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Party over for Indian startups & unicorns?

Govt goes bullish on startups with ESOP holiday, tax relief.

Of those heavy loss-making unicorns, 14 were from the e-commerce sector, followed by fintech at 13, and consumer services at six unicorns…reports Asian Lite News

The great Indian startup and unicorn party, which saw record funding volumes in 2020, 2021 and the first half of 2022, appears to be over for now as several top names in the ecosystem continue to bleed money, with no respite in sight in FY23.

At least 55 (74 per cent) from 74 unicorns incurred a cumulative operating loss of $5.9 billion in FY22, according to leading startup covering portal Inc42.

Of those heavy loss-making unicorns, 14 were from the e-commerce sector, followed by fintech at 13, and consumer services at six unicorns, the report added.

While Swiggy incurred around $398 million loss in FY22, BharatPe reported $726 million operating loss in FY22.

Flipkart incurred $568 million loss and Meesho reported $422 million operating loss.

VerSe Innovation reported a loss of $343 million in FY22; ShareChat incurred $377 million and Unacademy $352 million, according to Inc42.

Another unicorn udaan incurred $229 million in FY22 operating losses.

The curious case of edtech major BYJU’s continues to haunt millions. The company reported an astounding net loss of over Rs 4,588 crore in FY21 on consolidated revenues of Rs 2,428 crore.

However, the company last year said it registered nearly Rs 9,991 crore in revenues in its FY22 financial results.

Meanwhile, BYJU’s is yet to file its FY22 results with the Ministry of Corporate Affairs (MCA).

Most of the leading Indian edtech startups have been bleeding money for months now.

Some of these loss-making unicorns companies are expected to launch their IPOs soon but with their income nosediving, the public market route to raise money and stay afloat has become all the more difficult.

Indian startups raised a total of $2.8 billion in funds in the first quarter of 2023, a massive 75 per cent decrease compared to the same period in the previous year ($11.9 billion), as rising inflation and interest rates continue to impact investments significantly amid a deepening funding winter.

There were no new unicorns created in the January-March period, compared with 14 unicorns in Q1 2022, according to the report by Tracxn, a leading global market intelligence platform.

The funding volumes contracted due to the reduction in late-stage funding, which declined by 79 per cent in the first quarter ($1.8 billion) compared to Q1 2022.

Early-stage rounds saw funding of $844 million, a drop of 4 per cent compared to Q4 2022 but a drop of 68 per cent compared to Q1 of 2022.

Late-stage rounds in Q1 of 2023 saw funding of $1.8 billion, a decline of 79 per cent compared to Q1 of 2022 and a 23 per cent drop compared to Q4 last year.

All eyes are now on top Indian startups/unicorns as they begin to reveal their FY23 results.

ALSO READ: Raj Neervannan-cofounded AlphaSense keen on India

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Business STARTUPS News

Gloomy quarter for fintech startups

Fintech.

No companies from the fintech space went public in Q1 2023, and there were no new entrants in the unicorn club….reports Asian Lite News

Fintech startups in the country attracted investments worth $1.2 billion in Q1 2023, 55 per cent lower (year-on-year) than $2.6 billion they raised in the same period last year, a report showed on Thursday.

It was an uneventful quarter in terms of IPOs and unicorns for the sector.ANo companies from the fintech space went public in Q1 2023, and there were no new entrants in the unicorn club.

However, this was a sharp jump of 126 per cent when compared with $523 million raised in Q4 of 2022, according to data provided by global SaaS-based market intelligence platform Tracxn.

The sector recorded late-stage investments of $977 million in the first three months of 2023, a spike of 325 per cent when compared to Q4 2022 but a drop of 44 per cent from Q1 2022.

Early-stage funding during the quarter was $177 million, down 30 per cent and 76 per cent from Q4 2022 and Q1 2022, respectively.

Seed-stage funding of $30.2 million was observed during this quarter, a fall of 21 per cent and 74 per cent from Q4 2022 and Q1 2022, respectively, the report mentioned.

In the fintech space, India is the second-highest funded geography after the US in the first quarter, and occupies a spot in the top five geographies in terms of total funding activities.

“However, the funding is still on a declining trend when compared with previous years, although there has been an uptick in funding over the past few quarters,” the report added.

Sequoia Capital, AngelList and Y Combinator are the most active investors in the country’s fintech space.

Y Combinator, 100X.VC, and LetsVenture were the top seed-stage investors. Xceedance, Telama Family Office, and CourtsideVC were the top early-stage investors, while Premji Invest, General Atlantic, and TVS Capital Funds were the top late-stage investors.

The sector observed six $100 million funding rounds in the first three months. Companies such as PhonePe, Mintify, Insurance Dekho and KreditBee raised funds above $100 million during this period.

Fintech companies in Bengaluru took the lead, raising $796 million, followed by Mumbai and Gurugram, which raised $222 million and $151 million respectively, during the quarter.

There was a slight uptick in acquisitions. The sector witnessed 11 acquisitions in Q1 2023, as against six acquisitions in Q4 of 2022, said the report.

ALSO READ: Mounting Losses & Piling Debt Crippling PIA

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Business India News

SoftBank offloads its VC arm

SoftBank

The acquisition comes after SoftBank and its Vision Fund registered huge financial losses amid the overall slump in the world of technology…reports Asian Lite News

Japanese investment giant SoftBank is selling one of its venture capital arms, SoftBank Ventures Asia (SBVA), to Singaporean investment firm The Edgeof, as VC funding remains scarce amid the global macroeconomic conditions.

The acquisition comes after SoftBank and its Vision Fund registered huge financial losses amid the overall slump in the world of technology.

The Edgeof, a newly-established entity, will be led by Founder Taizo Son (SoftBank CEO Masayoshi Son’s younger brother), and Co-founder and Chairman Atsushi Taira from the founding team of Mistletoe.

The Edgeof will leverage Mistletoe’s know-how and establish a pan-Asian ecosystem for ‘aStartups’ by discovering, investing and supporting the growth of game-changing startups, the companies said in a statement.

The company defines “aStartups” as startups that have a mission to address fundamental problems in the world with advanced technology.

SoftBank Group will collaborate closely with The Edgeof, offering valuable expertise, industry insights, and an extensive network to drive innovation and promote growth.

The acquisition is contingent upon regulatory approval and is expected to be completed this year.

“Through this acquisition, we aspire to build an ecosystem that enables visionary entrepreneurs and their startups to effect significant, positive societal change,” said Taira.

Following the acquisition, a fresh brand identity will be unveiled to signify the firm’s commitment to cultivating groundbreaking technologies across the region.

Son, Founder, The Edgeof, said, “We are confident that our collective strengths and resources will ignite a new era of revolutionary technologies and solutions, establishing us as a prominent influence in developing and expanding startups worldwide.”

Founded in 2000, SoftBank Ventures Asia is an early-stage venture capital firm based in Seoul and currently operates nearly $2 billion funds under management.

Since its inception, SoftBank Ventures Asia has focused on ICT investments, including AI, IoT, and smart robotics, with global investment professionals in Seoul, Beijing, Singapore, and San Francisco.

In February this year, SoftBank had posted a loss of nearly $6 billion in the quarter that ended in December.

ALSO READ: EY U-turns on ‘Project Everest’

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Business Technology World News

Intel, ARM strike ‘chip’ deal

Intel is currently investing in leading-edge manufacturing capacity around the world to serve sustained long-term demand for chips….reports Asian Lite News

In a significant move, chip-maker Intel on Wednesday said it will work with British chip designer ARM to build low-power compute system-on-chips (SoCs).

The collaboration will focus on mobile SoC designs first, but allows for potential design expansion into automotive, Internet of Things (IoT), data centre, aerospace and government applications.

ARM customers designing their next-generation mobile SoCs will benefit from leading-edge Intel 18A process technology, which delivers new breakthrough transistor technologies for improved power and performance.

“Intel’s collaboration with ARM will expand the market opportunity for Intel Foundry Services (IFS) and open up new options and approaches for any fabless company that wants to access best-in-class CPU IP and the power of an open system foundry with leading-edge process technology,” said Pat Gelsinger, CEO of Intel.

Intel is currently investing in leading-edge manufacturing capacity around the world, including significant expansions in the US and the EU, to serve sustained long-term demand for chips.

“ARM’s collaboration with Intel enables IFS as a critical foundry partner for our customers as we deliver the next generation of world-changing products built on ARM,” said Rene Haas, CEO of ARM.

This collaboration will enable a more balanced global supply chain for foundry customers working in mobile SoC design on ARM-based CPU cores. By unlocking ARM’s leading-edge compute portfolio and world-class IP on Intel process technology, ARM partners will be able to take full advantage of Intel’s open system foundry model, which goes beyond traditional wafer fabrication to include packaging, software and chiplets.

Intel 18A delivers two breakthrough technologies, PowerVia for optimal power delivery and RibbonFET gate all around (GAA) transistor architecture for optimal performance and power.

“IFS and ARM will develop a mobile reference design, allowing demonstration of the software and system knowledge for foundry customers,” said the companies.

ALSO READ: Mounting Losses & Piling Debt Crippling PIA

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Asia News Business World News

Mounting Losses & Piling Debt Crippling PIA

Pakistan International Airlines (https://twitter.com/Official_PIA)

Reports from the Pak news outlet ARY put the tax debts of PIA at over $1.4 billion. The carrier has even asked for a government bailout to the tune of $157 million after failure of several attempts to privatise it. The faulty policies of successive governments have soaked PIA into a sea of losses and debt where it sees no saviour … writes Kaliph Anaz

Pakistan’s official carrier, Pakistan International Airlines (PIA) is now carrying the image of the country’s economic despondency around the world. The troubled airline better known for its mismanagement and poor services has been in news for the past several years for its financial irregularities. High operating costs, inefficiencies, incompetence and looting of yesteryears have left the airline with accumulated losses of over $3.3 billion as of 2020.

Reports from the Pak news outlet ARY put the tax debts of PIA at over $1.4 billion. The carrier has even asked for a government bailout to the tune of $157 million after the failure of several attempts to privatise it. The faulty policies of successive governments have soaked PIA into a sea of losses and debt where it sees no saviour. Even the Kingdom of Saudi Arabia airport authorities are reluctant to let it survive further on credit. Reportedly, the Saudi airport authorities including King Abdul Aziz International Airport, Jeddah and King Khalid International Airport, Riyadh have sent final notices to PIA for clearing their dues. Till now the generosity of Saudi authorities had ensured a trouble-free run for the ailing airlines despite pilling up dues to the tune of nearly $ 40 million. However, weary of PIA management’s antics of avoiding the settlement of liability, they have demanded clearances of outstanding dues.

According to some experts tracking the airline industry, the problems of PIA in Saudi Arabia are not limited to financial woes. The civil aviation authority of the Kingdom has warned it several times in the past on the issue of flight delays and poor services. Notably, PIA’s time punctuality has been less than twenty per cent in the last six months. Earlier, the frequent delays had even resulted in the shifting of PIA flights from Jeddah’s North Terminal to Hajj as a penalty. Shifting of its Jeddah operation towards Hajj Terminal was a major blow to PIA’s reputation, and market share and was inconvenient for passengers, particularly Umrah pilgrims.

Closure of PIA operations at any airport in Saudi Arabia would adversely impact Hajj operations as well as the Pak government’s prestige. PIA has been criticized for its inefficiencies, including overstaffing and a lack of modernization in its operations. The airline has also been accused of corruption, which has further contributed to its financial troubles.

Besides, the airline has had a number of safety incidents over the years, including several crashes. In 2020, the European Union Aviation Safety Agency (EASA) suspended PIA’s authorization to operate in European airspace due to concerns over the safety of the airline’s operations. This also suggests the presence of political interference which leads to issues like the appointment of unqualified staff and the misuse of airline resources. Due to its poor image, PIA is currently banned from flying to the EU, the UK, and the US – three huge markets for international travel that give a strong indication of its fast deterioration. Attempting to retain a hold on coveted slots at London Heathrow (LHR) while not in use, PIA has temporarily offered these to Turkish Airlines and Kuwait Airways.

Incidentally, PIA has been mired in drug trafficking incidents with 17 kg of heroin seized (Dec 2016) at Karachi Airport from a plane bound for Jeddah. Similar instances were reported (Mar 2017) from flights heading to the UK and the arrest of PIA crew members (Mar 2018) for smuggling narcotics on an Islamabad-Paris flight.

In April 2023, online media outlets were filled with reports about PIA pilots protesting against unpaid salaries at the airlines. The pilots are reportedly warning not to operate any flights until they get paid. For the suffering pilots, the crunch could not have come at a worse time amid sky[1]high inflation in a country squeezed by a shortage of foreign currency reserves.

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Raj Neervannan-cofounded AlphaSense keen on India

Raj Neervannan-cofounded AlphaSense raises $100 mn, bullish on India.

Headquartered in New York City, AlphaSense employs over 1,000 people across offices in the US, the UK, Finland, Germany, and India….reports Asian Lite News

Market intelligence and search platform AlphaSense, co-founded by Indian-origin Raj Neervannan, on Wednesday said it has raised $100 million in addition to its $225 million Series D financing round at a $1.8 billion valuation through new investments led by CapitalG, Alphabet’s independent growth fund.

Existing investors, including the Growth Equity business within Goldman Sachs Asset Management (Goldman Sachs) and Viking Global Investors, also participated in the round.

This investment, said the company, will fuel the continued deployment of AlphaSense’s advanced AI capabilities, including generative AI that dramatically speeds up the research process for business and financial professionals.

“This investment will enable us to continue our mission of pushing the boundaries of technology and accelerating our research and development efforts in India, a valuable innovation hub,” said Neervannan, Alphasense’s CTO and Co-founder.

Neervannan has an MBA in finance from The Wharton School in the US, and a BE in computer science from Birla Institute of Technology and Science, Pilani.

Headquartered in New York City, AlphaSense employs over 1,000 people across offices in the US, the UK, Finland, Germany, and India.

“With the support of CapitalG and our existing investors, we are committed to further enhancing our product offerings and driving value for our global customers. This wouldn’t be possible without the talent and innovation of our India employees, and I am excited to see this growth continue,” he added.

AlphaSense has spent a decade building and refining its AI tech stack and amassing data to continuously train its language models, while also building its vast collection of top-tier, trustworthy business content.

“The AlphaSense platform is really powerful in how it leverages AI to transform and streamline the work of business and finance professionals globally, including investors like ourselves, as well as many happy users at companies like Google, Bank of America, and Merck,” said James Luo, Partner at CapitalG.

AlphaSense enables leading corporations and financial institutions to uncover valuable insights they can’t find anywhere else and make smarter decisions with confidence and speed.

“With the big leaps we are taking with AI to deliver even more precise data and insights to our customers, I am more excited than ever by our product roadmap and business momentum,” said Jack Kokko, CEO and Founder of AlphaSense.

AlphaSense acquired Stream, the world’s broadest library of expert interview transcripts, in 2021 and Sentieo, a financial intelligence platform, in 2022.

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Business Economy

EY U-turns on ‘Project Everest’

firm EY.(Photo;EY Careers/Facebook)

The plan came as regulators called for major industry reforms over conflict of interest and poor working practices…reports Asian Lite News

Accounting firm EY has called off its plan called ‘Project Everest’ to break up its auditing and consulting units, BBC reported.

The firm, formally known as Ernst & Young, announced they were “stopping work on the project” because it’s US arm decided to not to move forward, BBC reported.

The Big Four — Deloitte, EY, KPMG and PwC — dominate the global accounting market share.

The plan came as regulators called for major industry reforms over conflict of interest and poor working practices, BBC reported.

Had the deal gone through, it would have been the biggest shake up in the accounting industry for more than two decades.

Officials initially flagged concerns that the audit arm of the company could not do a fair job for its client who also used its consultancy services. EY’s announcement ends a yearlong battle to build internal support to split the units.

“We acknowledge the challenges with separating some of our businesses that have the deepest technical expertise in a way that gives both organisations the capabilities they need to compete in the market effectively,” according to an internal note seen by the BBC. “We also recognise that we need more time to make the necessary investments to prepare the businesses for a separation.”

The project cost the Big Four more than $100m (�80.3m) according to the Wall Street Journal.

Earlier this month, Germany’s accounting watchdog fined and banned EY for its handling of Wirecard’s audits, the insolvent electronic payment processor. It owes creditors almost $4bn, after admitting a �1.9 never existed on its books as part of a global fraud operation. The ban forbids EY from conducting audits on certain companies for two years, BBC reported.

In 2021, the UK regulators called to reduce the dominance of the Big Four after high-profile accounting failures such as Carillion and British Home Stores (BHS). PwC, the US retail chain’s former auditor, was fined a record $8m after signing off accounts the industry watchdog, the Financial Reporting Council (FRC), called “incomplete, inaccurate and misleading” in its report into the aftermath of the collapse, BBC reported.

In the US last year, the Securities and Exchange Commission (SEC) charged EY $100m, the largest penalty ever against an audit firm for its employees cheating on their CPA ethics exams and misleading their investigation.

ALSO READ: ‘One of the bright spots’, IMF hails Indian economy

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Business Economy India News

‘One of the bright spots’, IMF hails Indian economy

Photo taken on April 19, 2022 shows the IMF headquarters in Washington, D.C., the United States. (Photo by Ting Shen/Xinhua/IANS)

The Indian economy had fared far better in those years than the IMF had estimated and, therefore, had “less room for catching up” than the rest of the world…writes YASHWANT RAJ

The International Monetary Fund on Tuesday hailed India as “one of the bright spots” in the global economy even as it trimmed its projected growth for 2023 by 0.2 percentage points, but only because, it acknowledged, it had previously underestimated the country’s performance during the Covid-19 pandemic years of 2020-2021.

In other words, the Indian economy had fared far better in those years than the IMF had estimated and, therefore, had “less room for catching up” than the rest of the world.

The fund’s had a grim warning for the global economy though: while the recovery from pandemic and the war in Ukraine will continue, although at a rate slower than projected before, because of recent turmoil in the banking sector — shutting down of two regional banks in the US and the distress sale of Switzerland’s Credit Suisse — the “fog around the world economic outlook has thickened”.

The fund’s World Economic Outlook, a quarterly report on the state of the global economy, cut the projected growth for the world by 0.1 per cent and said the slowdown will take place in advanced economies, chiefly the UK and the euro area. The banking system turmoil, however, will hit emerging markets and developing economies the hardest, if it deepens.

“We are therefore entering a tricky phase during which economic growth remains lacklustre by historical standards, financial risks have risen, yet inflation has not yet decisively turned the corner,” Pierre-Olivier Gourinchas, the fund’s economic counsellor and the director of research, wrote ina blog accompanying the World Economic Outlook.

The economic outlook cuts India’s growth projected by 0.2 percentage points from its January report to 5.9 per cent for 2023 and then it will rebound back to 6.3 per cent in 2024.

The report itself offered no explanation. But Daniel Leigh, a senior IMF official said at a news conference: “This is one of the bright spots in the global economy right now; such a high growth rate and it is moderating down to 5.9 with minus point two revision compared to January.

“We realized that 2020-2021 has been actually a lot better than we thought. And so actually, there’s less room for catching up,” Leigh said further, adding, “And that pent up demand (regarding) consumption that was informing our previous forecast is therefore going to be less because they’ve already had more catching up before. So that’s why there’s downward revision”.

ALSO READ: Hyundai’s EV plans are getting bigger

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Hyundai’s EV plans are getting bigger

The move is in line with global carmakers’ plans to fill their lineups with zero-emission vehicles to help slow the pace of global warming….reports Asian Lite News

Hyundai Motor Group said on Tuesday it will invest 24 trillion won ($18.2 billion) in its domestic electric vehicle (EV) production facilities and other EV projects by 2030.

Hyundai Motor, its smaller affiliate Kia and auto parts maker Hyundai Mobis will collectively make the investment to become the world’s No. 3 EV maker in terms of sales by 2030, the group said in a statement.

The move is in line with global carmakers’ plans to fill their lineups with zero-emission vehicles to help slow the pace of global warming.

The companies will spend most of the planned investments in expanding their existing EV production lines, developing future mobility parts and technologies, establishing the EV infrastructure and exploring new EV business opportunities, reports Yonhap news agency.

The latest investment figure has been revised up from 21 trillion won announced by the Korean automotive group in May last year.

Hyundai Motor and Kia are aiming to sell a combined 3.64 million all-electric vehicles in global markets in 2030. In this year’s CEO Investor Day last week, Kia said it aims to sell 1.6 million EVs in 2030.

Hyundai Motor and Kia plan to release a total of 31 battery electric vehicles by 2030, including the Kia EV9 this year and the Hyundai IONIQ 7 next year, it said.

The EV9 is Kia’s second model equipped with Hyundai Motor Group’s EV platform, called E-GMP, after the EV6 SUV launched in 2021. Hyundai’s IONIQ 5 and IONIQ 6 are also built on the same platform.

The 31 pure electric vehicles include 18 models from Hyundai and its independent Genesis brand and 13 from Kia.

On Tuesday, Kia began the construction of a 150,000-unit-a-year EV plant inside its existing factory in Hwaseong, just south of Seoul, with a goal to start production in late 2025.

Hyundai.

President Yoon Suk Yeol attended the groundbreaking ceremony and called on the group to lead the future mobility solutions industry.

“The government will run as ‘one team’ (with Hyundai Motor Group) to take the lead in the world’s mobility innovations market along with policy support such as tax benefits (for the automotive industry),” he said.

Hyundai Motor also plans to complete a 150,000-unit-a-year EV plant in its main Ulsan plant, 414 kilometers southeast of Seoul, by 2025.

The group is building a 300,000-unit-a-year EV and battery plant in the U.S. state of Georgia, with a goal to begin production in the first half of 2025.

Hyundai Motor and Kia have set a combined sales goal of 7.52 million units this year, up 9.8 percent from the 6.85 million units they sold last year.

The two together form the world’s third-largest carmaker by sales after Toyota Motor Corp. and Volkswagen Group.

Hyundai Motor, Kia and Hyundai Mobis are expected to spend their own cash and cash equivalents reaching more than 35 trillion won as of the end of 2022 for the EV investments.

ALSO READ: Tim Cook set to unveil India’s first Apple store

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Tim Cook set to unveil India’s first Apple store

Reports surfaced earlier this year that Cook-led Apple will quickly shift some of its China manufacturing to India and Vietnam in the next 2-3 years…reports Asian Lite News

As Apple firms up its plans to put India on its global manufacturing and retail map, the company’s CEO Tim Cook will be in India next week to inaugurate Apple’s brick-and-mortar stores in Mumbai and Delhi.

Reliable sources told IANS that Cook will inaugurate Apple’s own branded retail stores — at Jio World Drive Mall in Mumbai and at Select CityWalk mall in Saket, Delhi — that will be the first for the tech giant which has doubled down on its India growth plans.

Apple set another all-time revenue record for the India market in the quarter that ended December 31, 2022.

In the analysts’ call after posting its quarterly results, Cook said, “India is a hugely exciting market for us and a major focus.

“We brought the online store there in 2020. We will soon bring Apple Retail there,” Cook had announced.

Tim Cook(twitter)

“I’m very bullish on India,” he added.

According to the India Cellular and Electronics Association (ICEA), Apple’s ‘Make in India’ smartphone now constitutes 50 per cent of total exports.

Reports surfaced earlier this year that Cook-led Apple will quickly shift some of its China manufacturing to India and Vietnam in the next 2-3 years.

India is likely to produce 45-50 per cent of Apple’s iPhones by 2027, at par with China, where 80-85 per cent of iPhones were produced in 2022, according to estimates.

India accounted for 10-15 per cent of iPhones’ overall production capacity at the end of 2022.

Apple became the first smartphone player in India to have exported $1 billion worth iPhones in the month of December.

It currently manufactures iPhones 12, 13, 14 and 14 Plus in the country.

As Apple gears up to throw open the gates of its first branded retail store in India this month, its physical stores have left an indelible impression on millions worldwide.

For millions of Indians, visiting an Apple Store in the country will be a delightful experience. Those who have a constant yearning to be ‘delighted’ at Apple Stores at world-famous tourist spots, India will soon be on the Apple’s retail global map.

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