Hello everyone,
India’s payments space has seen a flurry of activity of late. First it was Facebook, which bought a minority stake in Jio Platforms to push its WhatsApp Pay through Reliance Industries’ e-commerce venture JioMart. Soon after, Walmart-backed Flipkart pumped an additional $28 million into PhonePe. And now, Paytm is said to be in talks to raise new capital from technology major Microsoft.
Building a war chest
Paytm has held talks with US technology giant Microsoft for fresh funding as the Vijay Shekhar Sharma-led company prepares to stave off stiff competition in the fast-growing digital payments space, especially after the Facebook-Jio partnership that threatens all incumbents.
How much?
The proposed capital raise, which may amount to around $100 million (Rs 760 crore), is likely to be an extension of a planned $1-billion (Rs 7,600 crore) fundraising that the company had initiated in November last year.
Why it matters
This comes at a time when Paytm is fighting a bruising online payments war. Paytm has been losing ground in the Unified Payments Interface (UPI) to rivals like Google Pay and Walmart-owned PhonePe. Read more.
SoftBank Vision Fund eyes secondary deals
The $100-billion SoftBank Vision Fund is on a lookout to snag new deals in India even as the spluttering technology investor grapples with a severe crisis across its portfolio companies globally.
Rajeev Misra, who oversees the Vision Fund as its CEO, said the firm has $13 billion in unspent capital which they are in talks to deploy in India, and globally, amid doubts about the group’s ability to plough new funds into companies.
Misra and the overall Vision Fund have come under major scrutiny not only for their outsized bets on cash-guzzling and overpriced technology startups but also for the infighting at the firm. The bet on shared economy has been further compounded by the coronavirus outbreak.
Read the story to know more about the challenges faced by its portfolio companies in India and how it plans to steer through this period of uncertainty.
Sucking e-commerce dry
From expecting the Indian ecommerce firms to benefit from the lockdown just as they have in the US and China, analysts and industry watchers are now expecting overall growth in the sector to be in the mid-single-digits this year, down from almost 35% in 2019.
For the two largest players in the space, Walmart-owned Flipkart and Amazon, daily deliveries are down to around 10% of what they were prior to the lockdown, while the gross merchandise value (GMV) of products they sell has fallen to around 5% of what it was a month ago.
Both companies are bleeding more money on every delivery than before as the margins on food and fast moving consumer goods (FMCG) are far removed from the margins they used to earn on smartphones and apparel. Read more.
Udaan layoffs
Udaan, a business-to-business e-commerce startup, has laid off about 10-15% of its contract staff, affecting at least 3,000 jobs.
The downsizing is largely driven by the Covid-19 pandemic significantly denting the company’s top line across non-essential categories including electronics, and apparel. Read more.
The trend
Technology startups are likely to cut hundreds of jobs over the next six to eight months, as demand stutters. Multiple internet businesses—including Oyo, BlackBuck, Treebo, Acko, Fab Hotels, Meesho, Shuttl, Capillary, Niki.ai, Swiggy and Fareportal—have on average cut workforce by 30%, including temporary staff, in the past one month. Read more.
Sequoia surge
Sequoia Capital’s accelerator fund ‘Surge’ has backed 15 startups across India and Southeast Asia, at a time when new deals globally are few and far between.
The $200-million fund has made seven investments in the country across sectors in its third batch, taking its overall Surge portfolio to 52 startups. Surge is a 16-week accelerator programme, wherein startups receive scale-up support, along with $1-2 million in capital from Sequoia, besides co-investments from other investors.
Sequoia, through this accelerator, is building a tight-knit resourceful community which the Silicon Valley blue chip firm hails as the next phase of differentiation in early-stage deals at a time when capital has largely commoditised cash. Read more.
Global Picks
– As workers spread out to halt the virus, robots fill the gaps. Read more at Wired.
– Doctors are now social media influencers. They aren’t all ready for it. Read more at MIT Technology Review.
– Magic Leap’s $2.6 billion bait and switch. Read more at TechCrunch.
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