channel resources to tap the growing pool of investors. 

Zerodha’s Varsity (its education-based platform) claims to run on zero-profit education initiatives — from helping novice investors to offering skill-based certifications to serious traders. Also, Kamath recently launched a new YouTube channel, Zing, to target the growing number of young investors.

However, analysts believe that this is Zerodha’s attempt to counter the huge marketing push of the closest rival, Groww, which has been leveraging content/influencer marketing over the past several years to tap young investors.

It is imperative to mention here that Groww, too, is focussed on spreading financial awareness. Under its “Ab India Karega Invest” initiative, the startup organises financial awareness sessions. Moreover, it also publishes newsletters centred around financial news and education, besides creating videos in different languages.

Groww Needs To Grow Its Offerings

According to a July 2023 report published by ICRA Ratings, Groww needs to diversify its income stream, as a sizeable share of its FY23 broking revenues is from futures and options (F&O) broking (over 80% of the broking income). 

“Going forward, Nextbillion Technology’s ability to maintain the momentum of client additions while improving its revenues and profitability and maintaining comfortable capitalisation would remain critical from a credit perspective,” the report stated.

Currently, Groww doesn’t charge annual account opening and maintenance charges from its users like Zerodha, which as per analysts draws new and young customers to the platform. However, much still depends on how Groww builds products to ensure customer stickiness. 

“Millions of users opening new accounts with Groww will not ensure monetisation unless the platform can sell any of its products to these users. The conversion would matter for which Groww will have to experiment with diverse product offerings,” a veteran investor said.

Notably, Groww’s revenues mainly come from charging brokerage fees of up to INR 20 per buy/sell order.

Zerodha & Groww: Comparing Apples And Oranges?

Despite the recent buzz around Zerodha and Groww competing in terms of user growth and increasing revenues, experts in the industry believe that Groww still has a significant journey ahead in capturing a highly monetisable user base similar to Zerodha.

At the same time, keeping the marketing expenses in check will be a challenge for Groww, which has largely ignored community-based organic growth like Zerodha.  

The CEO of FinEdge Harsh Gahlaut said that comparing the two investment tech platforms is like comparing apples and oranges.

“Groww has used the money it raised to rack up numbers on client acquisition at any cost. It rode the boom of first-time users for both stocks as well as mutual funds over the last 3-4 years and that has helped it surpass Zerodha on the number of ‘subscribers’. If this is the only metric then clearly Groww is the winner,” he added. 

 Gahlaut also noted that Zerodha currently has no competition. “The broking industry has serious challenges of revenue sustenance. This is because most traders can have a very short span on the markets. This problem is even more with first-time users… and Groww has a significant number of such clients,” he noted.

Meanwhile, Vivek Banka, the cofounder of fintech startup GoalTeller is of the view reliance on VC money and operating in highly volatile markets put it at a disadvantage compared to Zerodha, which is bootstrapped.

“The pace of user growth will stagnate at some point. Stockbroking is kind of cyclical as when a recession hits, sooner or later, there can be degrowth in the active user base. The true test of businesses is during such times and companies with heavy PE/VC funding will be in a fix,” Banka added. 

It cannot be denied that the Kamath brothers-led startup has stood the test of time, gone through various market cycles and is sitting on a loyalist userbase. 

Zerodha maintains a dominant position in the market, despite the growing competition from its closest rivals such as Groww, Angel One, and even HDFC Bank.

This may clarify why Zerodha stands out as the sole discount broker that imposes an annual account maintenance fee of over INR 300, while other platforms do not levy such charges.

Be that as it may, Groww is yet to reach the maturity that Zerodha is in charge of today. A mere rise in active users does not put it ahead of Zerodha in the race. 

While one cannot deny that Groww offers more comfort to novice investors than any other platform in the stockbroking market, this is hardly any insurance for their stickiness. 

For the platform to have a more sustainable user base, more market cycles will have to forge their journeys. And finally, in terms of user sustainability and diversification, it’s quite likely that Groww may face substantial headwinds going ahead.

Update | 8th November, 1:00 IST

Note: The story has been updated to include the info on the year in which Groww ventured into the stock trading segment and its education initiatives.

The post Groww Vs Zerodha: Taking Stock Of The Investment Tech Giants appeared first on Inc42 Media.

“Three years ago, my thoughts were – I would love to have these robots living with me in the future. But I will be lucky if it happens while I am alive. If you ask me today, I would say I have changed my thinking,” said Dennis Hong, who has developed the world’s fastest humanoid robot called ARTEMIS. Inc42 had an interaction with Hong on the sidelines of GITEX Global 2023 in Dubai, where the robot was displayed.

During lab tests, ARTEMIS clocked a speed of 2.1 metres per second, making it the world’s fastest-walking humanoid robot.

The UCLA Samueli School of Engineering has developed this full-sized humanoid robot with a first-of-its-kind technology. Researchers at the Robotics and Mechanisms Laboratory (RoMeLa) at UCLA have designed ARTEMIS, the first humanoid robot in academia that can run and the third in the world, after Honda and Boston Dynamics.

ARTEMIS, short for advanced robotic technology for enhanced mobility and improved stability, debuted in the 2023 RoboCup, the latest edition of the Robot World Cup Initiative. This global event features intelligent robots demonstrating various capabilities. The official goal of RoboCup is to create a team of robots that can defeat the human World Cup champions by 2050. For context, RoMeLa has won the RoboCup world championship five times.

As Hong shared, internally, ARTEMIS stands for ‘a robot that exceeds Messi in soccer’. ‘She’ is partially funded by the U.S. Office of Naval Research (ONR). Also, it was funded in part by 232 donors who contributed more than $118,000 through a UCLA Spark crowdfunding campaign.

The ARTEMIS team has many Indian researchers, and Hong believes India is a big tech market where lots of innovations are happening.

“Exciting things have happened in the Indian robotics space. But apart from those, what I see are the students from India. Their eyes sparkle like smart electricity; they are passionate, and I think that [enthusiasm] shows up in the innovative technologies India is now building,” added Hong.

According to a report by Precedence Research, globally, the humanoid robot market stood at $1.62 Bn in 2022. It is estimated to hit $28.7 Bn by 2032, at a CAGR of 33.3%. As ARTEMIS is still a research project, the primary focus here is to develop a humanoid robot that can function like a human being, and the finer points will be addressed later.

Interestingly, the Asia-Pacific market is expected to witness the fastest growth rate due to technological advancements and a growing demand for enhanced customer experience in countries like China and Japan. In India, Manav is the first 3D-printed humanoid robot that does push-ups, headstands and plays soccer.

Get To Know ARTEMIS, Inside Out

As mentioned, ARTEMIS is considered a ‘she’ named after the Greek goddess of chastity, hunting and the moon. Although a general-purpose humanoid robot, ‘she’ has been specifically developed to study dynamic bipedal locomotion in unstructured surroundings.

For context, bipedalism means movement on two feet, regardless of whether a living being is primarily bipedal. For instance, some primates can walk upright for a short period, displaying bipedal capabilities. Bipedal movement includes running, hopping or walking.

Standing at 4 ft, 8 inches and weighing 85 pounds (38.6 kg), ARTEMIS can walk, run and jump on rough and unstable surfaces without falling. She does not lose her balance even when strongly shoved or otherwise disturbed.

According to Hong, custom-designed torque-controlled proprioceptive actuators have been used for ARTEMIS instead of position-controlled servo motors. The former resembles how biological nerve endings in the muscles and joints synchronously work during movement, ensuring smooth motion for mobile robots.

In contrast, servo motors enable precision positioning in a controlled environment (think of robotic welding) but cannot manage the highly dynamic movements of running or jumping robots. Essentially, the technology for fast-moving legged robots must replicate the swing and the spring that human muscles can provide so easily.

“So, this robot does not use AI for locomotion; it is all model-based [for faster and accurate movement]. However, it is smart in the sense that it can recognise things and make decisions which are automated. So, for the locomotion – the moving/jumping part – it is all model-based, and making reception and taking decisions are all AI,” explained Hong.

This combined approach enables ARTEMIS to walk and run on uneven terrains.

Another major advantage is that the robot’s actuators are electrically driven rather than controlled by hydraulics. As a result, ARTEMIS makes less noise, operates more efficiently than robots with hydraulic actuators and is cleaner because hydraulic systems are notorious for leaking.

ARTEMIS has custom-designed force sensors on each foot and has cameras and an orientation unit in her head to help her perceive the surroundings.

“Here’s a fun fact. ARTEMIS wears regular shoes made for humans, and she wears size 4. ARTEMIS prefers Nike. #justdoit,” chuckled Hong.

Rough Terrain Ahead?

Hong said the ARTEMIS team started working in 2018 with a paper-and-pencil calculation. After maths said this technology would work, they did the fundraising in 2019.

“Then, in 2020, Covid happened, and we had to shut down our lab. But that did not stop us. We started working remotely, and in March 2023, we had the official launch,” he added.

But this is just the beginning of a long journey.

Hong cannot come up with a timeline when human society will widely accept a robot’s presence among them. Currently, ARTEMIS is shaping up as a soccer player. But in the future, humanoid robots may have the potential to take up various roles, from professional sportspersons to caregivers to drivers and more.

Even if the technology is available soon (for commercial production), there could be other concerns. For instance, safety is a big issue. Consider this. If ARTEMIS is used at home and a baby comes her way when she is walking, what will happen? In all probability, she will step over it.

There is another major issue. Industrial robots, cobots or those carrying out tactical hazardous operations have been designed to operate in specific situations and environments. However, humanoid robots must be primed to adapt dynamically to human environments and habitats.

“So, besides technological issues, other factors need to be considered, and there is no fixed timeline for this right now. But I would like to see this happen in my life. It’s my dream,” concluded Hong.

[Edited by Sanghamitra Mandal]

The post The Making Of ARTEMIS — The World’s First Full-Sized & Fastest Humanoid Robot appeared first on Inc42 Media.

After nearly a decade in India, food delivery is finally a profitable business. Zomato’s second consecutive profitable quarter shows that the company in particular has figured it out.

The Deepinder Goyal-led company capitalised on the revenue momentum in FY24 and seems poised to become a profit-making machine based on what we have seen this year.

But it’s not just Zomato; Swiggy, too, is close to cracking profitability, and the company is also eyeing an IPO in the near future. The food delivery race has been fuelled for nearly a decade by VC money, but it seems the duopoly will now rely on cash generated by the business.

There’s of course a lot more at stake than just food delivery, but this Sunday, we wanted to see how profitability might change Zomato and its biggest rival. After these top stories from our newsroom:

• BYJU’S Strange Numbers: After multiple delays, BYJU’S finally released its FY22 financials, but only partially. The core business reported an EBITDA loss of INR 2,253 Cr, while revenue grew to INR 3,569 Cr. But the full picture is still missing
• Funding On The Rise? With Q3 2023 ending this past week, we can see that Indian startups have raised $8.3 Bn so far this year, nearly on par with 2020 levels. Does this mean we are on the road to recovery of some kind? Read our full report for more

The Zomato Express Rolls On

Last quarter, Zomato got a deferred tax boost of INR 17 Cr to eke out INR 2 Cr in profit, this time around it has taken a more certain step into the black. With a PAT of INR 36 Cr, Zomato’s profits surged 18X this quarter, thanks to Zomato Gold subscription revenue, growth in gross order value and an increase in order volume.

While there was bullishness last quarter that Zomato’s core food delivery business would soon be able to sustain Blinkit and other verticals, as it turns out, this will not be needed for long. Zomato’s quick commerce vertical Blinkit turned contribution positive for the first time in the quarter as well, with a record 45.5 Mn orders.

Hyperpure, the B2B supply arm, reported a 123% YoY surge in revenue, while dining-out vertical saw a sharp 88% increase in revenue to INR 49 Cr. But both these verticals continue to remain loss-making.

How Did Zomato Get Here?

So, how exactly did Zomato turn things around? For one, it must be noted that expenses grew 16.3% QoQ in the second quarter, whereas revenue grew 10% QoQ.

This indicates that the push has come from improving how much money Zomato keeps for itself per transaction. One of the ways it has improved this is with platform fees.

The company said that the fee, which ranges between INR 1 to INR 5, did not affect demand elasticity. So one can expect platform fee to become a permanent fixture in our food delivery bills

The other major revenue stream for food delivery is Zomato Pro, but Pro orders are less profitable for the company than regular orders. Here too, the platform fee is a major contributor to Zomato’s bottom line, and makes up for some of the lost revenue for every Pro order.

Swiggy On The Profitability Trail

Of course, Swiggy was the first one to introduce platform fee, charging consumers directly while simultaneously eliminating commissions for restaurants. This strategy protected restaurants and nudged them towards using the commissions saved for ads and promotions.

Zomato aped this strategy and the results are clear for everyone to see now. In Swiggy’s case, the company has not filed its FY23 numbers, but its loss jumped to $545 Mn for the calendar year 2022 from $300 Mn in 2021, according to Prosus, Swiggy’s lead backer.

Swiggy cofounder and CEO Sriharsha Majety claimed in May that the company has achieved profitability in its food delivery business. Majety also said that other parts of Swiggy’s business are slowly gaining traction and close to breaking into positive unit economics.

At the time, Swiggy told Inc42, “Instamart would reach unit economics positivity in the next few weeks.” And now reports indicate that Swiggy is gunning for an IPO too.

Swiggy began preparations for its IPO in 2023. However, the funding winter and a sharp fall in the valuations of tech startups globally made it keep the plan on the back burner. Now, the company is considering a stock market debut in 2024 and has engaged in discussions with bankers to evaluate its valuation.

This will bring another dimension to the rivalry between Swiggy and Zomato, which has been a mainstay in the Indian consumer services market.

How Will Zomato & Swiggy Change?

Of course, it’s not just food delivery, as Zomato and Swiggy have quick commerce and dining out as rival businesses too. Plus, Zomato recently entered the courier delivery space too, which is a direct competition for Swiggy Genie. For the moment though, Zomato is looking at B2B deliveries only.

In all likelihood, given how similar Swiggy and Zomato’s revenue strategy is and given the fact that both have subscription programmes and similar allied businesses, we expect both companies to have roughly the same scale and profit margins by 2024 and early 2025.

The revenue mix might be different but primarily, both companies will more or less grow at a similar pace given that this is not a zero-sum business category. Essentially, Zomato users also use Swiggy and vice versa.

There are possibilities that profitability will unlock better outcomes on other fronts such as customer service and issues related to gig workers, but that is still not a certainty.

What cannot be doubted is that Zomato and Swiggy will need to look for ways to maximise revenue and add more revenue streams, even perhaps outside their traditional strengths.

As per analysts that track food delivery space, fintech is one area that both Swiggy and Zomato will look to target, particularly financing for cloud kitchens and restaurants. The duopoly has the data advantage to create better risk models for lending to such businesses.

Another option is lifestyle-related verticals that are asset-light. Zomato already does events, and analysts can also foresee the company branching out into hotel and travel experience bookings.

“There is room for a disruptive player at scale, similar to what Airbnb did in Silicon Valley to the likes of Booking.com and others. And it fits what Zomato does with Zomaland and other events,” said one analyst at a Mumbai-based brokerage that covers Zomato.

Profits can change a company, and this is especially true for listed companies that have shareholders to answer to. In the past, Zomato’s experiments and pilots have been hit or miss, but in its current situation, the company needs to take a more measured approach to expansion.

For now, Zomato can bask in the afterglow of its second profitable quarter for a brief moment, but before long, it will be back to the old rivalry and figuring out the next big thing.

Financials In Focus 

It’s not just Zomato, of course — a whole host of Indian startups and listed tech companies have released their latest financial statements.

• Tiger Global-backed unicorn Apna saw revenue grow by nearly 3X in FY23, closing in on the INR 200 Cr mark
• Delhi NCR-based logistics unicorn Shiprocket saw operating revenue go beyond the INR 1,000 Cr mark, but its net losses widened due to acquisition costs
• The Indian entity of gaming unicorn MPL narrowed its loss by over 80% in FY23, while operating revenue surged by 36%
• Listed logistics unicorn Delhivery posted a net loss of INR 102.9 Cr in Q2 FY24, down 59.5% from INR 254.1 Cr
• Listed geospatial tech company MapmyIndia saw profits rise 30% YoY to INR 33.1 Cr in Q2 FY24, with momentum across business verticals
• NASDAQ-listed SaaS unicorn Freshworks reported 19% higher revenues, and stepped out of the red with a profit of $17.4 Mn in the July-October quarter

Find these and more financials in our tracker here

Sunday Roundup: Startup Funding, Tech Stocks, IPOs & More

• Funding Galore: Indian startups raised $133 Mn across 18 funding deals, a decline of 71% week-on-week. Aequs and Skyroot saw the biggest rounds of the week
• Mamaearth’s Mega IPO: D2C unicorn Mamaearth’s public issue was oversubscribed 7.61X on the last day of its IPO buoyed by huge demand from qualified institutional buyers

• Drone Battle: The NCLT has blocked RattanIndia’s attempts to alter the shareholding structure of Throttle Aerospace Systems amid an ownership dispute between the two parties
• Messaging Apps Vs Telcos: A telco body has appealed to the government to classify WhatsApp, Telegram and other apps as illegitimate channels for business communication

That’s all for this week. We’ll be back next Sunday with another roundup of the biggest stories and trends from the startup ecosystem!

The post Zomato’s Profit-Making Machine appeared first on Inc42 Media.

When Mamaearth or Honasa Consumer’s IPO first came to the market in late 2022 and early 2023, we wondered whether the company could shake off its identity crisis. As we said at the time, the company’s key strength is its retail or offline sales network, even though Mamaearth disrupted the space in its early years as an online-first direct-to-consumer brand.

Of course, as companies and brands mature, they have to adapt to the tune of the market. Mamaearth’s latest avatar has been dictated by the age-old mantra for selling products: sell closer to your customer.

Mamaearth began as an aspirational brand, but it had to transition to a model that more or less resembled traditional FMCG players because it realised the real strength of these brands is in their retail presence and distribution prowess.

Along the way, the company raised funds to acquire several players, and now, beyond the retail channel, it has the salon chain BBlunt as an intermediary channel to reach customers. So, in essence, Mamaearth today is a new-age D2C brand, retail FMCG player, as well as a services company.

So the biggest question for many investors ahead of the company’s IPO today is which Mamaearth should they bet on, if at all?

But before we go ahead, we must mention, we are not focussing on the company’s valuation, which many claim to be rich, or indeed its revenue growth. Instead we wanted to examine what expectations investors and other observers can have from the company, given that services, products and new-age companies are respectively evaluated very differently.

What Even Is A D2C Brand? 

In the past two years, the line between ecommerce and retail has blurred repeatedly in different ways. Many D2C brands, particularly in the beauty and personal care category, took the omnichannel route to reach retail consumers, but they also realised that the most habitual online shoppers had changed their shopping behaviour.

Particularly, in the metros, where quick commerce apps became the go-to destination for the most active online shoppers. Dark stores and apps such as Zepto, Blinkit or Swiggy Instamart are fast replacing marketplaces from a FMCG consumption point of view, at least in dense urban areas.

Today, the presence on marketplaces such as Nykaa, Tira, Myntra, Flipkart, Amazon India or Meesho is necessitated by the fact that brands are building a second layer of customers. That’s the online shopper from Tier 2 and 3 and beyond, being targeted by the likes of Mamaearth and Honasa’s other brands, The Derma Co., Aqualogica, Ayuga, BBlunt and Dr. Sheth’s.

Lastly, the less tech-savvy retail consumer is still buying from traditional stores and prefers the high-touch experience. So Mamaearth has to cater to these, also build up marketplace presence and work with quick commerce distribution and procurement teams.

Besides, it has to build native channels like its app or website for the fraction of shoppers who become repeat and loyal users. Therefore, they can be pulled into the more profitable native channels.

And that’s not the story for Mamaearth alone. It’s the trajectory that D2C brands, particularly in BPC and F&B, have to follow today. Profitability, in the long run, depends on a healthy mix of these channels that offer varying margins. In FY23, Honasa earned 59% of its revenue from online sales, whereas 36% came from offline channels. However, the share of offline channels doubled from 18% in FY21.

So firstly, looking at Mamaearth as a technology-first D2C brand would be folly. Yes, it has the branding nuance and digital marketing nous of a D2C brand, but the core of the business as we have seen in our analysis recently is a retail brand.

BBlunt: Honasa’s Trump Card?

Of course, what sets Honasa’s product and brand umbrella apart is BBlunt, which is the company’s services arm in the beauty and wellness space. BBlunt is not just an independent salon chain, but a channel for Honasa and Mamaearth’s products.

One can see The Derma Co. (skincare), Aqualogica (hydrotherapy), Ayuga (ayurvedic products) being consumed at the salon end, while this will help reinforce the brand’s presence in retail shelves and online channels.

Founded in 2004, the BBlunt salon chain already has very strong brand recall and enjoys the goodwill that comes from being in the market for nearly two decades. One can see Mamaearth leveraging BBlunt to enable the efficiency that the house-of-brands model requires.

Indeed, ‘house of brands’ as a concept has failed to take off because platforms are unable to make the most of the margin efficiency offered by the omnichannel GTM across their portfolio. Only one or two brands have the appeal to bring customers into brand-owned retail stores.

In Honasa’s case, Mamaearth enjoys a lopsided advantage in terms of brand recall, whereas the other brands in its portfolio are not immediately associated with the company. The non-Mamaearth brands would gain from the wider spotlight under BBlunt to gradually gain some equity.

However, the big challenge here would be the expansion of BBlunt’s salon network from the current 10 salons. BBlunt has zero presence in North India, for instance, according to the company, so this channel only becomes meaningful if the company spends a significant amount of its IPO proceeds to expand BBlunt. The filings indicate an allocation of INR 26 Cr from the IPO proceeds to expand BBlunt. Will this be enough?

Honasa is bypassing several complexities in the house-of-brands model through BBlunt, but the latter being a retail services business has different headwinds. “This channel is expected to provide us with a ready base of consumers to generate trials and will provide the ability to acquire new consumers, not only for BBlunt but also for other brands in our portfolio,” the company said in its RHP.

And looking at it from a competitive standpoint, it is a big strength that is unmatched by many of its direct rivals. Having said that, BBlunt itself has competition from franchise or brand-owned chains such as Jawed Habib, Gitanjali, Lakme Salon, Looks, Naturals and a host of other international brands such as Jean-Claude Biguine and Toni & Guy, among others.

To maximise revenue under its various channels, Honasa would need a steady stream of new SKUs and the right SKUs for the right channels. As outlined in the company’s pre-IPO filing, the contribution of new SKUs to overall revenue growth in FY23 was 56.58% higher than FY22.

Adding new SKUs across price points is one way to win the game, as seen in the case of FMCG majors such as Unilever which has 15 unique brands in BPC alone.

What Mamaearth IPO Means For D2C Brands 

Speaking of rivals, their attention will be on Honasa and Mamaearth for altogether different reasons. As some analysts told us this past week, this is a litmus test for the D2C segment and the Indian ecommerce ecosystem as a whole.

Yes, Mamaearth and Honasa have to invest more to bolster their in-house manufacturing operations, but short-term profitability hinges on efficient distribution and supply chains.

Even though many of the private equity and venture capital investors that backed D2C brands were bullish on the ecommerce aspect, pretty much all food & beverage, beauty and lifestyle brands now acknowledge that omnichannel is key and retail is king.

So while Mamaearth might not be a puritan’s D2C brand that only uses native channels, the success or failure of its listing and the subsequent movement of the stock with investor sentiment will inform a lot of its competition about how to tailor their operations.

The likes of SUGAR, WOW Skin Science, Purplle, The Ayurveda Co., Pureplay Skin Sciences and others are some of the brands that are waiting in the wings to not just go to the public markets like Honasa, but also see whether the company’s bet on a hybrid services-plus-products model will fulfil its potential.

The post Searching For The Real Mamaearth: Key Questions Ahead Of Honasa’s IPO appeared first on Inc42 Media.

Mamaearth, a prominent D2C player in the Indian consumer goods market, has unveiled its plans to raise INR 1,700 Cr in primary capital through an initial public offering (IPO), a combination of fresh share issuance and offer for sale (OFS). The seven-year-old beauty and personal care brand will sell 4,12,48,162 equity shares to the public. 

Its parent company, Honasa Consumer, will launch the three-day IPO on October 31 (Tuesday). The issue opened for anchor investors on October 30 and the startup has reserved up to 60% of the QIB (Qualified institutional buyers) portion shares for them.  

Share allotment will be done by November 7, and the stock is likely to be listed on the BSE and the NSE on November 10.

Mamaearth’s valuation was pegged at $3 Bn, or roughly INR 24,000 Cr, in June 2022. However, the brand put its IPO on hold amid subdued market conditions. It is now set to be listed at a valuation of $1.2 Bn, which is just 40% of the previously reported valuation. 

The IPO floor price is 30.80 times the face value of the equity shares, with a cap price of 32.40 times the face value of the equity shares. The lot size of Mamaearth’s IPO is 46 equity shares and bids can be made in multiples of 46 equity shares. 

At least 75% of the shares are reserved for qualified institutional buyers (QIB), with a maximum of 15% for non-institutional investors (NII). Retail investors will be allocated 10% shares.  

Eligible employees opting for the employee reserve portion will get a discount of INR 30 per equity share.

As Mamaearth is a major new-age consumer brand listing on Indian bourses, it is set to attract a wide range of investors.

Girish Vanvari, founder and CEO of the Mumbai-based tax, regulatory and business advisory firm Transaction Square, thinks Mamaearth IPO is a “test case”, as it will show how many people are keen to bet on a D2C brand. 

“As you see, all the IPOs in recent months were from established companies with good price-to-earnings (P/E) multiples. But a loss-making or break-even company has come up for an IPO after a long time. This has got to be a test case for how people react. This is going to be a significant and defining trend for all ‘unicorn’ IPOs, which have taken a backseat. This is more than just Mamaearth,” he added.

What Works In Favour Of Mamaearth’s Listing

According to RedSeer, Mamaearth had a 1.5% market share of the total beauty and personal care (BPC) market in CY2022. 

The BPC segment in India was a $26.3 Bn market opportunity in 2022 and is estimated to reach $38 Bn by 2028. Globally, this sector will likely touch $783.49 Bn by that time.

Given the size of the Indian BPC market and Mamaearth’s relatively short-term but impressive presence (think of its specialisation in all-natural products), the brand has cornered considerable success. Analysts believe the brand’s strong market presence and value proposition will be critical drivers. Here are the top three factors that may boost Mamaearth’s IPO.

Brand presence: The company has a presence in more than 500 cities in India. Its online distribution network has covered 18,000+ pin codes nationwide, with products accessible in more than 715 districts. Besides, the BPC startup also retails through more than 100,000 outlets. 

In the past few years, Mamaearth has rapidly emerged as one of the top natural skincare and haircare brands in India. “The company’s visibility is further enhanced through its participation in shows like Shark Tank India and its aggressive social media marketing,” said Umesh Chandra Paliwal, founder and CEO of Unlisted Zone, a Ghaziabad-based marketplace for unlisted shares.

Right timing: According to analysts with whom we spoke, Mamaearth’s IPO appears to be well-timed, given the positive market sentiment in the past two quarters and the recent trend of IPOs providing good returns. “However, managing the grey market premium will be essential for a successful IPO,” said Paliwal.

D2C opportunity: Mamaearth, known as the face of D2C brands in India, provides a unique opportunity for retail investors, family offices and HNIs keen to invest in direct-to-consumer companies, although it sells approximately 60% of its products through online marketplaces like Amazon and Flipkart. To date, no pure-play Indian D2C brand has been listed on stock exchanges.

What May Go Awry For Mamaearth In The Long Run

Several factors may hinder the brand’s IPO success starting with its financials.

Mamaearth reported losses due to the impairment loss on goodwill and other intangible assets of INR 154 and high advertising costs (around INR 500 Cr ) in FY 23 which may worry potential investors. Compared to other FMCG incumbents like Hindustan Unilever (HUL), this level of ad spending is disproportionately high. For context, HUL invested INR 4,859 Cr in advertising and promotional activities in FY23, just 8.3% of annual turnover (INR 58,154 Cr, FY23).

More importantly, it faces tough competition from peers like The Moms Co, Wow Skinscience and mCaffeine like brands and a large chunk of its promotional expenditure includes influencer marketing, celebrity endorsements and gaining traction on social media.

Between FY21 and FY23, the company spent INR 22.74 Cr, INR 39.93 Cr and INR 67.14 Cr, respectively, on promotions featuring celebrities and social media influencers.

According to Santosh N, managing partner of the Mumbai-based valuation firm D&P Advisory, “While the losses indicate that the company’s valuation is steep, it is also unfair to directly compare these valuations with larger FMCG companies that have been in existence for 50 to 100 years and the P/E ratio at which FMCG companies are valued.”

In the unlisted market, Mamaearth shares have faced tepid demand, being offered at around INR 350. “Given the IPO price band of INR 308-324 and the company’s financials, this did not attract buyers,” said Paliwal of Unlisted Zone.

Promoters selling their shares: Another red flag for investors could be promoters selling shares worth INR 100 Cr. Although Vanvari of Transaction Square believed it was a small amount, several analysts found it a cause for concern.

The D2C brand’s high dependence on third-party manufacturers has also raised eyebrows, as it currently works with 37 contract manufacturers. But at a press conference during the IPO launch, Mamaearth founders Ghazal and Varun Alagh emphasised that the company’s current focus is on innovation, new products, growth and scaling to new markets. 

“Manufacturing is capital-intensive and it will limit our resources. On the other hand, outsourcing manufacturing will help us move quickly at this growth stage,” the founders added. 

The Bottom Line: IPO Oversubscription Likely

Despite many challenges, the IPO market momentum is expected to work in Mamaearth’s favour. “With anchor investors already lined up, there is a high chance that the IPO would be oversubscribed,” said Vanvari. 

This will lead to short-term success, allowing the brand to invest IPO earnings into growing its offline reach.

However, there will still be challenges to maintain its D2C identity in a fiercely competitive market. In fact, its IPO outcomes may face a litmus test in the coming days, depending on how fast it can grow its offline sales network to reach every corner of Bharat.   

Given this context, potential investors will have to weigh the risks and rewards carefully despite Mamaearth’s unique position as a D2C player in the IPO market.

With inputs from Meha Agarwal, Sanghamitra Mandal

The post Mamaearth IPO: Gauging The Investor Sentiment & Market Dynamics appeared first on Inc42 Media.

Over the week, Infosys cofounder and former boss Narayana Murthy kicked up a storm online after exhorting youngsters to be prepared to work 70 hours a week for India to effectively compete with developed nations. 

“India’s work productivity is one of the lowest in the world. Unless we improve our work productivity,,.. we will not be able to compete with those countries that have made tremendous progress… My request is that our youngsters must say – This is my country and I want to work 70 hours a week – exactly how Germans and Japanese did after the second world war,” said Murthy. 

The 77-year-old Murthy made the comments in a conversation with veteran investor and former chief financial officer (CFO) of the IT giant, Mohandas Pai, on the first episode of investment firm 3one4 Capital’s podcast ‘The Record.’

Drawing parallels with Germany and Japan, Murthy said that citizens of the two countries worked extra hours during the post-war rebuilding era. He also said that India’s work culture had to ‘change’ to highly determined, extremely disciplined and hardworking. He called on the youngsters to take the lead in this endeavour and lead this ‘transformation.’

Just as the podcast went live on YouTube, comments trickled which divided the online community in half. Lending support to Murthy, JSW Group chairman Sajjan Jindal endorsed the demand for a 70-hour work week, adding that a five-day week was not a fit for a developing nation of India’s size.

Echoing the sentiment was Ola cofounder Bhavish Aggarwal who tweeted, “Totally agree with Mr Murthy’s views. It’s not our moment to work less and entertain ourselves. Rather it’s our moment to go all in and build in 1 generation what other countries have built over many generations!”

In a separate post later on X, formerly Twitter, Aggarwal said, “Putting in the hours. Not just 70, more like140! Only fun, no weekends!”

Beleaguered former managing director and cofounder of BharatPe Ashneer Grover also chimed into the conversation, offering rather a nuanced take. Reacting to the row, he said Murthy’s comment offended people as work was still measured in ‘hours’ rather than ‘outcome’.

“I think junta got offended here because work is still being measured in ‘hours’ than ‘outcome’. The other thing is people feeling as if youngster’s laziness is only thing keeping India from becoming developed. Funny – getting offended unites us more than cricket, religion, caste or language,” said Grover. 

Internet Responds, Rather Tersely

As the video went viral on social media, netizens took to X to slam the comment and air their grievances against any such proposal. While political representatives compared Infosys to a sweatshop, others compared the proposal to modern slavery. 

In a tweet, a user said, “Let’s do the maths, 70 hrs a week is – 14 hrs a day (assuming 5 working days) + 7 hrs sleep + 2 hours commute (for non metro cities increase to 3 for metros) = 23 hrs. Leaves about 1 hr for eating, shopping, entertainment, and family. Isn’t this modern slavery?:

Others highlighted the argument of work-life balance and claimed that excessive work hours could hamper personal commitments and impact the mental wellbeing of employees. Some even added that long commutes in metro cities could pose challenges to such a proposal and that many employees were not paid well enough to work 70-hours a week. 

Users also claimed that Indians were amongst the most overworked workforce in the world. A 70-hour work week would imply a daily shift of 14-hours in a week with five working days. 

Giving heft to the argument, edtech startup upGrad’s cofounder and chairperson Ronnie Screwavala also differed with Murthy’s stance, saying that boosting productivity was not just about long work hours but rather a byproduct of upskilling, positive and fair pay. 

Speaking to Inc42, wealthtech startup Fynocrat’s cofounder and director Gaurav Goel said that increasing working hours to 70 hours could disrupt an employee’s personal life and would not be sufficient  to advance India’s development.

“… What happens when an employee’s personal life is disrupted by a gruelling 70-hour workweek?…. Increasing working hours to 70 per week won’t suffice in advancing India’s development,” said Goel. 

Chiming into the debate, menstruation-focussed D2C Ayurveda brand Menoveda’s cofounder Tamanna Singh, citing existing research, said that excessive working hours could lead to diminishing returns in productivity. 

“Startups, in particular, rely heavily on innovation, which flourishes in an atmosphere that encourages mental and physical wellness. Nurturing such an environment is not just a matter of corporate social responsibility; it is a strategic imperative that ensures the long-term success and resilience of businesses,” said Singh. 

Many users online also backed Murthy’s demands saying that the rise of ‘startup culture’ in the country had spawned the demand for more hours at work. Curiously though, many startups and founders have also landed in soup for similar statements regarding working hours and excessive employee requirements. 

Startups Under Spotlight

The pandemic rejigged the entire recruitment lifecycle as work from home and flexible working hours emerged as new avenues as Covid-19 locked people indoors. While the pandemic effect has waned, attrition has seen a sudden spurt even as employees tend to spend more time with families after Covid scare. 

But, a section of the startup ecosystem seems set in its ways and many funders have even attracted the public ire for their statements. 

Back in September last year, Bombay Shaving Company founder Shantanu Deshpande courted controversy after he pitched 18-hour work days for freshers. He later rebuffed the ‘18 hour’ figure as a mere exaggeration. 

Prior to that healthtech unicorn Pristyn Care’s cofounder Harsimarbir Singh also landed in choppy waters after sharing his interview hacks which involved scheduling interviews early morning and conducting them same late at night. He also claimed to conduct interviews on Sundays and pushed demands such as asking outstation candidates to show up to the startup’s office the next day. 

Not just this, there was also a raging debate on moonlighting last year which largely saw some sliver of support from Indian startups but sharp criticism from IT giants. While Wipro boss Azim Premji called moonlighting cheating, Murthy himself cautioned youngsters against falling into the ‘trap of moonlighting.’

Despite this, Indian startups have led the baton when it comes to progressive employee policies in the country. Startups such as Zomato have introduced wellness leaves and mental health policies, Swiggy, last year, announced that its employees were free to do moonlighting. 

However, the matter again boils down to the idea of what putting in long hours entails. Growing and scaling budding ventures take hours of hard work, beyond the 9-5 schema, and give a person the opportunity of building something big on a tight budget. On the other hand, a streamlined approach with set working hours may work for large enterprises that have plentiful resources. 

Caught in between seem to be Indian employees who appear to be straddling both worlds, vying for the work environment of a developed nation but in a developing economy. 

The post Why Has Narayana Murthy’s 70-Hour Work Week Pitch Stirred Controversy? appeared first on Inc42 Media.

So much has already been said about the unit economics problem in quick commerce, but startups in this space are ultra bullish and the revenue growth announced by Zepto this week is just another example of why that is.

With the massive spike in its revenue, Zepto is definitely in the quick commerce spotlight for now, especially after becoming the only unicorn in India this year so far. But is there a deeper story behind the 14X revenue growth, which has unsurprisingly dominated headlines?

We’ll take a look at this major question for Zepto and indeed quick commerce, but take a a few minutes to check out these top stories from our newsroom:

• Mamaearth’s IPO Trail: Mamaearth’s parent company Honasa Consumer Limited is all set for its IPO this coming week, but what exactly do investors need to know before it opens. Read in our in-depth story
• Deeptech’s Moment: Peak XV Partners MD Rajan Anandan on why deeptech startups are all set to change what it means to be a technology company in India
• Startups Vs Network Fees: More than 130 startups have sent representations to TRAI over the telco plan to implement network fees, but will this actually calm the fears in the ecosystem?

Zepto’s Dream Start

It’s not often that one sees a company breach the INR 2,000 Cr revenue mark in its first two years, but that’s what Mumbai-headquartered Zepto has managed. Credit where it’s due in terms of scaling up quick commerce, bringing a competitive intensity to the segment.

Zepto has actually managed to disrupt players such as Zomato-owned Blinkit and Swiggy’s Instamart which should ideally have made the most of their existing scale when QC emerged as a category in 2020. Zepto, which rebranded from Kirana Kart in late 2021, clearly saw a gap and that was related to the mixed focus of Zomato and Swiggy.

As cofounder and CEO Aadit Palicha has said several times since last year, Zepto’s advantage is its singular focus on executing the quick commerce model. In terms of revenue, it has worked well.

But at the same time, losses have grown pretty significantly in absolute terms, even if Zepto has made quite a progress from an EBITDA margin point of view. The quick commerce startup reported a net loss of INR 1,272.4 Cr in FY23, an increase of 226% from FY22, which is a big number, but this blow is softened by the improvement in profit after tax margin from -277% to -63% in FY23.

The Unit Economics Question

So the question is: Is Zepto out of the unit economics weeds? Not quite say some former executives in the quick commerce space, including some who have come through Zepto in the past year.

“Zepto’s operating leverage is still very low. The company has to continue to spend money in expanding and scaling up revenue in the future. The trickiest part is maintaining this execution over a number of years,” according to a Mumbai-based retail and digital commerce analyst as well as investment advisor.

Operating leverage is the degree to which any company can increase its operating income through revenue, while keeping gross margins high and variable costs low. In the case of Zepto, the gross margin is not that high, as is typically the case in quick commerce.

“One might see around 15% gross margin in this space. In a typical INR 450 order, Zepto and others are losing around INR 15 to INR 20 per order, if you include discounts, last-mile delivery costs as well as warehousing costs,” added a Delhi NCR-based finance professional, who has worked closely with ecommerce players across segments.

Even a 15% margin of INR 75 is not enough to cover this, we were told, and the only way to solve this is to keep the older stores profitable for a period of more than two years consistently.

“If a dark store was opened 15 months ago, and it’s still making losses even at 100% warehousing capacity, then it will be very hard to make it profitable now. Such stores have to bring in profits for Zepto to cover corporate costs such as expansion of the network,” says the finance professional quoted above.

Cash Burn Remains A Problem

Given that we have not seen Zepto’s audited financial statements but only a part of the P&L, there are some other aspects that we are not yet privy to, which will only become clear after a deeper perusal of the startup’s financials.

The first of these is that there are abnormal losses in the quick commerce segment, which are below EBITDA line items and not always accounted for. There’s inventory pilferage, wastage, obsoletion of inventory, which are not always accounted for.

These are typically clubbed under EBITDA, but these should be accounted as business losses, we were told. Of course, we will find out more once we see how the below-EBITDA calculations are being done for Zepto in FY23.

The second problem is that as players such as Blinkit, Zepto and Swiggy Instamart expand, the working capital also increases. Even if a company has EBITDA of -INR 200 Cr or -300 Cr, the company will continue to need cash, added the first Mumbai-based analyst.

“In the case of Zepto, there are some monthly debt obligations, working capital needs, GST credit, inventory buying and inventory write-offs. If you put all this together the company will continue to need cash for buying inventory and to add more stores, which will also need more inventory. In Zepto’s case it will have to come from outside i.e investors.”

Fighting Deep Pockets

This is why some analysts and those who have worked in this segment believe that success in quick commerce essentially boils down to who has the most amount of cash. Zepto, some told us, will need to raise cash nearly every 12-15 months to scale up this revenue to compete with Zomato, which is likely to have profits to invest in Blinkit or Swiggy, which has a similar revenue mix advantage.

The company has stated that it will reach INR 10,000 Cr in lifetime revenue in the next few months. That would mean that it has doubled or tripled its revenue in FY24, at the very least, which is quite a tall claim. Zepto also said it is on track to achieve EBITDA breakeven (excluding ESOPs and other non-cash line items) in 10 months.

But this bullishness does not fit the view of the category among the experts. They believe margins may improve but losses will continue to grow unless a significant proportion of dark stores turn profitable or Zepto ventures into other verticals. The alternative is adding platform fees, which we have already seen in Swiggy and Zomato. But will this be enough to cover for the losses per order?

Essentially, the execution and singular category focus that allowed Zepto to push forward might be a bit of a problem in the long run, because it will need profitable streams to continue growing without relying on debt or equity funding. This despite raising $200 Mn in August 2023.

Zepto has quite clearly grabbed the quick commerce bull by its horns, but it’s still far away from taming the beast.

GenAI In Spotlight

It is no longer hype, but indeed the next big thing in technology. Generative AI, or GenAI and intelligent automation has the potential to disrupt industries at large, changes many of the paradigms of Web 2.0 or even Web3, and opens up the possibilities for altogether new business models. And India is currently at the forefront of this global technology shift.

Inc42’s latest report titled India’s Generative AI Startup Landscape, 2023 delves into the revolution and our data shows that the GenAI opportunity is projected to surpass $17 Bn by 2030 from $1.1 Bn in 2023, growing at a CAGR of 48%.

This meteoric rise is attributed to the innovative prowess of India’s GenAI startups as well as how quickly startups across sectors are harnessing the powers of generative AI .

Get Our Much-Anticipated Report Now

Sunday Roundup: Tech Stocks, Startup Funding & More

• Ola Electric’s Mega Round: This week’s total funding tally is well above the weekly average for 2023, but a bulk of the $466 Mn raised came from Ola Electric’s $384 Mn debt and equity round
• Another Finfluencer Fined: SEBI has slapped a disgorgement fine of INR 17 Cr on fintech influencer Nasiruddin Ansari aka ‘Baap of Chart’ for allegedly misleading investors
• RateGain Gains: Travel SaaS startup RateGain’s net profits more than doubled YoY to INR 30.04 Cr in Q2 FY24, as travel demand bounceback continued to drive revenue

• More Exits At BYJU’S: CFO Ajay Goel is the most recent high-profile exit from the beleaguered edtech giant, who is quitting just six months after joining BYJU’S
• Jio’s New Bet: Reliance Jio has entered the satellite-based internet race with the announcement of JioSpaceFiber, which aims to bring connectivity to remote regions

That’s all for this week. We’ll be back next Sunday with another roundup of the biggest stories and trends from the startup ecosystem!

The post Beyond Zepto’s 14X Revenue Surge appeared first on Inc42 Media.

Angel tax has been haunting Indian startups since its introduction in 2012, and many entrepreneurs today want a permanent solution to the complexities that this taxation regime brings.

Notable, since its introduction, the angel tax has undergone metamorphosis several times. Despite this, it has been time and again contested by industry stakeholders who have continued to be in pain under its reign.

Is there a solution to the angel tax issue? 

Well, that is exactly what we will try to uncover in this piece. However, before we move ahead, it is imperative to be well-versed with the origins of the now highly controversial taxation regime that has many new-age founders on tenterhooks.

The story of the now infamous angel tax starts with the introduction of Section 56(2)(viib) in the Income Tax Act, 1961. The Government of India, in 2012, included the sub-section in the I-T Act to keep shell companies at bay and tighten its noose on the generation and circulation of black money.

Simply put, this is a tax payable on capital raised by unlisted companies if the value of the shares issued to investors exceeds their fair market value (FMV).  

And, this was a non-issue for startups until 2016, when Income Tax officials started sending the notices to startups as well under the Section 56(2)(viib) and Section 68 questioning

• Revenue is not matching the projected value
• The valuation method 

The Income Tax officials since then have asked startups to pay the angel tax as per Section 56(2)(viib). 

While the government’s intention behind such a tax levy was to curb the inflow and outflow of unaccounted money, it now fails to distinguish between genuine and fraudulent cases, as some would say.

This is probably why Subhash Chandra Garg, former secretary of the Department of Economic Affairs, Ministry of Finance, wants the entire tech startup ecosystem excluded from Section 56(2)(viib) angel tax. 

Speaking with Inc42, Garg said, “The wrestling going on for the last six to seven years to find a fix for the original sin of Section 56(2)(viib) should stop by abolishing this section for technology startups.”

In his book, “We Also Make Policy”, Garg elaborated that tech startups are not vehicles for money laundering and that changing the Department for Promotion of Industry and Internal Trade (DPIIT) notification alone was insufficient.

Garg has a point here. Even if there are a few cases of money laundering, the entire ecosystem must not be blamed and punished on the back of assumptions that the money being invested in them would eventually be syphoned off.

It must be noted that the Indian government has made several amendments to the now overly complicated taxation regime, but Indian founders hardly see any relief.

Before delving into the suggestions brought forth by industry experts, let’s steal a glance at what the existing norms are all about.

The Existing Norm

In February 2019, the Indian Government after much hullabaloo, notified G.S.R 127(E) guidelines that allow startups to go for angel tax exemption.

According to the notification, an entity could be exempted from angel tax, if

1. It’s a DPIIT-recognised startup
2. The aggregate amount of paid-up share capital and share premium of the startup after the issue or proposed issue of shares, if any, does not exceed INR 25 Cr. This does not include VCs.

Such startups are asked to file a declaration in Form 2, which states:

• They will not establish any subsidiaries for the next seven years.
• Will not provide loans or advances, including salary advances to employees.
• The startups have not invested in any assets, such as buildings or land, beyond what is used by the startup and so on.

The declaration list to apply for the angel tax exemption is way too long. 

According to Diana Mathias, a partner at N.A. Shah Advisors, startups typically expand through acquisitions, which enable them to enter new markets and reach new customers. However, when this happens, the startup exemption is revoked.

“These conditions are challenging to comply with, and genuine startups still in the growth process face heightened scrutiny from income tax authorities regarding their pricing and valuation mechanisms adopted in hindsight,” she said, adding that only a few startups opt to file Form 2 as a result. 

Interestingly, an RTI response by DPIIT revealed that between February 19, 2019, and September 26, 2023, of the 10,809 DPIIT-recognised startups that applied for the exemption, only 8,066 startups were exempted.

In its latest attempt, the IT department made changes to Rule 11 UA, introducing several valuation methods, to provide more clarity and flexibility to startups and investors in the form of:

• Five New Valuation Methods: Non-resident investors now have access to five valuation methods, including the Comparable Company Multiple Method, Probability Weighted Expected Return Method, Option Pricing Method, Milestone Analysis Method, and Replacement Cost Method. This expansion aims to cater to the diverse needs of investors.
• Valuation For Shares Issued To Non-Residents: The price of equity shares issued to non-resident entities can now be considered the Fair Market Value (FMV) for both resident and non-resident investors, subject to certain conditions. This provision seeks to streamline the valuation process for cross-border investments.
• Price Matching For VCs: Price matching for resident and non-resident investors is now available for investments made by Venture Capital Funds or Specified Funds. This change aims to create consistency in valuations across different investor categories.
• Valuation Methods For CCPS: According to the notification, the valuation of CCPS could also be based on the FMV of unquoted equity shares.
• Safe Harbor Provision: To provide some leeway, a safe harbour of 10% variation in value has been introduced.

While these changes are seen as positive steps, they do not resolve the angel tax issue, as several founders and investors pointed out.

So, What’s The Long-Term Solution?

The startup founders that Inc42 spoke with agreed that the existing angel tax regime needs a further tweak. 

The founding partner of VC fund 3one4 Capital, Siddarth Pai, suggested the dematerialisation of securities to address the regulator’s black money concerns, standardisation of the scrutiny process and upgradation of the computer-assisted scrutiny selection (CASS) system in accordance with the startups as some of the key reforms needed in the long run. 

Further, the industry stakeholders want: 

Increase In The Exemption Limit To INR 80 Cr: Speaking of quick fixes, some founders want the current angel tax exemption limit to increase to INR 80 Cr from the current INR 25 Cr to encompass a more extensive range of startups.

Dematerialisation Of Security: Dematerialising security would enhance traceability and enable the identification of ultimate beneficial owners (UBOs). It would also capture secondary transfers, which currently go unrecorded. This will help combat the issue of lack of transparency among private companies.

Standardisation Of The Scrutiny Process: The scrutiny process should be made more objective and less reliant on subjective judgments by tax officers. Guidelines should be established to differentiate legitimate business cases from money laundering. Quality of spending should be considered.

Updation Of The CASS System: The CASS system needs an update to prevent companies with losses and share premiums from receiving notices automatically. Startups often operate with losses during their growth phase. Better triggers and interlinking is required. 

Resolution Of Issues Under Section 68: Section 68, although less discussed than Section 56(2)(viib), is equally significant. Recent cases involving TravelKhana and BabyGoGo, whose bank accounts were emptied due to Section 68, have sent shockwaves throughout the Indian startup ecosystem. 

Section 68 aims to delve deeper into fraudulent transactions and is unconcerned with valuation or premium. Instead, it seeks to establish the identity, creditworthiness, and genuineness of transactions for each investor.

While the aforementioned solutions can go a long way in addressing the angel tax issue, Somdutta Singh, the founder and CEO of Assiduus Global, an angel investor, and an advisor to the Government of India, believes that a comprehensive and clear definition of startups needs to be floated, taking into account factors like revenue, age, and scale. This will help in distinguishing genuine startups from other entities.

Seconding this, Ipsita Agarwalla, senior member of International tax practice and funds formation practice at Nishith Desai Associates averred that considering that valuation rules have been notified by the government and valuation will be undertaken by SEBI-registered merchant bankers, clear instructions should be given to tax authorities to not raise questions on valuation. 

Additionally, simplifying the angel tax provisions and providing exemptions or deductions based on certain criteria can reduce the burden on startups and encourage investment. 

Industry experts also believe that similar improvements can be made to address issues related to Section 68. Finally, regular communication and coordination between tax authorities, the DPIIT, and startups can help in addressing concerns promptly and ensuring compliance without undue scrutiny.

The post What Startups Want? Settling The Angel Tax Debate Once & For All appeared first on Inc42 Media.

Mamaearth’s parent company, Honasa Consumer Limited (HCL), has filed its red herring prospectus (RHP) with market regulator Securities and Exchange Board of India (SEBI) as it looks to become the first new-age consumer brand or D2C brand to list on the Indian bourses.

The IPO will open for bids on Tuesday, October 31, 2023, and conclude on Thursday, November 2, 2023. The anchor issue will open on October 30, 2023. The price band at which the issue will open is INR 308 – INR 324. At the higher end of the price band, the company is expecting to raise around INR 1071 Cr.

The Delhi-based beauty and personal care company filed the RHP on October 23, 2023, for the initial offer, which includes a fresh issue of equity shares aggregating up to INR 365 Cr or $44 Mn.

Besides this, there is an offer for sale (OFS) component of up to 4.12 Cr shares, which would see shareholders such as Kunal Bahl, Rishabh Harsh Mariwala, Rohit Kumar Bansal and Shilpa Shetty Kundra offloading their stakes in the company.

The company is targeting a valuation of around $1.2 Bn through the IPO.

The IPO is being run by Kotak Mahindra Capital, JM Financial, Citi, and JP Morgan, with legal advice provided by Cyril Amarchand Mangaldas, IndusLaw, and Khaitan & Co.

As per its RHP, Mamaearth claims proceeds from the fresh issue will be directed toward bolstering marketing efforts to enhance brand visibility, establishing new exclusive brand outlets, and expanding the network of BBlunt salons.

The allotment for the Honasa IPO is expected to be finalised on Tuesday, November 7, 2023, with the listing date tentatively fixed for November 10, 2023 (Friday).

Nykaa, which was listed publicly in late 2021, is a competitor to Honasa’s Mamaearth due to its private-label beauty brands. However, the Mumbai-based ecommerce giant is primarily a marketplace, and Mamaearth is one of the brands that sell through Nykaa.

Mamaearth’s IPO would be a true test for the Indian D2C brigade and as such plenty of eyes are eagerly watching the listing.

Breakdown Of Key Brands And Categories

Founded in 2016 by the husband-wife duo of Varun and Ghazal Alagh, Honasa’s product portfolio comprises six beauty and personal care brands which include Mamaearth, The Derma Co., Aqualogica, Ayuga, BBlunt and Dr. Sheth’s. This product portfolio is supplemented by our professional salons chain, BBlunt Salons.

Here’s a brief overview of each brand:

• Mamaearth: Mamaearth is the company’s flagship brand with a focus on developing toxin-free beauty products made with natural ingredients. Mamaearth was India’s largest digital-first BPC brand in India in terms of revenue from operations in FY23 according to the RHP
• The Derma Co.: Launched in 2020 to provide solutions for skin and hair conditions through a range of active ingredient-based products. The brand offers consumers an AI-enabled experience through real-time skin assessment analysis to help them detect skin conditions and identify specific products or regime for treatment. The brand has achieved an ARR of INR 300 Cr within three years of launch.
• Aqualogica: Launched in November 2021, Aqualogica is a specialised skincare brand that leverages the science of hydration to introduce products suited to Indian skin-types and has achieved an ARR of INR 150 Cr in less than 18 months.
• Ayuga: Launched in December 2021, Ayuga aims to make the traditional wisdom of Ayurveda relevant for Indian millennials by curating products in easy-to-use, modern formats that can easily fit in a consumer’s daily skin and hair care regime
• BBlunt: The company acquired BBlunt in March 2022 with the objective of extending its portfolio to specialised professional hair care and styling segments
• Dr Sheth’s: Acquired in April 2022 and operating through its Subsidiary, Fusion Cosmeceutics Private Limited, which became wholly-owned by Honasa in December 2022. Dr. Sheth’s offers specialised skincare solutions crafted with a combination of natural and active ingredients. Since its acquisition in 2022, the brand has grown 21 times, as highlighted by the founders during the press conference.

The parent company’s multiple brands together boast 301 new SKUs and 252 products as of March 31, 2023. Its core strength over the past few years has been an omnichannel distribution strategy besides its native ecommerce channels. The current online and offline split for the company is 64.01% and 33.47% respectively.

“Varun and I started as middle-class parents trying to find right products for our son, just as a babycare product. But we realised while many are selling to India, not many are crafting for India, which marked our entry into other categories,” said Ghazal during a press conference today on October 26, 2023.

A Snapshot Of The Group’s Shareholding Pattern (Pre-Issue)

Cofounder and chief executive officer (CEO) Varun Alagh owns 34.30% of the startup, with a total of 10,67,37,650 shares. Meanwhile, cofounder and chief innovation officer (CIO) Ghazal Alagh owns 1,00,65,200 shares, or a 3.23% stake, in the D2C brand. Together, they own 37.53% of the startup. The promoter group, comprising three members, owns a 37.6% stake in the company.

Venture capital firm Sequoia India is the second-biggest shareholder, with a 24.01% stake in the company. Through its two funds – SCI Investment VI fund and SCI Investment III fund – the VC firm owns 80,10,900 shares of Honasa Consumer Limited.

Honasa achieved its unicorn status in December 2022 after securing $52 Mn at a valuation of $1.2 Bn in a funding round led by Peak XV Partners (Sequoia Capital).

Sofina Ventures, Fireside Ventures, Kunal Bahl, and Rohit Bansal are among the other key investors in Honasa.

People At The Helm

As of June 30, 2023, Honasa had 993 permanent full-time in-house employees. These employees were supported by 1,767 contractors and consultants. Apart from founders Varun and Ghazal, there are five other key managerial personnel as per the RHP. The leadership team together boasts a combined professional experience of 100 years and the average employee age is 29 to 30 years.

• Raman Preet Sohi is the chief financial officer and is responsible for establishing and executing the financial strategy
• Dhanraj Dagar is the company secretary and compliance officer
• Zairus Master is the chief business officer and is responsible for setting and achieving business targets of the company and providing guidance for different revenue channels
• Jayant Chauhan is the chief product and technology officer. He is responsible for formulating a vision for the use of technology in the company.
• Anuja Mishra is the chief marketing officer. She is responsible for drafting and executing the marketing strategy of the organisation. She joined the company on March 10, 2022

Diving Into Honasa Consumer’s Financials

Honasa Consumer reported a net loss of INR 151 Cr in FY23 as against a net profit of INR 14.4 Cr in the year-ago fiscal. It reported an operating revenue of INR 1,492.7 Cr in FY23, a jump of 58% from INR 943.4 Cr in FY22.

Further, for the three months ended June 30, 2023, the group registered INR 464.46 Cr as consolidated revenue from operations. For the same period, the net profit stood at INR 24.71 Cr.

The exceptional loss in FY23 was largely attributed to the impairment of goodwill, arising out of the acquisition of Just4Kids Services Private Limited, the parent entity of Momspresso. Without it, the startup would have reported a net profit of about INR 3.7 Cr during the year under review.

Breaking this up amid the six brands, Mamaearth is one of the most revenue-generating brands for Honasa.

In FY23, the company derived INR 172.5 Cr or 11.56% of its operating revenue from the sales of its top two products, which were under the Mamaearth brand.

Further, for the same period, INR 408.68 Cr or 27.38% of the operating revenue was derived from the top 10 brands under Mamaearth, The Derma Co., Dr Sheth’s and Aqualogica.

Omnichannel Scale & International Presence 

As mentioned above, the omnichannel (retail and ecommerce) strategy has been one of the key competitive strengths for Mamaearth and its sister brands. In the competitive beauty ecommerce landscape, it faces competition from companies such as Nykaa (private labels), Purplle, Pilgrim, Pureplay Skin Sciences (Plum and Phy), SUGAR, Wow Skin Science and a host of other D2C brands.

The company has a presence in over 500 cities in India. The online distribution network covered over 18,000 pin codes in India, with products accessible in 715+ districts. Besides this, it also sells products through more than 100,000 retail outlets.

Beyond India, the company is looking to take Mamaearth to international markets and is looking to replicate the omnichannel strategy in Bangladesh, Malaysia, Vietnam, and Thailand. This would supplement the company’s other key international markets such as the UAE, Qatar, Nepal, Malaysia, Maldives, and Mauritius, where it sells primarily through Amazon.

Challenges And Market Opportunity

According to a RedSeer report quoted in the RHP, the market for BPC products in India is expected to grow at a CAGR of approximately 11% from approximately $20 Bn in 2022 to approximately $33 Bn in 2027.

The BPC products market lends itself well to digital penetration, and the online BPC market, which is currently sized as $3 Bn, is expected to grow at 29% annually to be around $11 Bn by 2027, translating to an online penetration of 34%.

However, one of the key challenges for the company is its high dependence on third-party manufacturers. In FY21, FY22 and FY23, the top three manufacturers for each period contributed 81.95%, 70.97%, and 51.73%, respectively, to the total value of its purchase of traded goods. It currently works with 37 such contract manufacturers.

Not only this, being a D2C brand it faces stiff competition, and a large chunk of its marketing expenses include engaging influencers, entering into celebrity endorsement agreements and maintaining a presence on social media platforms.

For FY21, FY22 and FY23, the promotional costs incurred on a standalone basis in connection with its engagement of celebrities and social media influencers stood at INR 22.74 Cr, INR 39.93 Cr, and INR 67.14 Cr, respectively.

Also, being able to innovate and maintain product differentiation continuously is another key challenge for the company. One of the risk factors that the company mentions in its RHP is related to the launch of new brands and products. This is because the company fears that consumer preferences can’t be predicted as they tend to change swiftly. Also, the company is not sure if its new launch will be “commercially viable or effective or accepted by our consumers”, which is typical in the FMCG space.

In the RHP, the company mentions its ability to innovate, quality assurance, supply chain and logistics as few of its many strong capabilities. However, at the same time, the continued losses over the years may keep retail investors at bay from applying for the IPO.

Having said that, the Indian startup ecosystem has gradually started to rise above the funding winter and tech stocks are expected to see positive growth amid stability across global markets. Being one of the most anticipated startup IPOs of the year, the Mamaearth listing comes with high hopes, but how well these hopes will get fulfilled, we will find out in less than two weeks.

The post On The IPO Street: Decoding Mamaearth’s RHP, Shareholding Pattern, Risks & More appeared first on Inc42 Media.

Indian startups are up in arms against telecom operators for allegedly trying to violate the basic principles of net neutrality by trying to bring over-the-top (OTT) platforms under the regulatory ambit. 

Ever since the Telecom Regulatory Authority of India (TRAI) floated the consultation paper on regulating OTT communication apps back in July this year, a full-blown public fracas has erupted between the telecom operators and Indian startups. 

The Indian telecom providers are aggressively batting for an overarching regulatory framework, mandating OTT platforms to foot network costs based on bandwidth usage. All major private players, be it Reliance Jio, Airtel or Vodafone Idea (Vi), have proposed a revenue-sharing agreement between operators and big tech companies, which has now made Indian startups wary. 

Fearing an eventual rollout of such mandates to startups, as many as 132 Indian founders wrote a letter to TRAI chairman PD Vaghela in September, cautioning him against the implementation of such a move. 

Apprehensive that the proposed recommendations may ‘tilt the balance of power’ in the favour of telcos and apps of their choice, Indian startup founders publicly slammed any such proposition and raised alarm over violation of net neutrality. Trading barbs publicly, some tech entrepreneurs equated the proposed network fee with ‘hafta vasuli’ (extortion money), while others warned of George Orwells’ 1984-esque dangers. 

On top of that, industry bodies of the two sides continue to train guns at each other as alarm bells have gone ringing across the Indian startup ecosystem. The result has seen the Indian startup community band yet again to protect their interests against the onslaught of telecom operators.

Be it the violation of net-neutrality or being charged for network costs, Indian startup founders believe that their fears are not unfounded. So, what’s making them so restless?

Fear 1: Startups Dread The Network Cost Bomb

Indian startup founders are heavily averse to the idea of being saddled with network fees. The rationale is led by concerns that telecom operators will eventually roll out the payment diktats to startups and smaller players, which may impede the digital innovation ecosystem. 

To put things in perspective, operators currently have pitched for imposing a network cost on OTT platforms based on the traffic consumed by such platforms. Bharti Airtel has been a bit precise in approach, telling TRAI that all traffic originators that exceed 5% bandwidth occupation at peak hours, measured at an individual operator network level, would have to pay such charges. 

Speaking to Inc42, Vishwas Patel, joint managing director of fintech startup Infibeam Avenues, said that the network fee proposal simply entails gatekeeping. He believes that once the revenue-sharing proposal is approved, nothing will stop the telcos from slapping similar policies on smaller players and startups. 

Similarly, several startup founders believe that the proposal may lead to additional compliance burden and further squeeze the revenue margins of smaller players in the digital ecosystem. 

In addition, while big techs with deep pockets may easily pay such charges, it would become difficult for smaller companies and emerging startups to sustain if such a proposal is mandated. 

Fear 2: Net Neutrality At Stake

In what can be seen as the biggest fight in the country over net neutrality since 2016, startups allege that ‘fair-share fee payments’ undermine the basic tenets of net neutrality. Making their case before TRAI, the founders termed teclos’ recommendations on network fee as discriminatory and antithetical to the principles of net neutrality in India. 

“… The precedence that such discriminatory practices will set will impact our prospects in India and abroad, and greatly harm the vision behind Digital India…. These initiatives (such as Startup India) aren’t complete without the support for Net Neutrality – a principle that assures telecom or internet service providers don’t discriminate for or against online apps and services, on the basis of availability, speed, or cost of access, leaving that choice to the end user alone,” added the founders in their letter to TRAI. 

Startups believe that imposing any such diktats would put additional compliance mandates on startups and would be directly at odds with net neutrality principles. Citing his contention, Patel told Inc42 that imposing network fee mandates may lead to some players not being able to pay such charges. He further asked if telcos would block access to OTT platforms that are not able to pay the charges and if such a move will not amount to gatekeeping and flouting net neutrality norms.

Wint Weath’s Ajinkya Kukarni feels that any slight diversion from net neutrality would push the country down the road of ‘1984’, citing the Orwellian novel that explores the themes of authoritarianism and mass surveillance of people and their behaviour.

Others believe that telcos are merely pipes for transmission of data and ought not be allowed to impose cost mandates on any company. 

While telcos have gone overboard in claiming that their recommendations do not violate net neutrality, big names in the Indian startup world, including Paytm’s Vijay Shekhar Sharma, Zerodha’s Nithin Kamath, and Matrimony.com’s Murugavel Janakiraman, have publicly pitched for a neutral internet. 

Fear 3: Apprehensive Of The Telecom Licence Raj

Another key aspect that has left startups high and dry is telcos’ stand for an extended regulatory regime encompassing digital platforms and OTT players. 

Reiterating their demand, operators seek that OTTs should also be liable for similar licensing requirements and regulatory scrutiny. Telcos base their contention on the fact that communication apps also offer the same services, be it calling or messaging, to users yet are exempted from regulatory compliance. 

On the other hand, startups state that internet services are already regulated under the IT Act, 2000. They further claim that online services are fundamentally different from telecom services and merely complement the latter. 

The biggest contention, however, of the startups seems to be that telecom service providers would yield the biggest power if OTTs are brought under regulatory purview. The homegrown digital players believe that telcos would ‘essentially have the power to tilt the playing field to favour’ an app or website.

Indian startups believe this would inevitably lead to discrimination, non-level playing field, entry barriers, and increased compliance burden for digital companies.

“… Telecommunications licensing requirements, if extended to internet applications and services, may impose onerous obligations on internet services, including costly legal compliances, and impact key product decisions, which may harm India’s vibrant startup ecosystem…,” the founders wrote in a letter to TRAI. 

Fear 4: Not The Birds Of Same Feather

Indian startups and OTTs fear that they will eventually be treated on par with telecom  operators despite glaring dissimilarities between the two. 

However, telcos argue that internet-based communication services have substituted traditional calling, eating into their revenues and profits.

In retort, startups have termed these claims unfounded, saying there are inherent structural and functional differences between telecom operators and OTTs. The founders even went on to claim that categorising OTT services as ‘substitute services or segmenting them as messaging, video and other apps’ is incorrect. 

Citing the very nature of how the internet operates, Indian founders also claimed that startups pay for hosting services and for sending and receiving content online to edge providers. Startups also claim that users themselves are requesting access, rather than the assumption that platforms themselves are generating the traffic. 

“The internet is not a simple two-sided market. Ours are internet services which consumers demand, and are delivered via a complex network of networks called the internet, and not value added services which are delivered by telecom operators. We host our services and pay for sending and receiving content via the Internet to our edge ISP…,” added the letter by startups. 

Additionally, startups fear that allowing price differentiation based on content accessed would ‘militate’ against the open architecture of the internet. In simple words, allowing telcos to charge differently for one service would compromise the entire architecture of the internet where multiple stakeholders are involved in processing the data.

Treatment at par with telcos might open a can of worms for startups and OTT platforms be it the heavy licensing regime or regulatory oversight that they are currently more or less not mandated to adhere to. As Wint Wealth cofounder and CEO Ajinkya Kulkarni told Inc42 recently, internet is the biggest utility and ought to be neutral. 

Fear 5: A Highly Uneven Playing Field 

The biggest reason that appears to be giving sleepless nights to startup founders is supposition that proposed recommendations by telcos may adversely impact the homegrown startup ecosystem.

Startup founders have time and again said that imposing network costs would favour ‘large multinational conglomerates’ who can afford to adapt to such regulations. They further claim that giving telcos the ‘key’ to control factors such as calculation of these proposed bandwidth costs would harm and ‘impact the thriving’ Indian startup ecosystem. 

Echoing a similar sentiment, Zerodha cofounder Nithin Kamath said that the exponential growth of the Indian technology and startup ecosystem was the result of a neutral internet and that the destiny of the country was tied to the internet remaining open, accessible, and neutral for everyone. 

Others fear that imposing additional cost mandates could hit the top line of Indian startups, making them a less attractive bet for investors globally. As funding winter already takes the sheen off the ecosystem, any additional blow could mean that funding may further dry up and may mean an adverse impact on foreign investments and innovation. 

Besides, imposing network costs could mean OTT platforms imposing additional costs on end-customers. In a price-conscious market such as India, that could have disastrous implications for a company looking to scale up operations amid intensifying competition from peers. 

As the fight erupts into a bigger battle between telecom operators and startups, it remains to be seen which side TRAI turns to. For now, the startup ecosystem is waiting with bated breath as founders continue to have sleepless nights, fearing what future holds for them. 

The post 5 Reasons Why The Network Fee Debate Is Giving Indian Founders Sleepless Nights appeared first on Inc42 Media.

Deeptech startups in India today are writing the playbooks and building the precedents that will keep the Indian tech and digital economy on pace with global developments, believes Rajan Anandan, managing director of Peak XV Partners and Surge.

Peak XV’s ninth cohort of Surge, its early-stage accelerator and incubator program features 13 early-stage startups, seven of which are based in India. And the latest batch has a significant number of deeptech and AI startups, which is not by design but by circumstance.

Anandan claimed it’s not in the nature of Surge to pick a trend or a theme to focus on when selecting startups. As it happens, most of the early-stage innovation is happening in these spaces.

“We set out to find the absolute most interesting, most audacious founders building the most interesting companies and I think what you’re seeing is the underlying nature of the ecosystem changing. It seems that more and more companies are AI companies today,” Anandan told us.

While deeptech is a wide space, the companies in the cohort are solving problems in manufacturing, semiconductors, quantum computing, climate tech, and healthcare. Over 75% of the Surge 09 startups have cross-border operations and ambitious plans for global expansion.

We spoke to Anandan about how India is poised to capitalise on the rise of AI and deeptech and how Surge is excited about helping build companies that will change the course of India’s tech economy, which has gone from services to products in the past two decades.

Edited excerpts

Inc42: As someone who has been keeping a close eye on early stage innovation and given the number of deeptech startups in the Surge cohort, do you believe this is AI’s year? 

Rajan Anandan: Deeptech is not just AI, right? Even if you go back to the Surge cohorts three years ago, we were seeing AI companies because we tend to be very early. So we were investing in early AI companies even before generative AI became this big buzzword.

But what’s different about this year is that we are seeing what’s happening beyond AI and that’s very critical for the Indian tech economy to mature beyond where we are. What’s really new in this cohort is we have two semiconductor companies. Mindgrove is making systems on chip. InCore is building a fabless semiconductor startup. The very first truly indigenous made-in-India chip that will be going into production over the next several months is being built by this company.

The ecosystem is changing much more towards science-based, IP-based, hardware-software combinations, in addition to AI. They are very different compared to the startups that you may have seen in the past cohorts.

Inc42: One of the criticisms in relation to the deeptech sector is that founders don’t have the right approach for go-to-market or from a monetisation point of view. What are your thoughts on this?  

Rajan Anandan: You know you can’t go about developing green hydrogen with electrolysis like Newtrace if you don’t know the science. So yes, founders in deeptech are typically very deeply technical. The startup’s founders are two PhDs and they have been at it for a while. They did the PhDs in Europe and started this company three years ago after coming back to India.

But there’s something called technology readiness level at tech companies or for tech-based innovations. But we only invest through Surge when the tech is ready to be commercialised. So we know that these companies are ready to hit the market or in some cases are already out there.

But with Surge, we also focus on three key things, which addresses some of the gaps we may typically see.

The first is around the basics of building a startup — from culture to hiring and managing talent, etc etc. The second is around how do you really make the right design choices commercially, for example when it comes to pricing.

The third is go-to-market. For instance, we have a lot of sessions around enterprise sales or serving large companies or how do you sell to governments, which is what many deeptech companies in the defence sector have to do. So our focus is on helping founders, giving them the right foundations, a toolkit, and the skill sets for building enduring companies.

Even a lot of our software companies are being built by engineers, so even if they have the technical expertise they have combined it with the commercial aspects.

Inc42: But SaaS or software companies even six-seven years ago had a playbook to follow from companies like Zoho or Freshworks or even others that have cracked the global market. Indian Deeptech does not have that deep history yet. 

Rajan Anandan: Firstly, within Surge we have very good playbooks for SaaS or other segments. Let’s say you decide to launch a SaaS company tomorrow. You can go ahead and read the playbook and chat with us for a couple of hours to get a better idea. We don’t have those yet for deeptech. But in time we’ll fill that gap.

I think it’s not just Peak XV; it’s the entire ecosystem, right? We have two semiconductor startups creating products, co-IPs and chip design and things that have not been seen before. We are not talking about services in the semiconductor space which the likes of HCL have been doing.

This is all very early, but I think it’s exciting to see this very high-calibre talent emerging from India, and these companies are solving problems that will have a mark on the world.

Inc42: A lot has been said about building for the world from India, but is that forgetting about the many problems that are yet to be solved for the Indian market?

Rajan Anandan: India has a twin-engine innovation ecosystem. One engine is focused on India and innovating for the domestic market. We are seeing entrepreneurs focused on every possible sector, from edtech to ecommerce to fintech, logistics and others.

The second part of the engine is innovating for the world. And I think there the context goes back to the 1980s when Infosys was founded. Since then Indian companies have been building for the world or providing services to the world, so in that sense, this new wave of SaaS companies building global products is not entirely new.

I would say that 40% of the Indian startups that raised seed funding in 2022 were building for the world from day zero. Founders are looking beyond SaaS, with manufacturing, which requires a totally different approach to building a business.

Now we are also seeing this evolution of Indian entrepreneurs going beyond SaaS, with AI, which is actually software but you know more than that. We are now in this zone, where innovation is everywhere and it can come from anywhere.

Inc42: In 2023, we have seen many founders quit startups to start up afresh in these sectors. Is this something you expect to see more of as new growth segments or sectors emerge? 

Rajan Anandan: I don’t think we should look at it negatively or positively. The thing to keep in mind is that these founders give their heart and soul to their startup. Being an entrepreneur is not easy.

And by the way, one may also not be the right person at a given time to continue leading the company. So bringing in the right people or transitioning to professional CEOs who can take the business forward is not a bad thing. If somebody says I’ve been building this company for five, 10 or 15 years, but now I want to try to build something else, they should have the freedom to do so.

That’s how Silicon Valley became what it is. They have entrepreneurs who built their first company, which may have failed or succeeded, but they built another company, and a third startup after that. Talent should be free to build new things and I think it’s very important to have this continuity of entrepreneurs within the startup ecosystem.

The post Deeptech Playbooks Are Being Written By Early Stage Startups Today: Peak XV’s Rajan Anandan appeared first on Inc42 Media.