India’s $100 Bn+ ecommerce market has seen a slew of changes in 2023, ranging from the entry of new players, the expansion of the Open Network for Digital Commerce (ONDC) going live and D2C brands exploring the omnichannel path for revenue growth.

While Walmart’s infusion of $600 Mn into Flipkart as a part of its mega $1 Bn round hogged the limelight towards the end of the year, Amazon put a pause on its spending in India and streamlined its workforce in line with global strategy.

The past year also saw MamaEarth, become the first publicly-traded D2C brand in India, with IPO subscribed 7.6 times amid a spiked interest from the institutional investors. 

India’s two largest conglomerates, Reliance Industries and Tata Group, are also rewriting their playbooks to grab a major chunk of the burgeoning online retail industry, with the focus now shifting to clock revenues from beyond metros and Tier 1 cities. 

At the same time, the government has lent its support to the ONDC to check the dominance of large players in the aggressively growing ecommerce market. The year 2024 promises to bring many of these factors into play.

The 8 Biggest Ecommerce Trends To Expect In 2024

Amazon-Flipkart Duopoly Likely To Weaken With Rise Of Meesho & Co

Despite a challenging regulatory environment, the strengthening of the D2C ecosystem and ONDC’s foray into digital commerce, marketplace giants Amazon India and Walmart-owned Flipkart have managed to capture more than 90% of the total gross merchandise value (GMV) during the peak festive sales in 2023. 

Even as these giants are building strategies to operate in a far more regulated environment than before, analysts believe that the marketplaces will continue to leverage the first-mover advantage, scale in terms of user base, and distribution channels in 2024, giving them an edge over the competition. 

Except for SoftBank-backed Meesho, which has made surprising leaps in terms of average month-on-month user growth, analysts predict other players will not dent the current ecommerce revenue share of Amazon and Flipkart. 

D2C players or ONDC will have some impact in 2024, but only Meesho is in the position to challenge the duopoly. In April 2023, equity research firm Jefferies said that Meesho is growing faster than the overall growth rate of the ecommerce industry in India.

 “Meesho had an impressive 120 Mn average monthly active users on its platform during CY22. Over the last two years, Meesho added ~100 Mn MAUs, much higher than additions by peers. Meesho scores well on all stages of an online purchase journey, including awareness (measured by app downloads), consideration (measured by MAUs) and transaction (measured by MTUs),” the Jeffries report added.

Other analysts believe Meesho’s zero commission model for sellers who offer unbranded products targeted at consumers from middle-low income households has worked for the Bengaluru-based ecommerce unicorn which has captured 7% of the ecommerce market share in India.

However, the larger question is how these giants will move beyond Tier 1 cities and metros, which have driven a majority of the revenues so far. Meesho and even the likes of JioMaart or TataNeu will have to capture underpenetrated markets, a top ecommerce industry analyst told us.

“This is especially true since Amazon and Flipkart do have control over large inventories earlier in the form of companies like Cloudtail, Appario and now private label brands. With time, if the regulators do not put an end to this structure through definitive laws, Amazon and Flipkart will build on the market duopoly,” an ecommerce analyst added.

National Ecommerce Policy Will Disrupt Best-Laid Plans

The year ahead is also expected to see the announcement and implementation of the much-awaited ecommerce policy after years of battles between India’s retailer body, the Confederation of All India Traders (CAIT) and the marketplace duopoly.

Sources told us that the announcement of the ecommerce policy was deferred since both Amazon and Flipkart have had several rounds of discussion with the Union Commerce Ministry expressing contentions over the various provisions of ecommerce consumer protection rules (2020).

Sources told us the policy builds on the ecommerce consumer protection rules (2020) and will incorporate strict adherence to local data storage, consumer interest, the counterfeit policy of marketplaces, marketplace linkages and ownership of sellers, predatory pricing, forced discounting and flash sales.

The ecommerce policy, as per several reports, will not see further revisions or drafts made publicly. 

Amazon and Flipkart are particularly in a tight spot since they are owned by foreign entities and have been alleged to have violated FDI and FEMA rules in past. As such, the upcoming ecommerce policy is expected to impact them the most, especially since both have aggressively expanded in having partnerships and tie-ups with private-label brands over the past few years. 

There have also been allegations of both using the data of the most popular products being sold on the platform to build their private labels. “It will be interesting to see what the regulations hold in place for advertising on ecommerce marketplaces since that is where Flipkart and Amazon draw a majority of their revenues now,” Prem Bhatia, CEO of ecommerce tech company Graas, told Inc42.

ONDC Penetration To Grow

ONDC made a big foray into India’s digital commerce sector in 2023, the first of its kind initiative in the world to transform the digital trade and ecommerce landscape. Although ONDC began by disrupting food delivery, the fact remains that the open protocol is yet at a very nascent stage. 

ONDC is still building its network and hence would need aggressive seller onboarding, awareness campaigns and investment in marketing to make a dent in the online retail industry as it is.

CBO Shireesh Joshi told Inc42 that in 2024, ONDC’s focus will be further expansion into cities and vertical expansion. 

“We are focussed on expanding our services to many cities with a wider range of products and services. A case in point will be for instance we are devising this product of sachet loan products for street side vendors at a very low interest rate against their sales history. The target is becoming accessible and penetrating to remote markets,” he added.

Notably large players such as Snapdeal, Amazon’s logistics arm Amazon Transportation Services (ATS), BigBasket, PhonePe, Paytm, and Ola have joined the network, showing the network’s growing presence and stature.

ONDC will continue to function as a not-for-profit entity and may eventually charge small fees from sellers but that will happen several years down the line. On the discount/incentive side, the ONDC CBO maintained that the buyers may expect some discounts slashing around Q1 2024. 

Sources have informed us that the big ecommerce players have largely stayed away from ONDC which again puts a question on the scalability of the open protocol. “That is a larger question which should be posed to Amazon and Flipkart,” Joshi said in response.

Reliance, Tata’s Acquisition Appetite To Grow

Despite the ecommerce industry’s explosive growth over the past few years, the $100 Bn+ industry is still very small compared to the $1.5 Tn retail industry which is where the biggest conglomerates of India like Reliance Industries, Tata Group, and Aditya Birla Group have a huge edge over the ecommerce players. 

Reliance and Tata have unshakeable dominance in the retail industry of India on top of which they have built JioMart, TataNeu as well as other platforms. 

Industry sources revealed that the next leg of growth for these conglomerates will come from digitising their thousands of offline stores, bringing their brands into the digital sphere and acquisitions. 

“In a way, Tatas and Reliance will have different playbooks. Reliance eyes acquisitions and distress deals to strengthen its presence in any industry. We may expect Reliance’s Jio to acquire more brands across fashion, grocery, pharmaceuticals, and apparel, verticals. For Tatas, their loyalty programmes, super app ambitions and infusion of capital to build a good tech stack, expand to multiple categories would be priorities,” an industry analyst said.

While Amazon and Flipkart’s dominance has been in online retail across selected markets, Reliance and Tata are bringing in organised retail models which will be integrated with their digital presence. 

Omnichannel Plays Will Dictate D2C Brand Success

Is the party over for the D2C ecosystem? Mostly, Yes. 

The D2C brands were cashing on the lower interest rates globally as a result of which the VC money aided the quick expansion of the digital-first brands. However post-pandemic, a realisation has dawned upon the D2C startups that they will have to build an omnichannel strategy to cater to offline markets and still depend on third-party marketplaces to sell online. 

“In future, omnichannel strategies will become even more essential for the success of D2C brands. For a seamless customer experience, brands need to integrate online and offline channels as new technologies continue to redefine consumer interactions,” Ashish Dhuwan, Vice President, beatXP, an online store for health products said. 

Personalised experiences across channels will be provided through data-driven insights, making personalisation essential. New technologies, such as artificial intelligence (AI) and augmented reality (AR), will further enhance the omnichannel play of D2C brands.

Success in the D2C is accelerated by omnichannel integration, which simplifies and streamlines the customer experience across multiple platforms. Online platforms, social media, and retail stores are just a few of the channels that D2C brands can integrate to create an easily accessible customer journey, he further said.

Graas’ Bhatia said that the D2C brands will have to cut down on their marketing, and advertising spending in 2024 while adopting a wait-and-watch strategy for capital to flow into the markets before they go into expansion mode.

“In general, I don’t think that the first few months of 2024 will be an easy market for D2C brands. On the positive side, some of the Indian D2C brands which have good products can explore Southeast Asia, the Middle East and other geographies as markets,” Bhatia added.

D2C House Of Brands, Roll-Ups Will Begin To Fold

Amazon brands aggregator Thrasio’s meteoric rise and fall perhaps now serves a lesson or two for many of its clones in India. 

The ‘house of brands’ ecosystem in India that mushroomed in the past few years has more or less subsided. The likes of Mensa Brands, Goat Brand Labs, Upscalio, and Globalbees raised millions of dollars in quick succession, going on an acquisition spree.

But industry players believe these acquisitions happened at fairly high valuations, and the fact that many ‘house of brand’ platforms raised venture debt, means they now find themselves in a difficult spot when it comes to long-term survival.

“Even the large fundraise for house of brands involved a heavy debt component and now the cost of the repayments has increased which has impacted their growth prospects,” an industry insider said.

The year ahead will see further consolidation and mergers in this space with the likes of Aditya Birla-backed TMRW, Wipro Consumer Care or even Reliance acquiring a few such startups.

“Even if the distressed sales happen in the first half of 2024, as soon as the interest rates lower globally and VC money flows, we can expect some of the roll-ups to raise capital again but till then it will be a matter of withstanding challenges,” the founder of a Bengaluru-based D2C brand said.

Vertical Ecommerce In For Consolidation

Category-specific ecommerce marketplaces or vertical marketplaces have made significant strides over the past couple of years with the likes of publicly listed companies like Nykaa and CarTrade even achieving profitability, while Urban Ladder attracted Reliance’s eye. 

This is at a time when horizontal marketplaces like Amazon and Flipkart are yet to reach profitability despite a majority share in the industry. 

The upcoming FirstCry IPO will serve as an important metric for the success of vertical ecommerce marketplaces in 2024 as per analysts.

Nykaa, Cartrade or FirstCry will set the benchmarks for vertical ecommerce in the country. Since these are publicly listed companies the focus will also be laser-sharp on achieving and maintaining good unit economics, a market analyst said.

We have also seen Reliance acquiring Netmeds, Urban Ladder, and Tata acquiring 1MG, and CaratLane in the past few years. 

Experts are also expecting privately held vertical ecommerce marketplaces will land more funding and acquisition opportunities in 2024, given the success of category-specific market leaders. 

How Will B2B Marketplaces Fare? 

While most of the focus in ecommerce is on marketplaces, B2B ecommerce has grown tremendously in the past half-decade. However, market analysts expect their growth to be dependent on capital access given the cost of acquisitions of materials and maintenance of warehouses is capital intensive. 

Even as B2B unicorn Udaan announced a mega fundraise, the reports mentioned that it was a mix of equity and debt which was a down round. Udaan’s revenues have also fallen considerably in FY23 even as it looked to pare down costs. 

The smaller B2B ecommerce marketplaces are now challenged with reducing the acquisition/ purchase costs of raw materials and finding buyers who they can sell at a reasonable price.

“Essentially the discount party that the B2B marketplaces had to offer to buyers is over. And now, we will only see the market leaders surviving the storm,” an agritech marketplace founder said.

In addition, exploring markets beyond India may prove to be more difficult given the geopolitical tensions in the Middle East, Russia and the US. 

“The B2B marketplaces will have to reduce their dependencies on asset-heavy models and focus on India as a geography in 2024 to become cost-effective and generate revenue,” the founder quoted above said.

[Edited By Nikhil Subramaniam]

The post 8 Ecommerce Predictions For 2024 appeared first on Inc42 Media.

Standing on the precipice of 2023, we took note of some of the most concerning funding trends in the world’s third-largest startup ecosystem.

According to Inc42’s annual ‘Indian Tech Startup Funding Report 2023’, Indian startups secured just over $10 Bn in funding until December 25 this year, down 60% compared to the $25 Bn raised in 2022.

Not just this, deal count, too, withered 40% YoY to 897 as the investor appetite waned due to several startup misadventures during the year. Historically, Indian tech startup funding hit a seven-year low, plummeting even below the $13 Bn raised in 2019.

However, despite the massive shortfall, the likes of fintech, ecommerce and enterprise tech continued to lead the funding scenario in the Indian startup ecosystem.

According to Inc42, these three sectors accounted for more than two-third of the total funding raised by Indian startups in 2023. Interestingly, the sectors also contributed to more than half of all startup funding deals that took place in the homegrown startup ecosystem in 2023.

As the three sectors continued to dominate the startup food chain in the country, let us take a look at what the funding scenario looked like in different sectors in 2023.

Fintech: The Shining Jewel in India’s Startup Crown

In 2023, as many as 129 fintech startups cumulatively raised $3.02 Bn, according to Indian Tech Startup Funding Report 2023. 

Even though the figure was down 37% compared to the $4.8 Bn raised a year ago, fintech remained the shining jewel in India’s startup crown as the most funded sector.

In the fintech realm, lending tech was the top choice of investors, as nearly 40% of all fintech funding ($1.2 Bn) went to lending tech startups. Subsectors like banking and fintech SaaS bagged $971 Mn and $348 Mn, respectively, during the year.

Looking at stagewise funding, early stage fintech startups saw the worst year-on-year decline in funding at 54%. Meanwhile, growth and late stage startups also saw a funding meltdown of 33% and 36%, respectively.

Ecommerce Held Its Ground

Given India’s rapidly rising population of online shoppers, it is no surprise that ecommerce remains one of the top-funded startup sectors. However, investors’ second-most favourite sector, too, could not escape the chills of the funding winter.

Until December 25, 2023, as many as 192 ecommerce startups ended up securing $2.6 Bn in funding in 2023, down 32% YoY compared to $3.2 Bn in 2022. The three subsectors within the ecommerce realm that took the most sectoral funding were D2C, B2C and B2B. Meanwhile, D2C startups attracted $1.4 Bn in 2023. 

In terms of stagewise funding split, seed stage startups suffered greatly and could only raise around $89 Mn in 2023, down 65% YoY. 

Enterprise Tech Takes A Deep Plunge Over The Years

As the Indian startup ecosystem moves towards correction, businesses across sectors, from manufacturing to finance, are increasingly relying on tech solutions for automation, efficiency, and growth. This has created a steady (and unsurprising) demand for enterprise tech products and services.

This made the sector the third most funded sector in India’s vibrant startup ecosystem. Yet, the enterprise tech space witnessed a significant jolt in 2023, as more than 150 startups raised a mere $1.3 Bn compared to a whopping $4 Bn in 2022 and $3.7 Bn in 2021.

Several factors conspired to temper investors’ enthusiasm for this space. The global economic slowdown cast a shadow, raising concerns about return on investment and prompting VCs to tighten their purse strings. 

Deeptech Flourished As The Dark Horse In 2023

On the contrary, deeptech emerged as the dark horse of the year that was otherwise infested with dying investor trust. 

The sector raised $496 Mn in 60+ deals, mirroring a rise of 50% from $397 Mn raised in 2022 and a 105% increase from $242 Mn raised in 2021.

As AI became an inevitable part of daily consumption habits in 2023, VCs and PEs started attaching their investments to startups disrupting established industries and solving complex problems.

Furthermore, the Indian government’s push for indigenous technology development created fertile ground for Deeptech startups to flourish. Initiatives like the National Mission on Quantum Technologies, the draft deeptech policy, Atal Innovation Mission, and the Prime Minister’s Science, Technology and Innovation Advisory Council (PM-STIAC) are further set to provide crucial support in this arena.

Beyond AI, other deeptech sub-sectors like robotics, biotechnology, and materials science are also expected to see significant traction going ahead. 

The potential for these technologies to revolutionise industries and improve lives is drawing increasing attention, attracting both domestic and international investors. Yet, the sector has its challenges. Long development timelines, high investment requirements, and the absence of a quality talent pool cannot be ignored.

Despite the roadblocks, the sector is well poised to play a pivotal role in India’s economic growth.

Other Key Sectors On The Tenterhooks, Too

While the Indian startup economy maintained its momentum, specific sectors found themselves in the passenger seat despite being in the top 10 checklist of investors.

Edtech, once the poster child of startups, faced a harsh reality check in the year of the extended funding winter. Layoffs created sombre headlines as demand crumbled. Parents, previously enthusiastic about filling every learning gap with online courses, tightened their belts amid economic uncertainty. 

The initial frenzy subsided, leaving many startups scrambling for viable business models. Amid all this, investors infused only $283 Mn into fewer than 50 startups. This capital infusion into the sector was down 88% YoY and more than 94% from 2021.

Similarly, the media and entertainment space was also impacted significantly — falling from $3.8 Bn+ raised in 2021 to a mere $285 Mn raised in 2023.  

Moving on, consumer services, a sector catering to several needs, felt the pinch of consolidation. Dominating players captured an outsized share of the market, squeezing smaller providers. Demand congregated in specific subsectors, leaving others neglected. 

Unfortunately, the sector witnessed a 90% decline in funding from $3 Bn+ raised in 2021 to $385 Mn in 2023.

Startup Funding — Outlook For 2024

Overall, the dip in the funding of the Indian startup ecosystem shouldn’t be misconstrued as a decline, experts suggest. The current slowdown is being viewed as a necessary correction and a sign of maturing growth. The initial exuberance has given way to a more measured approach, where investors favour proven business models and sustainable traction over speculative leaps.

Moreover, startup fundamentals have only started to get stronger. While the year proved to be a litmus test for many Indian startups, it also nudged the erring players to focus on the right set of metrics, rooted in hard facts and beyond vanity metrics. 

Even though startup funding levels are at their seven-year low, experts believe this is only a temporary setback, which could pave the way for a more resilient and thriving startup landscape. Meanwhile, notwithstanding the funding chill of the past two years, the ecosystem has much to look forward to in 2024.

[Edited by Shishir Parasher]

The post Here’s How Top Startup Sectors Performed On The Funding Front In 2023 appeared first on Inc42 Media.

With each passing year — and we have had 10 years of recaps and predictions — the future of technology seems less and less certain. But despite the nature of ever-evolving technology, we try to predict where the Indian tech and startup ecosystem is heading.

And so it is in 2024, after the past year that has had its fair share of challenges, success stories and everything in between. We have, of course, taken a look at how the key sectors will look in the new year in our Indian Tech Outlook 2024 series, but there are still some bigger questions to answer:

• Are startups and IPO-bound companies ready for geopolitical headwinds and setbacks?
• Will policies and laws around emerging technologies hold back innovation or spur it?
• Which sectors will face the biggest test with the rise of emerging technologies and regulations around these new areas?
• How will generative AI change the game in 2024 — not only for startups but also for tech behemoths?
• How will the focus on profitability and sustainable models impact Indian VCs, startups and listed tech cos?
• How will the corporate governance debacles of the past two years impact VCs and founders?

We made 24+ predictions last year, and roughly 50% of them were on the mark, while a fair few were just shy of hitting and might come to happen this year. But this time we have eight major predictions for the Indian tech and startup ecosystem for 2024 — along with nine micro-trends that we foresee.

Consumer Services — Get Ready To Pay More For Streaming, Deliveries, Mobility

Platform fees became a thing in 2023 and they are unlikely to be phased out, especially given the clear revenue spike these fees have given to the likes of Swiggy and Zomato.

While Zomato reported two profitable quarters in FY24, Swiggy is also said to be on track to hit the milestone of profitability sometime in 2024. What’s more — both are now charging restaurants a per-order fee as well. So, in some ways, the food delivery giants are turning into double-sided marketplaces.

Quick Commerce Joins Fee Spree: When it comes to quick commerce, similar fees are being tacked on to every order under various names such as handling charges or packaging charges, so expect big announcements from Zepto, Blinkit and Instamart about unit economics improvements.

Ride-Hailing’s Revenue Thirst: On the mobility side, the drive for revenue has resulted in new models such as Ola Prime Plus or Namma Yatri’s subscription plans for driver-partners.

Essentially, the discounts and rebates that were used to grow the user base have given way to the most active users paying a small fee per transaction, or sometimes even for basic services like no cancellations.

Uber, which is striving to turn profitable in India, is also likely to follow suit with such plans in the next year.

OTT Hikes Looming? These platforms are banking on the fact that the most active users will continue to transact, even if other users might drop off. That’s also the rationale that the likes of Netflix and Amazon Prime are likely to use to hike their prices, to defend against the potential threat from a JioCinema-Disney+ Hotstar merger.

Can ONDC Fix Fee Anxiety? The X-factor is ONDC, which could create a new market for the users who grow weary of platform fees. The open network is already bringing some relief to consumers through its seller apps for food delivery and mobility, as we have written in the past year. Expect more such disruptions in 2024.

VC Ecosystem — Consolidation, New Thesis, Partner Rejigs

Partner exits, new fund managers, new funds and old funds slowing down or exiting India altogether —  as we said in our recap of the year for VCs, it wasn’t an easy year, and 2024 is unlikely to come as a relief.

AI Bets With Eye On Exits: The focus on early-stage investments will continue with AI startups getting a bigger chunk of the seed money, but investors are more likely to back those startups that have products and business models ripe for acquisitions by big tech giants.

Deeptech and AI will become a key thesis focus for VC funds as they look for early-stage bets.

After the low returns on existing capital deployed, VCs will prioritise exits in 2024. The movement towards exits began in 2023 when 56% of the investors surveyed by Inc42 reported exits in their portfolio in the year. But it won’t be easy to find the right early bets in GenAI.

Portfolio Consolidation On The Cards: Given the upheaval at VC firms such as Lightbox and Omidyar Network India, we can expect their portfolio companies to face fundraising challenges in 2024. Consolidation of portfolios between firms is also on the cards given that many key partners are looking at new thesis areas.

One also cannot rule out Sequoia-like restructuring when it was rebranded to Peak XV Partners. Foreign funds are definitely watching the regulatory situation closely to restructure their partnerships.

Dry Powder At The Late Stage: Of course, the elephant in the VC room is the dry powder they are holding, and all indications are that this capital will be deployed in pre-IPO rounds or in late stage companies that are set for IPOs in 2025. Investors and startups are anticipating public listings of tech companies in FY25 from the April-June quarter onwards.

As Inc42’s Indian Startup Investor Ranking & Sentiment Survey, 2023 indicates, 38% of investors active in India failed to deploy even 50% of their allocated budget into startups in FY24. Smaller funds will continue to look for early-stage bets to exhaust this dry powder.

In larger funds, the need to deploy this capital will shift focus to late-stage rounds, unlike the past two years when seed was the preferred stage. There is likely to be more pressure on VCs to deploy capital from funds that are running close to expiry.

Big Tech’s Comeback As Investors? Moving on, our conversations with VCs indicate that fundraising will be a struggle for firms as LPs continue to question the ongoing corporate governance debacles.

As a result, big tech companies are slated to once again return to the investment fold after a quiet few years. This is in line with the focus on generative AI startups and AI models emerging in India, which will become attractive acquisition targets for tech behemoths such as Google, Facebook, OpenAI and others.

Fintech — Super App Platforms Will Face The Jio Financial Services Test

If 2023 was the year of super apps, 2024 will be the year of Jio Financial Services (JFS) as Mukesh Ambani’s grand plans in the BFSI space will be seen taking shape.

Jio Wants It All: Already, there are murmurs of Jio disrupting spaces such as consumer durables, merchant lending, personal loans and more. And with the Jio Payments Bank licence, the company is also in the fray to push its payments business which has been lagging behind the competition for many years.

Of course, the likes of Paytm, PhonePe, CRED, BharatPe, Groww and others are unlikely to watch JFS eating their lunch. Expect several new products from these unicorns and listed giants as they push to improve their revenue mix and capitalise on their user base, particularly the ones that are eyeing IPOs in 2025.

Paytm’s Crunch Year: After going through an up-and-down year, Paytm will likely focus on merchant acquisitions in a bigger way as indicated by CEO Vijay Shekhar Sharma, especially given its new lineup of payments devices. This is the best approach for the company, which had to scale back its consumer lending play in late 2023.

Acquisitions On The Card: Of course, one cannot rule out JFS taking the inorganic route to expansion and growth. Reliance Jio and Reliance Retail have banked on high-profile acquisitions in the past few years and this playbook has worked out well for both giants. The fintech landscape’s diversity offers JFS the chance to become the acquisition king in 2024.

Corporate Governance — Serious Consequences For Founders Caught In Legal Probes

Startup founders are used to being in the headlines but not in the way that we saw in 2023. From Ashneer Grover and Rahul Yadav to GoMechanic’s four cofounders and Byju Raveendran, the cofounder and CEO of India’s highest-valued startup (at least till a while back) — many found themselves caught in legal tangles for various reasons.

Lawman Knocking: Some of these founder-related issues are more serious than others with fraud allegations being investigated by the Economic Offences Wing and the Enforcement Directorate. These investigations and inquiries will run their course in 2024, but corporate governance and fraud issues often go under the radar for months before surfacing.

Will many more unicorns and high-profile founders find themselves caught in the legal net? That’s uncertain, but there is a growing concern that a lot of issues have been swept under the rug, and the rejig at VC firms will likely unearth many more cases where founders are hit by fraud allegations.

Erosion Of Trust: “VCs didn’t realise the amount of risk and liability that they are subject to, because they trusted a lot of founders,” at least one early-stage investor told us earlier this year, adding that as this trust erodes there will be more cracks that appear in the woodwork.

However, despite these measures, the sentiment among founders is that investors are not doing enough to improve their role in corporate governance. As Inc42’s Annual Funding Report, 2023 showed 54% of the surveyed Indian founders rated corporate governance measures by investors as moderately or barely effective.

Fate Of IPOs — Geopolitical Tensions Will Complicate Funds Inflow

Ola Electric, Awfis, Firstcry — and a slew of other startups — are lining up for the public markets in 2024. But these best-laid plans could face a curveball with geopolitical conflicts raging in Europe for the past couple of years, in the Middle East and even closer to home in Asia.

A recent EY report looking ahead to 2024 said, “Current events muddy the geopolitical outlook and raise the risk of more significant conflict escalation in the year ahead. But what is crystal clear is geopolitics has become a multiverse: a complex mix of alliances and rivalries, with overlapping bilateral, regional and other types of institutional groupings.”

War, Everywhere: India and Japan are wary of China’s transgressions, while North Korea is reported to be increasing its war-readiness in light of what it believes are US-led confrontations.

For instance, the domestic markets saw some negative sentiments in early October as the Israel-Palestine conflict escalated.

According to investment advisory CapitalMind, “Geopolitical risks create uncertainty, which weighs on economies and equity markets as investors become more risk-averse. This can lead to lower stock prices, especially in the short term.”

Covid Fears Are Back: To make matters worse, there are fears of another wave of Covid hitting big economies — signs of which are already becoming apparent in India. While optimism is high among IPO-bound companies about 2024, they cannot afford to overlook the macroeconomic impact of these conflicts.

The Influence Of Polls: The fact that both India and the US are set for major elections does not make the situation any easier for companies eyeing public markets. In the Indian context, the General Elections will influence market activity and investor confidence to a great extent.

Lightspeed Venture Partners’ managing director Anuj Bhargava believes that generally investors are more cautious and wait for big political events to take shape. “When you have something this substantial coming up, I think people normally like to wait and see the outcome before they make big decisions and IPOs are normally very big decisions… Investors also wait on the sidelines.”

GenAI Revolution — Global AI Regulations; New Realities For Startups

There’s little doubt that 2023 was the year of GenAI and it has already become a crutch that startups and listed companies are relying on to reduce overheads, human resource dependency and more.

But one aspect of the GenAI revolution will become more prominent in 2024 — the push for global or universal regulations to tackle the rise of inauthentic or AI-generated content, ethical AI, deepfakes and other unsavoury aspects in this context.

New Roles, Bigger Budgets: Startups and enterprises will also have to deal with new realities that emerge with the rise of generative AI. For one, we are likely to see more and more companies appoint Chief AI Officers to tackle organisational readiness for emerging technologies.

At least 84% of Indian chief executive officers (CEOs) are raising new capital or reallocating budgets to invest in generative AI, compared to 70% globally, the EY CEO Outlook Pulse 2023 report said.

India-First Models: Startups in LLM ops, AI training, vertical generative AI and localised LLMs will also become more prominent in the year ahead, with India-specific models coming to the fore.

We saw some signs of this in 2023, with the likes of Sarvam AI bagging large early-stage rounds and startups such as Giga ML while the launch of Bhavish Aggarwal-led Krutrim SI was also widely followed by those in the ecosystem.

Early Bets, But Which Ones? The focus of early-stage accelerators is squarely on AI and deeptech too, and in 2024, we are likely to see generative AI become more horizontal than ever before as adoption grows across sectors — even if some of these will largely be experiments for the most part.

Companies are still figuring out how to leverage AI beyond increasing efficiency and reducing turnaround times for customer support, content creation and user experience features.

Peak XV managing director Rajan Anandan told Inc42 in October that India is witnessing the incredible growth of AI and deeptech innovation, as well as the abundant talent in these sectors. “It seems that more and more companies are AI companies today,” Anandan added about the latest cohort of Peak XV’s Surge accelerator.

That said, many investors also acknowledge that early bets can be hit or miss and there is a risk of spray-and-pray in generative AI investments.

Ecommerce — Amazon-Flipkart Duopoly To See Cracks

For years now, ecommerce in India has been all about Amazon and Flipkart. Snapdeal, Paytm Mall and a host of other marketplaces fizzled out, but the two giants have continued to grow larger.

Meesho’s Time To Shine? Between 2019 and 2021, D2C brands tried to shake off the duo but realised they could not afford to ignore their reach and scale. But in late 2022, Meesho looked to break this duopoly, and in 2023, the company claims to have done just that.

While Meesho’s financials are not yet out, the Bengaluru-based unicorn claims to have crossed INR 5,000 Cr in revenue in FY23 and cut its losses by 50%. Meesho’s focus has been on small sellers and low-ticket-price items, which dot India’s unorganised retail channels.

Digitising this class of merchants has seemingly worked out for Meesho, even though Amazon India and Flipkart still have a significant revenue and logistics advantage. In 2024, Meesho is likely to focus on the latter to unlock more efficiencies.

Everyone Joins The Ecommerce Race: Beyond Meesho, Amazon and Flipkart have to deal with Reliance’s JioMart, TataNeu as well as the rapidly-growing quick commerce platforms which have creeped into the marketplace territory with their dark store models. Blinkit sells books and electronics; Swiggy Mall (formerly Maxx) has Dipak Krishnamani, a former Amazon marketing executive, leading the business.

In other words, the duopoly of Amazon and Flipkart has never looked shakier, and 2024 promises to revive the ecommerce royal rumble again. Walmart-owned Flipkart is readying a war chest of $1 Bn to get set for the battle and also take it through to the public listing, similar to what PhonePe did in 2023.

There was some speculation that Meesho might once again revisit its live commerce and social commerce thesis in the near future, through acquisitions of short video platforms. Social platforms such as Josh, Sharechat, Roposo and others have struggled to maintain the momentum they once saw and could become acquisition targets for Meesho and others

Policy Headwinds — New Challenges For Edtech, Ecommerce, Fintech, Big Tech

Continuing on the ecommerce theme, there is another potential headache for the marketplace giants. The Indian government has already stated that the National Ecommerce Policy is coming in 2024, and besides this, the social security code for gig workers could also see the light of day after years of delay in its implementation since the initial announcement.

Rules Of The Ecommerce Game: The ecommerce policy is widely expected to be in favour of small sellers and could further complicate the holding structures of marketplace giants and the alleged preferential treatment for some large sellers. Besides this, discounting and predatory pricing are two other points where the policy could disrupt the existing incumbents, allowing room for more players to break through.

Will Gig Workers Get Their Due? With issues in gig economy platforms persisting in 2023, the social security code could be a much-needed relief for part-time delivery workers and mobility partners. In particular, startups and platforms would have to allocate a portion of their revenue for gratuity, pension, provident fund contributions and insurance of gig workers.

In this context, the rising reliance on platform fees also makes sense. The logic being that companies would charge consumers to pay for workers. How this impacts the profitability of platforms remains to be determined.

The Question Of Data: Another key piece of the policy puzzle is the Digital Personal Data Protection Act and the much-discussed National AI Policy. The former is expected to give a few headaches to fintech, social media, enterprise tech and services companies, while the AI policy is likely to mandate stricter rules to deal with AI-generated content in media.

We have covered the contours of the DPDP Act, which brings clarity to users on how their data can be used by companies and also informs tech startups on how they must deal with users’ personal data, and consent. But, as we reported, many entities have highlighted that the law falters on aspects like implementation and a few other parameters.

All-Important AI Regulations: There is far less clarity on what a potential AI policy might entail, but if recent statements by the government are any indication, there is some momentum on this front as well. In the inaugural statement at the virtual G20 summit, PM Narendra Modi called for using technologies such as AI in a responsible manner.

Union IT minister Ashwini Vaishnaw is said to have discussed the issue of inauthentic content such as deepfakes with representatives of social media platforms in November. Which direction will India’s AI policy take and how significant will India’s mass of users prove in negotiations for global AI regulations, even as big tech companies such as Google, OpenAI, Facebook and others dominate this space. Expect more clarity on this in 2024.

…And Nine Other Trends (Very Briefly)

1. Casual & Mid-Core Gaming To Change The Game As RMG Fades Into The Background 
2. More Unicorns Eyeing India IPOs Will Look To Reverse Flip 
3. Green Hydrogen, Circular Economy Will Take Climate Tech Beyond EVs
4. Mid-sized IPOs To Be The Theme Of 2024 In The Public Markets
5. Generative AI Will Be The Latest Reset In Edtech After Hybrid Models
6. Kirana Tech Wave Of 2020 Will Die Down, Acquired By Quick Commerce Leaders
7. Geopolitical Tensions Will Clip Global Ambitions Of B2B Players
8. Social Media Platforms Will Bank On GenAI To Fill Creator Gap
9. Generative Coding Will Change Cybersecurity Game — For Attackers And Defenders

The post Inc42’s Indian Tech & Startup Predictions For 2024 appeared first on Inc42 Media.

At a time when the entire world is focussed on the usage of green energy in a bid to reduce its carbon footprint, India, too, isn’t far behind. The country is seemingly doing everything in its power to meet its net zero emission goals. 

The endeavour is visible in the fact that the electric vehicle (EV) adoption in the country has grown about 50% this year. According to Vahan data as of December 29, the registrations of EVs in the country rose to 15.13 Lakh units in 2023 from 10.25 Lakh units in the previous year.

Within the EV segment, two-wheelers continue to lead the space. The registrations of two-wheeler EVs in the country grew 34% year-on-year (YoY) to 8.49 Lakh units in 2023.

This increase happened despite over a dozen companies in the category getting involved in FAME-II controversies and the government slapping crores of fines on original equipment manufacturers (OEMs). As such, the increase in sales could have been even higher if the FAME-II fiasco had not taken place.

Meanwhile, the year 2023 also saw a major consolidation in the segment.

A Trend Shift?

Though electric two-wheeler sales increased, only a handful of players – either legacy automotive manufacturers or deep-pocketed startups – ruled the space this year.

For instance, Bhavish Aggarwal-led IPO-bound Ola Electric witnessed around a 140% surge in its vehicle registrations in 2023 to 2.62 Lakh units from 1.1 Lakh units last year. 

Similarly, Ather Energy, which raised around INR 1,000 Cr this year in fresh funding, witnessed an over twofold rise in its vehicle registrations to 1.04 Lakh units.

On the other hand, legacy two-wheeler player TVS Motors emerged as one of the key names in the EV segment this year, with its vehicle registrations increasing 250% YoY to 1.65 Lakh units in 2023. Hero MotoCorp and Bajaj Auto also saw a big increase in their EV registrations. 

While some of these top players of 2023 were also embroiled in FAME-II controversies and saw a muted start to the year, they managed to regain momentum by August.

BGauss, iVOOMi Energy, Kinetic Green, Lectrix EV, and Okaya were among the other names that saw a rise in sales on a YoY basis. 

However, the most prominent players of 2022, including Okinawa Autotech, PureEV, Hero Electric, Ampere, and electric motorcycle manufacturer Revolt, lost much of their charm this year.

Let’s take a look at the performance of some of the most prominent electric two-wheeler players in 2023 and their month-on-month performance over the last three months:

However, despite the electric two-wheeler segment selling a record number of vehicles this year, the pace of growth clearly slowed down. Last year, the electric two-wheeler registrations had jumped over 300% YoY to 6.31 Lakh units. In 2021, the jump was over 400% YoY.

Some experts Inc42 spoke to are also of the opinion that the FAME-II subsidy issue was a major setback for India’s EV growth story this year. 

For instance, Vinkesh Gulati, chairman research & academy, Federation of Automobile Dealers Associations (FADA), had told us earlier this year that in a country like India, which is largely dependent on imports of batteries and cells for EVs due to scarcity of resources, raw materials, and infrastructure, adhering to localisation norms is very difficult.

“FAME-II scheme was the best catalyst to increase sales, but as of now, it is a deterrent for some of the manufacturers,” Gulati had said.

However, some industry players also said then that the industry cannot grow by depending on subsidy alone and there was a need to crackdown on the EV players that functioned more as assemblers of imported parts rather than manufacturing them as per India’s road and climatic conditions.

The FAME-II Controversy & The Path Ahead 

The root of the problem was a series of EV fire incidents that grabbed the headlines in the summer of 2022. Ola Electric, Okinawa Autotech, Jitendra, and multiple other players found themselves surrounded by controversies due to the fire incidents – a few of which also claimed lives.

With the rise in such incidents, the government initiated a probe into the matter. The investigation revealed problems associated with the batteries used in these vehicles – either their battery management system (BMS) lacked certain basic safety features or the batteries were of inferior quality. 

In any case, it was evident that many electric two-wheeler players were using batteries manufactured in other countries that were not built for India’s climatic conditions. Besides batteries and cells, some players allegedly imported most other parts used in their EVs. 

Soon after, the Centre started doubling down on domestic value addition by EV OEMs. It also tightened the battery testing norms. 

Following these measures, a dozen two-wheeler EV manufacturers, including Okinawa Autotech, Revolt, Hero Electric, and Ampere, came under the government’s scanner for allegedly claiming subsidies under FAME-II without adhering to the minimum localisation norms prescribed under it.

Starting with holding back the release of some FAME-II subsidies, the ministry of heavy industries (MHI) took multiple steps which slowed the sales growth of these players. The ministry put an embargo on some of the manufacturers from listing their sales on the official National Automotive Board (NAB) portal, slapped heavy penalties, and issued notices to the OEMs to return the subsidy amounts, among others.

Meanwhile, another problem was brewing, which involved Ola Electric, Ather Energy, TVS Motor, and Hero MotoCorp. A whistleblower alleged that these players were selling their chargers and proprietary software separately at an extra price to keep the vehicle prices under the INR 1.5 Lakh cap to avail subsidies under the FAME-II scheme. They were also penalised by the MHI but the adverse impact did not last long.

Many of these players increased their vehicle prices as FAME-II incentives were slashed. 

These controversies also resulted in significant volatility in two-wheeler registrations throughout 2023. Starting with 64,693 units of registrations in January, the volume peaked at over 1 Lakh in May but slumped again and remained volatile. After rising more than 22% month-on-month (MoM) to 91,718 units in November, two-wheeler EV registrations fell over 23% to 70,206 units in the last month of 2023.

Meanwhile, the FAME-II scheme is expected to end in March 2024. While there have been demands for the extension of FAME-II and reports around the launch of a new FAME-III, the government hasn’t confirmed either of the developments, officially. Recently, a media report also claimed that the government is considering an extension of the existing scheme till FY25.

 However, an industry source told Inc42 that it is highly unlikely that the government would further invest in it right now, particularly with FAME-II being a major “mess”. 

“Also, the most important thing is the matter is now in the court. The MHI has erred in many ways, it has been withholding money that it had promised to give the OEMs… and just squeezed out some OEMs for no reason. I doubt the government would add money to the coffers of any ministries’ activity unless it’s clear which way the court decides,” said the person. 

“If the court decides that the MHI was completely wrong, then the INR 1,200 Cr that has been held back has to be paid to the OEMs along with the INR 500 Cr claimed from some of these OEMs,” the person added.

It is pertinent to note that the MHI disbursed INR 5,228 Cr in subsidies till December 1, 2023, supporting 11.5 Lakh EVs sold. 

At the time of its announcement, the scheme had an outlay of INR 10,000 Cr with an aim to support  7,090 ebuses, 5 Lakh electric three-wheelers, 55,000 electric four-wheeler passenger cars, and 10 Lakh electric two-wheelers. 

Will 2024 Accelerate The EV Growth Story?

Rising awareness about the need to combat pollution, improvement in technology, and the government’s promotion of EVs are expected to lead to further increase in EV sales growth in 2024.

Amid these, deep-pocketed players who can survive without government subsidies, are expected to emerge as winners. Besides, the private funding for EV OEMs could also witness a decline with the sentiment now shifting towards supporting the other sub-segments.

According to industry experts Inc42 interacted with throughout the year, the electric two-wheeler market, which is currently cluttered with around 200 players, will witness consolidation going forward as the technology matures and people opt for superior quality products. 

Meanwhile, there is an increasing number of electric motorcycle players that have started entering the electric two-wheeler market now, which is also likely to push up two-wheeler EV sales in the coming years. 

While established names like Royal Enfield are working on EV launches, many startups are also trying to disrupt the Indian motorcycle market.

Ultraviolette, Orxa Energies, Matter, Oben Electric are among the several VC-backed startups that are expected to start the deliveries of their EV motorcycles in 2024 or scale up deliveries further. Ola Electric also aims to launch its electric bikes next year.

Speaking to Inc42, Mohal Lalbhai, founder and CEO of Matter, said that there is a rising demand among motorbike riders to go electric but there is a supply crunch of affordable and decent mass-market products. 

“The motorcycle market is where consumers have been desperately waiting for the supply of a product which is affordable, has a decent range and performance… without these aspects, you will not see enough growth in the electric motorcycle segment. It’s honestly because of the lack of options that consumers are sticking either to ICE or other options,” he said, adding that it is the largest untapped market as far as the two-wheeler EV space is concerned.

As such, the Indian two-wheeler EV market seems well poised for rapid growth over the next few years. However, it remains to be seen how the regulations for the sector evolve and how OEMs deal with them.

[Edited By Vinaykumar Rai]

The post Who Won The EV Two-Wheeler Game In 2023? appeared first on Inc42 Media.

The improvement in the global macroeconomic environment and change in investor sentiment on the back of improving financials turned 2023 into a bumper year for listed new-age tech startups after a forgettable 2022.

The 14 Indian new-age stocks that were under Inc42’s coverage at the end of 2022 together gained $11.8 Bn in 2023. Their combined market capitalisation stood at $36.9 Bn at the end of 2023 as against $25.07 Bn a year ago.

Among these, two of the biggest gainers were Zomato and RateGain, whose shares jumped over 100% in a year.

It is important to note that the 11 Indian new-age tech stocks under Inc42’s coverage at the end of 2021 – Nykaa, Nazara, Zomato, Paytm, PB Fintech, CarTrade, Fino Payments Bank, IndiaMart, EaseMyTrip, and MapmyIndia – together shed over $30 Bn in total market capitalisation in 2022. 

Meanwhile, EaseMyTrip, which was the only 2021 listing that did well in 2022, became the only loser this year, with a sharp correction of over 23% in its market value.

Overall, by the end of 2023, the market cap of 19 new-age tech stocks currently under Inc42’s coverage stood at $40.6 Bn.

Here’s a year-on-year comparison of the market cap of the 19 listed new-age tech startups under Inc42’s coverage.

The Dazzlers Of 2023

While the year was an exceptional one for most new-age tech stocks, some of them stood out as improvement in their business performance, bottom lines, and sectoral trends gave them a boost.

Zomato Delights Investors 

Foodtech giant Zomato turned its fortunes on the stock exchanges in 2023. Its market capitalisation, which nosedived over 60% in 2022 to $6 Bn, rebounded strongly to end this year at $12 Bn.

Zomato’s two consecutive profitable quarters, Q1 and Q2 of FY24, proved to be the ultimate game changer for the stock that was already on an uptrend since the beginning of the year due to its business decisions. 

From reintroducing the Zomato Gold loyalty program to the introduction of a platform fee, Zomato’s new monetisation avenues boosted its fundamentals during the year. 

Zomato also became a leading force in changing the overall market sentiment towards the new-age tech startup in 2023.

Shares of Zomato surpassed INR 125 level on the BSE, surging 108% year to date (YTD).

RateGain Takes Off On Travel Market Boom

Traveltech SaaS startup RateGain was another 2021 listing that saw a lacklustre 2022. However, it declined below 20%, which was lower compared to the likes of Zomato, Paytm, PB Fintech, and others.

However, RateGain turned out to be the biggest gainer among these shares in 2023, rising a whopping 160% YTD.

From a market cap of $0.37 Bn at the end of 2022, RateGain’s valuation surpassed $1 Bn mark by the end of December this year.

RateGain cashed on the sharp growth in the travel industry post-Covid, with more and more players opting for digitalisation. Its profit kept leapfrogging every quarter this year.

PB Fintech’s Phenomenal Year 

The fintech major was one of the biggest gainers in 2023 as its bottom line improved and there were no new regulatory hurdles to challenge its growth.

PB Fintech’s market cap more than doubled to $4.2 Bn by the end of 2023 from $2 Bn at the end of 2022. Its shares also gained over 75% in 2023 in sharp contrast to almost a 50% decline last year.

Though competition remained an overhang, the parent entity of insurtech major Policybazaar and lending tech platform Paisabaaar, kept the investors’ hopes steady with a proper profitability trajectory and showing results ahead of estimates.

Nazara Plays It Well 

Despite the GST Council’s decision to hike the GST rate to 28% from 18% hitting the online gaming industry hard, Nazara Technologies delivered a solid performance in 2023.

The company’s shares gained over 47% YTD while its market cap surged to $0.75 Bn from $0.46 Bn at the end of 2022.

The limited contribution of skill-based real-money gaming to Nazara’s overall revenue turned out to be a boon. Nazara shares gained as the company posted steady profit and aggressive expansion plans.

DroneAcharya’s & MapmyIndia’s Bull Run 

Drone startup DroneAcharya listed on the BSE SME platform towards the end of 2022 amid strong volatility in the market. The stock gained almost 40% this year, helped by the company signing new contracts, diversifying into drone manufacturing, and cracking multiple other deals.

On the other hand, geotech startup MapMyIndia’s shares also surged over 88% YTD, with its valuation crossing the $1 Bn mark this year. We must note that the homegrown competitor of Google Maps doubled down on its fights against the monopoly that the US-based tech giant created in India.

The Odd Ones Out 

Paytm, Nykaa, and Delhivery are three major names that saw an extremely volatile 2023 and ended the year with lower gains compared to their peers. 

Shares of fintech major Paytm rallied over 80% until October this year but regulatory changes came as the biggest blow. Meanwhile, Nykaa and Delhivery failed to keep the market upbeat due to a lack of consistent growth.

From a market cap of $4.2 Bn at the end of 2022, Paytm’s valuation surpassed the $7.5 Bn mark in October but now it’s about to end 2023 at around $5 Bn market cap.

On the other hand, Nykaa and Delhivery saw relatively lower rises in their market caps. While shares of Nykaa ended the year 12% higher, those of Delhivery gained 16% in 2023. 

The New Entrants’ Mixed Performance

A total of five new-age tech startups – ideaForge, Mamaearth, Yatra, Zaggle, and Yudiz – got listed on the bourses in 2023, with Yudiz listing on the SME platform and the rest on the mainboard. 

Together, the five stocks ended the year with a total market cap of about $3 Bn. While the shares of ideaForge and Yudiz have declined since their listing, the others are trading higher.

Mamaearth, which was the most-talked about startup IPO of 2023, has the highest valuation of $1.6 Bn among these five stocks which went public this year.

Will The Gains Continue In 2024?

The Street expects the turnaround seen in the Indian public markets in 2023 to continue in 2024 as well. Most of the analysts are largely bullish on the new-age tech stocks.

While the likes of Nykaa, Paytm, and Delhivery are expected to witness pressure in the medium term, their long-term growth potential looks positive, as per the analysts’ estimates.

However, it goes without saying that the fundamentals of the companies will play the biggest role in deciding the future. Several analysts told Inc42 recently that after the bloodbath in 2022, especially among the IPOs about which there was a lot of hype, the market will continue to remain cautious on IPO valuations and the companies’ bottom lines.

Meanwhile, amid the bloom in the public market, at least 12 new-age tech startups are expected to get listed on the bourses next year.

While geopolitical tensions and high interest rates in the US continue to pose challenges, experts believe that the chances of a downtrend in the broader market are very remote in the near term and this will also support the market performance of the new-age tech startups. 

[Edited By Vinaykumar Rai]

The post A Comeback For The Ages: 14 New-Age Tech Stocks Added $11.8 Bn In M-Cap This Year After 2022’s Drubbing appeared first on Inc42 Media.

We have covered the length and breadth of the Indian startup ecosystem in the past month. Our 2023 in Review series has recapped the controversies, startup success stories, the newsmakers in Indian tech, the public listings in 2023 and upcoming IPOs of Indian tech startups, and more.

And looking ahead at 2024, we have mapped out the trajectory of the key sectors through our Indian Tech Outlook series.

But there’s still some breath left in 2023 and what better way to encapsulate this year than 15 visuals that succinctly point out what the past 12 months have wrought on the Indian startup ecosystem.

Without further ado, here are the 15 charts that best capture 2023 from the point of view of Indian startups and tech ecosystem, starting with the key indicator — funding.

Startup Funding Plummets To Seven-Year Low In 2023

The year was 2023, but when it comes to startup funding, it might as well have been 2016. With just over $10 Bn raised in the year, the total funding inflow dropped to pre-2017 levels. What’s even more telling is that nearly $1 Bn of the total $10 Bn raised this year has come in December alone.

In fact, when we separate the outlier rounds (deals of $100 Mn and above), the total tally is $5.5 Bn, which is just over what the entire ecosystem raised in 2016. Indeed, as we will see, this decline in capital inflow has ripple effects in other areas of the ecosystem and indicates where the startup ecosystem is headed, particularly in new venture creation, startup valuations and more.

Pace Of New Venture Creation Cools Down

For a country which boasts 1.15 Lakh startups (as per DPIIT) and more than 68K tech startups, India has witnessed a major decline in new startups created over the last two years. This is despite several second-time entrepreneurs and CXOs launching new ventures in the past year, and the bullishness around early-stage funding.

The past two years combined saw 1.14K new startups coming into the, which is still quite a bit lower than the 1.4K new ventures that were recorded by Inc42 in 2021.

The factors that drove new business creation between 2019-2021 have faded into the background — that spurt came with the growing base of internet users and the fact that many founders looked to tap into newer segments of growth. In particular, we saw a surge in consumer brands and D2C startups, where there has been a paucity of new ventures in the past two years.

Another important factor was the so-called ‘Great Resignation’ in 2020 and 2021, which led to many new businesses coming into the picture. These startups looked to tap the digital transformation wave, but in 2023, some of these sectors — edtech, kirana tech in particular — have failed to live up to the hype of 2020-2021.

IPOs Show Recovery, But Startups Remain Cautious

Ten Indian tech startups went public in 2021, but 2022 saw the IPO enthusiasm fade away. In 2023, a brief window of opportunity opened up which saw five startups – ideaForge, Mamaearth, Yudiz, Zaggle and Yatra – going public between July and October.

While ideaForge saw the biggest pop on listing and listed at premium of over 90%, the other four IPOs received mixed to a muted response.

Public markets have not been too enthusiastic about loss-making tech IPOs in 2023, but the picture might change in 2024, with three companies — Ola Electric, Awfis and FirstCry — filing their pre-IPO documents with SEBI in December. Other major companies such as OYO, Digit Insurance and even Swiggy are expected to join the IPO parade in 2024.

By all indications, 2024 seems to be on course to change the IPO sentiments for tech startups, but these are still early days and a lot could change between now and the next few months.

Consolidation Wave Cools; M&As Back At 2019 Levels

After the funding peak of 2021, startups went on an acquisition spree, which continued well into 2022 as startups splurged the capital raised for inorganic growth, product experiments and acquihires.

But 2023 has tempered the consolidation wave significantly. With just 112 mergers and acquisitions (M&As) this year, the tally is on par with 2019. As cash reserves fell in 2023, startups looked to cut costs and reduced hiring — many even shed parts of their businesses that they had so enthusiastically entered in 2021.

Plus, the relatively glacial flow of VC money meant that any consolidation had to be done through the cash generated by these businesses. Given that most startups are loss-making, only a handful could execute M&A deals. Many of these M&As have proven to be distressed sales, such as the Allen acquisition of Doubtnut or TenderCuts being acquired by Good To Go, or indeed the GoMechanic acquisition by Servizzy after the startup’s corporate governance debacle.

The situation is unlikely to improve in 2024 as many investors only expect the funding activity to pick up in the second half of the year, and even then, startups are likely to prioritise runway extension and revenue expenditure over luxuries such as acquisitions.

Investor Confidence Shakes In Women-Led Startups

Towards the end of 2023, Smriti Irani, the Union Minister for Human Resource Development,  accused VCs of bias towards startups led by men. “Risk-taking by VCs for women-led initiatives which are based on innovation is far lower as compared to those by men,” she had claimed

There is a grain of truth to this. Funding raised by women-led Indian startups has been declining since 2021, and 2023 was the worst in this regard, with the total funding tally for such startups not even accounting for 10% of the overall funding, unlike each of the three previous years.

So what changed in 2023? For one, there is some correlation between the decline in new venture creation and the fall in funding for women-led startups. It’s also noteworthy that newer areas of focus for the VC ecosystem in the past year are areas that are traditionally male-dominated — generative AI, manufacturing, new-age financial services and more.

In the past three years, ecommerce has emerged as the primary avenue for funding women-led startups in India, particularly evident in the direct-to-consumer (D2C) space. But D2C as a category has slowed down in 2023 and this also explains why there is a slowdown in VC funding for women-led startups unlike the pandemic era.

Investment Tech Boom Driven By Discount Brokers

While the above graphic shows us steady growth in each fiscal year, it does not depict the actual surge in demat accounts in 2023 as a whole.

For context, the number of demat accounts in India rose to 127 Mn in August 2023, a YoY surge of 26%, primarily due to attractive returns from equity markets, and the ease of the account opening process.

What this growth indicates is the growing appetite for the Indian salaried class to invest in stock markets, mutual funds and other investment asset classes. Of course, a lot of the credit has to go for the government’s push for mutual funds investment through widespread promotional campaigns, but the role of discount brokerages such as Zerodha or Groww cannot be ignored.

Bengaluru-based Groww reached a new landmark with 6.63 Mn active investors on its platform at the end of September 2023, as against Zerodha’s 6.48 Mn. This made the company the biggest discount brokerage by clients in India. For context, Groww had 5.3 Mn active investors at the end of 2022, compared to Zerodha’s 6.3 Mn.

These platforms have leveraged technology to make onboarding much easier for new-to-market investors, introduced education initiatives to boost adoption and usage, and facilitated micro-investments in many asset classes, which has resulted in a major spike.

Credit Demand Surging Among Indians

The number of credit cards issued in India has seen a three-fold rise in the past five years, largely fuelled by digital customer acquisition, the launch of several co-branded credit cards and the role played by bank-fintech partnerships.

Credit (pun unintended) is also due to the card tokenisation policy that mandated ecommerce players to issue tokens for transactions instead of storing credit card details directly. This has eliminated some of the fears around card details getting leaked or hacked when stored improperly and pushed the usage of credit cards in India.

“As the country pushes towards a digital economy with an increasing volume of transactions, tokenisation has immense potential to further digitise the payment ecosystem. With a substantial 560 Mn tokens already in circulation and a fast-paced growth rate, we foresee tokenisation becoming a pivotal force in the evolution of digital payments,” RBI Executive Director P Vasudevan said in a report in November this year.

India’s Economy Bounces Back Strong After Post-Pandemic Cooldown

The pandemic brought the world to its knees, and India’s economy was not immune to the shock, but the revival since then has been cited as an example of sharp V-shaped recovery.

After nine successive quarters of degrowth till Q1 FY21, the Indian economy rebounded to become one of the fastest-growing economies in the world. The highlight was the incredible 21.6% growth during the first quarter of FY22, and since then we also saw a spike in Q1 FY23.

Even as major global economies showed recessionary signs in 2023, India’s economy remained robust, driven by government stimulus for industries such as manufacturing and a sharper focus on exports. This resulted in the industrial production index spiking, and electronics exports have contributed significantly to the growth (as seen below).

This is what the World Bank said about the Indian economy in October: “Despite significant global challenges, India was one of the fastest-growing major economies in FY23 at 7.2%. India’s growth rate was the second highest among G20 countries and almost twice the average for emerging market economies.”

FDI Inflows Fall Amid Global Pullback

While the outlook remains positive for 2024, there are still some lingering concerns around FDI inflows, which have been a major contributor to the economic growth of the past two years.

But foreign direct investments are estimated to hover around FY20 level in FY23, which indicates that the global macroeconomic conditions have not stabilised as much as many might have hoped after the zero interest rate fiscal policies of many leading central banks around the world.

The Indian government has stated that production-linked Incentive (PLI) schemes for sectors such as electronics manufacturing, pharma, food processing, EV manufacturing, medical appliances and other areas have driven FDI. The China+1 movement could also be credited for FDI inflows remaining more or less consistent for India in the past two years.

But the outlook remains slightly bleak given geopolitical conflicts in the Middle East, Europe and the posturing of North Korea against the US in recent weeks.

These conflicts aside, there is high optimism among foreign investors in relation to the upcoming General Elections in India, with a widespread feeling of government stability. Will this help India mitigate any headwinds and gain from foreign investments as investors look to dodge the geopolitical tensions in other parts of the world?

Smartphone Exports Boom

As we stated above, exports have been a central focus for India in the past two years and this is best reflected in smartphone exports from the country.

Morgan Stanley estimates that India’s smartphone market could triple in size by 2032, or reach $90 Bn in value as India becomes the third-largest economy in the world. But the wave of tech giants manufacturing in India has also become a dominant narrative in 2023.

The rapid growth in exports (nearly 2X higher in 2023) comes as a result of two factors – India’s PLI scheme for electronics manufacturing and Apple boosting its manufacturing in the country, which has also brought other major manufacturers to the Indian market.

According to government statistics from earlier this year, iPhone exports accounted for nearly 90% of the total value of smartphone exports from India. With Apple’s target of making India home to a quarter of its total manufacturing output, the country’s smartphone manufacturing segment is ready to make a bigger claim.

India’s Startup Ecosystem Is Now A Major Employer

Over the past two years, job-related headlines from the startup ecosystem have been dominated by layoffs. While retrenchments have certainly plagued Indian startups, the ecosystem as a whole has also emerged as one of the biggest in terms of job creation.

Indian startups have created employment for more than 10 Lakh people over the past seven years, with several startups having created tens of thousands of jobs alone. Several factors have worked in favour of the trend observed.

The answer becomes much more obvious when superimposing the funding trends over employment generation, but as the number of startups itself rose rapidly, so did the employees being hired by them.

That said, 2023 saw a marked decline in funding and new startups being launched. The ripple effect of the latter would likely be felt over the next few years, as fewer companies opening now would lead to fewer job opportunities down the line.

The Breakout Year For Electric Vehicles

The enthusiasm around electric vehicles is best captured through the lens of Ola Electric. The company which only entered the OEM business in 2021 is on the verge of an IPO. It’s no wonder then that many observers are calling 2023 an inflection point for the electric mobility ecosystem

But we’d like to temper these expectations — India saw 5,60,240 EV registrations between April and November 2023, which indicates that FY24 is on track to record 8 Lakh registrations, much lower than FY23.

Several analysts have pointed out that EV sales boomed in 2023 due to substitutions of existing two-wheelers. Two-wheeler EVs dominated FY23 in terms of sales accounting for more than 49% of all registered EVs.

When it comes to the EV market, it’s firmly in the corner of two-wheelers, with the market share growing from 2.1% in FY2018 to 61.7% in FY2023.  It’s as yet unclear whether OEMs can maintain this pace in the next couple of years. One factor that could spur EV sales and registration is the potential entry of EV giants such as Tesla, which would be a big signal for the transition from ICE vehicles to EVs.

Case in point: 70% of tier-one Indian car consumers state they’re willing to consider an electric car for their next vehicle, as compared to the record-high global average of 52%, per a McKinsey survey.

The likes of Tata, MG, Mahindra and others also have plans to bring more affordable four-wheelers to the market, which would undoubtedly also come with a boost for the EV charging infrastructure. So the big question is: Will 2024 be the year of electric cars?

UPI Breaches 100 Billion Mark

UPI — most fintech companies sing praises about it in public, while in private many are concerned about the over-reliance on UPI for payments, especially because it is a digital public good and therefore remains free for users to a large extent.

Despite the revenue downside, what is undeniable is that UPI has become a pillar of the digital economy, and has even crossed over to other geographies in the past two years.

In 2023, India saw more than 3,684 UPI transactions per second and 96% of this volume was driven by PhonePe, Google Pay or Paytm.

This year, CRED emerged as the darkhorse to shake up the competitive landscape, taking the total number of UPI transactions to well over 100 Bn in 2023. For context, this is 10X the transaction volume from just four years ago.

In many cases, UPI has become the key user acquisition channel for fintech startups and we do not foresee any slowdown in its usage, at least not until the Indian government introduces a merchant discount rate (MDR) for UPI transactions.

India In The 5G Era

India’s mobile internet story has reached new highs every year since the introduction of 4G networks in 2015 and 2016. Reliance Jio’s blistering 4G launch in 2016 turbocharged India’s adventure into the internet age, as hundreds of millions of users went online with megabit speeds.

Seven years on, India’s telecom sector completed a 5G rollout that took less than two years between the 5G spectrum auction and 92% of Indian districts being 5G enabled.

Over the past few years, the Indian government has looked to push homegrown technology for the 5G era and today the telecom industry is widely regarded as one of the most important pillars of the economy, thanks to its widespread impact.

India’s push for self-sufficiency has resulted in India taking an early lead in 6G research, and as the industry becomes self-reliant, India’s telecom future looks secure.

Around a decade ago, when 2G was the norm in India, a GB of data would cost around INR 299, which was around $5. Fast forward to 2023, with nearly all of the country receiving 5G coverage, a GB of data costs less than 5% of what it used to in 2013.

The cheap internet has also fueled the rise of India’s digital economy – from UPI to food delivery, the affordability of the internet is fueling the $1 Tn digital economy India dreams of.

India Stack Built Around Digital Public Infrastructure

When innovation comes, regulation follows, but in India’s case, this is also backed by the rise of digital public infrastructure or DPI, where government-backed programmes and policies have driven adoption across fintech, education, banking, healthcare and other critical sectors.

Among these, UPI can be easily singled out as the most transformative digital innovation till date. Beyond this, if Aadhaar formed the backbone of India’s digital stack till a few years ago, the past few years have seen the rise of DigiLocker for identification and authentication of access to services, digital health IDs, technology-enhanced educational initiatives, the Account Aggregator (AA) framework and most recently the Open Network for Digital Commerce (ONDC).

The last of these promises to revamp not just ecommerce and delivery of consumer services, but is also eyeing a disruption of delivery and access to financial services.

India’s DPI progress is being seen as an example of how developing economies could propel their own tech ecosystems, with the government working closely with other nations to export this key pillar of the Indian economy in 2023.

The post 15 Charts That Defined India’s Tech And Startup Ecosystem In 2023 appeared first on Inc42 Media.

In a year which saw shares of new-age tech startups like Zomato, PB Fintech, and RateGain make big gains, the performance of Delhivery remained lacklustre on the stock exchanges.

Though the shares of the logistics unicorn surged between April and September this year, they are set to end 2023 with much lower gains compared to its new-age tech peers. 

It is pertinent to note that Delhivery went for its IPO in 2022 when the number of listings of new-age tech startups fell to a mere three amid tumultuous market conditions. After its listing in May, Delhivery shares slumped almost 40% in 2022, in line with the wealth erosion seen in most of the listed startup stocks.

The beginning of 2023 was also not too great for Delhivery as its shares traded sideways till the end of April. However, the stock gained momentum after that and was up 38% year to date (YTD) by September. But this upsurge didn’t last long as the shares shed some of the gains. As of December 28, the startup’s shares were trading about 16% higher YTD.

Slow business growth and rising expenses are seen among the key reasons holding back the stock. The startup’s losses have also not helped the stock as investors are focussing on companies which are profitable or, at least, have a strong profitability outlook.

With that said, let’s take a look at Delhivery’s 2023.

Delhivery’s Volatile 2023 

Shares of Delhivery remained volatile this year, but its earnings estimates’ miss in Q2 FY24 led to a bigger slump. 

Delhivery reported its Q2 FY24 financial results on November 4, posting a 90% year-on-year (YoY) decline in adjusted EBITDA loss to INR 13 Cr, while its net loss narrowed almost 60% YoY to INR 102.9 Cr.

Meanwhile, operating revenue increased a mere 8% YoY to INR 1,941.7 Cr. The shift of festive season sales to Q3 this year also played a role in this.

However, most brokerages expected the company to report a larger decline in loss and higher sales. The logistics startup’s growing expenses due to investments for growing its capacity and expansion hurt its bottom line.

Delhivery’s express parcel business, which accounted for the biggest chunk of operating revenue during the quarter, failed to increase its contribution to the overall business on a YoY basis. Meanwhile, revenue generated by the express parcel and part truckload (PTL) verticals continued to witness growth, while the growth of the supply chain services business slumped.

There were several other developments, which impacted the stock’s performance positively as well as negatively in 2023.

Key Developments In 2023

• Delhivery expanded its facilities across Chennai, Hyderabad, and Noida 
• Launched a mega-gateway in Bhiwandi, one of India’s largest trucking terminals
• Acquired an additional 4.75% stake in warehouse automation startup Falcon Autotech for INR 52.11 Cr
• Claimed to be “almost at the breakeven point”
• Moved to the National Company Law Tribunal (NCLT) against Go First alleging that the airline deliberately took payments from it despite heading towards insolvency

The exit of some of its pre-IPO investors also had an impact on the stock performance during the year.

Delhivery’s Shareholding Pattern

In a trend similar to the one seen in other new-age tech stocks, Delhivery witnessed large block deals and major exits during the year.

• Private equity firm Carlyle Group offloaded its remaining 2.5% stake in Delhivery in June via bulk deals worth over INR 709 Cr
• VC major Tiger Global offloaded its 1.6% stake in Delhivery in a bulk deal for INR 338 Cr
• SoftBank dumped over 6.3% stake in Delhivery during the year in deals cumulatively worth INR 1,701 Cr

The stake held by foreign investors in the logistics startup also saw a decline throughout the year. Foreign institutional investors (FIIs) held a 65.5% stake in Delhivery at the end of the September quarter of 2023 against a 74.24% stake a year ago.

Meanwhile, mutual funds increased their cumulative stake in the startup. As of September 2023, as many as 16 mutual funds held a 14.12% stake in Delhivery against 13 funds holding a 6.95% stake a year ago.

Will Delhivery Deliver In 2024?

The Delhivery stock is currently trading below its listing price at around INR 380.

Of the 23 analysts covering the stock, 16 have a ‘buy’ or higher rating on it while five have a ‘hold’ rating. Its average price target is INR 452.17.

Analysts largely believe that the stock has strong growth potential for the long term. However, rising competition and increasing expenses remain the key concerns in the near to medium term.

For instance, international brokerage UBS recently initiated coverage on Delhivery with a ‘buy’ rating, citing long-term synergistic growth and profitability potential. However, it flagged increasing competition and customer concentration as key risks.

Meanwhile, ICICI Securities, in a recent research note, said Delhivery’s adjusted EBITDA profitability could see a reversion on a sustained basis given that ecommerce shipment volumes are trending upwards again after a slow year.

However, the brokerage believes that if medium-term growth visibility worsens due to global headwinds, it could pose a risk to the growth thesis.

On the technical charts, the stock is showing signs of a 10-20% correction in the medium term, according to Kush Ghodasara, CMT and an independent market expert. He believes the stock will take a long time to script a turnaround.

With geopolitical tensions like the Red Sea attacks emerging as another threat, it remains to be seen if Delhivery can deliver better returns to its investors in the coming year.

The post Delhivery Delivers Another Lacklustre Year On Bourses, Can It Change The Course In 2024? 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 95 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 2.25 Lakh Cr, 68 of these companies reported a combined loss of INR 48,068.3 Cr in FY23. In contrast, the rest managed to eke out a collective profit of INR 5,675 Cr. The divide becomes more intriguing considering that 19 of these companies are listed. 

We are nearly nine months into FY24, yet a number of Indian startups have not released 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

Atlan’s Profit Takes A Hit

Data collaboration software startup Atlan reported a profit after tax (PAT) of INR 7.74 Cr in FY23, a decline of 18.70% from INR 9.52 Cr in FY22.

The Salesforce-funded startup’s operating revenue rose 189.78% to INR 93.83 Cr from INR 32.38 Cr in FY22

Total expenses jumped 203.45% to INR 85.53 Cr in FY23 from INR 28.19 Cr in FY22.

Read: SaaS Startup Atlan’s Profit Slips 19% To INR 7.74 Cr In FY23

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

Awfis’ Sales Cross INR 500 Cr Mark

Chennai-based coworking space Awfis reported an operating revenue of INR 545.3 Cr in FY23, an increase of 112% from INR 257 Cr in FY22. The IPO-bound startup posted an operating revenue of INR 187.7 Cr in Q1 FY24.

Its net loss narrowed 18% to INR 46.6 Cr in FY23 from INR 57.1 Cr in the previous fiscal year. In the first three months of FY24, the startup incurred a net loss of INR 8.3 Cr.

Awfis’ total expenditure surged 82% to INR 612.4 Cr in FY23 from INR 335.9 Cr in the previous fiscal year. In the first quarter of FY24, its expenditure stood at INR 612.4 Cr.

Read: IPO-Bound Awfis’ Net Loss Narrows To INR 46.6 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

boAt Slips Into The Red For First Time Since Inception

Aman Gupta-led consumer electronics startup boAt slipped into the red for the first time since its inception as the increase in its expenses outpaced the rise in sales. boAt reported a net loss of INR 129.4 Cr in FY23 after posting a profit of INR 68.7 Cr in FY22.

Operating revenue rose 18% to INR 3,376.7 Cr from INR 2,873 Cr in the previous fiscal year.

The startup earned INR 2,350.8 Cr in FY23 from the audio segment, which accounted for 70% of its operating revenue. The wearable segment contributed INR 901.5 Cr to boAt’s topline this year.

Total expenses jumped 28% to INR 3,562 Cr in FY23 from INR 2,786.9 Cr in the previous fiscal year.

Read: Aman Gupta’s boAt Sold Audio Products, Smartwatches Worth INR 3,376 Cr In FY23

BookMyShow Turns Profitable After COVID

Online ticketing platform BookMyShow turned profitable and posted a consolidated net profit of INR 85.1 Cr in FY23 as against a loss of INR 92.2 Cr in the previous fiscal year.

As more people stepped out and went to movie theatres and attended live events post the Covid-19 pandemic, the startup’s operating revenue surged 252% to INR 975.5 Cr in FY23 from INR 277 Cr in the previous fiscal year. 

BookMyShow’s total expenses also jumped 138% to INR 940.9 Cr in FY23 from INR 395.2 Cr in the previous financial year

Read: BookMyShow Posts INR 85 Cr Profit In FY23 On Post-Pandemic Boost, Sales Jump 3X

CaratLane’s Sales Cross INR 2,000 Cr Mark

Titan-owned jewellery startup CaratLane’s operating revenue surged 73% to INR 2,169 Cr in FY23 from INR 1,255.6 Cr in the previous fiscal on the back of growing demand.

Despite the rise in revenue, CaratLane’s net profit dipped 8% to INR 82 Cr during the year under review from INR 89.2 Cr in the previous fiscal year.
Total expenditure jumped 69% to INR 2,068.5 Cr in FY23 from INR 1,225.9 Cr in the previous fiscal year.

Read: Titan-Owned CaratLane’s FY23 Sales Jump To INR 2,169 Cr, Profit Dips To INR 82 Cr

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

Clear’s Revenue Crosses INR 100 Cr Mark

Peak XV Partners-backed Clear’s (formerly known as ClearTax) operating revenue jumped over 85% to INR 108.8 Cr in the financial year 2022-23 (FY23) from INR 58.7 Cr in FY22.

Despite the increase in revenue, the startup’s net loss grew nearly 5% to INR 233.5 Cr in FY23 from INR 222.7 Cr in FY22.

Total expenditure increased over 21% to INR 343.7 Cr from INR 283 Cr in FY22.

Read: Tax Filing Platform Clear’s FY23 Revenue Jumps Over 85% To Cross INR 100 Cr Mark

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

Darwinbox’s Loss Jumps To INR 158 Cr

HRtech unicorn Darwinbox’s consolidated net loss soared 2.4X to INR 158.25 Cr in FY23 from INR 65.72 Cr in the previous fiscal year.

The Microsoft-backed startup’s operating revenue almost doubled to INR 224.04 Cr in FY23 from INR 116.73 Cr in FY22. 

The SaaS-based startup’s total expenses soared 2.2X to INR 407.22 Cr in FY23 from INR 186.93 Cr in the previous fiscal year.

Read: HRtech Unicorn Darwinbox’s FY23 Loss Surges 2.4X To INR 158 Cr

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

ElasticRun’s Revenue Cross INR 4,000 Cr Mark

Softbank-backed logistics unicorn ElasticRun’s revenue from operations saw a YoY increase of 24.71% to INR 4,754.86 Cr from INR 3,812.65 Cr in FY22. Further, the total revenue saw a YoY increase of 26.71% to INR 4,851.09 Cr from INR 3,828.24 Cr in the previous fiscal.

However, the startup loss nearly doubled to INR 618.82 Cr from INR 358.59 Cr in FY22. 

ElasticRun’s total expenditure surged 30.65% YoY to INR 5,469.91 Cr from INR 4,186.66 Cr in FY22.

Read: SoftBank-Backed ElasticRun’s FY23 Loss Doubles To INR 619 Cr

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

Flipkart’s B2C Arm Narrows Its Loss

A decline in its cash burn helped Flipkart’s B2C arm, Flipkart Internet Private Ltd, reduce its net loss by 9% to INR 4,026.5 Cr in FY23 from INR 4,419.5 Cr in the previous fiscal year.

Flipkart Internet’s operating revenue zoomed 42% to INR 14,845.8 Cr in FY23 from INR 10,477.4 Cr in FY22.

Total expenditure surged 27% to INR 19,043 Cr in FY23 from INR 15,024.3 Cr in FY22

Read More: Flipkart’s B2C Arm’s Sales Near INR 15,000 Cr Mark, FY23 Loss Dips To INR 4,026 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

FirstCry’s Loss Surges Over 500% In FY23

IPO-bound omnichannel retailer FirstCry’s net loss surged over 518% to INR 486 Cr in the financial year 2022-23 (FY23) from INR 78.6 Cr in the previous fiscal year. In the first quarter of FY24, FirstCry incurred a net loss of INR 110.4 Cr.

FirstCry’s operating revenue rose 135% to INR 5,632.5 Cr in FY23 from INR 2,401.2 Cr in the previous fiscal year. In the first quarter of FY24, the startup’s operating revenue stood at INR 1,407 Cr.

FirstCry reported a total expenditure of INR 6,315.6 Cr in FY23, an increase of 146% from INR 2,568 Cr in FY22. In the first quarter of FY24, its expenditure stood at INR 1,541.8 Cr.

Read: IPO-Bound FirstCry’s FY23 Loss Zooms Over 500% To INR 486 Cr

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

HealthifyMe’s Loss Dips

Healthtech startup HealthifyMe saw its total loss decline by around 10% to INR 142 Cr in FY23, down from INR 157 Cr reported in the year-ago fiscal. 

Meanwhile, total revenues from operations rose 23% to INR 228.7 Cr in FY23 from INR 185.25 Cr in FY22. Total expenditure stood at INR 371.72 Cr during FY23, up 8.23% YoY.

Read: HealthifyMe’s Revenue Cross INR 200 Cr Mark, Losses Dip 10% 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

Jar Spent INR 16 To Earn Every Rupee

Fintech startup Jar’s loss increased 77% to INR 122.8 Cr in FY23 from INR 69.5 Cr in FY22.

The Bengaluru-based investment tech startup’s revenue from operations jumped to INR 8.7 Cr in FY23 from INR 73.8 Lakh a fiscal ago. 

The Tiger Global-backed startup’s expenses doubled to INR 137.5 Cr in FY23 from INR 70.3 Cr in FY22.

Read: Tiger Global-Backed Jar Spent INR 16 To Earn INR 1 In FY23

Jumbotail’s Loss More Than Doubles

Bengaluru-based B2B startup Jumbotail saw its loss more than double in FY23. The startup incurred a net loss of INR 264.1 Cr, a 111% increase from INR 124.7 Cr it reported in the previous fiscal year.

Its operating revenue surpassed the INR 800 Cr mark. In FY23, the startup’s operating revenue stood at INR 819 Cr, a 117% increase from INR 377.3 Cr in FY22.

Total expenditure jumped over 100% to INR 1,114.04 Cr in FY23 from INR 523.60 Cr in the previous year

Read: Jumbotail’s FY23 Loss Surges 112% To INR 264 Cr Despite Doubling Sales

Jupiter Spent INR 54 To Earn Every Rupee

Neobanking soonicorn Jupiter Money’s loss jumped over 2X to INR 327 Cr in FY23 from INR 156.3 Cr in the previous fiscal, hurt by a sharp jump in its employee benefit expenses.

The Jitendra Gupta-led startup reported an astronomical increase in revenue to INR 7.1 Cr from a mere INR 40 Lakh it had reported in the previous year. The startup’s FY23 expenses increased 115% to INR 383 Cr in FY23 from INR 178 Cr in FY22.

Read: Neobank Jupiter Spent INR 54 To Earn Every Rupee 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

Mensa Brands’ Revenue Touches INR 500 Cr Mark

Ananth Narayanan-led Mensa Brands’ loss increased over 2X to INR 227 Cr in the financial year ended March 31, 2023. The house of brands unicorn had incurred a net loss of INR 96.6 Cr in FY22.

Operating revenue stood at INR 499.6 Cr, a 137.4% increase from INR 210.4 Cr in the previous fiscal year.

Mensa Brands’ total expenses jumped 142% to INR 763.2 Cr during the year under review from INR 315.4 Cr in FY22.

Read: Mensa Brands’ FY23 Loss More Than Doubles To INR 227 Cr

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

MediBuddy’s Loss Crosses INR 300 Cr Mark

Bengaluru-based healthtech startup MediBuddy’s net loss widened 24% to INR 321.7 Cr in FY23 from INR 259.3 Cr in the previous fiscal year.

The operating revenue of the startup, founded by Satish Kannan and Enbasekar Dinadayalane, grew 27.2% to INR 297.7 Cr during the year under review from INR 234.1 Cr in FY22.

MediBuddy’s total expenses jumped over 30% to INR 648.9 Cr in FY23 from INR 497.4 Cr in the previous year, with the cost of materials consumed being the single biggest contributor at 35%.

Read: MediBuddy’s FY23 Loss Jumps 24% To INR 321.7 Cr As Business

Milk Mantra Slips Into The Red In FY23

Bhubaneswar-based dairy tech startup Milk Mantra slipped into the red in the financial year ended March 31, 2023 with a net loss of INR 12.3 Cr as against a net profit of INR 13.6 Cr in FY22.

Operating revenue rose a marginal 2% to INR 272.9 Cr in FY23 from INR 267.1 Cr in the previous fiscal year.

Total expenditure jumped 13% to INR 289.4 Cr in FY23 from INR 256.6 Cr in the previous fiscal year.

Read: Milk Mantra Posts INR 12.3 Cr Loss In FY23 As Sales Remain Flat

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

Mswipe Halves Its FY23 Loss

Fintech startup Mswipe’s net loss declined 45% to INR 49.1 Cr in FY23 from INR 90 Cr in FY22.

The Mumbai-based startup’s revenue from operations rose 14% to INR 274.5 Cr in FY23 from INR 240.7 Cr in FY22. Including other income, Mswipe’s total income rose 12% to INR 278.3 Cr during the year under review from INR 247.7 Cr in the previous fiscal year.

Total expenditure declined 3% to INR 328.4 Cr in FY23 from INR 337.8 Cr in FY22.

Read: Mswipe’s FY23 Loss Declines 45% To INR 49 Cr On Lower Cash Burn

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

Noise Profits Takes A Plunge

Gurugram-based bootstrapped startup Noise saw its profit nosedive to INR 88 Lakh in the financial year 2023-23 (FY23) from INR 35.5 Cr a year ago.

However, the startup’s operating revenue jumped 1.8X to INR 1,426.5 Cr in FY23 from INR 792.8 Cr in FY22. 

The smartwatch and earphone manufacturer’s expenses surged 1.9X to INR 1,431.6 Cr in FY23 from INR 752.6 Cr in FY22. 

Read: Noise’s FY23 Revenue Soars Past INR 1,400 Cr, But Profit Fails To Create A Buzz On Rising Expenses

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

Ola Electric’s FY23 Sales Cross INR 2,600 Cr Mark

IPO-bound Ola Electric’s operating revenue surged 605% to INR 2,630.9 Cr in FY23 from INR 373 Cr in FY22. In Q1 FY24, Ola Electric’s sales stood at INR 1,242.7 Cr. 

The EV startup reported a net loss of INR 1,471.6 Cr in FY23, an increase of 88% from INR 783.4 Cr in the previous fiscal year. In April to June of FY24, Ola Electric’s loss stood at INR 268 Cr.

While it posted a total expenditure of INR 1,460.7 Cr in the first quarter of FY24, expenses rose 231% to INR 3,883.3 Cr in FY23 from INR 1,173.8 Cr  in FY22.

Read: Ola Electric Clocks INR 1,242.7 Cr In Q1 FY24 Sales, Nearly 50% Of FY23 Revenue

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

Paper Boat’s Sales Cross INR 500 Cr Mark

Hector Beverages, the parent company Paper Boat, saw its net loss widen 71% to INR 90.6 Cr in the financial year FY23 from INR 53 Cr in FY22.

The juice maker’s loss widened, despite it crossing the INR 500 Cr mark in sales for the first time. The startup’s sales rose 56% to INR 504 Cr during the year under review from INR 324 Cr in FY22.

Paper Boat’s total expenses rose to INR 599.1 Cr in FY23 from INR 378.1 Cr in the previous fiscal year.

Read: Paper Boat’s FY23 Loss Surges 71% To INR 90.6 Cr, Revenue Crosses INR 500 Cr Mark

PayMate Manages To Narrow Its Loss

IPO-bound B2B payments solutions provider PayMate managed to narrow its consolidated net loss by a marginal 3.5% to INR 55.7 Cr in FY23 from INR 57.7 Cr in the previous fiscal year. On the other hand, operating revenue rose 11.7% to INR 1,350.1 Cr in FY23 from INR 1,208.9 Cr in FY22.

The fintech startup’s total expenses increased 11% to INR 1,407.3 Cr during the year under review from INR 1,266.9 Cr in FY22. In that, the cost of materials accounted for a significant 95%.

Read: IPO-Bound PayMate’s FY23 Loss Narrows Marginally To INR 55.7 Cr

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

PhonePe’s Revenue Nears INR 3,000 Cr Mark

General Atlantic-backed fintech giant PhonePe’s net loss rose 39% to INR 2,795.3 Cr in FY23 from INR 2,013.7 Cr in the previous fiscal year due to a sharp increase in its ESOP expenses.

PhonePe’s operating revenue surged an impressive 77% to INR 2,913.7 Cr during the year under review from INR 1,646.2 Cr in FY22.

The digital payments giant’s total expenses shot up 59% to INR 5,886.3 Cr in FY23 from INR 3,705.6 Cr in FY22.

Read: Walmart-Backed PhonePe’s Loss Crosses INR 2,500 Cr Mark In FY23

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

Purplle’s Sales Inches Closer To INR 500 Cr Mark

Beauty ecommerce marketplace Purplle’s operating revenue more than doubled to near the INR 500 Cr mark during the year ended March 31, 2023. The startup’s operating revenue or sales stood at INR 474.9 Cr in FY23, an increase of 116% from INR 219.8 Cr in FY22. 

Despite the rise in operating revenue, Purplle’s net loss grew 13% to INR 230 Cr from INR 203.6 Cr in FY22. 

The startup’s total expenditure grew 71% to INR 738.3 Cr from INR 431.2 Cr in FY22.

Read: Purplle’s FY23 Sales Inch Closer To INR 500 Cr Mark, Loss Widens To INR 230 Cr

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%

Pine Labs-Owned Setu’s Loss Jumps Over 100%

Bengaluru-based fintech startup Setu’s FY23 net loss jumped 118% year-on-year (YoY) to INR 62 Cr. The startup’s operating revenue increased 22% to INR 14.2 Cr from INR 11.6 Cr a fiscal ago.

The fintech startup’s overall expenditure rose by over 77% to INR 79.6 Cr during the year under review from INR 44.9 Cr it spent in the previous fiscal year. 

Read: Pine Labs Owned Setu Spent INR 5.6 To Earn Every Rupee In FY23

Servify’s Operating Revenue Almost Doubles

Device management startup Servify’s net loss narrowed to INR 229.1 Cr in FY23 from INR 2,860.8 Cr posted in the previous fiscal, helped by a sharp decline in non-operating expenses.

Servify’s operating revenue almost doubled to INR 313 Cr during the year under review from INR 611.2 Cr in FY22.

The startup reported an over 73% decline in its total expenses to INR 846.7 Cr in FY23 from INR 3,176.4 Cr the previous year.

Read: Decline In Non-Operating Expenses Helps Servify Narrow FY23 Loss Over 90% To INR 229 Cr

ShareChat’s Loss Crosses INR 5,000 Cr Mark

India’s indigenous social media platform ShareChat saw its loss increase to INR 5,144 Cr in FY23 on the back of amortisation expenses due to the acquisition of MX Taka Tak. In FY22, the startup’s loss stood at INR 2,988.6 Cr in FY22.

ShareChat’s revenue from operations increased 59% to INR 552.7 Cr in FY23 from INR 346.9 Cr in FY22.

The startup’s total expenses increased 72% to INR 5,862.1 Cr in FY23 from INR 3,407.5 Cr

Read: Google Backed ShareChat’s Losses Ballooned To INR 4,064 Cr In FY23 

Shiprocket’s Revenue Crosses INR 1,000 Cr Mark

Zomato-backed logistics unicorn Shiprocket’s revenue from operations increased over 78% to INR 1,088.8 Cr in FY23 from INR 610.5 Cr on the back of its acquisition spree.

The startup’s loss increased over 425% to INR 333.8 Cr during the year under review from INR 63.6 Cr in the previous fiscal year.

On the expenses front, the Saahil Goel-led startup spent a total INR 1,397 Cr in FY23 as against INR 697.8 Cr it had spent in FY22.

Read: Shiprocket’s FY23 Revenue Crosses INR 1,000 Cr Mark, Reports 3.6X Surge In Loss

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

Unicommerce’s Profit Inches Up 

IPO-bound SaaS startup Unicommerce’s operating revenue zoomed 52% to INR 90 Cr in the financial year 2022-23 from INR 59 Cr in the previous fiscal year on strong demand for its services.

This resulted in the SoftBank-backed startup’s net profit rising 8% to INR 6.4 Cr in FY23 from INR 5.9 Cr in FY22.

The startup’s overall expense rose 55% to INR 84.1 Cr in FY23 from INR 54.4 Cr in the previous fiscal year.

Read: IPO-Bound Unicommerce Posts INR 6.4 Cr Profit In FY23, Revenue Nears INR 100 Cr Mark

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

upGrad’s Loss Jumps Past INR 1,000 Cr Mark

Mumbai-based edtech unicorn upGrad’s net loss surged 76% to INR 1,141.5 Cr in the financial year 2022-23 (FY23) from INR 648.2 Cr in the previous fiscal year.

The startup’s bottom line took a hit due to goodwill writedown of INR 410 Cr despite its operating revenue crossing the INR 1,000 Cr mark. The Ronnie Screwvala-led startup reported an operating revenue of INR 1,169.6 Cr in FY23, an increase of 97% from INR 595 Cr in the previous fiscal year.

The startup’s overall expenses increased 56% to INR 1,938 Cr from INR 1,241 Cr reported in the previous fiscal year.

Read: upGrad’s FY23 Loss Surges To INR 1,141.5 Cr On Goodwill Writedown Of INR 410 Cr

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

Yulu’s Loss Inches Closer To INR 100 Cr Mark

Emobility startup Yulu saw its consolidated net loss widen 71% to INR 94.9 Cr in FY23 from as against INR 55.5 Cr in FY22.

The cleantech startup’s operating revenue rose to INR 41.7 Cr, a 43.8% from INR 29 Cr it reported in the previous fiscal year. 

Yulu reported a total expenditure of INR 140.1 Cr in FY23, a sharp 60.5% increase from INR 87.3 Cr spent in the prior fiscal.

Read: Yulu’s FY23 Net Loss Widens 71% To INR 94.9 Cr As Business Expands

Zepto’s Revenue Suprasses INR 2,000 Cr Mark

Zepto, the latest entrant to the unicorn club, reported an operating revenue of INR 2,024.3 Cr in FY23, a 14X increase from INR 140.7 Cr in the previous fiscal year.

At the same time, the startup’s loss soared 3.2X to INR 1,272.4 Cr from INR 390 Cr in FY22.

Total expenses stood at INR 3,350 Cr in FY23 as against INR 532.7 Cr in the previous year.

Read: Zepto’s FY23 Revenue Jumps 14X To INR 2,078 Cr, Loss Triples To INR 1,272 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: 30th December, 14:00 PM IST

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

The year 2023 embraced corrections as the Indian startup ecosystem came to terms with the harsh realities of the extended funding winter, layoffs and wary investors. 

Funding taps ran dry across new-age sectors and ventures as investors tightened their purse strings harder than ever. As a result, total startup funding receded to a seven-year low of $10 Bn in 2023, even lower than the $13 Bn that was raised in 2017. The contrast becomes even sharper when we compare the data with 2022 and 2021 when Indian startups raised $25 Bn and $42 Bn, respectively. 

While seed-stage companies were the worst hit, equally distraught were some of the biggest names in the Indian startup ecosystem, who were experiencing diminishing investor interest at every step of the way. And their worries were probably for a reason. 

Well, much to their chagrin, late-stage funding cratered 60% year-on-year (YoY) to $5.6 Bn in 2023 and the deal count withered 57% YoY to 83.

Unfortunately, mega deals ($100 Mn and above), too, fell with a thud during the year to 23 from 60 such deals in 2022 and 109 deals in 2021, as per Inc42’s Indian Tech Startup Funding Report 2023. 

Salvaging the reputation were names such as PhonePe, Lenskart, Flipkart, DMI Finance, Ola Electric and the like that raised some of the biggest rounds in 2023. 

Not to mention, the fall in mega deals has slowed down the country’s potential of minting unicorns, which we already witnessed in 2023 — just two unicorns were born in the year. 

Imperative to highlight that late-stage deals accounted for 70% of the total capital inflow into the Indian startup ecosystem in 2022 and churned 22 unicorns. 

Fintech, Ecommerce & Enterprise Tech Startups Clinch 90% Mega Deals

The fintech sector continued to be the darling of the investors as it accounted for more than half, 12 to be precise, of the total mega deals witnessed by the ecosystem in 2023. 

Close on the heels were ecommerce startups, which secured five mega deals, while enterprise tech took the third spot on the podium with four such deals. 

Ironically, even though deeptech and cleantech stood at the bottom of the ladder with just one deal each, it was truly a watershed moment for the sectors. It shows that investors have now started to recognise the true potential of these two mushrooming new-age sectors.

Moving on, digital payments giant PhonePe raised $850 Mn in multiple tranches throughout the year to fuel its growth ambitions ahead of its listing on the Indian bourses. Other fintech heavyweights who enjoyed mega deals in the year of the extended funding winter included names like lending tech startup DMI Finance ($400 Mn round), fintech SaaS giant Perfios ($229 Mn) and insurtech player InsuranceDekho ($210 Mn).

“Relative to other sectors like SaaS which suffered from multiple headwinds from decline in global customer traction, some of the established fintechs showed high growth combined with a convergence to profitability, and investors chose to fund them,” said general partner at VC firm WEH Ventures,  Deepak Gupta.

From the ecommerce arena, Lenskart and Flipkart took the pole position on the charts as both raised $600 Mn each with investors making a beeline. While B2B ecommerce major Udaan raised $340 Mn in a mega round towards the fag end of 2023, quick commerce platform Zepto became the second unicorn of 2023 after bagging $231 Mn from a clutch of investors. 

IPO-bound Ola Electric, too, made a big splash in the Indian startup arena after it secured a massive $384 Mn round from Temasek. Alongside, Builder.ai made a mark in the enterprise tech space with its $250 Mn fundraise, and robotics startup Grey Orange bagged $135 Mn in 2023. 

Behind these big bucks was a flurry of foreign investors who invested in some of the biggest names in the Indian startup ecosystem. 

Foreign Investors Seen Drenching In The Late-Stage Opportunity

Foreign investors continued to chokehold late-stage deals in 2023, be it General Atlantic, Investcorp, DST Global, Lightspeed India, or the like. 

US retail giant Walmart alone led two of the biggest mega deals this year – PhonePe’s $850 Mn and Flipkart’s $600 Mn rounds. 

Barring names such as Kedaara Capital, TVS Capital and a few others, domestic capital was conspicuously missing from the top 10 mega deals. 

Interestingly, none of the investments made by big names such as Peak XV, Accel India, SoftBank and Tiger Global made it into the top 10 mega rounds during the year.

On the contrary, sovereign wealth funds such as ADIA, QIA and Temasek participated in droves in mega rounds, picking up stakes in some of the biggest names in the Indian startup ecosystem.

Meanwhile, SoftBank was busy booking profits and offloading a good chunk of its stake in Indian listed startups to shore up returns. 

Now, as we stand on the cusp of 2024, much appears to be in store for the world’s third-largest startup ecosystem.

So, What’s On The Horizon?

Even though the capital drought is expected to seep into 2024 as well, industry experts see no dearth of funds for late-stage startups with sustained revenue growth and profitability.

According to Manish Maryada, the cofounder and CEO of fintech startup Fello, 2023 was just a glimpse of VCs’ changed investment strategies. Concurring with this, investment firm FAAD Network’s cofounder and director Dinesh Singh told Inc42 that focus on profitability and strong unit economics will attract larger investments in 2024.

A case in point is the names like GreyOrange, Udaan, Aye Finance, and InCred, which raised copious amounts of capital in the last weeks of December 2023. A common theme among all these late-stage companies was that they had streamlined their operations or were inching closer to profitability. 

However, investors will continue to tread warily in the year ahead. They are expected to keep a close eye on meticulous corporate governance guardrails, strong compliance records, credibility of founders, and corporate culture, among other things.

Chiming in, JITO Incubation and Innovation Foundation’s (JIIF’s) chairman Rajat Mehta said, “The outlook for mega deals in the startup landscape in 2024 will be shaped by a range of factors, including economic conditions, regulatory dynamics, and emerging market trends. The general central elections in India and the US will play a major role and will lean more towards creating an extremely positive sentiment for mega deals.” 

With much in store for the homegrown new-age tech companies in 2024, all eyes will now be on whether mega deals resuscitate next year or will the funding winter permeate deeper, chilling the Indian startup ecosystem to its spine. 

[Edited by Shishir Parasher]

The post The $100 Mn Chase: Mega Deals Dwindle In 2023, Recede To Pre-2018 Levels appeared first on Inc42 Media.

There is a reason why India is called the world’s third-largest startup ecosystem. Well, for starters, in terms of unicorns and the number of startups, we are just behind the US and China.

However, that wasn’t always the case. There was a time when we still had many miles to go in having even a mark on the global startup map. However, since the start of 2014, India’s startup ecosystem has come alive in terms of funding activity, heightened innovation and more stress on building in India for the world. 

Not to mention, when the rest of the world had to endure several macroeconomic shocks of the last decade, India’s rapid economic growth allowed the country to fuel its entrepreneurial spirit, paving the way for the startup boom. And, it was around this time that the rise in innovation and easing of FDI norms brought major tech investors to Indian shores. 

Between 2014 and 2023, India saw more than 3,100 new startup launches each year on average, according to the Department for Promotion of Industry and Internal Trade (DPIIT). Not just this, as many as 9,995 Indian startups have raised more than $146 Bn in funding since 2014.

But, How Has Funding Looked Like Over The Years?

India has seen a near-constant rise in startup funding for the best part of the last decade. In 2014, as many as 376 local startups ended up raising around $5 Bn.

Gauging the success of ventures like Ola, Zoho, and Flipkart, investors started to buy into the Indian startup story, pouring more funds.

India’s 4G launch and demonetisation in 2016 significantly drove the fortunes of ecommerce and fintech startups. The advent of UPI at the same time laid the foundation for more startups to emerge. The spread of the Covid-19 pandemic in early 2020 initially dented the Indian economy and the startup ecosystem with it.

However, funding picked up, supercharged by the unprecedented demand for digital solutions for everything from grocery shopping to health consultations.

The year 2021, which saw a devastating second wave of the pandemic, also bore witness to the most intense period of startup funding in the history of India’s fledgling startup ecosystem. In a single year, Indian startups raised as much funding as they had lapped up between 2014 and 2018. 

Indian startups were innovating and investors were investing. ‘Growth at all costs’ was the new motto amid the new normal, and startups raised whatever deemed them fit, sometimes even without a minimum viable product (MVP).

Soon came February 2022, and as Russian boots fell on Ukrainian soil, the global economy tanked. Russia was heavily sanctioned and taken out of the global financial network, and as a result, the world went through an energy crisis. This spooked investors, and funding in startups started to slow down.

As the slowdown threatened to evolve into a recession, Indian startup funding continued to decline and hit a seven-year low in 2023. Even so, Indian startup funding ticked over $146 Bn, a new milestone for the ecosystem.

Despite the shocks, Indian startups have had a strong 2023 as several big names have turned profitable, signalling that good times might just be close by.

Policies Supporting India’s Startup Economy

For the most part, India’s startup ecosystem has enjoyed great policy and regulatory support from the government. One of the most important schemes promoting India’s startup ecosystem has been the Startup India programme, managed by DPIIT.

Launched in 2016, Startup India has played a pivotal role in propelling the growth of India’s startup ecosystem. Tax breaks, simplified regulations and incubation support have since fostered a nurturing environment for innovation and risk-taking.

Coupled with the easing of FDI norms, VC funding skyrocketed, attracting investors and empowering startups to scale and compete on the global stage. As a result, India is now the world’s third-largest startup ecosystem and home to 112 unicorns.

To boost local manufacturing, the government also introduced production-linked incentive (PLI) schemes in 2020 across 14 key sectors, including semiconductors, advanced cell chemistry batteries, and drones. This has incentivised both global tech giants like Apple and local startups to make in India for the world.

Speaking about innovations, India Stack is the top talking point. Internationally acclaimed breakthroughs such as the United Payments Interface (UPI), electronic Know-Your-Customer (eKYC), Aadhaar Card, the Account Aggregator network (AA) and the Open Network for Digital Commerce (ONDC) have stepped up the Indian startup game.

UPI, in particular, has proven to be among the most influential government-backed fintech platforms anywhere in the world. The platform is enabling thousands of transactions in India each second, for free, all the while displaying unparalleled resilience and stability. Hundreds of tech startups in India started by enabling UPI payments, including PhonePe, Paytm and BharatPe, among dozens of others.

Lastly, India’s G20 Presidency in 2023 made way for the Startup20 initiative, which brought together startups, investors, policymakers, and innovation hubs from across the G20 member nations, with a focus on investment, inclusivity and collaboration. This resulted in more visibility for the world’s third-largest startup ecosystem, wider discussions around it and a favourable policy push within the country.

How India Stacks Up Against Its Peers On The Podium

While the Indian startup ecosystem has made a significant mark on the global map, it has a long way to go before it can challenge China and the US.

For context, US-based startups raised $2.7 Tn between 2014 and 2023, while Chinese startups raised $793 Bn during this period, and India is not even close to these figures. The key reason behind this stark difference is that the US and China had multiple startup-friendly policies in place, much earlier than India.

For instance, Apple was founded in 1976 and India was a closed-market economy until the early 90s. Being far more mature startup ecosystems, the US and China also are home to a far larger number of startups.

However, as India’s internet penetration rises, and the demand for tech solutions with it, the country could emerge as a threat to China’s position.

Gazing In The Crystal Ball

Industry experts believe that the Indian startup ecosystem will continue to witness maturity, which will lead to stronger fundamentals and high-quality startups.

Speaking of maturity, many companies founded at the peak of India’s startup-minting era of the late 2010s have grown fully and are headed towards possible IPOs now. This trend is expected to continue over the next few years.

Meanwhile, senior executives of many late-stage startups are now launching their ventures to start up again. This trend, too, is expected to grow at an exponential rate, luring in more investments from VCs.

In addition, the Indian government’s support for startups and the belief in their potential to boost the country’s economy is expected to result in the creation of more startups, soonicorns, unicorns and even decacorns. Now, as we approach the beginning of a new year, it is time to reiterate that India continues to be the most exciting place on the global map.

[Edited By Shishir Parasher]

The post $146 Bn+ Raised In 10 Years — The Outlook For Funding Winter-Hit Indian Startups Isn’t That Grim After All appeared first on Inc42 Media.

A total of 76 founders of 48 new-age tech companies in India took home INR 441.44 Cr in annual salaries in the financial year 2022-23 (FY23)!

The average founder annual salary rose by 87.5% to INR 6 Cr in FY23 from INR 3.2 Cr in FY22.

This comes at a time when the ongoing funding winter has brought about a significant transformation in the country’s startup ecosystem, compelling startups to focus on profitability. This also meant cutting down 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 are still bogged down by losses.

While 41 companies (excluding Lenskart) out of the aforementioned 47 reported a total operating revenue of INR 88,330.5 Cr in FY23, 29 of them incurred a combined loss of INR 22,415 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 remuneration 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

*NOTE: Includes, salary, wages, & bonus
^ NOTE: Includes short-term employment benefits and share-based payments

Supam Maheshwari | FirstCry

Supam Maheshwari, the cofounder of IPO-bound omnichannel startup FirstCry, received an annual remuneration of INR 200.7 Cr in the financial year ended March 31, 2023. As per the startup’s DRHP, Maheshwari’s remuneration in FY22 stood at INR 29.1 Cr. In the first three months of FY24, Maheswari received an annual remuneration of INR 25.8 Cr.

The DRHP revealed that Maheswari’s remuneration of FY23 and the first three months of FY24 included short-term employment benefits and share-based payments.

In FY23, the startup’s loss increased over 500% to INR 486 Cr, while operating revenue rose to INR 5,632.5 Cr.

Nithin & Nikhil Kamath | Zerodha

Nithin and Nikhil Kamath, the cofounders of bootstrapped stock broking platform Zerodha, took home INR 48 Cr each in annual salaries in FY23, making them one of the highest paid founders in this list. However, their remuneration remained unchanged from the previous fiscal year even as Zerodha’s net profit increased 37% to INR 2,909 Cr. Its total revenue inched closer to the INR 7,000 Cr mark during the year under review.

Ritesh Agarwal | OYO

OYO’s Ritesh Agarwal took home INR 12 Cr in remuneration, representing a 114% hike from INR 5.6 Cr withdrawn in FY22. It must be noted that while Agarwal’s compensation more than doubled during the year, the unicorn fired nearly 600 employees in FY23.

OYO reported a 34% decline in its net loss to INR 1,286.5 Cr in FY23 from INR 1,941.5 Cr in the previous fiscal year. The SoftBank-backed startup’s operating revenue grew 14% to INR 5,463.9 Cr in FY23 from INR 4,781.3 Cr in FY22. 

Deepak Singh Ahlawat | Gameskraft

Deepak Singh Ahlawat, the cofounder of Gameskraft, received one of the biggest hikes among the list of the cofounders featured in this list. His annual remuneration jumped 264.6% to INR 10.1 Cr in FY23 from INR 2.77 Cr in the previous fiscal year.

The startup’s revenue from operations jumped 24.8% to INR 2,662.5 Cr in FY23 from INR 2,133.1 Cr in FY22, while profit rose 14.2% to INR 1,061.9 Cr in FY23 from INR 930.4 Cr in FY22.

Manish Taneja | Purplle

Manish Tanjea and Rahul Dash, the cofounders of beauty ecommerce startup Purplle, took home INR 6.71 Cr each in remuneration in FY23, a hike of 527% from INR 1.07 Cr each they got in the previous fiscal year.

The startup’s operating revenue or sales stood at INR 474.9 Cr in the financial year 2022-23 (FY23), an increase of 116% from INR 219.8 Cr in FY22. Loss grew 13% to INR 230 Cr from INR 203.6 Cr in FY22.

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 took home INR 3.8 Cr in salary, an increase of 11.8% from INR 3.4 in the previous year. 

The company which was founded in 1999 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, received 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, received an annual 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. 

Gaurav Singh Kushwaha| BlueStone

Gaurav Singh Kushwaha, the CEO and cofounder of Ratan Tata-backed jewellery brand Bluestone, took home an annual remuneration of INR 3.1 Cr. This was a surge of 313% from INR 75 Lakh he took home in the previous fiscal year.

Meanwhile, BlueStone saw its operating revenue increase 67% to INR 771 Cr in FY23 from INR 461.3 Cr in the previous fiscal year. Net loss jumped 183% to INR 167.2 Cr in FY23 from INR 59 Cr in FY22.

Last Updated: 29rd December, 18:55 PM IST

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

The year of extended funding winter has been worse for the world’s third-largest startup ecosystem in almost every sense — layoffs, shutdowns, deal counts and capital infusions.

According to Inc42’s annual “Indian Tech Startup Funding Report 2023“, Indian startups secured over $10 Bn in funding until December 25 this year, with just two new unicorns in its kitty.

On a year-on-year basis, this represents a 60% decrease compared to the $25 Bn raised in 2022. Historically, Indian tech startup funding hit a seven-year low, plummeting even below the $12 Bn raised in 2018.

The number of deals, too, witnessed a significant 40.8% YoY decline at 897 deals compared to 1,517+ in 2022.

It must be noted that of the $10 Bn+ raised during the year, more than $2.8 Bn (28%) was raised by five startups alone. While PhonePe raised $850 Mn, Lenskart and Flipkart lapped up $600 Mn each. Further, DMI Finance and Ola Electric received a fund infusion of $400 Mn and $384 Mn, respectively.

Overall, the median ticket size reached its lowest level since 2019 to $2.2 Mn from $4 Mn in 2019. Also, funding in women-led startups tanked 80% to $480 Mn from $2.4 Bn in 2022.

Now, before we delve deeper into understanding which stage startups or sectors got hit the most due to the extended funding dry spell, here are some funding trends of 2023 that we have identified:

• Mega Deals Below 2018 levels: Mega deals during the year under review fell to 23 deals against 28 mega deals in 2018. This also represents a 61.66% decline from the 60 mega deals in 2022.
• Top 3 Startup Hubs Saw A Major Funding Decline: On a year-on-year basis, Mumbai saw the maximum decline in funding at 62%, followed by Bengaluru at 61% and Delhi NCR at 51%
• Chennai Took The Lead Among Other Emerging Hubs: Chennai startups raised $211 Mn across 32 deals, followed by Pune at $211 Mn across 30 deals and Hyderabad at $129 Mn in 27 deals.
• Deeptech Continues To See An Uptick In Funding: Despite the ongoing funding winter, funding in the sector has been continuously rising in the last three years. In 2023, deeptech startups raised $496 Mn compared to $397 Mn raised in 2022.
• Valuation Markdowns: In 2023, investors slashed the valuations of eight unicorns, including BYJU’S, Meesho and PharmEasy.

Interestingly, Padmaja Ruparel, cofounder, Indian Angel Network (IAN), sees this shift as a strategic pivot that is reshaping India’s startup narrative.

“2023 saw a transformation in the Indian startup ecosystem, bringing a sharp focus on the fundamental purpose of business building. This meant that being ‘well-governed and valuable’ rather than ‘valuation’ became a cornerstone for founders and investors,” Ruparel added.

Seed Stage Startup Funding Plunged The Most At 72% YoY

Moving on, seed stage startups could raise only $681 Mn versus $2.4 Bn raised in 2022, representing a 72% YoY decline. The number of deals, too, slipped 36.6% to 467 from 737 in 2022.

Late and growth stage funding figures did not prove to be any consolation either, declining 60% YoY in 2023 to $2.9 Bn and $5.6 Bn, respectively.

Considering the ongoing market correction, with growth and late stage startups being scrutinised more on their ability to show the path towards profitability, the downfall at growth and late stage was quite expected.

The continued government intervention with new policies and regulations, larger corporate governance issues, and pressure to showcase a sustainable future growth path slowed down funding for growth and late stage startups.

However, the steep decline at seed stage was surprising, considering 31 early-stage focussed funds worth $1.8 Bn were launched during the year.

But, there is a catch!

Several investors that Inc42 spoke with emphasised that the seed stage funding numbers do not reveal the clear picture as most of the deals have gone unannounced.

Shashak Randev, founder VC & cofounder of 100X.VC claimed to have made 62 investments in 2023, with 70% of their portfolio raising follow-on investments at an median ticket size of $700K to $1 Mn.

Pranav Pai, founding partner and chief investment officer at early-stage VC firm 3one4 Capital even claimed 2023 as one of their most active years in terms of founding teams reaching out to them for an investment.

“Anecdotally, the early stage in India has remained on track and within range despite a challenging year. We have seen most of our peers continue to invest in pre-seed, seed, and post-seed rounds. Most of these rounds have not been announced in the media, and the founders have focussed on building the product and leading controlled launches. We expect the launch and round announcements to resume normalcy in 2024,” Pai added.

Ecommerce & Fintech Sectors Topped The Funding Charts

With $2.6 Bn+ raised across 192+ deals, ecommerce leads in terms of the number of deals in the year of the extended funding winter. As expected, almost 56% or 107 of the ecommerce deals were concentrated at the seed stage.

Meanwhile, fintech took the lead in terms of the funding amount, with startups raising $3 Bn across 129+ deals. Of the total funding, 53.3% or $1.6 Bn was raised by four companies alone – PhonePe, DMI Finance, Perfios and InsuranceDekho.

In 2023, the sector went through a rollercoaster ride as both RBI and SEBI put several regulations, policies and guidelines in place. As a result, fintech funding across all stages was cut to half in 2023, with the seed stage taking the maximum hit. Further, lending tech and banking remained investors’ favourites taking in almost 71% of the total funding.

What’s more exciting is that in the top five sectors, cleantech, including electric vehicle, climate tech, and energy startups, also made it to the top five sectors, along with deeptech and enterprise tech. Between 2021 and 2023, 30+ funds were launched with cleantech as one of their focus areas, thereby leading to continued investment in the sector.

[Edited by Shishir Parasher]

The post Startup Funding Hits A 7-Year Low Of $10 Bn As Investor Appetite Wanes In 2023 appeared first on Inc42 Media.

After the global economic slowdown and high-interest rates brought an abrupt end to the initial public offering (IPO) party in 2022, the year 2023 saw some signs of revival in the public markets globally.

In India, the IPO landscape was abuzz with activities, especially in the second half of 2023, on the back of strong economic growth and positive domestic and foreign investor sentiments. Overall, the number of IPOs crossed the 100 mark by the start of December this year.

In line with this, new-age tech IPOs, too, picked up pace on the Indian stock exchanges. A total of five Indian new-age tech companies went public in 2023 as against a mere three in 2022.

The five new-age tech companies – ideaForge, Mamaearth, Yatra, Zaggle, and Yudiz – collectively raised over INR 3,600 Cr this year through their IPOs. 

Experts believe that 2024 will see even more Indian companies taking the IPO route given that the benchmark indices, Sensex and Nifty50, are hovering around their all-time high levels. This is also expected to result in a surge in IPOs of new-age tech startups.

While the likes of Ola Electric, GoDigit, FirstCry and OYO have filed their draft red herring prospectus (DRHPs) with the Securities and Exchange Board of India (SEBI), others like Swiggy, PayU, and Garuda Aerospace are also eyeing public listings next year.

Then, there are also not-so-prominent names like Travel Boutique Online and agri-drone company AITMC Ventures, which filed their draft documents this year and are likely to launch their IPOs next year.

In addition, Mobikwik, Capillary Technologies and ixigo, which earlier postponed their plans of public listing due to adverse market conditions, may also decide to go public, considering the improvement in investor sentiment.

Considering the aforementioned factors, Inc42 expects at least 12 new-age tech startups to go public in 2024. With that said, here are the new-age tech companies that are likely to go public next year.

12 Startups Likely To Go Public In 2024

Awfis To Be India’s First Publicly Listed Coworking Startup 

Chennai-based coworking space provider Awfis Space Solutions is set to launch its IPO in 2024 following its filing of its DRHP at the fag end of December.

As per the DRHP, the IPO comprises a fresh issue of INR 160 Cr and an offer-for-sale component of up to 1 Cr shares. With this, Awfis is set to become the first Indian coworking startup to go public. 

The OFS component will comprise share sale of up to 5.01 Mn equity shares by Peak XV, up to 4.94 equity shares by Bisque Limited, and up to 75,174 equity shares by Link Investment Trust.

The startup plans to allocate INR 52.5 Cr from the net proceeds to establish new coworking setups. It aims to launch 15 new centres under the ‘Awfis’ format in FY25. These will span across Mumbai, Bengaluru, Delhi NCR, Hyderabad, Pune, Chennai, Kolkata, Ahmedabad, Lucknow, Bhubaneswar, and Jaipur. 

The remaining net proceeds, amounting to INR 68 Cr, will be utilised as working capital.

Founded in 2015 by Amit Ramani, Awfis has evolved from a coworking network to a tech-enabled workspace solutions platform, catering to freelancers, startups, SMEs, large corporates, and MNCs.

Having secured $90 Mn from investors, Awfis completed its last funding round in May 2020.

The startup competes with the likes of WeWork, Smartworks, BHIVE, 91Springboard, OYO’s Innov8and Tablespace. 

Awfis reported revenue of INR 545.28 Cr in FY23, compared to INR 257.05 Cr a year ago. Its net loss declined slightly to INR 46.64 Cr in FY23. In the first three months of FY24, the coworking space provider reported an operating revenue of INR 187.7 Cr, while its loss stood at INR 8.56 Cr.

FirstCry Wants To Be The Second New-Age Ecommerce Major To Go Public

FirstCry filed its DRHP with the market regulator SEBI in the last week of December. The Supam Maheshwari-led ecommerce unicorn is looking to raise INR 1,816 Cr through fresh issue of shares. With this, the startup is on track to become the second new-age vertical ecommerce major to go public after Nykaa.

The public issue also includes an OFS component of up to 5.4 Cr equity shares. Japan’s SoftBank, which owns over 25% stake in the startup, will offload 2 Cr shares, whereas Premji Invest will sell 86 Lakh shares during the OFS. Founder Supam Maheshwari will also sell some shares in the IPO.

The startup plans to use the net proceeds from the IPO for setting up new modern stores and warehouses, as well as lease payments for existing modern stores in India, totaling INR 648 Cr. 

Additionally, it aims to use INR 155.6 Cr for investment in its subsidiary FirstCry Trading for overseas expansion in Saudi Arabia. It will also utilise INR 170.5 Cr from the IPO proceeds for investment in subsidiary Globalbees Brands to acquire an additional stake in indirect subsidiaries. 

While INR 100 Cr will be used for sales and marketing initiatives, INR 57.6 Cr will be utilised for technology and data science costs. The remainder amount is intended to be used for funding inorganic growth through acquisitions, other strategic initiatives, and general corporate purposes.

Founded in 2010 by Maheshwari and Amitava Saha, FirstCry is an omnichannel baby and kids marketplace, providing various categories of products from clothing to essentials.

The startup entered the unicorn club in 2020 after raising $296 Mn from SoftBank’s Vision Fund. 

It posted a consolidated net loss of INR 486 Cr in the fiscal year 2022-23 (FY23), a rise of 518% from INR 78.6 Cr in the preceding fiscal year.

Garuda Aerospace Expedites Listing Plans 

Chennai-based drone startup Garuda Aerospace, which recently raised INR 25 Cr (about $3 Mn) in a bridge funding round led by Venture Catalysts and WeFounderCircle, is eyeing a listing around mid-2024.

In an interaction with Inc42 earlier this year, founder and CEO Agnishwar Jayaprakash revealed his IPO plans, expressing the hope to initiate proceedings post-March 31, 2024. However, the startup seems to have expedited its public listing plans since then.

Founded in 2015 by Jayaprakash, Garuda manufactures and sells drones, and offers drone-as-a-service (DaaS) solutions to sectors like agriculture, defence, mining, mapping, and warehouse management.

Earlier Jayaprakash stated, “We don’t want to be a startup with an inflated valuation because then it becomes difficult to maintain that and you just keep slipping. I want to climb the mountain. I feel that adding value and making a profitable business automatically will appeal to retail investors.”

Meanwhile, the Indian government is aiming to make India the drone hub of the world by 2030 and has implemented several reforms to foster the growth of drone manufacturing and usage within the nation. Consequently, two drone startups, DroneAcharya and ideaForge, have listed on the stock exchanges since 2022.

Currently valued at $250 Mn, Garuda Aerospace is looking to close FY23 with a revenue of INR 100 Cr. Speaking with Inc42, Jayaprakash had earlier said that the drone startup was eyeing a revenue of INR 1,000 Cr in FY24.

Go Digit Refiles IPO Papers

Even after refiling its DRHP, Insurtech major Go Digit General Insurance has yet to receive the final approval for its $440 Mn IPO.

The Bengaluru-based startup, which first filed its DRHP in August last year, refiled the IPO papers in March this year to address the concerns raised by SEBI about its employee stock appreciation plans. 

Go Digit’s IPO comprises a fresh issue of shares worth INR 1,250 Cr and an offer for sale (OFS) of 109.45 Mn shares. The startup plans to deploy the proceeds to expand operations and increase its capital base. 

After filing its first DRHP with the SEBI, the startup also received the IRDAI’s approval to launch the IPO in November, but the market regulator kept the IPO in ‘abeyance’.

In its new addendum of the draft prospectus, Go Digit General Insurance disclosed that it had received a show cause notice and multiple advisories from the insurance regulator. 

Founded in 2017 by Kamesh Goyal, Go Digit offers insurance policies across verticals, including motor vehicle, health, travel, and property. Besides Prem Watsa’s Fairfax, the startup is also backed by prominent names such as Sequoia, cricketer Virat Kohli and actor Anushka Sharma. 

In FY22, its loss widened 141% year-on-year (YoY) to INR 295.8 Cr. However, its operating revenue stood at INR 5,267.6 Cr in FY22 as against INR 3,243.4 Cr in the previous fiscal year.

Mobikwik Presses The IPO Restart Button 

One Mobikwik Systems Ltd, the parent company of fintech unicorn Mobikwik, has restarted preparations for its $84 Mn (around 700 Cr) IPO.

According to a report, Mobikwik is working with DAM Capital Advisors Ltd and SBI Capital Markets Ltd to get listed.

The company is looking to go public next year.

It is pertinent to note that MobiKwik filed DRHP for its IPO of around INR 1,900 Cr with SEBI in 2021 – a year marked by numerous new-age tech companies going public. According to the draft documents, the IPO comprised an issue of new shares worth INR 1,500 Cr and an offer of sale (OFS) element of INR 400 Cr.

In the same year, the fintech major also bagged the SEBI nod for the IPO.

However, the company suspended the IPO process due to a downturn in the global equities market. In January 2022, the startup explicitly said that it would refrain from making a market debut until market conditions stabilised.

Meanwhile, Mobikwik claimed to have posted profit for the second consecutive quarter in Q2 FY24 with a PAT of INR 5 Cr.

Ola Electric Becomes First Indian EV Startup To File For IPO

Recently, Bhavish Aggarwal-led electric vehicle (EV) maker Ola Electric filed its DRHP with SEBI for an INR 5,500 Cr+ public listing. 

As per the DRHP, the Ola Electric IPO will comprise a fresh issue of INR 5,500 Cr. It will also have an offer for sale (ODS) component of up to 9.5 Cr shares. 

Cofounder and CEO Aggarwal and major investors, including SoftBank, Temasek, Tiger Global, Alpha Wave, Tekne Capital, and Matrix Partners, are set to participate in the OFS as Ola Electric prepares for its listing on the BSE and NSE. 

According to the DRHP, the funds from the fresh issue will be directed towards capital expenditure for the Ola Gigafactory project, research and product development, organic growth initiatives, and general corporate purposes. Additionally, the proceeds will be allocated for the repayment or prepayment of the debt.

As per the draft document, the OEM’s net loss surged 1.87X to INR 1,472 Cr in the fiscal year ending March 2023 from INR 784.1 Cr in FY22.

The company also disclosed that its Q1 FY24 loss stood at INR 267.1 Cr.

Founded by Ola Cabs cofounder Bhavish Aggarwal, Ola Electric is an electric vehicle manufacturer, which currently has a lineup of five scooters. 

At the end of October 2023, the company managed a comprehensive omnichannel distribution network, featuring 935 experience centres, which include 414 service centres.

In October this year, Ola Electric closed an INR 3,200 Cr ($384 Mn) funding round in a mix of equity and debt. While the equity part was led by Temasek, the debt part of the round was led by the State Bank of India.

OYO Slashes IPO Size To $400-$600 Mn

OYO filed its DRHP through a confidential pre-filing route and a reduced size in March this year, three months after SEBI directed the hospitality unicorn to refile its draft papers.

OYO initially filed its DRHP with the SEBI in 2021. At the time, it planned to raise INR 8,430 Cr ($1.2 Bn). However, the IPO size has now been scaled down to INR 3,286 Cr–INR 4,929 Cr ($400 Mn-$600 Mn). 

Founded in 2012 by Ritesh Agarwal, 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. It mainly earns revenue from sales of accommodation services, commission from bookings, and subscriptions. 

Earlier this year, Agarwal told employees that the startup was on course to report its first ever profitable quarter in Q2 FY24, with a project profit of INR 16 Cr.

Lightbox-Backed PayMate To Refile DRHP With SEBI 

Even after SEBI asked Mumbai-based B2B payments solutions provider PayMate India to refile its DRHP, the startup has yet to do so.

PayMate first filed its DRHP for an INR 1,500 Cr IPO in May 2022. It did not proceed with its IPO plans due to uncertain market conditions.  

As per the IPO prospectus, Ajay Adiseshann, the founder of PayMate intended to sell a significant portion of his stake worth INR 134.73 Cr. 

Founded in 2006 by Adiseshan, PayMate counts Visa, Lightbox and Recruit Strategic Partners as its investors. 

PayMate’s consolidated net loss stood at INR 55.7 Cr in FY23, down a marginal 3.5% YoY. Its operating revenue rose 11.7% YoY to INR 1,350.1 Cr in FY23.

PayU India Eyes $500 Mn IPO

Prosus-backed fintech giant PayU India is looking to file its draft red herring prospectus (DRHP) with the market regulator in February for an IPO of at least $500 Mn. The IPO will likely value the company between $5 and $7 Bn.

The company is said to be aiming to go public by the end of 2024. It has enlisted Goldman Sachs, Morgan Stanley and Bank of America as IPO advisors. Further, it plans to involve at least one Indian investment bank in the transaction. 

PayU claims to serve more than 4.5 Lakh merchants, over 70 large banks via Wibmo, and 2 Mn+ customers with credit facilities in India.

PayU India enables businesses to collect payments through over 150 modes, including debit cards, credit cards, net banking, BNPL, QR, UPI, EMIs, and wallets. It competes with Razorpay and Cashfree in India.

Its revenue surged 21% YoY to $497 Mn in the first half of FY24 from $412 Mn in H1 FY23, Prosus revealed in its half-yearly financial report.

Portea Medical Gets SEBI Nod For INR 1,000 Cr IPO

Earlier this year, Healthvista India, the parent company of the healthtech startup Portea Medical, received approval from SEBI for its IPO.

Portea filed its draft papers with the market regulator in July 2022, along with an addendum to its draft red herring prospectus (DRHP) on March 10, 2023.

The IPO will comprise a fresh issue of equity shares worth INR 200 Cr and an offer for sale (OFS) of up to 5.62 Cr shares worth INR 800 Cr.

The OFS will see Accel sell up to 2.48 Cr shares that it holds across Accel Growth III Holdings (Mauritius) Limited, Accel India III (Mauritius) Limited and Accel India V (Mauritius) Limited. Ventureast Life Fund III will sell up to 42.78 Lakh shares, and MEMG CDC Ventures will sell up to 44.45 Lakh equity shares.

Qualcomm Asia Pacific will be selling up to 42.56 Lakh equity shares and Sabre Partners Trust will offload up to 39.84 Lakh equity shares in the OFS.

Healthvista India plans to use the incoming funds for its subsidiary’s working capital requirements, debt repayment, medical equipment purchase, inorganic growth, marketing, and general corporate needs.

Founded in 2013 by Krishnan Ganesh and his wife Meena, Portea offers healthcare services,  which include maternal care, physiotherapy, nursing, lab tests, counselling, and critical care.

Portea is currently operational in 16 cities across India. In FY22, the healthtech startup posted a net standalone loss of INR 53.82 Cr against revenues of INR 96.37 Cr.

Swiggy Set To Float The Biggest Startup IPO Of 2024 

In what is being called the biggest IPO by an internet company next year, food delivery giant Swiggy will likely list on the stock exchanges in mid-2024 with an issue size of $1 Bn (INR 8,300 Cr).

As per market analysts, one of the major things to watch out for will be Swiggy’s valuation, which has seen various markdowns and markups. 

Swiggy initiated IPO preparations last year, initially eyeing a 2023 listing. However, global tech startup valuations experienced a sharp decline, causing Swiggy to temporarily defer its plans.

Founded in 2014 by Sriharsha Majety, Nandan Reddy, Phani Kishan Addepalli, and Rahul Jaimini, Swiggy has raised $3.6 Bn to date.

Swiggy’s net loss jumped 2.2X to INR 3,628.9 Cr in FY22 from INR 1,616.9 Cr in FY21 on the back of a sharp rise in expenses.

Unicommerce Sets Sight On A 2024 Listing

Unicommerce eSolutions Pvt Ltd, which offers a software-as-a-service (SaaS)-based order management and fulfilment platform to ecommerce and retail businesses, is expected to make a public listing late next year. The cofounder of Snapdeal, Kunal Bahl, mentioned about the Unicommerce IPO in an X post on November 7.

The startup enables end-to-end management of ecommerce operations for D2C brands, retail companies, and other online sellers through its comprehensive suite of SaaS-based technology products.

Unicommerce’s platform keeps track of stocks across multiple warehouses, keeps inventory information updated across multiple sales channels (both offline & online) and automates order pickups to support faster and more accurate deliveries.

Unicommerce’s operating revenue zoomed 52% to INR 90 Cr in FY23 from INR 59 Cr in FY22 due to a strong demand for its services.

Snapdeal acquired Unicommerce in 2015. Established in 2012  by IIT Delhi alumni — Ankit Pruthi, Karun Singla, and Vibhu Garg — the founders exited the company within two years.

[Edited by Vinaykumar Rai]

The post Spring Time On D-Street: Meet The 12 Startups Likely To Go Public In 2024 appeared first on Inc42 Media.

Shares of PB Fintech, the parent entity of insurtech major Policybazaar, became one of the biggest gainers of 2023 on the back of the bull run in the domestic equity market, which resulted in the reversal of fortunes for new-age tech startups after the hammering they got in 2022.

Like its peers Zomato and RateGain, the fintech player made big gains in the first half of 2023 and also sustained the uptrend for the rest of the year. As per analysts, the stock is on track to continue this rally in the mid to long term.

On the back of the uptrend of 2023, PB Fintech’s market capitalisation more than doubled to $4.2 Bn by the end of the year from $2 Bn at the end of 2022. Its shares gained 73% in 2023 versus an almost 50% decline last year.

So, what led to the rally in 2023? The answer is the same as we have discussed in our analysis of other new-age tech stocks as part of Inc42’s 2023 In Review series — improvement in fundamentals and an aggressive march towards profitability.

Now, before we go into how 2024 looks for the stock, let’s take a look at the PB Fintech stock performance so far in 2023. 

March Towards Profitability Set The Stock On Fire

Amid the increasing focus of startups, both listed and unlisted, on turning profitable, PB Fintech reported its first adjusted EBITDA profitable quarter in Q4 FY23. The startup also stated that it expected to turn profitable in FY24.

The development came just a quarter after PB Fintech’s lending vertical, Paisabazaar, achieved breakeven on an adjusted EBITDA level in Q3.

Led by two back-to-back positive developments, PB Fintech shares gained over 38% year to date (YTD) by the end of May 2023.

Amid all these, the startup saw a slew of new developments in 2023, including the rise in competition after Jio Financial Services entered into the insurtech space. However, the stock not only brushed aside the concerns and continued to climb up but was also less volatile in comparison to its fintech rival Paytm.

 A look at some of the key developments at the startup during the year. 

• The Directorate General of GST Intelligence (DGGI) reportedly sent a show cause notice to Policybazaar earlier in the year for alleged wrongful claim of input tax credit.
• The DGGI notice was just the beginning of many other regulatory actions. Later in the year, the Securities and Exchange Board of India (SEBI) imposed a penalty of INR 1 Lakh on Paisabazaar Marketing and Consulting, a subsidiary of PB Fintech, for appointing a principal officer without requisite certification.
• In the most recent incident, Paisabazaar also came under the radar of the Income Tax  Department.
• PB Fintech appointed Sarbvir Singh as the new joint group CEO of the company.
• Policybazaar secured a fresh fund infusion of INR 350 Cr ($42 Mn) from its parent entity PB Fintech.
• The startup’s ESOP expenses continue to be a drag on its bottom line. However, it has managed to bring down these expenses over the last few quarters. 
• Most analysts strengthened their bullish outlook on the stock this year. 

In its last reported quarter – Q2 FY24 – PB Fintech reported a net loss of INR 21 Cr, which was a decline on a year-on-year basis but a rise on a quarter-on-quarter (QoQ) basis. However, the bull run in the stock remained unaffected by the QoQ rise as its two verticals, Policybazaar and PaisaBazaar, are showing strong growth.

The startup’s share price surged to INR 784 as of December 28 (Thursday) from INR 447.55 at the end of December 2022. The offloading of stakes by some of the major investors like SoftBank and Tiger Global during the year also failed to have any significant impact on the stock.

Decoding PB Fintech’s Shareholding Pattern

In line with the trend seen at Zomato and Paytm, PB Fintech also saw some of its pre-IPO investors selling their stakes in the startup. 

• SoftBank, which has been selling its stakes in the listed Indian companies in its portfolio, offloaded a 2.53% stake in PB Fintech in December, held via its SVF Python II Cayman. 
• Prior to that, the fund offloaded a 1.85% stake in the fintech major in October while SVF India Holdings (Cayman) also sold a 0.69% stake in the startup at the same time.
• Tencent Cloud Europe B.V. offloaded its 2.09% stake in PB Fintech in May this year, bringing down its holding to 6.28%.

Meanwhile, the rise in the stock price attracted interest from mutual funds and other institutional investors. A large number of PB Fintech shares offloaded by pre-IPO investors were lapped up by the likes of HDFC Mutual Fund, Mirae Asset Mutual Fund, ICICI Prudential Life Insurance Company Limited, Societe Generale Odi, BNP Paribas Arbitrage, and Citigroup Global Markets Mauritius, among others.

As of the September 2023 quarter, as many as 21 mutual funds held a 7.83% stake in PB Fintech as against 16 of them holding a 4.68% stake a year ago. Insurance companies also increased their stakes to 3.7% from 0.84% at the end of the quarter ended September 2022.

The stakeholding of foreign portfolio investors in the company increased to 29.92% in the quarter ended September this year. Overall, foreign institutional investors held a 49.4% stake in PB Fintech at the end of Q2 FY24.

Will The Stock Continue To Soar In 2024?

The Street is largely bullish on the stock and expects it to continue the ongoing rally next year. Some brokerages believe that PB Fintech has the first-mover advantage in the insurtech space, which, along with its strong tech backbone, will help continue the strong growth despite the rising competition. 

In a research note earlier this year, Kotak Institutional Equities said, “We believe that intense competition in the life business, with a change in tax rules and increase in maximum bancassurance partnership and increased negotiating power of PB, provide tailwinds to its growth.”

Meanwhile, Citigroup opined that PB Fintech’s end-to-end customer journey model, market dominance in digital-backed origination, robust tech backbone, and transitioning monetisation model towards annuity revenue place it in a sweet spot.

Following PB Fintech’s Q2 FY24 earnings, Keynote Capitals noted that the company was standing at a “pivotal juncture”, driven by catalysts such as renewal commission growth, strategic expansion into Tier II and III cities through offline channels, and stringent cost management. All these measures, the brokerage said, were poised to generate favourable operating leverage. 

Helped by its aggressive goals, the startup’s management now sees PB Fintech turning profitable by as early as Q3 FY24. 

However, it is pertinent to note that brokerage JM Financial flagged competition from insurance regulator Insurance Regulatory and Development Authority of India’s (IRDAI’s) Bima Sugam and the rising losses of PB Fintech’s new initiatives business as key risks to its growth thesis.

Kush Ghodasara, CMT and an independent market expert, expects the stock to perform well in the long run but sees a decline in the next 2-3 months.

All said and done, the year 2024 promises to be another good year for PB Fintech’s investors. However, the stage for it would be set by the startup achieving its net profitability goal. As such, all eyes would be on PB Fintech’s financial performance in Q3 FY24 and the subsequent quarters. 

The post Reversal Of Fortunes: After 50% Fall In 2022, PB Fintech Soars Nearly 75% In 2023 appeared first on Inc42 Media.

What was 2023 like for India’s fintech startups? Paytm inched towards profitability but ended the year on a sour note and PhonePe bagged the majority of all startup funding and is all set to race it out with the likes of Groww, CRED and BharatPe with its super app.

But the super app story of 2023 was tempered by tightening regulations amid the funding dip and shutdowns of heralded startups such as ZestMoney.

The RBI’s directive to regulated entities (banks and NBFCs) to increase risk weights has complicated the already-murky buy-now-pay-later (BNPL) world. Several startups are still feeling the hangover of last year’s directives for prepaid payment instruments (PPIs) to rejig their lending models.

At the same time, the fintech market is set for a disruption with the entry of Jio Financial Services, which has eyes on pretty much every vertical that these players have staked their claims on.

One also cannot forget the potential merger between fintech unicorn slice and the North East Small Finance Bank, which is likely to add another dimension to the competitive landscape.

11 Trends That Will Shape Indian Fintech In 2024

Moving on, there are some big questions ahead of 2024: Will fintech startups crack the profitability puzzle after a year of rationalising costs? With the exception of Zerodha, Neogrowth, Indifi and Groww, a majority of the fintech companies in India continue to grapple with losses, even if the likes of Paytm and CRED claim to be moving towards this milestone.

While many of these startups have banked on UPI to grow their user base, they now find themselves caught in a paradox — UPI does not have the revenue upside, but it’s still the most necessary component of the fintech stack.

These factors make for a very interesting 2024. Founders and investors believe only a laser-sharp focus on profitable verticals and growth areas will deliver the results for startups. Startups have banked on VC funding to grow their user base but now when it comes to unit economics and profitability, they are looking to extract the most out of this user base.

How will these moves play out in 2024? Here are 11 trends that we believe will permeate through the fintech ecosystem in the year ahead.

Fintech Super Apps Will Foray Into Consumer Services Verticals

The convergence of financial services across unicorns and major players has been a major trend of 2023, even if their strategies are quite different.

We have taken an in-depth look at these various approaches throughout the year — whether it is Groww building on its funnel of investment tech users, BharatPe’s merchant-first approach, or CRED’s product direction targeting the cream of the Indian fintech market. Also, one cannot overlook PhonePe, which is investing in developing and growing four separate apps, including the Indus Appstore, a unique proposition in the fintech world.

In 2024, we expect startups to keep fleshing out these models as they look to wean themselves off the UPI reliance. UPI has become a crutch and a cross to bear for these players.

For instance, Mastercard CFO Sachin Mehra said in October that UPI has been a painful experience for ecosystem participants. His concerns over the sustainability of the payments stack have been echoed by others too.

Some startup founders had earlier told Inc42 that NPCI does not seem to be worried because it is actually making money from UPI. Unlike fintech startups building on UPI, NPCI is a profitable entity.

But try as they might, super apps cannot afford to cut off UPI. Instead, we will see them build new products and verticals that will be supported by the user inflow that UPI brings in. CRED’s Garage (vehicle management product) is one such product, and we can expect startups to enter into new consumer services verticals to capitalise on any UPI momentum they have.

Founders and experts believe that fintech startups have an advantage over ecommerce platforms in building and pushing super apps since they have more habituated users than say Meesho, Amazon or Flipkart. These platforms have built the tech stack around financial services and have a clearer view of how these areas are evolving.

“There is a strong possibility of 2024 turning into a year of super apps particularly for CRED, Paytm and PhonePe. Traditionally, if you look at larger financial services companies like Bajaj Finance and even banks, they have tried to cross sell with varying degrees of success. This will happen in fintech as well,” Ashish Khandelwal, founder of Kunal Shah-backed ANQ Finance, told Inc42.

Funding To Remain Slow, Except In Digital Lending, Platform Models

The funding activity overall across the startup ecosystem and fintech, in particular, may see moderate growth in 2024 compared to last year, as per analysts. A bulk of the funding will go for platforms that have inched towards profitability, but this does not ensure that sustainable models will be the future course.

In the absence of such a surety, investors will continue to back those fintech models that are growing fastest. Here again, super apps and platform plays will be preferred due to the potential to scale up revenue. And, of course, lending tech is more or less a permanent investment focus area, given that these companies require more capital and their revenue models are time-tested and enduring.

This is particularly true for digital lending startups that have established robust partnerships with banks, and those with profitable models — the likes of Indifi and Neogrowth turned profitable in FY23, for instance. Digital NBFCs are also likely to get a lot of investment interest as well as lending SaaS companies that are creating new-age risk assessment models.

Case in point: Even as overall funding plummeted in 2023, the fintech sector saw the highest funding in Q3 2023, with $442 Mn invested as per Inc42 data, and this was driven by lending tech.

Industry experts say that although funding activity may improve compared to last year, it will not reach the 2020 or 2021 levels when fintech was one of the highest-funded sectors in India.

Ashok Hariharan, CEO and cofounder of risk management platform IDfy, expects fintech companies to see good deals from March 2024 onwards. “There may be muted funding activity towards the traditional lending-based fintech firms. Similarly, I see fewer Series A and Series B rounds happening, compared to the late stages. However, we cannot expect 2024 fintech funding at par with that of 2021 levels,” he added.

High Valuation Fintech Giants, Listed Companies To Drive M&As

The past two years have seen two major acquisition bids fail, but it gives us an idea of where the market is trending. Whereas CRED’s acquisition bid for smallcase in 2022 fell through due to valuation differences, PhonePe pulled out of the ZestMoney deal this year after issues emerged in its due diligence.

The build-vs-buy debate in fintech is particularly complicated because of regulatory overhang. Companies invest millions in building up verticals and then have to scrap them due to regulatory changes, whereas acquiring smaller players allows them to not only bring in talent but also import technology that is better suited for regulatory changes.

Plus, in some cases, there is a revenue upside from acquiring that can boost the bottom line. To bolster its lending vertical, CRED also acquired lending SaaS startup CreditVidya in November 2022 and operationalised another NBFC Newtap that it had acquired in 2021. These deals enabled the company to grow its revenue by 3.5X to INR 1,484 Cr in FY23.

Similarly, BharatPe is looking to make deeper inroads into lending with its acquisition of Trillion Loans NBFC in 2023. Trillion reported a profit of INR 74 Lakh in the financial year 2021-22 (FY22) while its revenue stood at INR 7 Cr. The acquisition is a critical part of the consumer lending plans for BharatPe, which has so far relied heavily on merchant loans.

“There will be a possibility that the large fintech platforms may open their network to smaller players who have niche products,” IDfy’s Hariharan added.

Climate & EV Financing Will Emerge As New Areas Of Growth 

While 2023 was a relatively slow year for climate tech development, funding is one of the major challenges that will be hurdled in 2024 as we wrote in our outlook for this sector.

Investors and VCs are waking up to the business models that will have a more immediate impact on the market, and climate financing, including EV auto loans, is one of the areas where there should be plenty of activity in 2024.

The expected higher inflow of capital in this sector is in line with the government’s push. At the recent COP28 summit, the Indian government emphasised the need for substantive enhancement in climate finance for developing countries, questioning existing claims about FDI inflows in this regard.

While those discussions are unlikely to yield immediate results for investors and VCs, climate financing is a model that is better understood than other climate tech models. However, so far the focus has been on electric mobility.

In 2023, the EV financing landscape saw some major shifts owing to the increasing adoption of EVs. Recently, B2B SaaS startup Finayo, which connects lending partners with EV retailers and OEMs raised $1.9 Mn, while EV financing startup Revfin raised $14 Mn in its Series B funding round led by Omidyar Network India.

A number of EV original equipment manufacturers are tying up with financial institutions to facilitate loans. IPO-bound Ola Electric entered into partnerships with Shriram Finance and other institutions to facilitate EV sales.

Jio Financial Services Expected To Give A Tough Time To Fintech Giants

The launch of Jio Financial Services in mid-2023 has already upset the fintech applecart to some extent. However, in 2024, we will see the ‘nascent’ giant flex its muscles.

Not because Jio has shown its disruptive capabilities in India’s digital commerce as well as the infrastructure sector in the past couple of years. JFS has not only launched personal loan services for salaried and self-employed individuals but also has the Jio Payments Bank to rely on to improve its payments vertical and capitalise on UPI.

Plus, JFS has signed a JV with investment giant BlackRock for an asset management company (AMC), challenging the likes of Zerodha and Groww which are building their AMCs.

At least one founder told us, “Any industry that Reliance enters will be up for disruption given the scale and capital at which the conglomerate operates. There is a possibility for consumer durable lending for JFS since they already have a huge network of consumer durable outlets in the country. The disruption Reliance may cause could lead to a change in the business models of rival firms,”

ANQ Finance’s Khandelwal is, however, of the opinion that fintech incumbents need not worry about big players entering their arena as technology is still a massive competitive moat.

“The fintech industry is different because there needs to be a niche focus and expertise in digital innovations which large conglomerates don’t always have. For instance, Bajaj Group came up with Bajaj Finserv and it took them many years to establish themselves as a digital-first company,” he added.

But even at its inception, JFS was the world’s highest-capitalised financial services platform, according to RIL chairman Mukesh Ambani. This financial safety net is one of the key potential competitive edges for JFS in a fintech market where startups are not exactly flush with funds.

Fintech Unicorns Eyeing India Listing To Reverse Flip

If PhonePe’s redomiciling to India has inspired a wave of startups to take the same route, it has also inspired some fear given PhonePe’s huge $900 Mn tax outlay for this.

But for Indian fintech companies that are looking to list in the domestic bourses — Razorpay, Groww, Pine Labs, for example — bringing their holding companies to India is imperative, no matter the bill.

Groww has reportedly applied to the National Companies Law Tribunal (NCLT) to shift its base from the US to India. Payments major Razorpay is also exploring a similar strategy, while Singapore-based merchants’ payments platform PineLabs is also planning to redomicile, as per reports.

In 2024, the government is likely to ease some of the tax burden on the redomiciling of businesses in India, but there are no guarantees.

According to Manish Lunia, cofounder of lending tech startup FlexiLoans, companies are likely to move on this front with friendlier policy measures.

Others have pointed out that the GIFT City in Gujarat is one way that the government might woo Indian startups registered overseas. For the Indian government, redomiciling of startups is being seen as a priority given the amount of value it would retain within the Indian economy.

Already, many investors are lamenting the IP and value drain from India when it comes to enterprise tech, where most large startups are registered outside India. According to an analysis conducted by Inc42, approximately 65% (or 13) of Indian unicorns with headquarters abroad operate in the enterprise tech (SaaS) sector.

Speaking at Inc42’s MoneyX in July 2023, Dipesh Shah, executive director (development), IFSCA, said, “We have structured the GIFT IFSC to stop the trend of entrepreneurs moving abroad in search of better opportunities and simpler regulations. Whatever tax and other benefits PE investors would get (there), we are offering similar facilities here.”

UPI’s Product Spree, Global Foray To Continue

Whose side is the NPCI on? That’s what many fintech startups asked Inc42 when we were on the ground at the Global Fintech Fest in October.

That’s because while on the face of it, this was an industry event, one could not help but feel that the dominant factor was NPCI. Nevertheless, NPCI’s pet project UPI is easily the most important pillar of fintech.

The Indian government has already set its intentions clear of making UPI a global phenomenon. NPCI has leveraged the success of UPI in India to export it to geographies like Southeast Asia, the Middle East, and the UK.

This past year, UPI received upgrades and new features such as conversational payments, NFC-based offline payments, UPI Tap & Pay and credit line on UPI. Either way, UPI is not about to slow down after a year especially after the total transaction value touched INR 17.40 Lakh Cr in November.

Lending Tech Set For Another Disruption With ONDC, Credit On UPI

ONDC is eyeing the fintech space keenly. Inc42 reported the digital commerce network’s plans to tap into financial services after the disruption of ecommerce and food delivery. Lending tech startups would be glad for the automatic scale this might open up, but a lot of the specifics are still unclear.

For one, the government-backed ONDC has not even clarified the future fees for seller apps and buyer apps even for ecommerce. Will this be another UPI that companies have to support without seeing much in the way of revenue?

Speaking of UPI, Prithvi Chandrasekhar, the CEO of consumer finance at fintech unicorn InCred, expects UPI’s credit features (linking with credit cards and more) to gather further momentum in 2024. But there is also a fear that it steps on the toes of fintech startups that are lending outside of UPI.

There is some fear that the entry of UPI in the credit space will give banks more leverage over startups. And it’s no surprise that a lot of startups are looking at NBFC and bank licences (more on this later)

“There will be some consolidation and some rationalisation in the lending space. Small-ticket BNPL and SME loan startups are potential acquisition targets for larger players. Similarly, a lot of fintech companies will be on the lookout for NBFC licences to reduce costs,” IDfy’s Hariharan said.

Automation And AI/ML Engines Will Reduce Dependency On People

Amid its decision to scale down small-ticket loans, listed fintech giant Paytm sacked hundreds if not thousands of employees, citing the increasing usage of artificial intelligence-led automation.

If a company with the highest revenue in the Indian fintech space of nearly $1 Bn is laying off employees citing AI, we can expect others to follow suit without blinking.

“AI and ML have played a pivotal role in the digitisation of the financial sector, and the rise of AI is only bound to streamline operations, reduce costs and enhance efficiency in the coming years,” Rahul Agarwal, cofounder of lending and alternative finance startup FinnUp, told Inc42.

The path to profitability in the Indian fintech landscape will require strategic considerations of automation.

It’s not just Paytm, of course — a whole host of companies are looking to shed human resources in favour of AI, especially when it comes to content creation (financial education and engagement), risk assessment models, underwriting models, ancillary data processing, robo-advisories, document processing, KYC and more.

Bengaluru-based Plum launched a PolicyGPT feature to solve customer queries related to insurance claims. Revenue-based financing platform Velocity also integrated OpenAI’s ChatGPT to furnish business data to its customers. But these solutions are rudimentary, the real efficiencies will be driven by fintech-specific AI models, which will come into the picture in 2024.

Regulatory Focus On Payments Gateway, API Banking

Digital lending has been the primary focal point for the RBI and the central government in the past few years, and this is not about to change in 2024.

For instance, there was a directive in the last week of the year about digital platforms advertising fraudulent loan apps, and the crackdown is expected to bring some pause to legitimate apps too.

RBI has also taken note of the exponential growth in unsecured lending, leading to the announcement of stricter guidelines for banks in November 2023, which is likely to culminate in higher lending rates when it comes to retail loans.

A senior partner at a Bengaluru-based consulting firm said that these two regulations have almost led to the closure of many fintech businesses.

“This is especially true for the lending tech companies that did not have correct underwriting models in place. The cost of bad loans has not hurt these companies as much as the VCs and banks now staying away from them because of the new regulations. ZestMoney is a prime example of this. The fintech startup was relying on BNPL and unsecured loans to save itself. However, the RBI has come down hard on each of these sectors making it unsustainable for companies to operate,” the senior executive further said.

Banking-as-a-Service (BaaS) is an area that is emerging as a potential game changer for fintech, particularly API banking and embedded finance.

But many of the startups that offer core banking software to small finance banks and cooperative banks in India also have international operations. As such these startups will likely face some challenges from the Digital Personal Data Protection Act, which governs the role of data fiduciaries, data storage, data sharing and user consent mechanisms.

Payment gateways are also likely to come under the scanner as per investors and founders we spoke to.

In December 2022, the Reserve Bank of India imposed an embargo on payments aggregators which lasted till December this year, and in the case of Paytm Payments Bank, the RBI embargo is still applicable.

The payments bank is hoping that the restrictions will be lifted by March 2024, which would then allow it to bring new customers on board.

Regulations are a reality for the fintech ecosystem, but they are not always unwelcome by investors.

Speaking to Inc42 earlier, Sandeep Patil, head Asia and partner at QED Investors, said, “Regulations may create short-term disturbances in the market, but it is definitely attractive from a long-term perspective. This is because we get more clarity into the dos and don’ts of operating in a specific space.”

Fintech-Bank Partnerships Will Take On A New Colour

BharatPe and slice are the two fintech startups that have stood apart from the competition. This is because the duo have banking licences, unlike others.

But the startups have something else in common.

The Punjab and Maharashtra Cooperative Bank (PMC Bank) acquired in 2021 by a BharatPe-Centrum JV was on the verge of collapse. The resulting Unity Small Finance Bank is currently in the long-drawn process of clearing out the dues of the erstwhile PMC Bank.

And the North East Small Finance Bank, which is in the process of merging with slice after the latter received an in-principle approval from the RBI in October this year, is looking to sell its over INR 600 Cr of stressed loans, about one-third of its loan portfolio. This is after reporting INR 213 Cr in losses in FY23.

Even if slice gets the merger approval, there is a long way to go before the acquisition pays off for the Bengaluru-based fintech unicorn, as the merged bank has to dig itself out of a financial hole.

“The rationale behind the RBI approving these new banks becomes clear when one sees that both banks were distressed and obviously, the central bank did not want any more banks to go down,” the founder of a home finance company told Inc42.

And while there have been some murmurs about other fintechs going for a bank licence, the chances look bleak given that there are more experienced financial services institutions also vying for the same.

A senior investment advisor working with multiple fintech companies said that the startups which are well-capitalised are also keen on acquiring NBFCs or small banks to ensure their sustenance, but RBI is unlikely to be moved by market sentiment, especially given how critical banking is to the economy.

So bank partnerships are the only way forward for fintech startups in the current climate, till there is another opportunity to grab a licence, which may or may not arrive in 2024.

[Edited by Nikhil Subramaniam]

The post 11 Fintech Predictions For 2024 appeared first on Inc42 Media.

Unlike most of its peers, Nykaa listed on the bourses as a profitable entity in 2021. However, rising competition, high inflation, and an increasing customer acquisition cost started taking a toll on the company’s fundamentals towards the end of 2022. Unfortunately, the same concerns continued until the fag end of 2023.

Speaking with Inc42 in June this year, an analyst flagged that Nykaa failed to improve its margins ever since its listing on the stock exchanges. This resulted in the stock not seeing much gains, despite the company being profitable. The analyst had added that the shares of Nykaa could rally if the company showed improvement in its margins.

While it took some time for the stock to regain investor confidence, it did manage to script a decent turnaround by the end of 2023. A rally in its share price starting mid-November resulted in the stock gaining 19% within a month — from INR 148.5 on November 12 to INR 176.85 on December 15.

While the stock lost some steam after that, it ended Tuesday’s (December 26) session at INR 170.85 on the BSE with a market capitalisation of nearly $6 Bn. The stock has gained over 10% year to date (YTD).

While increasing competition from deep-pocketed players like Reliance and Tata continues to weigh on Nykaa, the uptick in its beauty and personal care (BPC) and fashion verticals and improvement in margins have helped the company regain some of its lost sheen.

Now, let’s take a look at the key events, which shaped Nykaa’s journey in 2023.

Nykaa’s 2023: A Snapshot

Nykaa’s BPC and fashion verticals remained under investors’ scrutiny for most parts of 2023 due to their lower-than-expected growth. However, Nykaa managed to report improvement in the performance of these verticals in the second quarter (Q2) of the financial year 2023-24 (FY24).

While the BPC vertical witnessed moderate growth during the quarter, Nykaa Fashion posted better-than-expected results. 

The net sales value of Nykaa’s BPC vertical grew 19% year-on-year (YoY) in the September quarter while the same jumped 32% for the fashion business. GMV for the BPC and fashion verticals grew 23% and 27%, respectively.

This growth in the fashion segment, which was a matter of concern for analysts and investors due to a high cash burn, increased conviction that the vertical would become profitable earlier than expected.

During the earnings call post the release of Q2 results, Nykaa Fashion CEO Adwaita Nayar said that the vertical had reached its peak loss and its books would see improvement from thereon. 

Meanwhile, Nykaa’s consolidated net profit also surged 50% YoY and 44.4% quarter-on-quarter (QoQ) to INR 7.8 Cr in Q2.

While the Q2 numbers played a part in the stock’s rally, as per analysts, the stock was also due for a big upward movement given that other new-age tech stocks like Zomato and Paytm had surged in 2023.

“Most other internet stocks had moved up and Nykaa was positioning itself for that. If we look at the Q2 earnings, while the results were okay, the fashion vertical did quite well. Hence, a thesis was getting built that investors might finally start ascribing a value to the fashion vertical,” an analyst had then told Inc42.

Meanwhile, talks about rising competition for the company prevailed throughout the year. Not only this, Nykaa also saw many top-level exits and restructuring during the year.

 Here’s a sneak peek into each one of the aforementioned topics: 

On Competition Front

• The thesis for Nykaa took a turn when deep-pocketed Reliance entered the beauty retail space, with an omnichannel playbook and launched Tira earlier this year. 
• Investors’ fears escalated as Tata CLiQ announced the launch of its first omnichannel beauty retail outlet, Tata CLiQ Palette, in mid-2023.
• Nykaa’s fashion business was already facing competition from players like Flipkart-owned Myntra and Reliance’s AJIO by then. 
• Besides, beauty retailer giants such as Loreal India and Hindustan Unilever’s Lakme, which have ruled the offline space for years, also increased their focus on expanding their online presence. 

On Restructuring Front

• Five senior executives quit the company around March this year.
• Following this, Nykaa restructured its leadership team with new appointments, including that of former Amazon employee Rajesh Uppalapati as the chief technology officer.
• The company saw the exit of six other executives during the year, including its marketing head, resulting in founder and CEO Falguni Nayar taking over the reins of the marketing department.

Besides, heavy spending on advertising and marketing also caught investors’ attention during the year. However, Nykaa kept reiterating that it was laser focussed on long-term growth. 

Ironically, at a time when most stakeholders were worried about its high cash burns, Kotak Institutional Equities said that Nykaa would have to keep spending on advertising to retain its market share amid rising competition.

No Major Block Deals Witnessed In 2023

Unlike 2022, the ecommerce startup didn’t see any major offloading of stakes by big investors. Nykaa’s pre-IPO shareholder Kravis Investment Partners was the last to sell a chunk of shares via block deals worth INR 629 Cr in December 2022.

However, the company’s shareholding pattern underwent some major changes in 2023, which are as follows:

• Like most other new-age tech stocks, Nykaa has also been seeing a growing interest from mutual funds. At the end of the September quarter of 2023, 21 mutual funds held a 10.62% stake in the company as against a 2.04% stake held by 24 mutual funds a year ago. 
• Foreign institutional investors’ (FIIs) stakeholding in the company remained volatile. While they increased their stake in Nykaa to 9.84% at the end of the September quarter of 2023 from around 7% a year ago, it was a decline from the peak of 12.26% at the end of the March quarter of 2023.

How Does 2024 Look For Nykaa?

As of now, the Street seems to have a divided outlook on Nykaa. While most analysts see competition as the major risk for the ecommerce startup, others see the reversal in the Nykaa Fashion narrative to drive up the share price.

For instance, JM Financial notes that Nykaa Fashion appears to have turned the corner and is on track to generate incremental value for shareholders. The brokerage sees the vertical attaining profitability earlier than expected.

Surprisingly, the brokerage isn’t much concerned about the increasing competition. “We postulate that Nykaa retains its competitive edge as the preferred platform for brand launches, with marketing initiatives to provide brand visibility, along with its premium and sticky customer base,” it said.

Of the 22 brokerages covering the stock, 12 have a ‘buy’ or higher rating on the stock. While six have a ‘hold’ stance on Nykaa, the remaining four signal a ‘sell’. JP Morgan, HDFC Securities, and Macquarie are among the ones with a bearish stance on the company.

Meanwhile, the average price target set on the stock is INR 172.73 – a level that Nykaa is already trading at.

Moving on, Nykaa shares look positive on the technical charts. According to Rupak De, senior technical analyst at LKP Securities, Nykaa faces resistance at INR 187. However, a rally till INR 260-INR 300 level is possible in the next 6-7 months if the stock manages to cross this level, he added.

On the other hand, Kush Ghodasara, CMT and an independent market expert, said that Nykaa is trading at a premium when its fundamentals are taken into view. But, he expects the stock to rise up to INR 220.

For now, Nykaa’s Q3 FY24 results, which would also include the festive sales’ impact, are keeping the market hopeful. Still, it will be interesting to see if Nykaa can sustain growth in 2024.

[Edited by Vinaykumar Rai]

The post Losing Sheen? Decoding Nykaa’s Volatile 2023 & Calling Out The Risks Ahead appeared first on Inc42 Media.

Marked by a confluence of economic downturn and funding constraints, the year 2023 has proven to be a challenging one for the Indian startup ecosystem on many fronts. Even late and growth stage ventures bore the brunt of the funding crunch, with new fund launches by venture capital firms decreasing both in total value and the number of fresh funds.

Imperative to mention that compared to 2021 and 2022, total funding in 2023 declined by $32 Bn and $15 Bn, respectively, to stand at $10 Bn as of December 25.

Also, the Indian startup ecosystem saw many controversies take shape, casting shadows over investor confidence. Instances of mismanagement and alleged fraud involving startups like GoMechanic, B Capital-backed Mojocare, and Rahul Yadav-led Broker Network raised governance concerns among VCs.

The wave of deception not only invited scrutiny of several Indian startups but also sparked dissatisfaction among Limited Partners (LPs). This dissatisfaction triggered a significant shift in LPs’ relationship with venture capital firms, prompting a re-evaluation of fund recommendation and management processes.

Despite these challenges, 2023 saw the announcement and launch of 64 funds, including venture capital funds, micro-funds, and corporate VC funds. These funds amounted to over $5.6 Bn. In comparison, 2022 witnessed the launch of 126 funds, raising over $18 Bn for startup investments.

Now, let’s take a deeper dive into the fund launch scenario in the world’s third-largest startup ecosystem tracked by Inc42 during the year of extended funding winter.

Early & Early-Growth Stage Fund Launches Took Centre Stage In 2023

In 2023, early-stage startups emerged as the investor favourites. This made way for 31 funds launched with a corpus of $1.8 Bn.

It is essential to mention that some early-stage VCs started seeing good returns from their funds this year. A case in point is Blume Ventures, an early stage VC firm that has backed unicorns such as Unacademy, Slice, Purplle, and Spinny.

The firm reported that its inaugural fund (Fund I) and its extension Fund IA have realised 5x of the invested capital so far and are on track to realise 6x gross returns by their full lifecycle in 2024.

Blume Ventures’ Fund I was launched in 2011 with an initial capital of INR 98 Cr, followed by INR 24.5 Cr for its extension Fund IA in 2013.

While the number of early stage funds increased in 2023, a notable trend is the rise of micro VCs, whose small-ticket funding into pre-seed and seed-level startups has grown markedly in the past couple of years. This trend gained momentum after 2016 and has continued to grow in the last two years.

Furthermore, LPs are increasingly expressing interest in micro VC funds, drawn by the potential for more growth opportunities.

A prominent example is Mumbai-based Artha Group, which launched an INR 450 Cr winners-only micro VC fund, focussing on top-performing startups from the group’s portfolio of over 100 startups, with an average investment size of INR 20 Cr per investment.

Earlier this year, micro VC fund CapFort Ventures launched an INR 200 Cr India-focussed tech fund, while Singapore-based Grayscale Ventures made the first closure of its $20 Mn micro fund at $10 Mn.

In addition to making low-risk investments, VC funds are focussing on follow-on investments in well-performing portfolio companies, which has also increased the emphasis on growth stage funding.

Following early stage funds, the early-to-growth stage witnessed the highest number of fund launches, with 14 funds, amounting to $1 Bn. Investors believe that more Series A funding is expected to happen next year in the growth stage.

Late Stage Funds Remained Under Pressure

Throughout the year, there was significant pressure on growth and late-stage funds. Recognising the importance of more responsible and value-driven investments, VCs are scaling back on the number of funds launched.

Understandably, the launch of growth, growth-to-late stage, and late-stage funds has been low, with only 16 fund launches amounting to $2.3 Bn.

While late-stage fund launches may not see a significant increase in 2024, activity in the growth and growth-to-late funding stages is expected to rise.

A significant trend likely to accompany this shift is the departure of high-profile startup executives from their current ventures to establish new startups, with expectations of securing substantial funding from VCs.

For instance, Swiggy’s senior vice-president (SVP) Karthik Gurumurthy is departing the food tech giant to launch his startup and is said to be in talks with multiple venture capital firms, including Matrix and Accel, for funding.

Similarly, Vivek Sinha, former chief operating officer (COO) of edtech unicorn Unacademy, reportedly secured $11 Mn (around INR 91 Cr) in funding for his new edtech startup.

SaaS, Enterprise Tech Took The Spotlight

The year has seen a discernible trend toward sector-focussed fund launches in India. Out of the 64 funds launched so far this year, 19 have placed a strategic emphasis on SaaS-enterprise tech, with fintech closely following at 16 funds.

Pentathlon Ventures and Together Fund are among the VC firms that have launched SaaS-focussed funds.

Notably, the climate tech sector, which is still evolving in both investor perception and business models, continues to witness fund launches. Avaana Capital and Capria Ventures are notable VC funds that have introduced climate-focussed funds.

Meanwhile, AI has emerged as a newfound sweet spot in the VC arena, garnering significant attention and becoming a favoured investment choice for the year.

As of now, VCs are facing challenges in delivering returns to their LPs. Also, with the IPO market stagnant and M&A activities slow to pick up, many VCs have been unable to return capital to their LPs in the past 12 months.

Consequently, LPs are hesitant to inject additional capital into the ecosystem during this period of uncertainty. For now, the outlook for VC fund launches in 2024 remains uncertain, and it remains to be seen how the landscape will evolve in the coming year.

The post Dry Spell Reigns: Only 64 Funds Worth $5.6 Bn+ Launched In The Year Of Extended Funding Winter appeared first on Inc42 Media.

Covid-19 has come and gone and continues to raise its ugly head now and then. But many of the disruptive business models it has effected have not run out of steam, yet. One seismic shift in the retail space is the ubiquity of ecommerce, ensuring safety and convenience in the wake of the pandemic.

Soon enough, India experimented with the ‘rapid’ version of traditional ecommerce and got used to the 10-to-30-minute quick commerce/hyperlocal deliveries. Companies in the q-commerce space typically keep 1,500-2,500 SKUs in strategically located dark stores to ensure swift deployment within a radius of 2 km.

It was not a fad. Between 2021 and 2023, the quick commerce sector in India rode its sudden popularity surge and raised $4.2 Bn, according to Inc42 data. Be it grocery, food or on-demand hyperlocal delivery of non-food items (electronics, jewellery, personal care products and more, plus package pickups), the format seemed so lucrative that food delivery giants Zomato and Swiggy, hyperlocal delivery specialist Dunzo and grocery delivery startup Zepto topped up their capabilities to compete.

Even Rebel Foods, the parent company of famous cloud kitchen brands Faasos and Behrouz Biryani and the master franchisee of American fast-food chain Wendy’s, decided to take the plunge.

But here is an element of surprise. All the ventures we mentioned assumed that quick commerce in grocery delivery would be the way to go. Imagine the emergence of a convenience economy where consumers can never run out of daily essentials. The wait times are negligible, delivery charges are affordable, and an entire battalion of low-paid riders is ready to vroom through the city traffic to deliver in a few minutes. It became a norm in many countries during the pandemic, and Indian businesses foraying into grocery quick commerce anticipated a similar tailwind for years.    

While Zomato started its full-fledged quick commerce operations via Blinkit (formerly Grofers, which was founded in 2013 and acquired by the foodtech behemoth in 2022 for $569 Mn in an all-stock deal), Swiggy set up Instamart in August 2020 to offer instant grocery delivery. A year later, industry veteran Dunzo launched Dunzo Daily to run its quick commerce business. Finally, there came Zepto, a poster boy creating waves. It was incorporated in September 2020, started operations in April next year and became the first and only unicorn of 2023 after raising $200 Mn in August at a valuation of $1.4 Bn. 

The 10-Minute Delivery Game: Did Indian Players Master It?    

The Covid-induced gold rush subsided when shops reopened and the allure of 10-minute home deliveries started to wear off. The lack of solid business fundamentals was another key reason why many ultra-fast grocery delivery firms failed to corner success in the post-Covid era. 

Essentially, quick commerce companies need to create long-term value for consumers beyond the novelty of speed delivery. For instance, those catering to specific areas or customer groups can accurately estimate the local demand through data analytics, up the personalisation bar and supply products not readily available in local kirana stores. 

Also, the economies of scale work differently for quick commerce players. Unlike regular ecommerce, high order density and good AOV (average order value) may not produce the best results here for two reasons. First, the order flow is continuous and delivery needs to happen immediately. Therefore, each dark store’s productivity and profitability are crucial for business success. Additionally, order margins typically depend on product categories rather than average order value. Hence, a rigorous focus on top-selling categories and unit economics of every dark store is required for sustainable growth.

Given these complex parameters, it is not surprising that profit-making is still a distant dream for many of these quick commerce businesses. A quick look at Dunzo’s numbers also reveals these difficulties. 

Set up in 2014, the on-demand delivery startup has been backed by Reliance Retail (RRL) and a clutch of marquee investors such as Alteria Capital, Google and Lightrock India, among others, amassing $500 Mn in funding. Its backstory also showed resilience and potential. Dunzo was one of the lone flag-bearers in the graveyard of hyperlocal startups that mushroomed during 2015 and 2016 but promptly scaled back and shut shop after facing huge losses.

However, the platform has failed to make good on the quick commerce wave in the wake of the pandemic and seems to stand on the brink with scant survival prospects. 

Even after raising $240 Mn from RRL in January 2022 and undergoing two changes in its business model – an expansion into quick commerce using dark stores in 2020 and subsequently providing logistics services to retail stores on a revenue-sharing basis – Dunzo spent INR 9 to earn INR 1 in FY23. This resulted in a colossal loss of INR 1,801 Cr, nearly 4x the loss of INR 464 Cr recorded in the previous financial year.

Other major players also cut a sorry figure, while a few shut down their quick commerce initiatives shortly after the launch. Among these were JioMart Express from Reliance, Ola Dash (from the house of Ola), Swiggy’s premium grocery delivery pilot Handpicked and ZopNow. Then there was Flipkart Quick, which gradually scaled down its operations and consolidated the business with its next-day grocery delivery platform, Flipkart Supermart. Amazon, too, went for consolidation play and clubbed Amazon Fresh and Amazon Pantry, as pure-play q-commerce did not pay dividends.

Nevertheless, listed food delivery unicorn Zomato’s recent success in grocery delivery and quick commerce segments has kept hope alive. After initial struggles, Zomato’s quick commerce arm Blinkit turned contribution positive for the first time during the quarter ended September 30, 2023 (Q2FY24). Blinkit’s contribution margin as a percentage of gross order value (GOV) in the overall business improved from -7.3% in Q2FY23 to +1.3% during the quarter ended September 30, 2023 (Q2FY24). 

Interestingly, Tata group-backed grocery delivery platform BigBasket is the latest to join the bandwagon with BBNow. It comes alongside the existing BBExpress that offers deliveries in an hour, within a six km radius, offering more than 8K products.

This shows market expectations are now firmly established despite a few below-par performances. For instance, a RedSeer report projects India’s quick commerce growth to surge 10-15x by 2025 to reach $5.5 Bn. Although it indicates huge headroom for growth, consumer loyalty will ultimately determine the final winner in the 2023 quick commerce race. 

Of course, people loved the convenience and comfort of quick commerce in the hours of need. But will they be equally willing to pay for these speedy deliveries? More importantly, will they ditch local kirana stores and supermarkets for good to nurture the 10-minute wonder, often promoted as the future of ecommerce and retail delivery?  

How Blinkit Led The Quick Commerce Race In 2023

Before entering the whistle-stop quick commerce track, Blinkit (then Grofers) weathered two damaging storms in the grocery delivery space. The first occurred during 2015 and 2016 when numerous startups, including Shadowfax, Peppertap (B2C business), Local Banya, TownRush, Paytm Zip, Ola Store and Flipkart’s Nearby, entered the space but met with failure. (As we have already mentioned, Dunzo was a survivor, too, at the time.)  

Next came the Covid-19 crisis, but Grofers managed to enter the coveted unicorn club with a $120 Mn infusion from Zomato in June 2021. It was rebranded as Blinkit in December of that year, marking a strategic shift towards quick commerce.

In its third innings post the Zomato takeover, Blinkit has looked past the typical challenges of quick commerce and secured a leading position in several crucial areas, thus improving its brand image. Here is a deep dive into what the platform has done right in CY23.

Blinkit Emerged As The Top Customer Service Provider

According to a consumer sentiment analysis by Inc42 and Clootrack, customer service is among the topmost criteria for choosing any grocery delivery service. Surprisingly, none of the top quick commerce players could score well on that account.

On a scale of 1 to 10, where 1 is the lowest and 10 means the best customer experience, Blinkit topped the ranking with 2.4 and Swiggy Instamart was bottom with 0.5. Other major deciding factors include app functionality, simple return and refund policies, delivery partners’ behaviour and ease of order cancellation. 

Blinkit Records Maximum App Downloads

The quick commerce platform saw maximum app downloads between January 1 and November 22, 2023. An analysis by Inc42-AppTweak puts Blinkit downloads at 14 Mn+, followed by Zepto (11 Mn+) and Dunzo (3.4 Mn+). Swiggy Instamart data has not been considered here as there is no separate app for Swiggy’s grocery delivery service.

Blinkit saw a maximum spike in app downloads in October, probably due to the festive frenzy. Compared to the previous month (September), it recorded a 62% increase, while Zepto downloads flatlined and Dunzo plunged.

There’s A New Face In Town, But Can It Compete With Blinkit?

Rebranded from Kirana Kart in late 2021, Zepto is a Mumbai-based quick commerce unicorn that rose to prominence within three years of its inception. To date, the startup has raised $592 Mn from Goodwater Capital, Nexus Venture Partners, Glade Brook Capital and Y Combinator, among others. Its founders, Kaivalya Vohra and Aadit Palicha (Stanford dropouts), also led Hurun India’s top 100 under-30 list of 2023, sorted by age. 

A better business environment will go a long way. Interestingly, Zepto’s delivery partners have turned out to be its key strength, according to the Inc42-Clootrack consumer sentiment analysis. The quick commerce startup got the highest rating of 5.7 on a scale of 1 to 10 when it comes to interactions with delivery partners (10 denotes the best customer experience and 1 represents the worst). Next came Dunzo (1.9) and Blinkit (1.2), while Swiggy Instamart bottomed the list with 0.7.  

Although Zepto could not bring in a high score closer to 10, the overall positive sentiment it generated should be lauded compared to other storied players. Gig workers at Swiggy Instamart and Blinkit faced financial challenges in 2023, leading to strikes that lasted for several days. Sometimes, things came to such a head that delivery partners left en masse to join other players. Dunzo, too, delayed salaries and eventually laid off more than 20% of its workforce.   

Zepto, on the other hand, has a proactive approach and focusses on empowering its workforce. For example, the startup has partnered with Yulu and other EV majors to set up an all-electric fleet, enabling cost-effective mobility solutions for its delivery partners. Going forward, such an approach will result in a win-win scenario as 6.7% of the non-agricultural Indian workforce is estimated to join the gig economy by 2030. Their overall welfare will help build a thriving economy.    

Balancing growth and profit will be challenging. Zepto may have the right approach, but to emerge as the industry leader, it must bring home the bacon and grow sustainably, the survival mantra of the ongoing funding winter. Of course, a startup rarely breaches INR 2K Cr revenue in the first two years like this unicorn did. Its revenue from operations ballooned 14.3x to INR 2,024.3 Cr in FY23 from a meagre INR 140.7 Cr in FY22. But it also suffered a net loss of INR 1,272.4 Cr in FY23, a massive 226% jump from the previous financial year. However, its PAT margin improved to -63% from -277%, which means the narrative is not as bleak as it seems.

Unfortunately, this has more to do with the newbie’s low operating leverage. In simple terms, operating leverage is the degree to which a company can increase its operating income through revenue growth while keeping its gross margins high and variable costs low. In the case of quick commerce, the gross margin is typically low, and a newcomer like Zepto will have to burn cash for years for business expansion to push its revenue.

 According to some experts, the startup may have to raise funds every 12-15 months to retain its growth drive and keep its revenue flowing. Locking horns with competitors like Binkit and Instamart won’t be easy either, as their deep-pocketed parent companies enjoy a revenue mix advantage and will adequately fund these quick commerce platforms.

What Lies Ahead Of India’s Quick Commerce Startups In 2024 & Beyond

Now that the frenzy for safe and ultra-fast grocery delivery has declined to a large extent, will the quick commerce bubble burst and vanish in 2024? Not necessarily. Convenience is a habit, and the demand for instant home delivery will continue to drive the quick commerce market, say retail experts. In addition, India’s demographic shift and the subsequent rise in income may help remove the cost constraints hindering the sector’s growth. 

For context, 65% of India’s population will be within the crucial consuming cohort of 15-59 years until 2030. The surge in income is expected to lift 110 Mn households to middle-class consumption of goods these quick commerce platforms are rushing to deliver. Given this scenario, players in this space may find it easy to levy packaging and delivery charges and cut down on discounts and freebies to balance costs with earnings.

There are other ways of making quick commerce more viable and attractive. Platforms are now looking at extensive ad monetisation, promoting thousands of brands to their captive audiences for the best possible outcomes. Blinkit’s CEO, Albinder Dhindsa, is also pushing business growth through service diversification. The platform is now venturing into Urban Company-like at-home handyman services, starting with electricians, plumbers and specialists in AC repair. 

Nevertheless, the exponential rise in online shopping and digital payments has triggered quick commerce growth, so much so that research firms predict robust growth. A 2023 Deloitte report on the future of retail estimates a $40 Bn market by 2030, from $2 Bn in 2022. Another report by MarkNtel expects Indian quick commerce to grow at a CAGR of around 67% during 2023-28.

The model has its merits if it is valued as a premium service but stays within the realms of possibility. Sticking to a 10-minute deadline (or a maximum of 30 minutes) gets difficult in crowded metros, the critical markets for quick commerce. Moreover, given the low gross margins and high delivery costs of q-commerce, unit economics would remain elusive for many players.

Success will depend on processing more orders, pushing the right assortment of products (SKUs with good margins to increase AOV), ensuring efficient deliveries and offering unique value propositions that will encourage customers to top up their carts even after purchasing the required products. Industry players will do well to heed the lessons from Dunzo’s decline or Instamart’s perpetual issues with scaling as it continues to operate in the shadow of its parent app, Swiggy. 

Finally, quick commerce players in the grocery delivery space will soon have a formidable contender in ONDC (Open Network for Digital Commerce), as kirana stores and retailers of all sizes can join the network to provide direct delivery services to their respective customers.

Can quick commerce/q-commerce race past so many hurdles – from getting access to a steady funding flow to optimising execution to building a best-in-class delivery partner network as customer experience (and loyalty) will hinge on it? To say nothing about the criticality of exploring multiple revenue channels to survive and grow? Or will 2024 witness a spate of consolidations as it happened earlier with food delivery? Companies remain bullish about success, but the ground realities may craft a different narrative soon.      

[Edited by Sanghamitra Mandal]

The post India’s Quick Commerce Race: Blinkit On Top After 2023; Can Rivals Catch Up? appeared first on Inc42 Media.

After its muted debut on the Indian bourses in 2021, the Paytm stock continued to get beaten in 2022, plunging as much as 60% during the year. Amid the bloodbath in new-age tech stocks, the company’s market capitalisation tumbled to a mere $4 Bn by the end of 2022 from $13 Bn at the time of its listing.

However, the stock bounced back strongly, and the year 2023 saw Paytm driving the bullish sentiment of investors towards the new-age tech stocks. 

Piggy-backing on an improvement in its bottom line, strengthening of loan disbursement business, and a strong growth trajectory, the fintech giant’s shares rallied over 80% until October this year and its market capitalisation crossed the $7 Bn mark.

But, just when it seemed that the company was set to end 2023 on a high and further capitalise on the bull run on the bourses next year, the tightening of norms by the Reserve Bank of India (RBI) for unsecured lending came as an unexpected setback. 

Following this, Paytm decided to scale down its postpaid loan vertical, which resulted in the stock losing steam and its market cap falling back to the $4 Bn level. As of December 22, the stock ended at INR 641.90 on the BSE, up a mere 21% year to date.

While the exact impact of the company’s decision to reduce the focus on low-ticket-size loans will be clear in the quarters ahead, let’s take you through the journey of the Paytm stock in 2023 — its substantial hits and major misses.  

Taking A Note Of Paytm’s 2023 Milestones      

Paytm’s loan disbursement business contributes a comparatively smaller portion to the overall revenue stream than its payments business. However, over the last one year, Paytm doubled down on two of its key metrics – loans and merchants. 

In its last reported quarter, Q2 FY24, Paytm’s total operating revenue jumped over 32% year-on-year (YoY) to INR 2,519 Cr and revenue from payment services to consumers registered a slight YoY rise to INR 579 Cr.

Meanwhile, income from payment services to merchants surged sharply to INR 921 Cr and revenue from financial services and others, including its loan business, jumped to INR 571 Cr. 

Paytm’s loan disbursement amount and value increased consistently on a month-on-month basis, registering small spikes in the stock.

Besides, Paytm made multiple new announcements during the year, maintaining its uptrend. This was despite regulatory uncertainties for the fintech sector.

Some of the key announcements made during the year are as follows:

• Rolled out UPI SDK (Software Development Kit), allowing merchants to receive payments from customers easily
• Partnered with the State Bank of India (SBI) to launch Paytm SBI Card on the RuPay network 
• Launched two new variants of its soundbox device – Music Soundbox and Pocket Soundbox, adding an entertainment element to the payments device for its merchant network
• Announced plans to build artificial general intelligence (AGI) stack 
• Paytm Payments Services launched the industry’s first alternate ID-based guest checkout solution for merchants

Meanwhile, Paytm’s declining YoY losses, as well as highly bullish commentary from some of the major brokerages, further helped the shares touch the INR 980 level in October from INR 530 at the end of 2022. Notably, the company turning adjusted EBITDA profitable in Q3 FY23 contributed to the rise in stock price. 

However, the shares lost a bit of their upward momentum after Paytm announced its Q2 FY24 earnings. This was because the company missed the Street’s EBITDA margin estimates, even though its loss narrowed to INR 291.7 Cr. 

While many brokerages reiterated that Paytm would turn profitable by FY25, apprehensions around increasing competition from the likes of Jio Financial Services, PhonePe, GooglePay, and others kept everyone cautiously optimistic.

A further fall of over 20% hit Paytm after it decided to scale down its small-ticket loans of less than INR 50K, which predominantly comprise its postpaid loan or BNPL business. 

Here are some interesting takeaways:

• Below INR 50K loans comprised 72-75% of its total disbursements in the BNPL category in Q2
• Paytm disbursed postpaid loans worth INR 9,010 Cr, which jumped 122% YoY in the quarter
• Postpaid loans contributed a major 56% of its total lending value in Q2
• Merchant and personal loans accounted for 20% and 24% of the total value of loans disbursed, respectively, in Q2.

Amid all these, Paytm sacked over 1,000 employees a few days before stepping into 2024, citing the increased usage of AI-led automation. However, the company also claimed that its core payments business may see an increase of 15,000 employees in the coming year. 

Now, most analysts opine that Paytm’s growth will slow down next year while the path to profitability could get stretched further.

Nevertheless, the surge in Paytm’s share prices in 2023 saw many of its early investors selling their stakes and some even exiting the company.

So, Who Holds How Much Stake In Paytm?

Amid the profit booking spree of marquee investors in the realm of new-age tech stocks, the likes of SoftBank, Alibaba, and Antfin sold their stakes in Paytm in 2023 via multiple block deals. Most recently, Warren Buffett-led Berkshire Hathaway exited the fintech major by selling shares worth about INR 1,370.6 Cr.

This selling spree has impacted the FDI shareholding in the company, which fell to 39.52% by the end of September quarter 2023 from 71.49% a year ago.

This also coincided with Sharma upping his stake in the company. He became a significant beneficial owner (SBO) of Paytm after Resilient Asset Management, wholly owned by Sharma, increased a 10.3% stake in Paytm following Anfin offloading them.

By the end of September quarter 2023, Sharma held a 9.12% stake in the company against an 8.91% stake at the end of the year-ago quarter.

Moving on, mutual funds were relatively less interested in investing in Paytm compared to Zomato. As many as 19 mutual funds held a 1.26% stake in the company in the quarter ended September 2022, which rose to 2.79% a year later, with 19 mutual funds holding stakes.

What’s Next For Paytm?

Following the decision to scale down the small-ticket loan vertical, Sharma, in an interview, said that the company is now focusing on three key areas:

• Strengthening its online wealth management services, Paytm Money
• Continuing to tap into more merchants 
• Doubling down on AI automation to cut employee cost

Paytm is banking on this strategy to turn operationally profitable within a year. 

However, not everyone is so positive. Recently, Goldman Sachs extended its profitability projections for Paytm to FY26 from FY25 earlier. Jefferies, too, slashed its revenue estimates on the fintech major by 3-10% for FY24 to FY26, leading to an adjusted EBITDA cut of 12-15%.

Motilal Oswal, which earlier expected Paytm to report a profit after tax (PAT) of around INR 290 Cr in FY25, now expects the company to merely break even by the same time. It slashed its adjusted EBITDA estimates by 11-16% for the FY24-FY25 period.

This extended timeframe to achieve profitability is expected to hurt Paytm’s share price in the medium to near term.

Rupak De, senior technical analyst at LKP Securities, told Inc42 that Paytm might rise towards the INR 700-INR 720 level in the near term, but as investors start to book profits, the stock may tumble again. The support for the stock remains at INR 590 right now, below which the shares could plunge to INR 500 as well.

According to De, Paytm is a sell-on-rise stock right now.

Echoing a similar sentiment, Kush Ghodasara, CMT and an independent market expert, said that Paytm shares are looking weak on the technical charts and until they cross the INR 780 level, the shares will see selling post every major rise. There is a possibility that the stock could also revert to the INR 400 level once again, he added.

“From a technical perspective, when the broader market is at an all-time high and one stock is trading below the 200-day moving average, that is not a good sign,” Ghodasara said. “The buzz that was around Paytm during its listing, that fizz is now gone.”

While it remains to be seen if the revamped business strategy helps Paytm regain market confidence, the large block deals by major shareholders are expected to continue to drag the shares down at frequent intervals in the upcoming year. 

The post Paytm Ends 2023 On A Sombre Note: Can The Fintech Juggernaut Turn The Tide In 2024? appeared first on Inc42 Media.

After rebranding itself to X, the microblogging platform started its 2023 India journey by axing more than 90% of its workforce and closing most of its offices in the country.

Nothing changed for Twitter, but name, as legacy issues persisted, throwing a spanner in the social media platform’s progress in 2023.

To the company’s dismay, it remained in conflict with the Indian government as the Centre introduced a wave of new digital regulations.

From the DPDP Act to the Telecom Bill, X found itself amidst a plethora of adverse regulations throughout the year, managing additional compliance mandates imposed by the new laws.

The social media giant’s attempts at legal recourse against the Centre’s “innocuous” takedown orders faltered, with the Karnataka High Court siding with the government, resulting in a hefty penalty.

The Elon Musk-led platform also faced the ire of the government for its failure to crack its whip on fake news and misinformation on the platform. 

Despite the challenges, 2023 turned out to be the year of rapprochement and a turnaround for Twitter, now X. The mass layoffs and excessive cost-cutting exercise yielded results as X’s Indian arm minted a profit even as focus on building alternate revenue channels brought more money into its coffers. 

For a moment, it appeared that Instagram Threads could emerge as a major contender against X but the former fizzled out as quickly as it erupted into fame. 

All in all, 2023 also turned out to be a year of outreach, as X boss Elon Musk met Prime Minister Narendra Modi, hinting at some bonhomie even as Indian authorities and X fought pitched battles back home. 

Will hopes for a confrontation-free 2024 in India, let’s steal a glance at how 2023 turned out for the social media platform.

X’s Sabre-Rattling With The Indian Govt

It was another year of full-blown confrontation between X and the Indian government. At the outset of the year, the two parties were locked in a legal showdown in the Karnataka High Court over a case filed by X over “innocuous” takedown orders issued by the Centre. The saga somewhat culminated as the HC sided with the government and slapped a fine of INR 50 Lakh on the social media platforms. 

However, the company then filed an appeal against the order and the legal tussle is expected to continue well into 2024.

Globally, India continued to be one of the biggest sources of legal notices for the removal of content in the first half of 2023. However, this was just the tip of the iceberg. As the government unveiled a series of reforms to digital laws in the country, Twitter found itself in a regulatory quagmire. These new laws put additional mandates on the company and instituted strict penalties for non-compliance, going as far as bringing safe harbour protections under question. 

The government also pulled up the platform for the failure to crack the whip on misinformation and fake news on its platform even as GenAI-enabled deepfakes emerged as a new headache for the social media major. 

“X will find it challenging to convince their users that the content they see is human-generated, and not produced by AI bots. Another challenge is to prevent the spread of misinformation and manipulation of narratives propagated by tireless AI bots for and against governments and large corporations or groups,” Shorthills AI cofounder Pawan Prabhat told Inc42.

Piling on top of that was the wave of child sexual abuse material and related content on X that dominated the platform. To curb this menace, the platform suspended more than 98 Lakh accounts for spreading and tweeting such content. 

Such was the clamour that the Centre called the company a ‘habitual non-compliant platform’ that undermined the Indian government. Alongside, MoS for IT Rajeev Chandrasekhar warned the platform of removing Child sexual abuse material (CSAM) or losing safe harbour protections.

Already reeling under the weight of regulatory troubles, comments by the then Twitter CEO Jack Dorsey sparked a major storm for the platform in the country. He claimed that Indian authorities raided the homes of Twitter India employees and shut down its offices in the country.  

This opened up another font of confrontation for X as Chandrasekhar lambasted the platform for violating Indian laws and showing reluctance in removing questionable content from the platform during Dorsey’s tenure.

Such was the fallout that X’s head of policy in India and South Asia, Samiran Gupta, resigned from the company as the legal tussle between the Indian government and the platform intensified. 

Charting A Turnaround

Amid the figurative tug-of-war between the government and X, 2023 turned out to be a positive year for the platform on the financial front. X’s local arm, Twitter Communications India, reported a net profit of INR 30 Cr in the fiscal year ended March 2023 against a net loss of INR 32 Cr in the previous year. 

During the same period, revenue shot up 32% to INR 208 Cr from INR 157 Cr in FY22. 

While the company did not publicly release reasons for its turnaround, the sudden spike in profitability was attributed to a massive cost-cutting exercise that was undertaken at the company after Elon Musk took over the reins of the company in October 2022. 

While 80%-90% of the company’s Indian staff was fired at the fag end of 2022, X also shut down its Delhi and Mumbai offices to streamline operations in early 2023, as it embarked on a mega restructuring exercise. 

While the platform still continues to run without an India head, its focus has now moved towards shoring up revenues. Alongside, X also introduced its premium subscription service, Twitter Blue, (chargeable at INR 650-INR 900) for users in India to spruce up its topline. 

What also took the cake was the company’s interesting strategy to retain users and shore up engagement. As part of a monetisation avenue for creators in 2023, X began rolling out payouts to top creators, which attracted more user eyeballs to the microblogging platform. 

Despite every effort, India continued to be a challenging proposition for the company. 

How Will 2024 Bode For X?

Home to more than 27.3 Mn active users, India is the third-largest market for X. Ironically, the nation’s contribution to Twitter’s total revenue continues to be non-significant, largely marred by razor-thin margins and price-sensitive Indian users and advertisers.  

Stepping in 2024, the company could be looking to fix many of the aforementioned challenges. Further, with consumer spending expected to improve in 2024, X could see more revenues flowing in. 

Meanwhile, the Musk-led platform could also be looking to explore more strategies to resuscitate user engagement and add new users to its kitty as it expands its creator payout initiatives. Alongside, it may continue to ramp up its focus on monetisation. 

But, much more needs to be done. Frequent outages have so far left many users exasperated while the haphazard rollout of Twitter Blue has invited bad press. As 2023 comes to an end, the stage has been set for X to embrace a new tomorrow in the country. 

The post How A Gloomy 2023 Cast A Dark Shadow Over X’s India Journey In 2023 appeared first on Inc42 Media.

“If a business does well, the stock eventually follows.” –  Warren Buffet. There is no better case study for this quote in recent times than foodtech giant Zomato’s journey on the bourses in 2023.

While 2023 has turned out to be a remarkable year for new-age tech startup stocks, Zomato has shone the brightest so far this year. Not to mention, players like Paytm, RateGain, Delhivery, and PB Fintech, too, have witnessed their fair share of rallies after the bloodbath of 2022.

The share price of the foodtech major has more than doubled so far this year. The stock, which was trading in the INR 50-60 range in the first month of 2023, is on course to end the year at above INR 120.

The biggest reason behind its noteworthy performance has been the improvement in Zomato’s financials and the startup finally turning profitable. 

Amid the global economic slowdown, the year 2022 was all about investors questioning Zomato’s various business decisions, the biggest among them being its acquisition of Blinkit. However, to investors’ delight, Zomato figured out the sweet spot and its path in 2023.

The company did this by doing new experiments to increase its revenue and making hard decisions to bring down its expenses. From introducing a platform fee to exiting over 200 Indian cities and several nations, 2023 remained an eventful year for the Deepinder Goyal-led company. 

With that said, let’s take a closer look at Zomato’s noteworthy 2023 journey.

How The Zomato Stock Price Doubled In 2023

While the subdued trend continued in Zomato’s stock during the first few months, the company reporting its first-ever adjusted EBITDA profitability in the fourth quarter of FY23 began a sharp reversal in its fortunes. 

Zomato’s share price jumped 6% in a month following the announcement of its adjusted EBITDA profitability, helping its market capitalisation cross the $7-Bn mark from about $6 Bn at the end of 2022.

Around the same time, it emerged that the government-backed Open Network for Digital Commerce (ONDC) forayed into the food delivery segment. This led to a strong buzz that the network would pose a threat to Zomato. However, investor sentiment had turned positive on the stock by then as the company was chasing profitability aggressively. Therefore, ONDC’s foray into the food delivery space did not have any major impact on the company’s share price.

Amid this, Zomato experiments continued unabated. From piloting B2B logistics services to rolling out its in-house Unified Payments Interface (UPI) service for peer-to-peer (P2P) and merchant transactions, Zomato was on a spree of new announcements. 

Here is a quick look at the company’s new pilots and major launches in 2023:

• The return of the Zomato Gold loyalty programme had a major impact on the company’s overall performance throughout the year.
• The introduction of a platform fee of INR 2-INR 5 on food orders further helped Zomato improve its margins and strengthen investor confidence.
• The company forayed into the logistics space and launched a quick parcel delivery service for merchants with a new app – Xtreme.
• Zomato joined hands with the Indian Railway Catering and Tourism Corporation (IRCTC) for the supply and delivery of pre-ordered meals under a pilot.

Meanwhile, the surge in Zomato’s share prices continued, with the stock soon crossing its IPO price band of INR 72-INR 76 at the beginning of June, for the first time in over 12 months.

Amid its business experiments, the company reporting two consecutive profitable quarters in Q1 and Q2 FY24 proved to be the ultimate game changer. It further boosted the stock price, helping Zomato surpass its listing price of INR 115 at the beginning of November.

Notably, Zomato also undertook multiple restructuring measures to achieve and sustain this growth. Some of these measures are as follows: 

• It exited 225 Indian cities.
• Paused onboarding new customers for Zomato UPI.
• Stopped business in multiple countries, including Indonesia, Jordan, Czech Republic, and Slovakia. 

Zomato’s quick commerce business Blinkit, whose profitability was one of the major concerns for investors, also turned contribution positive for the first time in Q2 FY24. Zomato sees Blinkit achieving adjusted EBITDA breakeven by Q1 FY25, while Dalal Street believes that Zomato is well on track to achieve this target.

As a result of these positive changes, shares of Zomato ended the last trading session (December 22) at INR 128.45 with a market capitalisation of over $13 Bn.

A Shift In Shareholding Pattern

The sharp surge in share prices of Zomato also meant that alternate investment funds, banks, insurance companies, and foreign portfolio investors (FPIs) have started increasing their stakes in the company. 

As per Zomato’s shareholding data for the quarter ended September 2023, as many as 28 mutual funds held a 10.56% stake (almost 91 Cr shares) in the company. A year ago, 20 mutual funds held a mere 4.57% stake in the company.

Meanwhile, many marquee investors sold their stakes in Zomato to book profits. As a result, foreign direct investments (FDI) in Zomato, which comprised the shareholding of Antfin, Alipay, Macritchie Investments, and others, fell to 17.08% in the quarter ending September 2023 from a massive 32.41% in the year-ago period.

Taking advantage of the rally, Alipay exited Zomato with INR 3,336.7 Cr in November. 

Before that Tiger Global also exited Zomato by selling shares worth INR 1,123 Cr via block deals. Recently, SoftBank followed suit and exited the foodtech giant in an INR 1,127 Cr block deal. 

Following Alipay’s exit, the FDI stakeholding in the company is expected to further fall by over 3%. 

The stakes sold by these investors were lapped up by the likes of Axis Mutual Fund, Edelweiss Mutual Fund, Invesco Mutual Fund, and several others.

On the other hand, FPIs, including Canada Pension Plan Investment Board, BNP Paribas Arbitrage, and Kuwait Investment Authority Fund, increased their cumulative stake in Zomato to 37.64% by the end of the September quarter of 2023 from 25.46% a year ago.

Currently, foreign institutional investors hold the largest stake in Zomato at 54.72%. 

Will Zomato’s Bull Run Continue In 2024, Too?

Zomato looks well set on the technical charts to improve its performance on the bourses. Fundamentally, too, the company is expected to improve its profitability, which would further increase its share price.

Out of the 27 analysts covering the stock currently, 23, including Jefferies, Bernstein, Emkay Research, ICICI Securities, and JM Financial, have a ‘buy’ or above rating on Zomato. The stock’s average price target is set at INR 129.7.

Bernstein said in its latest research note that the Zomato flywheel is not just turning but accelerating into a dominant platform across food delivery and commerce.

Even in comparison to its global food delivery peers, Zomato leads the way, along with DoorDash, which has gained 82% year to date (YTD), the brokerage noted.

Despite the sharp rise in the stock YTD, most brokerages expect it to continue to deliver big returns going ahead. 

“We remain positive about the long-term growth opportunity for Zomato,” said Motilal Oswal, adding that competition is not expected to intensify further despite the entry of ONDC in the food and grocery delivery space.

Speaking to Inc42, Kush Ghodasara, CMT and an independent market expert, termed Zomato a “multi-bagger stock”. 

“If anyone wants to buy a new-age IT stock, Zomato is my favourite pick given its other ventures such as Blinkit and Hyperpure (B2B business) are also doing well now. Besides, Zomato has launched a new courier service, which is also expected to be a game-changer,” he said.

Ghodasara sees the stock rallying to about INR 225 in the next six months.

While most brokerages have revised up their gross merchandise value and revenue estimates on Zomato for the coming quarters, it now remains to be seen if the stock can deliver on it. The year 2024 would be about Zomato showing the market if it can sustain and increase its net profit. If this happens, then, as Buffett says, the stock would follow the results. 

[Edited by Vinaykumar Rai]

The post A Year To Remember: How Zomato Made A Roaring Comeback After 2022 Bloodbath appeared first on Inc42 Media.

India’s edtech paradigm has seen a massive shift in the past 18 months, with tech-first startups turning into hybrid players. Online learning has taken a backseat as physical centres and offline coaching have come to the fore.

After the peak of VC funding in the edtech sector in 2020 and 2021, the funding winter has so far been an unsparing one for Indian edtech giants. From the record $4.8 Bn raised in 2021, startups have seen funding wither away in the edtech realm. In 2022, the tally declined to $2.4 Bn and further to $267 Mn in 2023, as per Inc42 data.

Looking ahead to 2024, the edtech story is set to take another turn.

There are a number of factors that are proving to be influential for edtech startups towards the end of 2023, and these are likely to shape the course of edtech in India in the next year. 

9 Trends That Will Shape Indian Edtech In 2024

Despite the slowdown of the past year, the edtech opportunity in India is set to breach the $10 Bn mark by 2025. As startups expand their offline bases to smaller cities and towns, adoption is set to be driven by students and learners from Tier 2 and Tier 3 India. 

In turn, this is set to propel the use of regional languages in edtech content and modules and introduce affordability in the sector.

Speaking of content, generative AI and machine learning are set to change the game here. Many startups have already turned to AI to generate content, and this adoption is only set to grow.

And of course, one cannot ignore the BYJU’S-sized elephant in the room. The company’s many troubles — with investors, lenders, vendors, government and employees — is set to cause some pain for other edtech startups. As one Bengaluru-based edtech unicorn cofounder told Inc42 last month, “More and more VCs are asking questions and probing founders on revenue recognition and financials because of the opacity around BYJU’s.”

Indeed, the broader problems and headwinds in online learning are likely to bring in a wave of mergers and acquisitions (M&As) in the next year, as per edtech investors and founders. 

But there are segments in edtech that have remained relatively untouched by the slowdown. Higher education startups, tech certification, skill development and B2B startups (learning management systems, SaaS) are some of the brighter spots in an otherwise gloomy landscape. 

This overview, however, hides many of the nuances of what we can expect for edtech in 2024. So here’s what investors, founders and analysts expect from the sector in the year ahead. 

Regional Languages Come To The Fore

Affordable smartphones and low-cost data propelled online learning, but most startups focussed primarily on learning in English. As more and more edtech companies look to go deeper into the market to find their growth wings, edtech is set to go beyond metros and Tier I cities.

Tarun Saini, cofounder and CEO of Vidyakul, believes that regional language content and course modules will play an important role in further expanding reach of online learning — particularly in the context of test prep, skill development and K-12 courses. 

According to the 2001 census, just over 10% of Indians declared that they speak English as a second language. While this number has very likely grown in the past two decades, the fact is that regional languages are still the most widely spoken. 

If anything, English literacy is a category of edtech that has gained prominence in the past few years. So clearly, many edtech startups realise that students and learners are more comfortable in their native tongues. 

“Online only has already become a passe and in 2024, we will see more companies embrace the hybrid approach to learning. Within this, edtech startups will focus on Tier 2, which means building accessible products and that means focussing on regional language content,” Saini said.

Saini added that even VCs are interested in startups focussing on regional language content, as this has the bigger potential to penetrate the market, thanks to linguistic diversity and culturally resonant learning material. 

Affordability Will Become Edtech’s Siren Song

Another pain point that has become increasingly clearer over the past year has been the lack of affordable edtech courses. While the likes of Khan Academy, Josh Skills and PW (PhysicsWallah) have looked to disrupt this space, the majority of the market has gone for premium pricing.

The rationale here is that Indian families will not compromise on spending for education, but this has been called into question amid the bearish market conditions, decrease in discretionary spending and a general downturn in household expenditures.

Reaching non-English speakers in Tier 2 and 3 means also compromising on pricing to some extent. Mukul Rustagi, CEO and cofounder of Classplus, believes that the use of recorded digital content can enhance affordability and minimise expenses. Plus, the growing adoption of content automation can also contribute to reducing resource costs for companies, which could be passed on to students, learners and parents.

“Due to the affordability of recorded lessons, expenses can be minimised, leading to lower costs. Creators could record their live content and package them as courses without investing any extra time. They can also tailor their content to the language preferences of their audience,” Classplus’ Rustagi added 

Many startups have also introduced scholarship programmes to reduce the pricing friction in course prices. But the real need of the hour is a platform that can offer courses at scale at affordable prices, and across segments such as test prep, skilling and K-12. 

Generative AI Will Reset Edtech

There’s little doubt that 2023 was the year of generative AI, and edtech startups looking to offer affordable courses are leveraging this revolution to streamline costs — particularly people costs. 

Through the use of APIs and large language models offered by the likes of OpenAI, Google (Bard+Gemini) and Facebook (LLaMa), edtech startups have begun taking baby steps in the GenAI world. 

Despite its widely-publicised troubles in the year, BYJU’S has not shied away from talking about how it employs ChatGPT. In June, the beleaguered edtech giant announced the launch of BYJU’S WIZ, a suite of three artificial intelligence (AI) transformer models — BADRI, MathGPT, and TeacherGPT. 

However, it’s unclear how exactly this has come into the operations at BYJU’s. In other cases, edtech startups have roped in large language models to create AI tutors. 

According to Surya Mantha, managing partner of Capria Ventures, ChatGPT-like models are already being implemented by some of its portfolio companies in edtech.

“Masai processes several tens of thousands of resumes every month. The use of GenAI has brought tremendous efficiencies to the point where the admission process is almost entirely automated. Similarly, Cuemath is testing an AI-based model and a teacher co-pilot, which allows educators to give individualised attention and encourage critical thinking,” said Mantha.

Perhaps towards the end of the year, edtech startups might also dive into immersive learning with devices such as Apple Vision Pro and other mixed reality devices coming into the market. 

“The integration of AI and ML will empower edtech platforms to customise educational content to individual needs, creating tailored learning paths that accommodate students with different learning styles and paces,” said Anil Nagar, founder and CEO, Adda247. 

Nagar believes these formats will drive user engagement and reshape how students engage with content. This could be something edtech startups leverage to justify premium pricing, and go against the grain of affordability. But again, a lot depends on how these immersive learning environments are developed and how quickly compatible devices are adopted.  

Role Of Edtech Saas To Grow Bigger

While K-12 has withered away and test prep is going through the hybrid transition, the future of learning management systems (LMS) and ERPs looks promising, according to Vidyakul’s Saini. 

“SaaS products have become a part of the schooling ecosystem and are being used for attendance and maintaining the progress of students. This also helps parents track their child’s progress on their phones,” he added.

Generative AI and machine learning are also playing a role in this space. Jaideep Kewalramani, head of employability and COO at TeamLease EdTech, said that learning management systems (LMS) and edtech SaaS are moving towards AI-augmented models. The power of AI allows companies to develop personalised solutions for each school or class of institute. 

AI algorithms can analyse learning patterns, rate of knowledge acquisition, create progressive learning pathways and augment the tutoring support. Hyper personalisation, where the learning environment will behave specifically to a learner’s needs, is another development that will help improve engagement. 

“We can also expect some pilots that use Metaverse technologies for complex or immersive learning like engineering and history. On the business front, pricing pressures will continue forcing providers to be innovative and create models that will appeal for scale,” Kewalramani added.

In fact, we expect more and more edtech startups to leverage LMS and SaaS solutions for their own hybrid operations, instead of developing tools from scratch. This ties into the next point about M&As and the scaling back of people-led operations at edtech startups. 

M&A Wave Will Take Over

Where there’s a slowdown, consolidation is not far behind. Smaller edtech startups are realising that the way out of the logjam is to enter into M&As and acquihire deals with larger operations. If PW has dominated the M&A space in edtech, the year ahead will likely see more and more players coming to the table and acquiring smaller companies. 

Already, we are seeing offline giants such as Allen Career Institute acquiring distressed startups such as Doubtnut. Expect more of this in 2024. 

Founders such as Adda247’s Nagar anticipate strategic collaborations and acquisitions that will allow companies to rope in talent at a lower cost than direct hiring. Plus there is the possibility that edtech startups with sound fundamentals will look to venture into new areas through acquisitions. Again, the case in point is PW, which acquired Knowledge Planet and Xylem this year.

Dipanjan Basu, cofounder and partner at consumer-focussed VC Fireside Ventures believes that edtech is already going through a consolidation phase. Profitable businesses built with omnichannel coaching models and those catering to the growing reskilling needs of individuals will be the most active players in this space. 

Meanwhile, Teamlease’s Kewalramani observed that the post-Covid realignment towards hybrid models means that edtechs with pureplay online learning models could face more headwinds. Some such as FrontRow, for example, had to shut down this year.  

The corporate governance misadventures in edtech (BYJU’S in particular) could lead to a drop in general valuations. But the accumulated dry powder of the past two years is expected to drive a positive wave of fresh edtech investments, particularly in the latter half of 2024, he added.

It’s hard to imagine that companies that had several thousands of employees (like BYJU’S,  Unacademy, PhysicsWallah among others) will continue to employ these many people with the emergence of AI-powered modules and content. 

Layoffs are not being ruled out, despite the already sizeable number of employees let go by edtech startups since 2022. AI-driven content, learning systems and more and going to reduce dependency on human resources, as is widely expected in any domain where text-based content is key. Even profitable ventures such as PW are not immune to layoffs.

And as for shutdowns, analysts expect more startups to wind up their businesses particularly those that are not able to crack product pricing or product-market fit in this new hybrid reality. 

The BYJU’S Impact Will Continue To Hurt Edtech

It’s impossible to analyse the past year for edtech through a non-BYJU’S lens. The Byju Raveendran-led company has dominated the news cycle for all the wrong reasons, and this has basically complicated life for founders in the same categories.

Some are capitalising on white spaces left behind by BYJU’S — once the dominant force — in areas such as coding, early learning, K-12 and others. As BYJU’S looks to focus on hybrid models and expand its base there, many startups are zagging the other way. 

Rajesh Sawhney, founder and CEO of GSF Accelerator, believes that BYJU’S has “single-handedly destroyed” investor confidence in the edtech sector. He added, “There are so many good founders and edtechs out there doing innovative and pioneering work, but struggling to raise money due to the overhang of Byju’s debacle.”

He blamed the overcapitalisation of BYJU’s for the misplaced optimism and bullishness in edtech. 

Others such as Deepak Shenoy said the edtech sector has been rife with bad behaviour even in the past. But there is little doubt that this year’s BYJU’S drama has created problems anew. 

Given that, today BYJU’S has seen a valuation dip by nearly 85% (at least for one investor), there is a belief that it is going to reset expectations for other investors in edtech. The wild growth projections of the past did not work out and all expectations are being rejigged for 2024. Kewalramani feels that funding challenges within major players can create a ripple effect, impacting industry sentiment.

Funding To Remain Slow, Except For Hybrid Models

We’ve already established that edtech funding has dried up in the past year, falling by nearly 90% YoY since 2022. But what about the year ahead? 

A lot depends on how sustainable hybrid edtech models prove to be in the ongoing FY24 and the first two quarters of FY25. The edtech unicorn cofounder quoted earlier in the story believes that investors are unlikely to buy into revenue projections from 2021. “The goalposts have shifted. VCs have already discarded the growth-at-all-costs mentality, so funding will be hard to come by unless existing operations turn sustainable,” the founder added. 

Hybrid is the name of the game and those startups that are able to turn individual centres profitable over the next few months stand the best chance of success when it comes to securing funding. Venture debt, which was once prevalent in the industry, has also dried up thanks to unstable revenue collection. 

Where once revenue had a monthly run rate, hybrid operations are geared towards collecting revenue in the first quarter of the year i.e April to June when most courses begin. The revenue pipeline dries up after this to some extent unless there are additional streams tacked on to hybrid models. 

In any case, the bulk of the revenue reliance will be on offline plays, where capital expenditure is high for expansion. So the focus for startups will be on improving unit economics (for individual centres and cities) before seeking funding.  

Offline Players To Venture Into Edtech Arena In A Big Way

The likes of Vedantu and BYJU’S acquired offline coaching giants Deeksha and Aakash respectively in 2022, but the tables have turned. Now, giants such as Allen Career Institute are calling the shots. 

Allen’s acquisition of Doubtnut and the appointment of a new CEO (Abha Maheshwari) and other leaders is a sign of things to come. Allen’s other recent hires include former Flipkart execs Ankit Khurana and Saurabh Tandon as chief product officer and chief technology officer respectively. 

Allen has solidified its digital platform after the tussle with Unacademy in mid-2022, where the two companies clashed over alleged poaching of teachers. And while Unacademy has shed talent by the dozens in 2023, Allen has strengthened its play. 

In a similar vein, PhysicsWallah is looking at a major investment to expand its offline base, since that is the flavour of the season. After starting out as a YouTube channel, the company plans to  take its offline presence to 100 centres from the current 64 in 2024, with a planned outlay of INR 100 Cr for this spree. 

The company has reinforced its offline identity in the past year too, having launched the PW Vidyapeeth chain of large coaching centres, which have become the lynchpin for its profitability. 

Louder Calls For Edtech Regulation 

Finally, we believe that the problems in edtech — high fees, dependency on loans, arbitrary course content, introduction of untested models and more — are likely to come under the regulatory scanner. 

In 2021 and 2022, the Ministry of Education raised concerns about misleading edtech advertising and promotions, misselling and preying on the fears of parents. The high-profile cases against BYJU’S and WhiteHat Jr in 2021 brought these issues to light. 

Plus, BYJU’S layoffs this year, closure of offices and its much-delayed financials also saw concerns raised in the Indian parliament. 

Another major issue was the mushrooming of education-focussed lending startups. After surging in 2020 and 2021, their growth has been stymied after widespread concerns raised by parents about surreptitiously being trapped in loan repayment cycles without prior intimation. 

In late 2023, there was a notice by the government urging platforms to rethink tie-ups with foreign universities, which was one growth area for edtech. The University Grants Commission (UGC) said it would take action against edtech companies that offer online courses in collaboration with foreign universities without obtaining its prior approval. 

While India does not have an official edtech policy or regulatory framework, there is a growing call to streamline this sector as it affects Indians across classes and age groups. 

The Indian government’s focus so far has been on skill development in association with edtech startups to improve the employability of talent, but clear regulations about advertising, pricing and course content would not be unexpected given the public outcry around these issues. 

[With inputs from Nikhil Subramaniam. Edited by Shishir Parasher]

The post 9 Edtech Predictions For 2024 appeared first on Inc42 Media.

It’s been a busy year for Bhavish Aggarwal and 2024 promises to be nothing less. With Ola Electric filing for its IPO on the cusp of the new year, Aggarwal is in for a nervous few months and lots of twists and turns ahead.

Ola Electric’s INR 5,500 Cr+ IPO, coming just seven years after its incorporation, is not just going to be crucial for Aggarwal, but also a test for India’s electric vehicle market. Interestingly, Ola Electric is looking to go public at a time when India’s EV ecosystem has just begun to find its feet. It’s also the first auto sector listing in two decades.

Despite doubts about how quickly the EV market can grow, the stage is set for Ola Electric to be the first Indian EV startup to go public, and it’s now time to look ahead. The big question for Ola Electric and Aggarwal will be whether public markets will embrace EVs and a new-age company in a sector led by giants.

But for now, we can of course read between the lines of Ola Electric’s pre-IPO filings to see where the EV giant stands today. But first, here are our top stories from the newsroom this week:

• Bhavish Aggarwal’s Other Big Bet: At a time when the LLM fight seems to be intensifying worldwide and in India, Aggarwal-led Krutrim aspires to develop AI-centred cloud infrastructure and more. Here’s our deep-dive
• The Big VC Rejig: Partner exits, venture capital firms pulling out of India, rebranding and separation of VC structures and new fund managers coming into the picture — we recap a troubled year for India’s investor ecosystem
• PhonePe’s Billion-Dollar Year: PhonePe built a war chest in early 2023 and soon after came a flurry of new products that have changed the company considerably, as it steps into 2024

Ola Electric IPO In A Nutshell

Firstly, let’s look at the key details of the IPO itself. The public issue comprises a fresh issue of INR 5,500 Cr and reports indicate an offer-for-sale (OFS) component of INR 1,750 Cr for 9.5 Cr shares.

Aggarwal and major investors such as SoftBank, Temasek, Tiger Global, Alpha Wave, Tekne Capital and Matrix Partners are slated to offload their shares, with the founder and CEO leading the way here with half of the OFS section.

The EV unicorn plans to deploy the capital raised towards setting up its Ola Gigafactory project — targeting 100 GWh capacity for battery production at full scale —  to manufacture EVs, batteries and other components. Proceeds will also be utilised for research and product development, organic growth and general corporate purposes, including paying off some debt raised by Ola Electric.

Finally, the draft red herring prospectus (DRHP) made financial disclosures that Ola Electric reported a loss of INR 1,472 Cr in FY23, growing 1.87X from INR 784.1 Cr in the previous fiscal. Revenue from sales of EVs jumped more than 7X to INR 2,630 Cr in FY23 from INR 373.4 Cr in FY22.

The company also shed light on its financial numbers for the first quarter (Q1) of FY24 where loss stood at INR 267.1 Cr on an operating revenue of INR 1,242.7 Cr. So, essentially, Ola Electric has reached nearly half of its FY23 revenue in the first quarter itself.

That is significant growth for a company that’s just over two years into actually starting its OEM business by shipping units. How exactly has Ola Electric managed this?

What Can Ola Count On?

The company started with two models in 2021 and currently has a portfolio of five scooter models, which it retails through the Ola Cab app, dealers and experience centres.

As per the DRHP, the company operates a full-fledged omnichannel distribution network that comprises 935 experience centres, including 414 service centres, as of October 2023.

In October, Ola Electric also raised a mammoth INR 3,200 Cr funding round, in a mix of equity and debt, that saw participation from Temasek, SBI and others. This is the capital it is deploying to ramp up sales in 2023.

EV two-wheeler registrations have been seeing a solid growth momentum for the last few months, and rose 14% month-on-month (MoM) in November to cross the 85,000 units mark. Ola Electric made the most of the festive season rush for new EV two-wheelers and continued to lead the market by a distance. Its scooter registrations jumped over 14% MoM to 27,331 units in November 2023 from 23,821 units in October.

Besides the festive season, the high demand for Ola Electric scooters comes from its new product offerings. Ola Electric launched a new S1X model in three variants in August this year, with deliveries beginning in mid-September.

Further, Ola Electric tied up with Ola Cabs and brought its EVs into the ride-hailing arena.

As per Ola rider partners that Inc42 spoke to, the company is offering these bikes at an upfront security deposit of INR 5,000 (as of early December) and there are no other costs involved for the rider partners. This model, which opens up a new channel for Ola Electric, is also expected to play a big role in the surge in registrations and potential sales in the months to come.

These are all positives for the company in the crucial run-up to the public listing when its bankers would pitch the model to potential investors.

But in balance, the sales boom for Ola Electric masks many of the pain points that industry experts have raised in the past. Beyond this, the DRHP also includes some of Ola Electric’s admissions of risk factors.

What Are The Red Flags?

For one, the DRHP also gave an insight into the risks of growing operating losses in the near term, adding that it may face significant delays in setting up its Gigafactory due to the uncertain timelines around key government approvals. Any delay would result in rising costs for the company in the near future.

There is also the risk that the company is unable to achieve the level of automation and precision required for cell manufacturing, the DRHP highlighted.

As we had reported in the past, Ola Electric currently has a production capacity of up to 2 Mn scooters annually. It plans to increase this capacity to 10 Mn scooters per year. However, last year the company sold just over 155K scooters.

Speaking to Inc42 earlier, Dr Deb Mukherji, the former MD of Omega Seiki Mobility, said that Indian EV two-wheeler penetration is far too low and Ola Electric’s projections seem too bullish, unless the company expands to international sales.

“India hardly consumes 6 Mn scooters in total. Even if we assume a 50% conversion to EVs, the figures claimed by Ola Electric simply don’t add up,” Mukherji had said then.

There’s another potential risk for Ola Electric in the long run.

The fire incident involving Ola S1 Pro scooters in Pune last year led to Ola Electric paying a fine of INR 15 Lakh. Whether the company is likely to face a similar fine in the future is uncertain, but there have been other reports of safety incidents since last year, which may still be investigated.

After commencing deliveries in December 2021, the company has allocated INR 68 Cr for warranty expenses as of June 30, 2023, increasing from INR 44 Cr and INR 12 Cr as of March 2023 and March 2022, respectively.

Ola Electric is yet to complete a full warranty cycle since the policy covers three years, and the company says it has only seen a limited number of claims for the scooters it has sold. The key here would be to ensure high-quality production and high safety standards, where the EV market is yet to prove itself.

Will Markets Ride On Ola Electric?

While Ola Electric has joined a growing list of Indian startups looking to list on the bourses in 2024, it is pertinent to see what the market is looking for right now.  It’s widely expected that the bearish sentiment of the past couple of years will subside in mid-2024. That could be fortuitous for Ola Electric given that it would potentially only list after this period.

Even though investor sentiments might improve, there is still a risk for new-age tech companies, given that most have weak fundamentals.

Ola Electric’s losses don’t paint the most accurate picture either. As seen in our graphic above, the company currently has negative cash flows to the tune of nearly INR 885 Cr in FY22.

This is going to be a major sticking point for investors. Plus, there will be more questions about the valuation given that the company is eyeing a potential post-listing valuation of $7 Bn (more than 2X its current private valuation).

Investors are likely to ask themselves if it is worth investing in Ola Electric at the IPO stage or they should wait for the valuation to become less rich. Of course, valuation will depend on the IPO pricing.

In the past, massive IPOs such as Paytm, Zomato and Nykaa saw big pressure on their valuations in the early days. While Zomato has turned its course with back-to-back profitable quarters, Paytm and Nykaa are still trying to grow into their IPO valuations.

“There are two kinds of companies that can pull off massive IPOs. One they have really great fundamentals, and two, they have very charismatic promoters. Right now, Ola Electric is in the second category, so investors will look into Bhavish Aggarwal’s capabilities and leadership as a key success factor,” said a Delhi-based cofounder of a VC firm, adding that the EV boom should reduce some of the burden on the CEO.

EV companies could potentially attract higher valuations given that technology is a constant growth area. Plus, investors are likely to be attracted to the fact that this is the only EV company in the market, and positive EV policy changes will give them a big upside on the stock.

But IPO pricing will be key. Many public market investors are reading through the fact that venture capitalists pay a premium price, knowing they are investing for the future. But public market investors think relatively short-term.

Substantial revenues are no guarantee when it comes to retaining investors’ faith, especially when cash flow is poor. Bottom-line profitability and consistent financial reporting are the only true metrics that unlock this faith.

Ola Electric has just kick-started its journey and it has serious momentum, and while it does have some experience dealing with questions about range anxiety in EVs, does it have enough charge to prevent investor anxiety?

Wrapping Up 2023 And Looking Ahead To 2024 

• Next Big Things In Gaming: As RMG fades into the background, the gaming sector is anticipated to witness springtime for mid-core and casual gaming studios in 2024. But there’s a lot more too
• 2023’s Newsmakers: Which personalities, founders and leaders drove prominent themes and trends in Indian tech this past year. Here are the newsmakers of the year gone by
• Will 2024 Prove IPO Friendly? Considering the current bull run in the domestic equity market and a healthy pipeline of startups aiming to go public, the year 2024 is expected to see a sharp increase in new-age tech IPOs
• Climate Tech Outlook: Despite policies in place to support climate tech and given India’s net zero goals, the sector is yet to show the impact that was expected. Will 2024 change the game?

Sunday Roundup: Startup Funding, Tech Stocks & More

• Funding Picks Up: Indian startups raised $349 Mn in funding across 25 deals in the past seven days, a jump of 34% week-on-week
• Big Loss For slice: The fintech unicorn saw its loss surge to INR 405.8 Cr in FY23, even as it is looking to merge with loss-making North East Small Finance Bank
• BCCI Vs BYJU’S: The cash-strapped edtech giant assured the NCLT about its ‘good health’ in relation to the dues recovery case filed by BCCI, despite its losses reportedly growing to INR 8,200 Cr+ in FY22

• Awfis Joins IPO Parade: Coworking startup Awfis, which counts VC giant Peak XV Partners as a promoter, has filed its DRHP ahead of its potential INR 160 Cr+ IPO

We’ll be back next week with our last weekly roundup of 2023.

Don’t forget to stay tuned to our social media channels during this time of the year. Join Inc42 on Instagram, X/Twitter and LinkedIn for the latest news as it happens.

Correction Note | December 26, 2023; 12 Noon

• An earlier version of this story included a graphic with erroneous figures about Ola’s net loss from operating activities. The error has now been rectified

The post Ola Electric Charges Up For IPO  appeared first on Inc42 Media.

The Indian ecommerce industry stands as a transformative force, which is capable of reshaping the country’s retail sphere so that it is abreast of how digital consumers shop today. 

According to Inc42’s latest “State Of The Indian Ecommerce Report Q4 2023”, launched in partnership with Simpl, the market opportunity for ecommerce is going to be $400 Bn+ by 2030. Additionally, it is anticipated that the number of online shoppers will reach an estimated 500 Mn during this period.

Over the years, the growth in this sector has been fuelled by factors such as increased internet penetration, a rising digital-savvy population and increased online spending. However, investor confidence, too, has dwindled due to startups struggling to demonstrate profitability and high cash burns. 

According to Inc42, of the 19 Indian ecommerce unicorns, whose all financial metrics are available publicly, only six were profitable in the financial year 2021-22 (FY22). 

While the FY23 financials for the majority of companies are not yet available, names like Beardo, Bluestone, boAt, CaratLane, idfresh, Paperboat, and Purplle are in the red.

This has further dented investor confidence and reduced funding in the ecosystem, according to Inc42’s Q4 2023 report. Between July and September, the ecommerce funding stood at $224 Mn, down 47% in the same period a year ago, while the deal count dropped 26% year-over-year (YoY) to 52.

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With Q4 (October to December) 2023 data yet to be compiled, let’s steal a glance at what fresh challenges 2023 brought during the July to September quarter in the ecommerce realm.    

With that said, here are a few key funding trends that we have noted in our latest ecommerce report — State of Indian Ecommerce In Q4 2023.

Key Funding Trends In the June To September Quarter

Zero Mega Deals Observed

In Q3 2023, zero mega deals were observed in the ecommerce sector in India, indicating that investors are being cautious with their money. Surprisingly, only two startups were able to secure mega deals for the period between January and September  2023 — Fresh To Home, which raised $104 Mn in February 2023, and Lenskart, which secured $500 Mn in March 2023 and an additional $100 Mn in June 2023.

D2C Remained The Most Sought After Sector

Despite the prevailing downturn, the direct-to-consumer (D2C) sector stands out as a beacon of promise within the ecommerce sphere. Continuously proving its mettle, the D2C segment has solidified its position as the most promising domain within the ecommerce landscape, a trend that carried through into Q3 2023. 

Remarkably, the D2C segment secured substantial funding of $192 Mn, comprising a striking 84.9% of the total ecommerce funding for this quarter. Moreover, the segment claimed 33 deal counts, representing 63.5% of all deals within the ecommerce sector.

Additionally, D2C funding increased by 13.6% YoY during the quarter. Noteworthy D2C players that secured substantial funding in Q3 2023 included Furlenco ($36.6 Mn), Third Wave Coffee ($35 Mn), GIVA ($33 Mn), and Pepperfry ($23 Mn).

Seed Stage Continued To Gain Traction

Despite an overall downturn in funding and deal counts across various funding stages in Q3 2023, a noteworthy exception emerged. Seed stage funding during the quarter rose 11% YoY to more than $29 Mn. 

However, a contrasting trend was observed in the growth stage, as the funding nosedived 78% YoY to over $78 Mn. Similarly, late-stage funding stood at $95 Mn, sustaining a 37% YoY decline.

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Positive Consumer Sentiment Gave A Boost To Online Festive Sales

Struggling to make a comeback in the year of the extended funding winter, the ecommerce segment witnessed a positive spike in sentiment. 

According to Inc42’s consumer sentiment analysis, conducted in association with Clootrack, customers embraced the digital shopping experience with heightened enthusiasm. 

As a result, the Gross Merchandise Value (GMV) for online festival sales in 2023 (for the period between October 1 and November 15) stood at an impressive $11 Bn, up 16% during the same period a year ago.

This surge underscores the escalating trend of consumers favouring online platforms for their festival shopping escapades, indicating a burgeoning reliance on digital avenues for shopping convenience and diverse offerings.

Delving into the specifics of these festival sales reveals intriguing insights into consumer preferences. Here are some of the key findings from the survey:

• Electronics Commanded The Most Share: Commanding a total GMV of $4.7 Bn, electronic items such as mobile phones, tablets and laptops accounted for a staggering 42% of the total GMV, signifying the robust demand for electronic gadgets and appliances during festival seasons. Following closely, the fashion category stood out prominently, boasting a GMV of $2.8 Bn, contributing significantly with 25% of the total GMV. This notable preference for fashion-related products during festival sales highlights the enduring allure of clothing and accessories as quintessential festival purchases for consumers.
• Price & Value Superseded Discounts: Between October 1 and November 29, consumers were seen focussing more on price and value than discounts. This contrast illuminates a newfound appreciation for product quality, signalling that consumers prioritise intrinsic value over mere discounted prices. Moreover, the emerging trend underscores that customer satisfaction stands as the second most pivotal factor guiding consumer behaviour during online festival sales. This shift accentuates a changing consumer psyche — one that places heightened importance on the overall shopping experience, valuing satisfaction derived from quality purchases over fleeting price reductions.
• Delivery Experience Continued To Be A Concern: Amidst the bustling fervour of online festival sales, consumers navigate through significant hurdles, particularly concerning the timely delivery of purchases and the efficacy of customer service interactions. The delivery process, plagued by delays, communication lapses, or logistical complexities, remained a substantial concern, impacting overall satisfaction. Additionally, inadequate customer service responsiveness, unresolved queries, and post-sales support deficiencies pose critical challenges, shaping consumer perceptions profoundly.

What To Expect In 2024?

There’s no denying the fact that the troubles for Indian ecommerce startups are far from over. However, with D2C leading the command in terms of funding and companies like Nykaa and Mamaearth making it to the public markets, the sector is expected to regain its investors’ confidence.

Further, the buoyant festival sales vividly underscore the ecommerce sector’s enduring influence, evidenced by the consistent year-on-year increase in GMV. 

Yet, amid this privilege and growth, challenges persist. From refining delivery experiences to elevating customer service and navigating funding fluctuations, these hurdles need to be addressed for sustained progress. 

To ensure a robust and consumer-centric ecommerce landscape, companies must prioritise innovative solutions. By addressing these challenges head-on, the sector can pave the way for a more resilient and gratifying ecommerce experience for both businesses and consumers alike in India’s dynamic ecommerce market.

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The post With Zero Mega Deals In Sight, Ecommerce Funding Falls 47% YoY To $224 Mn In Q3 2023 appeared first on Inc42 Media.