India’s evolving fintech landscape has hardly witnessed a raging chorus, with every stakeholder – from regulators to startups and lenders – pressing for a change in guidelines. That’s what is taking the country’s $793 Bn fintech market, on course to surpass $2.1 Tn by 2030, by storm at the moment. 

The stakeholders have reached out to Prime Minister Narendra Modi, seeking a green light to charge large merchants on any UPI transactions above INR 2,000. The Merchant Discount Rate (MDR), which is the fee charged to merchants by banks or payment service providers for processing digital transactions through the Unique Payment Interface (UPI), was brought down to zero from January 1, 2020, to push for digital payments. 

But the need to bring back the MDR was amplified with UPI becoming the primary mode of retail payments and RuPay gaining traction, and the industry felt the blanket waiver was no longer necessary to drive digital payments. 

On March 24, the Payments Council of India (PCI) in a letter to PM Modi sought urgent reconsideration of Zero MDR on UPI and Rupay debit card transactions. PCI is an industry body of members like Airtel Payments Bank, Amazon Pay, Google Pay, Cashfree, and Jio Payments Bank. PCI’s call to impose MDR on big-ticket transactions was supported by another industry body, Startup Policy Forum, which counts Razorpay, Groww, and Zerodha as its constituent members. 

They have called for an MDR of 0.3% on UPI payments above the ticket size of INR 2,000 for P2M transactions where merchants have an annual turnover of INR 20 Lakh. The two-tiered approach will balance growth with financial inclusion on one hand, while on the other, foster a sustainable ecosystem for digital payments space.

Banks had earlier requested the government to restore MDR on UPI payments for merchants with an annual GST turnover exceeding INR 40 Lakh. In fact, various industry players have repeatedly demanded that MDR be restored. 

The call for MDR turned louder even as some of the largest players in the ecosystem, especially third-party applications (TPAPs) like Google Pay, PhonePe, and Paytm, maintained an unusual silence on the issue. Together, Google Pay and Phonepe constitute more than 80% of the UPI transactions on a volume basis, while Paytm remains a distant third. 

“While it is true that we have not heard much from the TPAPs on the MDR issue, there is no reason why they should not be supporting this, considering that it will not impact 90% of their transaction volume as the average transaction value for them is below INR 2,000,” Rajesh Londhe, cofounder, Phi Commerce, told Inc42. 

The fintechs and some of the leading banks that have taken up the issue with the RBI have not found any resistance from the regulator. “What the industry has been told is that the regulator is awaiting clarity from the government on MDR and once that happens, the RBI and the NPCI will have no choice but to allow the acquiring banks and payment companies to charge MDR from large merchants,” he said. 

An acquiring bank enables businesses or merchants to accept various types of transactions, including credit or debit cards and other digital payments. 

Sources privy to the discussions among the banks, fintechs and the RBI indicated that the industry hopes to see an announcement from the finance ministry on MDR soon. The participation of some of the largest private lenders has strengthened the case in their favour. 

With the chorus growing louder to reinstate MDR on UPI, we unpack what’s really driving the demand.

What Went Wrong In Zero MDR Regime

The zero merchant discount rate regime was rolled out in January 2020 for RuPay Debit Card and BHIM-UPI transactions through amendments in Section 10A of the Payments and Settlement Systems Act, 2007 and Section 269SU of the Income-tax Act, 1961. The move was intended to accelerate digital payment adoption in the wake of the government’s 2016 demonetisation push towards a cashless economy.

Finance Minister Nirmala Sitharaman had backed the move, arguing that while the government imposed Zero MDR, the costs incurred in UPI payments were far lesser than the other modes of transactions. 

While the government did not allow banks and payment companies to charge MDR from merchants on any UPI transactions, it compensated banks, PSPs and TPAPs to the tune of 0.15% for UPI transactions below INR 2,000, while there were no sops for big-ticket transactions. 

The incentive payout stood at INR 1,389 Cr in FY22 and it went down to INR 2,210 Cr in FY23. The corpus was raised to INR 3,631 Cr in FY24, but was again brought down to INR 1,500 Cr (revised estimate) in FY25. According to media reports, the allocation has been hacked down to INR 437 Cr for FY26 (projected).

While the government incentives slowed down, UPI transactions gathered momentum, emerging as the most preferred form of digital payments in India. 

In March 2025, UPI processed 18.3 Bn transactions valued at INR 24.7 Tn. The UPI’s share in India’s digital payments pie stood at 83% in 2024 from 34% in 2019, averaging a growth rate of 74% in the five years, as per data collated from The National Payments Corporation of India (NPCI), which runs the UPI. Merchants payments constituted 62% of all UPI transactions. 

Riding on the UPI wave, the government has signed agreements with various countries like France, Singapore, Maldives, and the UAE to develop UPI-like payment systems there and promote cross-border payments. 

Banks and fintech players argued that some of the goals aimed at Zero MDR on UPI had been achieved, with Indian consumer habits also undergoing a seismic shift. 

Why The Call To End Zero MDR Turned Louder

Over the past couple of years, banks, payment processors, and even TPAPs have had to upgrade their tech stacks and bear server costs to accommodate exponentially rising UPI transactions. 

“We have seen frequent outages because of technical issues faced by the NPCI, latency in the bank network, and such challenges. There were five reported UPI outages over the past one year across the country with NPCI attributing the same to some ‘intermittent technical issues’,” founder of a TPAP said. 

While it isn’t certain as to what the specific technical challenges could be, industry analysts say that it has become unsustainable for fintechs and banks to keep up with the rising costs associated with UPI transactions under the current Zero MDR regime.

Some fintech founders complained that the government’s incentives for UPI players were never enough to cover the costs associated with transactions. 

“It is crucial for payment companies to rely on sustainable models to whatever extent possible.This has been in the works for a while. The timing now seems right because the government has completed its initial digitisation and UPI groundwork. Now, the focus is on making the system sustainable while ensuring quality for those supporting it,” Rohit Taneja, founder and chief executive of Decentro, a banking integration platform for merchants, told Inc42. 

“Banks, in particular, have been vocal about this. Any senior banker would say that while UPI is great for maintaining trust, it is incredibly costly. They are expecting better support and incentives from the government, which has been the broader discussion,” he added.

Taneja went on to add that government incentives cannot be a solution since banks and fintech will have to first spend on infrastructure costs to enable transactions, and then only the government incentives will cover the costs. “Moreover, these incentives have been heavily skewed towards a few players, and they clearly benefited the most,” Taneja added.

Zero MDR is not the only issue that has roiled the fintech space. The dominance of TPAPs like PhonePe and Google Pay has created an uneven field in the consumer-facing UPI apps market. Industry leaders have long argued that this is against competitive practices.

The NPCI had called for limiting the market cap of UPI for each TPAP to 30% of the market share, but over the last couple of years, it has repeatedly deferred the deadline for this. 

Will MDR Restoration Be A Nemesis For UPI

“Certainly not,” the founder of a Bengaluru-based TPAP platform ruled out the possibility of a downfall for the UPI in bringing back the merchant fees. “Our demand is only to charge big merchants for transactions above INR 2,000. Big-ticket transactions make up only 10% of the UPI volumes.” 

PCI members Inc42 spoke to said the majority of the UPI volume is made up of micro-transactions, or those below INR 2,000. Also, the government incentives were for micro-transactions on the UPI and not large-ticket transactions. Since Zero MDR was a sweeping regulation, banks and payment companies weren’t charging merchants anything. 

Rajesh Londhe of Phi Commerce argued that the demand of charging 0.3% on each big transaction would not necessarily impact merchant behaviour or lead them to opt for other payment methods. 

“Merchants typically adopt the payment methods that consumers prefer. A decade ago, people asked for POS machines, but today, QR codes are the norm. The same will continue even after MDR is introduced. UPI adoption will not decline – it will simply create a more balanced ecosystem,” Londhe said. 

There are murmurs in fintech circles that some payment gateway companies were charging a certain percentage of the transaction amount as a payment processing charge disguised as hidden fees or convenience fees. 

“Once this merchant discount rate (MDR) comes into play, the concept of free UPI will no longer exist. Large merchants expect UPI transactions to be free, which puts pressure on PGs (payment gateways) to monetise through credit cards or offer additional services at very low margins – sometimes as low as 0.1% or 0.2%. This is not a sustainable solution,” Taneja said.

“Once the free aspect is removed, merchants can no longer expect free UPI transactions by default, since the government won’t mandate it. Each PG will develop its own pricing strategy. Some PGs may still choose to offer free UPI transactions, but it won’t be a universal rule.” he added.

The NPCI, however, negated the complaints of the payment service providers. The absence of MDR is not deterring new participants from joining the UPI ecosystem, NPCI managing director and chief executive Dilip Asbe was quoted as saying in the media recently, with 50 TPAPs keen on boarding the real-time payment rails.

What Keeps Third-Party Big 3 Silent On MDR Issue 

As the demand to end the Zero MDR regime grows louder, the silence from the big three consumer-facing UPI apps — PhonePe, Google Pay, and Paytm — hasn’t gone unnoticed, especially in the wake of the government slashing incentives over the past month.

Some of the big TPAPs are also members of the PCI, which has been leading the rally against Zero MDR. 

Although restoration of MDR on UPI is not likely to have any financial impact on these applications since most transactions are micro-transactions on these apps, these players are concerned that the merchants may pass on the costs being charged to the consumer that may, in turn, impact the userbase of these apps. 

The MDR being proposed to be charged from merchants will be shared between the acquiring banks and the payment gateways, not the TPAPs. Only if a TPAP has its own payment gateway business, like PhonePe or Paytm, will it make revenue out of the MDR ambit.

“Google Pay doesn’t have its own PG business. PhonePe and Paytm’s PG businesses are small, compared to mature players. This regulation although would not impact them directly, there are concerns of a spill-over effect on the consumer behaviour if large merchants are charged and they pass it on to consumers.This could impact the UPI userbase which, in turn impacts these TPAPs,” the Bengaluru TPAP founder pointed out.

Any erosion in the user base would also concern the government, which has been promoting UPI on international stages. 

What Lies Ahead For Debates And Deterrents 

Taneja of Decentro believes that the larger concern with the government lies in the challenges faced by banks, including some of the biggest lenders, in maintaining the infrastructure associated with a huge volume of UPI transactions.

“The government is also concerned about the sustainability of banks. In an extreme scenario, there could be a major financial crash due to banks being unable to sustain the system. That would be a far bigger problem. So, banks are already spending heavily on maintaining the UPI ecosystem. That is why we have seen even the likes of HDFC Bank and several big lenders supporting this demand,” Taneja said.

Londhe of Phi Commerce, however, ruled out such a possibility, saying that the concerns of shifting consumer behaviour because of the reintroduction of MDR were unfounded since businesses cannot charge any additional convenience fee to the consumer without government approval.

“The kind of UPI transactions which will most likely come from the UPI purview will involve large merchants and enterprises who will be ready to absorb a 0.3% cost for a large transaction or to retain consumers and not pass it on,” said the founder of a large payments gateway startup that deals with enterprises.

Taneja added that in such transactions the majority of the volume gets generated by the top 1% or 5% of high-spending individuals in India. “Most of them wouldn’t mind paying a convenience fee of INR 1 or INR 2. BookMyShow is a great example. When you book tickets online, you pay an INR 90 convenience fee, yet people prefer booking online rather than going to the theatre in person,” he added.

While there is a lot of chatter going on within the banking and fintech circles across India over the MDR issue, all eyes are now set on the next big move by the government and whether FM Sitharaman would further reduce the MDR incentives to banks and fintechs in the FY27 from an allotment of INR 437 Cr in FY26 or altogether cut back on incentives and introduce MDR on large UPI transactions.

[Edited By Kumar Chatterjee]

The post End Of Free UPI? Why Fintech Startups Want MDR appeared first on Inc42 Media.

In early 2023, restaurant body National Restaurant Association of India (NRAI) was gung-ho about the Open Network For Digital Commerce (ONDC) and so were other retail associations, but two years later, ONDC does not seem to have moved the needle too much.

The buzz was so loud around ONDC in 2023 that various consumer and payments apps such as Paytm, Magicpin, Ola and others joined ONDC as a buyer app, looking to break into the Swiggy-Zomato duopoly.

But that noise is all but a whimper today. Amid a leadership crisis that has seen CEO Thampy Koshy stepping down this week after CBO Shireesh Joshi had quit earlier, ONDC is going through a transition. The number of orders reducing significantly since last year, the government backed network is struggling to meet its milestones.

So let’s catch up with ONDC this Sunday and where it is headed. Will the government-backed network fulfil its promise and potential? Before we find out, here’s a look at the top stories from our newsroom this week:

• Ecom Express Derailed: Once valued at $850 Mn and gearing up for a public listing, Ecom Express has now been acquired by rival Delhivery for just $165 Mn, an 80% value erosion. What went wrong?
• SaaS’s Inflection Point: Indian SaaS startups raised over $2.1 Bn in 2024, up 31% YoY. A growing chunk of this capital is flowing toward companies that are not just building on AI, but being built by AI. Behind this investment flurry
• Behind Aisle’s Boom: Info Edge-owned Aisle’s revenue soared by nearly 146% in two years and the dating app reduced its cash burn by 42% this year. What exactly turned things around for this Tinder and Bumble rival?

From Highs To Lows

ONDC, backed by the Department for Promotion of Industry and Internal Trade (DPIIT), was introduced in December 2021 and launched for public use in 2023. It was seen as an alternative to the marketplaces and aggregators who were dictating terms for sellers. Instead, the ONDC offered an incentive-based structure for apps and an open network of sellers that everyone on the network could access.

That beginning was great —  mammoth discounts rained on food delivery on ONDC, almost 50% cheaper than aggregators like Zomato and Swiggy. The social media buzz pegged ONDC as a Zomato and Swiggy killer.

More than two years down the line, today, the network has crossed 200 Mn lifetime transactions as of March 2025 with a significant increase in annual transactions volume, however did ONDC prove to be a Swiggy, Zomato killer or has it been the other way round?

ONDC, which was tipped to be a one-stop shop for all things digital commerce, is now struggling to compete with well-capitalised startups in food delivery and quick commerce segments.

And the resignation of CEO Koshy this month is another blow. Post his exit, an executive committee has been formed to take things forward, with Nitin Nair who heads logistics, mobility, travel segments and  Vibhor Jain who is the head of network governance and chief operating officer as key members

“It is a seven member committee which has  several vertical heads as members. This executive committee has been tasked with overseeing the operations at ONDC post the exits of the CEO and CBO,” sources told Inc42.

Meanwhile, former CEO Koshy who was also in the founding committee at ONDC,  is expected to help with the transition and will be handing over the charge in June 2025.

Inc42 sent detailed queries to ONDC regarding the above developments. The story will be updated as and when the ONDC spokesperson responds.

Behind The CEO Exit

Speaking to Inc42, T Koshy said he believed it was the right time for him to step down as several milestones in transaction volumes, seller onboarding had been achieved.

“If not sizable, we have initiated an idea, set a stage for alternative stakeholders in digital commerce to access wider markets and build products/ services on top of an open source network. This has never happened in India’s digital commerce industry,” Koshy, whose name had become synonymous with ONDC, told us.

While denying any reports on whether ONDC’s transactions, revenue milestones were missed during the last three years, Koshy responded by saying that any transformative idea in a particular industry takes several years to shape and further more time to be accepted broadly.

“The UPI transformation happened over the course of a decade. While the UPI was made open to public in 2016 the idea was conceived several years ago and then many tweaks were done until the fintech industry recognised this digital payment,” Koshy, who served as executive director of National Security Depository Limited (NSDL) prior to joining ONDC, added.

Koshy added that while one may argue on the metrics like market share etc, to compete with deep pockets of giants like Zomato, Swiggy or Zepto continues to be a challenging task.

“We did not anticipate in the first year of ONDC being made open to the public that we would cross 50 Mn transactions but we did so. We are anticipating 150 Mn transactions in 2025 alone and by all means this is a huge leap,” Koshy added.

Did Quick Commerce Craze Doom ONDC?

Arguably 2023-24 has been a significant transformative year in India’s ecommerce industry with Zomato’s Blinkit, Swiggy Instamart and Zepto leading a consumer behaviour shift in India. The trio have raised $3.5 Bn in 2024 alone via private funds raise, IPO and qualified institutional placement.

A majority of this capital raise has been deployed to strengthen the capital intensive dark store network, offer cashbacks and expand into new categories, impacting not only ecommerce giants like Amazon, Flipkart but India’s mammoth $1 Tn retail industry which includes scores of kirana stores and small shops.

ONDC’s retail transactions also became a casualty of the quick commerce advent with a foreseeable slump in retail orders towards the latter part of 2024 and first three months of 2025.

Retail transactions which include food deliveries, fashion, electronics and groceries have consistently fallen, peaking at 6.5 Mn per month in October 2024 but declining to 4.6 Mn in February 2025 marking a 10-month low.

In the retail segment, the grocery reportedly constituted 1.8  Mn monthly transactions in February 2025 — a paltry number by most comparisons in the grocery space. Sources said that the share of grocery has consistently shrunk in the overall retail order volumes on ONDC whereas food delivery volumes have seen flat growth from the peak of 2024.

“Zepto single handedly changed the narrative of digital retail delivery and consumption by expanding faster and raising mega funds raises in the first half of 2024. Blinkit and Swiggy Instamart have not held back and targeted the markets  quickly capturing almost 90% of the industry. When it started, ONDC was reporting better than expected numbers due to seasonal peak demand in the festive season. After that, it has been a sob story for ONDC retail segment with consistently falling retail transactions,” a source within ONDC added.

Meanwhile, Koshy believes that the idea was not to challenge these large players as competing with flush ecommerce giants is a herculean task. He said that ONDC wanted to prove that an alternative can exist for India’s digital commerce industry.

“If you think about it, this is akin to what happened in the financial services and other industries. Some sort of consolidation will be there but that does not mean there should be no market competitiveness,” Koshy added.

On the other hand ONDC’s founding members that includes Protean eGov Technologies Limited and Quality Council of India and other shareholders like ICICI Bank, Bank of Baroda, Avaana Capital, HUL among others decided to scale down the incentive programme launched at the outset to attract buyers and sellers.

In addition, the buyer side applications like Paytm, Magicpin, Ola and others have also reduced the discounts they were offering to the consumers for retail orders placed via ONDC network. Is ONDC fading away as a result?

Shrinking Discounts Play Spoilsport 

Despite being just a year old in 2024, ONDC started a strategic shift and cut down incentives offered to network participants from the peak of INR 3 Cr in July 2024 per participant, to INR 30 Lakh in December 2024 per participant if sellers averaged 1 Mn monthly orders.

In addition, the network began charging INR 1.50 transaction fees for any transaction above INR 250 from the seller in a move underscoring ONDC’s thrust on maintaining financial stability and operational sustainability.

On the other hand, the buyer-side apps have also significantly reduced the discounts being offered on grocery, food delivery orders which includes players like Paytm, Ola and Magicpin. The operational costs were being supported by the incentives offered by the network shareholders but with that significantly down, buyer apps are finding it increasingly difficult to compete with quick commerce companies.

“PhonePe’s Pincode also opted out of ONDC primarily due to this reason. While the buyer side apps were offering discounts to the buyer, they were not charging high enough commissions from sellers which almost made it difficult for them to sustain,” a senior executive with ONDC associated buyer-app told us requesting not be named.

An ecommerce player which onboards sellers on ONDC stated that in comparison to Swiggy, Zomato which charged restaurants 30%-40% commissions, ONDC’s buyer apps like Paytm, Ola or even Magicpin took a mere 5% commission and have stuck to this low rate despite food delivery seeing an overall slump.

“Even Zomato, Swiggy’s food delivery business has slowed down. But they have been able to post healthy margins due to higher commissions from restaurant partners and other charges being levied on the platform passed on to consumers. For ONDC this proved to be deadly with overall industry slowing and discounts disappearing,” the above person stated.

The Silver Lining For ONDC

Despite retail orders slowdown, mobility and logistics segments have held onto strong transaction volumes and surprisingly performed better than retail.

“Mobility overall is undergoing a rapid shift with Ola, Uber’s dominance withering, Rapido taking over and BluSmart in deep crisis. Namma Yatri which was the first mobility player to onboard ONDC paved the way for zero commission rides which was trend setting for the industry. ONDC in that sense has a first mover advantage and has done good so far,” an ecommerce sector analyst said.

Koshy told us that in addition to ride hailing services, ONDC has been able to rope in various city metros, bus services to facilitate the mobility segment business.

“The mobility segment is now active in three metros and 18 cities. We started mobility services in Bhubaneswar and expanded later on. We are now collaborating with Delhi Transport Corporation (DTC) for online sale of DTC bus tickets. Besides, we have made bus bookings available via Redbus,” Koshy added.

The other success story of ONDC seems to be from the logistics industry with the network now onboarding multiple large and small players which include Delhivery, Shadowfax, Loadshare, Ola, Porter, Amazon Logistics, Ekart among others. The logistics orders increased from 35,000 in April 2024 to 2 Mn in February 2025.

“Logistics is perhaps the most important success story to have come out of ONDC so far with a huge gap being filled by logistics players onboarding ONDC and sellers now being given the choice to choose anyone among these players for running their deliveries,” founder of a key logistics company which is working with ONDC told us.

Despite the initial hiccups ONDC has made some strides in the digital commerce but will likely bank on a more financially sustainable model as well as generate heightened consumer awareness in order to give the rivals some competition. As of now, the immediate challenge will be to overcome the leadership crisis and ensure the smooth operations.

“ONDC is here to stay. It is a process in making. Today we have the likes of Reliance, Tata Group and Bajaj joining us besides numerous new age companies from each vertical. We have set the stage and someone will have to take it to the next level,” former CEO Koshy added.

But food delivery and grocery shopping are the most frequent use-cases that ONDC was looking to unlock and gain some advantage over delivery apps and marketplaces. Will the entry of conglomerates and new-age giants force it into a new direction and take it off the public limelight?

Sunday Roundup: Startup Funding, Deals & More

• UPI Goes Down Again: Digital transactions were impacted today due to a widespread outage on the UPI network — the sixth such outage in the past year — with several users reporting failed transactions and payments
• Funding Sees Bump: Between April 7 and 12, Indian startups cumulatively raised $195.1 Mn across 20 deals, marking a 35% surge from the previous week

• Ola’s New Launch: EV major Ola Electric has launched its first Roadster X motorcycle from its Futurefactory, the model which the company had accounted for in its February sales data
• Sovereign Models: Amid the ongoing global AI race, India must focus on building a ‘sovereign AI’ ecosystem to ensure autonomy over its data, Sarvam AI cofounder Vivek Raghavan said at the GenAI Summit By Inc42 this week

Edited by Nikhil Subramaniam

The post Did Quick Commerce Eat ONDC’s Lunch?  appeared first on Inc42 Media.

While the jury is still out on whether businesses are keen on deploying GenAI solutions, SaaS unicorn Zoho’s enterprise IT management solution ManageEngine’s CEO Rajesh Ganesan had an interesting take. According to him, the company’s clients are not in any kind of rush to adopt AI.

Ganesan was speaking during a session at Inc42’s GenAI Summit. He was joined by SpotDraft cofounder and CTO Madhav Bhagat, Bessemer Venture Partners’ Anant Vidur Puri, and Exfinity Venture Partners’ Chinnu Senthilkumar.

“There is no hurry. The enterprise clients want their business problems to be solved and the onus is on us to effectively use AI to solve those issues… In different geographies including India and the US, we are not seeing our clients rush through any adoption,” said Ganesan. 

To align the company’s goals with its clients, Ganesan added that Zoho has built a separate leadership team, tasked with overseeing AI product development over the next two years. 

Responding to a question about regulatory concerns around data privacy, Ganesan said that Zoho has established in-house teams to oversee regulatory compliance in each of the geographies it operates.

Noting that it is unwise to merely “throw technology” in the name of solving consumer problems, Ganesan said that it is important to strike a balance between local laws and high-quality products. 

For ManageEngine, India is one of the fastest-growing markets, just behind the US and the UK. 

Responding to a separate question about how important it is for SaaS startups to embrace GenAI, Bessemer’s Puri warned that GenAI-driven rivals will eventually pip companies that do not “evolve” their product, coding, testing and customer support stack with time. 

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While enterprise solution companies are in the process of deploying GenAI, Tejas Goenka, the MD of Tally Solutions has said that trusting the emerging tech remains a key challenge for small and medium-sized businesses due to data concerns.

Goenka said this during a fireside chat, Leveraging AI to Empower MSMEs in a Digital-First Economy, moderated by Kshitij Shah, the CTO of Ratnaafin Capital.

“While there is enthusiasm around AI, there are also concerns on how the sensitive data of businesses is being used,” the Tally Solutions MD said.

He added that since most AI tools today are predictive in nature and much of the data remains unstructured, AI can sometimes produce inaccurate results.

Despite these concerns, Tally Solutions has started integrating AI into various products since last year to enable simpler user experiences with minimal human intervention, allowing businesses to access their data via WhatsApp or interact with it through an AI tool — all without compromising on privacy.

Goenka added that a key challenge would be catering to the Indian market, where much of the hardware used by businesses, including laptops and PCs, is still outdated and lacks strong computing infrastructure, yet is expected to deliver a reasonably good experience.

The post Indian MSMEs Wary Of AI Leap Due To Data Privacy Concerns: Tally Solutions’ Tejas Goenka appeared first on Inc42 Media.

Amid an ongoing debate on why the country’s deeptech ecosystem has fallen behind developed economies like the US and China, Gaurav Aggarwal, the VP and Chief AI Scientist at Reliance Jio, has said that India currently lacks the risk capital needed to support AI development.

Aggarwal was speaking at Inc42’s GenAI Summit held in Bengaluru today. He was joined by Ashwin Raguraman, cofounder & partner at Bharat Innovation Fund; Roopan Aulakh, MD at pi Ventures; and Chinnu Senthilkumar, managing partner at Exfinity Venture Partners.

“We don’t have the right policies in place to leapfrog in AI development. Extending the risk capital is the type of capital for the deeptech we need. If you look at the kind of capital that has gone into the deeptech ecosystem of the US or China, India has not got any exposure to that kind of capital,” Aggarwal added. 

He added that while India holds vast and valuable datasets, the real challenge lies in putting them to use — similar to what the country faced while building the UPI framework.

“Besides my role at Reliance, I am also a volunteer at iSpirit. What we are currently doing is developing a Digital Public Infrastructure (DPI) for AI startups to make sharing of data, or data collaboration, easy. It is in very early stages but the challenge now is the same as it was during UPI’s development: how to engage as many stakeholders from the deeptech ecosystem as possible,” Aggarwal said. 

Can Govt Become The Largest Buyer of India’s AI Innovation?

With commerce minister Piyush Goyal questioning India’s deeptech prowess, comparing it with China’s advancements, many stakeholders have pointed out that the government itself could be the biggest beneficiary of products emerging from India’s deeptech innovation.

Reliance’s chief AI scientist has raised questions about the adoption of AI and SaaS applications developed by Indian startups and developers within government departments.

“Do we say a Zoho app or any good Indian deeptech product being used by the government ? The answer is No,” he added. 

Meanwhile, echoing the sentiment, Senthilkumar of Exfinity Venture Partners said the government could become the biggest consumer of Indian AI products in areas like legal, digitisation of complex court documents, passport services, and public healthcare.

Bharat Innovation Fund’s Raguraman pointed out that while the government has launched a platform under the National AI Mission, startups and innovators continue to face regulatory hurdles, tax burdens, and compliance issues, which often act as roadblocks to innovation.

“The UPI moment for AI is upon us, We already have digital backbone but would need a holistic participation from enterprises, the government and startups to leapfrog into next phase of growth,” Raguraman concluded. 

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Highlighting how the implementation of GenAI has finetuned its business, IPO-bound OfBusiness’ cofounder and CEO Nitin Jain said that the company has been able to dramatically cut the time taken by its team for research. 

Speaking at the inaugural session of Inc42’s GenAI Summit, Jain said the company has been able to cut the research time on a particular sector from 4-5 days to about 30-45 minutes. 

“Earlier it would take us four or five days to do deep research, which AI is able to do in about 30 to 45 minutes. AI is able to generate, curate questions and do a deep dive into the sector and ask detailed questions so that you’re aware about what M&A is getting,” Jain explained. 

Founded in 2015 by Jain, Asish Mohapatra, Ruchi Kalra, Vasant Sridhar, and Bhuvan Gupta, OfBusiness offers raw material procurement and financing solutions to SMEs in the manufacturing and infrastructure sectors.

Notably, OfBusiness has been doubling down on its AI playbook in the run-up to its IPO. Earlier this year, the B2B marketplace OfBusiness launched an AI-based platform, Nexizo.AI, to help mid-market and large companies fuel business growth. 

The platform allows companies listed on OfBusiness to find relevant buyers for their products, gather market insights for competitive intelligence and discover raw material prices. Besides, users can also access software tools to optimise their sales, logistics and inventory functions.

PhysicsWallah’s Doubt Solving Push 

Another IPO bound company PhysicsWallah has accelerated its doubt-solving engine with the deployment of GenAI, PhysicsWallah’s Sandeep Varma, Head-Data Science & Engineering, said during the GenAI Summit.

Varma said that at the edtech company almost 60% of the doubt solving processes for the students now take place with the help of the GenAI model.

“Doubt solving is such a key proposition for any education company, and I think it took almost 1.5 years to take us to production. Today, we are proud to say that 60% of our doubts come on a daily basis,” he added.

Due to the deployment of AI models, PhysicsWallah which recently filed its DRHP via confidential route has been able to reduce costs with current Gen AI model applications which is 1/10th of the expenses before.

“Recently, we also launched grading platforms specifically targeted with students who are preparing for UPSC, because they need to, they need to do 19 subjects, and they need to write those long essays. So what, what used to kind of be a bottleneck was the human resources that we have, the subject matter experts, because we can’t scale them with the volume of the volume of copies that we have. So using GenAI, we were able to reduce the turnaround time of seven days to almost instantaneous. It takes 30 seconds today, and it is happening at 120 at the cost of human evaluation,” Varma said.

Editor’s Note: Some parts of the story has been updated for clarity and accuracy.

The post How GenAI Adoption Helped OfBusiness Cut Down Research Time To Almost Zilch appeared first on Inc42 Media.

It’s been a year since a bumper listing opened up the growth path for Awfis, and now the company is looking to grab a big slice of the GCC boom currently swepping across the country.. 

Awfis saw its revenue surge 44% in the third quarter of fiscal 2024-25 to INR 318 Cr, while its EBITDA jumped 59% over the previous year to INR 107 Cr, driving a margin of 33.8%, wider by 320 basis points.

In the second quarter of FY25, the top line shot off 40% over the previous year to INR 292.38 Cr. The company not only stepped out of an INR 4.3 Cr loss it had incurred in Q1, it swung into an INR 38.67 Cr profit in the three months to September 2024.

All this happened in a year when the stock prices of most new-age companies either tumbled or slipped into the red. Awfis held strong, and hit an all-time high of INR 945 earlier this year. The shares closed at INR 671.7 on April 3.

The first coworking space company to go public, Awfis, after a stellar debut on the bourses, has inspired a host of shared work space solution providers like Indiqube, DevX, and Smartworks to explore public floats in 2025. 

Amit Ramani, the founder, CEO, chairman and managing director of the coworking space solutions provider, is bullish on the growth of global capability centres, or GCCs, set up by multinationals.

GCCs are single-handedly creating huge demand for shared workspace. With favourable government policies, we’ll see more GCCs coming up in the country and, prospects for companies like Awfis will grow in sync,” the chairman added.

Awfis Banks On The GCC Boom

The GCCs, also called global in-house centres (GICs), are the modern-day version of back offices set up for outsourcing business processes to India. Such facilities have evolved into innovation hubs and centres of excellence in India, according to an HSBC report.

Thanks to policy support and a business-friendly environment, the country is set to host 2,550 such centres, with a market value of $110 Bn by 2030. 

A report by Colliers said GCCs contributed 60% of the overall office leasing activity in 2024, when GCC leasing spiked 41% to 25.7 Mn sq ft across top six cities. This demand is expected to reach 30 Mn sq ft, accounting for around 40% of the total office space demand, in 2025. Bengaluru and Hyderabad are likely to remain preferred knowledge and innovation-driven GCC hubs, said the report. 

Flexible space operators, along with industries such as banking and financial services, technology and engineering, are now contributing half of the office leasing activity, Colliers said in its report.

Coworking companies serve the MNCs with strategic business needs. These are cost-efficient and make perfect fit for their hybrid model of operation. 

Some metro and non-metro cities have recently seen a surge in GCCs set up by mid-sized tech companies, with some of them going for micro GCCs that employ 40-50 people, the founder of a Bengaluru-based proptech firm said.

This trend, according to one founder in the real estate space, calls for tailor-made solutions for multinationals to provide an agile work environment to their remote workers. The increasing demand for customisation prompts flex space providers to innovate products.

Overseas companies, for instance, may need a custom-made, smart, ready-to-use office setup without necessarily committing an investment for the long term like in conventional real estate business partnerships. Large enterprises, as per market analysts, too are turning to coworking spaces in a big way. 

Awfis recently launched Awfis Elite – a luxury workspace solution crafted for GCCs and large enterprises.

“As GCCs increasingly prefer agile workspace solutions over traditional leases, Awfis has capitalised on this trend by offering customisable, tech-enabled offices with short-term leasing options,” Ramani told Inc42.

The Awfis chief added this offering goes beyond traditional office spaces to provide an elevated work experience tailored to global enterprises.

The company is also weighing expansion to Tier 1 and 2 cities. “In their initial phase, GCCs often require smaller, agile setups, but as they scale operations rapidly, their need for expanded workspace grows within a year,” he claimed.

Going Asset-Light To Push Growth

Building office spaces is a cash-intensive business. To address this, the company has partnered with landlords under the managed aggregation model. It involves sharing of both expenses and profits between the two sides. Awfis typically sets the minimum guarantee at 50% of market rental. 

“Around 67% of our total seats and 63% of total centres operate under the MA model,” Ramani said.

This strategy continues to drive operational efficiency and long-term growth.

“Majority of the capital investment in these arrangements comes from our partners, which significantly reduces our capital expenditure. This not only makes Awfis asset-light but also helps us mitigate risks associated with occupancy build-up. This model ensures high returns on capital employed (ROCE), exceeding 75%,” he added.

Did this translate into profits and play a key driver for margins? As per its internal estimates, under the MA strategy, there has been a 37% on-year growth in seats from 70,000 to nearly 96,000 in 2024. Awfis also saw a 26% increase in coworking centres under the MA model from 107 to 135 between 2023 and 2024.

Awfis has over 3,000 active clients with 66% of the seats taken by large corporations and MNCs, 20% by SMEs, and 13% by startups. Freelancers occupy the rest.

While nearly 77% of its revenue in Q3 of FY25 came from coworking and allied services, amounting to INR 234 Cr, its newer products like construction, fit-out projects, design and build contributed to the remaining 23% of the topline at INR 73 Cr. 

“We recently secured a deal with the NSE to design, build, and manage over 1.65 Lakh sq ft of office space in BKC, Mumbai. Our clients hail from various industries – from healthcare and financials to industrials, IT, and consumer goods. Some of our key clients include Lenovo, Capgemini, Subway, Clevertap, and Atlas Copco,” Ramani said.

Betting Big On Small Towns 

Although 80%-85% of the demand for coworking space stems from metros and large cities, Awfis is concentrating heavily on Tier 2  and beyond.

“Smaller cities are primed for shared workspaces, driven by a rising demand from the GCCs. The government’s new framework to promote GCCs in these cities is accelerating this shift, driving the need for flexible, hybrid workspaces. After the pandemic, commercial real estate demand in tier-II cities has surged. Industries like ecommerce, IT, and quick commerce are actively tapping into the tier-II talent pool,” the Awfis MD added.

The coworking company ventured into smaller towns in 2018 by setting up a centre in Chandigarh and claimed to be the first flex space operator in India to enter micro-markets.

“In line with this vision, we are further strengthening our presence by expanding into Lucknow. Since December 2023, we have grown our footprints in tier-II cities by 29% and increased our network from 17 to 22 centres. This expansion reinforces our commitment to unlocking the immense potential of these emerging markets,” he said.

In terms of performance by micro-markets, the Awfis boss said that cities like Jaipur and Bhubaneswar have emerged as strong performers, fuelled by cost-effective real estate, a growing pool of skilled talent, and improving infrastructure. These factors make them increasingly attractive to businesses looking for flexible workspace solutions, contributing to the company’s expanding presence in these markets.

[Edited By Kumar Chatterjee]

The post Awfis Chief Amit Ramani On How Co-Working Sector Will Take A Big Pie Of India’s GCC Boom appeared first on Inc42 Media.

Three years after the Ashneer Grover controversy broke out and dragged BharatPe into months of turmoil, the fintech giant has made a comeback of sorts. And while we still await the results for FY25, as we saw this week, the company has bounced back from losses to a break-even point. 

Specifically, it has reached this position after the first nine months of the fiscal year from a net loss of INR 492 Cr FY24. How did the company get there, especially when other fintech companies with higher revenue are striving to reach this mark? 

That’s what we spoke to BharatPe and fintech analysts about, but before we find out, a look at the other top stories from our newsroom this past week: 

• BluSmart’s Stalled Drive: When ICRA downgraded Gensol Engineering, it didn’t just trigger a stock market free fall but also made BluSmart suffer collateral damage, and that’s how BluSmart’s closest ally became its biggest risk  
• Paytm’s Super App Crumbling: Paytm was early in the super app race in India, but the past year has led to Paytm shedding parts of its once-mighty super app empire
• PlanetSpark’s AI Turn: From India’s edtech wasteland emerges another ray of hope in the form of PlanetSpark, which has shown that leveraging machine learning and AI can actually turn into profitability

BharatPe In The Break-Even Zone

When Suhail Sameer stepped down as BharatPe CEO in January 2023, the company was in dire state. The leadership layer had been decimated after a year of controversies and its on-paper losses had spiralled to INR 5,000 in FY22. 

Like much of the fintech industry and analysts at the time, we wondered if there was some life left in BharatPe. Since then the company has worked in silent mode amid all the noises around the fintech ecosystem to bounce back, and it would not be an understatement to say that this is a major feat. 

According to a BharatPe spokesperson, FY25 is the best year for the company thus far in terms of revenue and profitability. The turnaround began in early 2024.

“We became EBITDA positive for the first time in October 2024 or beginning of Q3 FY25, marking a significant turning point in our journey. In the first nine months of FY25, we not only reduced our losses substantially but also achieved consistent EBITDA profitability.” the company told Inc42. 

The spokesperson added that the company is on track to close FY25 as a fully EBITDA-positive business. A significant change in the past year has been the shift in focus from payments to lending and beyond, as we will see. The acquisition of an NBFC licence can be seen as a key piece in the puzzle, and added to BharatPe’s already strong fintech backend, which includes a joint venture which owns a small finance banking licence.

This twin engine gave the company a significant edge over some of the other players in the field.

From a narrative of governance lapses, financial misappropriation and leadership spats, BharatPe has levelled up its game and turned into a business that’s managing multiple RBI-regulated entities. 

A large part of this has come due to the change in leadership. After Sameer’s exit, Nalin Negi took over as interim CEO and was confirmed soon after. Unlike Sameer or any of BharatPe’s former CEOs, Negi came from a regulated financial services background having held leadership positions at SBI Cards and GE Capital. This has undoubtedly been a factor in turning the narrative and operations, particularly around compliance.

However, in terms of scale the Delhi NCR-based unicorn is still far behind competitors like listed giant Paytm and IPO-bound PhonePe. What’s BharatPe doing to catch up here? We take an inside look 

The Double Punch: NBFC And Banking Licence

Talk to any fintech founder, investor or analyst today in India, acquiring an NBFC license or a banking license is a dream come true for a fintech company in India. We saw the fate of Paytm after the RBI action on Paytm Payments Bank. It decimated the company’s profitability in one quarter and had it chasing for other banking partners to keep its payments business going. 

For BharatPe, the acquisition of a 49% stake in Unity Small Finance Bank in 2021, was a big deal. It paved the way for strengthening its core merchants business. In 2023, BharatPe went on to acquire a 51% stake in Trillion Loans, an NBFC which already had a large portfolio of secured and unsecured loans disbursed to small and medium businesses. 

Did this shore up BharatPe’s fortunes? Well, it looks like it.

“BharatPe stands apart as the only fintech company in India with stakes in both an NBFC and a small finance bank. This unique positioning enables us to offer a comprehensive suite of financial services, spanning payments, lending, and investments, seamlessly integrated to serve both merchants and consumers. Unlike pure UPI-driven platforms, we are building a financial ecosystem with real depth, adaptability, and long-term sustainability,” the spokesperson added.

While acquiring lending partners and providing minimum guarantees to the banks NBFCs has been a massive challenge for fintech platforms, BharatPe’s SFB-NBFC double punch was enough to break this knot.

If reports are to be believed, BharatPe is looking to completely acquire Trillion Loans over the next four years, and currently owns around 63% of Trillion. The NBFC reported a profit of INR 29.6 Cr in the first three-quarters of FY25, according to India Ratings and Research. 

The company spokesperson reiterated that merchants business — lending, subscription, PoS devices, credit on UPI — now contributes to 90% of its overall revenue, and that the platform has a registered merchants base of 18 Mn. 

While this may seem comparatively small compared to Paytm or PhonePe, those two have been built primarily around UPI, and branched out to merchant services after consumer payments. BharatPe, on the other hand, has taken the other route and gone B2B first. The company has told us in the past that this is its biggest moat. 

“We’re not caught up in the vanity metrics race—we’re more about creating products that actually mean something to our merchants and consumers. It’s worked for us in building a solid, profitable merchant business. Our merchant business is still the heart of BharatPe. It brings in over 90% of our revenue, through things like merchant loans, soundboxes, and PoS terminals,and offering cross-selling options like credit cards on UPI,” the BharatPe spokesperson emphasised.

Now Comes The B2C Play 

While merchants business has been the core revenue driver for BharatPe all these years, consumer payments is the next focus. While BharatPe is not a major UPI player, the hot topic of MDR on UPI has brought the focus back on the competition. And it also compels players like BharatPe to strengthen consumer payments besides merchants.

Building on top of UPI like the industry peers, BharatPe is now offering features such as bill payments, credit card bill payments, third-party ecommerce coupons and its own loyalty and rewards programme, besides investments and loans.

In October last year, BharatPe rolled out a separate wealthtech app, which offers P2P lending, gold loans, fixed deposits and more. 

In response to our queries, BharatPe said that while it will always be a merchants-first business, the company’s expansion into the B2C segment is a crucial pillar of its growth strategy. “We officially launched our consumer-facing business in 2024, and it’s already gaining strong traction. Key offerings like our co-branded credit card and UPI-based credit line are designed to bridge the credit gap for India’s digital-first consumers.” 

The company claims that even when it scales up these offerings and other new products, the focus will remain on sustainable growth by driving engagement across these features and verticals. 

IPO On The Horizon 

BharatPe has also set its sight on an IPO in the coming 10-12 months after achieving full year EBITDA profitability.

Bengaluru-based PhonePe has laid out its IPO blueprint and turned profitable (minus ESOP costs) and received capital infusion from Walmart consistently over the past couple of years. Paytm’s profitability target will also be put to test soon as results for Q4 FY25 come in after a year of cost restructuring. 

All of this is to say that BharatPe may not be the only profitable player at the end of this year. We haven’t even covered the likes of CRED which are also amping up their revenue game. It’s a tight race in the fintech world, and UPI payments, which acted as a lever for topline growth, is only going to become more lucrative, if and when it comes in. 

BharatPe’s biggest advantage will once again be its twin engines. With Trillion Loans already under its kitty, BharatPe has an added advantage of growing its SME loan portfolio and reducing the growth burden on the payments business to some extent.

For PhonePe and even Paytm, the focus is on the loan distribution model and drawing commissions from lending partners whereas for BharatPe, nearly 30% of loans being underwritten comes from its own NBFC. 

That being said, the huge merchant base for PhonePe and Paytm — 40 Mn and 43 Mn, respectively — cannot be ignored. BharatPe has to catch up with fintech super apps in a meaningful way and cannot be circumspect. 

Having put its tainted past behind it, BharatPe has also adapted to new regulations, corporate governance and fiscal discipline for this next phase.

“A key driver of our turnaround has been our commitment to disciplined execution and corporate governance. We have transitioned into a professionally managed organisation that not only meets but stays ahead of regulatory standards. Transparency, accountability, and financial prudence are at the core of our strategy, and this approach has been instrumental in accelerating our path to profitability,” the company spokesperson said.

That’s speaking with the finesse and cadence of a bank and not like a fintech company. This is not the BharatPe we used to know.

Sunday Roundup: Startup Funding, Deals & More

• Funding Remains Steady: Between March 24 and 29, Indian startups cumulatively raised $143.7 Mn across 16 deals, a 32% increase from the $109.2 Mn raised last week across 18 deals
• ONDC Crosses 200 Mn Transactions: The state-backed network has crossed the milestone within just two years of its inception
• BYJU’S Saga Continues To Unfold: During an NCLT hearing, the counsel of the edtech startup’s founders accused the former IRP Pankaj Srivastava of delaying the submission of BCCI’s settlement with the company
• X Drags Govt To Court Again: The Elon Musk-led social media platform has filed a petition before the Karnataka High Court to challenge the use of Section 79(3)(b) of the IT Act to block content
• BYD’s Billions For India: Amid India’s EV manufacturing push, Chinese auto giant BYD is reportedly planning to set up an EV production unit near Hyderabad with an investment of $10 Bn

[Edited By Nikhil Subramaniam]

Correction note: April 1, 11:30 AM

• An earlier version of this story erroneously mentioned that Suhail Sameer was removed from BharatPe. We have rectified this error.

The post How BharatPe Went From INR 5,000 Cr Loss To Break-Even appeared first on Inc42 Media.

As working harder gets replaced by working smarter thanks to automation and AI technology, communication and soft skills are just as relevant in today’s tech-driven world. PlanetSpark doubled down on this opportunity and even as other edtech platforms have struggled to make a mark, the company has turned cash flow positive after eight years of operations.

The Binny Bansal-backed startup will join the elite league of rare profitable edtech startups such as Physics Wallah by FY26 after reaching break-even in FY25, according to cofounder Kunal Malik.

Profit-making ventures are too rare in a sea of nearly 18,000 edtech startups in India. Even more so when XLRI graduates Malik and PlanetSpark cofounder Mahesh Dhoopar launched the startup in 2017.

The founders banked on a simple statistic to build on this idea. Nearly 4 Mn Google searches from India every month for soft skills with special focus on communication and language learning. Topics such as communication skill classes for kids, personality development for kids, and ways to boost a child’s confidence were the top searches.

“After-school activities, especially personality development and life skills, is an INR 10,000 Cr opportunity in domestic markets and, with international expansion, this could be an INR 20,000 Cr opportunity. Hence, the total addressable market (TAM) is still large,” PlanetSpark cofounder and CEO Malik told Inc42. 

It is this growth potential that wooed PlanetSpark to the K12 segment, which focuses on kindergarten to Class XII standard education. 

Even today, when the market is swept by GenAI, machine learning and tech skills development, Malik believes that there is a strong underlying demand for communication in English in India. Plus, AI has made real-time learning smoother through personalisation, while also minimising costs for the startup, the CEO revealed — read on to know more about how the startup leveraged AI for efficiency.

This thesis, according to the PlanetSpark CEO, is based on the fact that in India alone, the total addressable market for skills like communications is around 20 Mn children from the middle-income segment. 

“This represents an opportunity to create an INR 5,000+ Cr company in the Indian market. Additionally, about 20% of our traffic comes from outside India, including North America (the US and Canada), the Middle East, and a bit of the UK, which further expands our reach on a global scale,” Malik claimed.

Backed by the likes of Prime Venture Partners, Innoven Capital, besides Bansal, the startup has raised $31.3 Mn in funding so far, a relatively small amount given the huge inflow of capital in edtech between 2018 and 2021. This has been a key factor in PlanetSpark’s journey thus far too, pushing the startup to break-even in FY25, and the confidence of going for a public listing in the next two years. 

How PlanetSpark Reached The Break-Even Point

According to Malik, the company’s push for profitability came in FY24, when it raised $13 Mn in a funding round led by Prime Venture Partners. It vindicated this fundraise by cutting its losses by 70% to INR 26.6 Cr in FY24 from INR 89.5 Cr in FY23, while its revenue surged 60% to INR 67 Cr. 

The CEO claimed that gross bookings for the first two quarters of FY25 have already touched INR 61 Cr and the company was able to break even on a cash flow basis in this period. 

The cash flow break-even point means that a business’s operating cash inflows equal its operating cash outflows – it neither makes a profit, nor does it incur a loss based on cash flow.

“In FY25, the company achieved cash flow profitability during the first and second quarters – a major milestone showing that our operations are generating positive cash flow. Although we have narrowed the gap from FY24, we are not yet fully profitable on an accrual basis for FY25. However, we are very close to our target and expect to achieve full accrual profitability by FY26, starting from the first of April,” Malik claimed.

Accrual profitability refers to a company’s ability to generate profits based on the timing of revenue and expense recognition, rather than the cash flow basis. 

Beating The Edtech Blues With AI

The turn towards breaking even is all the more impressive given the woes in the Indian edtech sector in the post-pandemic world. While cumulative investment in edtech exceeded $11 Bn between 2014 and 2024, the sector suffered a drastic slowdown after 2022.

In the past two years, edtech made the unenviable record of having the most shutdowns and layoffs. While reopening of schools diminished the urgent need for digital learning, macroeconomic uncertainties, coupled with recession fears and soaring inflation made the investors risk-shy. Investors prioritised profitability over growth in the changing market dynamics.  

When large swathes of the edtech sector reeled under funding winter, PlanetSpark went on to cut costs across various levels to deliver results. Automating various processes helped the edtech firm become highly cost-efficient in terms of streamlining manual operations and optimising content delivery.

For one, the startup devised a SaaS product for teachers that enables digital class delivery. This product helped unlock growth for the company from educators, and helped further reduce costs since it was a subscription-based product.

“We also focused on driving organic revenue growth by expanding our social media presence, creating a production house for learner videos, and leveraging customer referrals. These initiatives together have enhanced our cost structure and played a pivotal role in achieving cash flow break-even in the first two quarters of FY25,” Malik said. 

Malik emphasised that some of the startup’s major product and growth strategies revolved around leveraging artificial intelligence. As a result, the focus was on product-led growth rather than acquiring customers through marketing campaigns.

“We added AI for scoring, personalisation and conducting classes, as well as for a differentiated pedagogy and curriculum. Over the last 8 years, we have critical data specific to language learning and communication skills, which is unique and differentiated from other platforms,” the CEO added.

Underpinning the importance of deploying the AI model, the PlanetSpark cofounder told Inc42 that the combined impact of automation and its in-house AI offering significantly reduced overheads and helped improve gross margins with AI-powered development accounting for nearly a quarter of platform’s learning modules.

However, it was not all smooth sailing. Malik claimed the company encountered challenges while integrating AI into its operations, especially when replicating emotional connection by human teachers.

“We quickly discovered that AI allowed us to excel in personalisation. Our AI-driven system tailors each child’s learning journey by adapting to their unique interests and learning styles. For example, if a child is fond of a particular character or topic, our content dynamically adjusts to bring that to life in a very engaging manner.”

The CEO believes that leveraging product-led growth allowed the startup to build based on customer feedback and strike an effective balance between automation and human touch, which is just as important in an AI-first world.

PlanetSpark’s IPO Dream 

After breaking even, the company is targetting net profitability in FY26. This is a critical step for the company, and coincides with its push for a public listing within the next two to two-and-a-half years.

“Our short-term goal is to continue the improvements we have  made in the company and officially, albeit informally, achieve profitability. That is  our first milestone. From there, we plan to grow the company to around $50 million in annualised revenue, which we see as the ideal scale for us to pursue an IPO,” Malik told Inc42.

The steady growth in business has kept the investor attention in PlanetSpark unabated. Malik believes that the focus on profitability gives the startup an edge, and means it doesn’t have to rely on ẻxternal funding for growth, even though interest from both Indian and international investors remains high.

PlanetSpark’s optimism is reaffirmed by a 55% surge in subscriptions this year. In terms of scalability, it saw a significant boost in revenue with 12.5% of it coming from working professionals.

“Our focus on enhancing communication skills has proven especially important after the 12th standard, when these skills become crucial for career success. This diverse demographic coverage, unlike typical tech platforms that cater to a narrower age band, has been a major growth driver in FY25 and sets us on course as we head into FY26,” Malik said. 

India constitutes 70-80% of PlanetSpark’s revenue at the moment, and more than 84% of the income is generated from middle-income groups. This reaffirms the fact that Indians in semi-urban areas and smaller cities are just as keen on enhancing communication skills across age groups as those in the metros and Tier 1 cities.

“Roughly 50% of our learners come from Tier 2, Tier 3, and Tier 4 towns. For example, we serve a school teacher in Nagpur, a retail shop owner in Meerut, and a bank employee in Vijayawada. This diverse demographic highlights the deep and widespread demand for enhanced communication skills across various age groups and income levels,” the CEO said.

A Bright Spark In Language Learning 

While the K-12 segment went into a slump when the schools reopened after the Covid-19 pandemic, language learning started getting the attention of small and large edtech companies in India.

SoftBank-backed edtech unicorn Unacademy, for example, forayed into the language learning model last year, positioning itself as a competitor to global language learning platforms like Duolingo and Babbel. 

The Indian language learning market saw significant growth in 2024, with the online learning platforms sector projected to reach $16.90 Bn in revenue by 2029, driven by increasing online education preferences and mobile learning adoption. 

PlanetSpark’s CEO acknowledges that the market is getting increasingly competitive, however, he claims the startup enjoys a first-mover advantage in the segment. User data and behavioural patterns collected over the last eight years also gives PlanetSpark a unique advantage, he claimed.

“We differentiate ourselves primarily through the deep, exclusive learning data we have gathered over our eight-year journey, with insights from nearly 1 Lakh learners on our platform.This data captures a wide array of learning styles and regional dynamics, such as learners in South India have a unique way of engaging that’s not there in other regions, and individual characteristics like whether a child is introvert or confident,” Malik told Inc42. 

He said that GenAI and machine learning offer great use cases when startups have existing data sets; it allows them to build products that competitors cannot replicate easily.

“Our first-mover advantage and deep market understanding further set us apart, and while we welcome competition as it validates the market’s potential and spurs innovation, our scale and the nuances we’ve built into our offerings keep us ahead in addressing our customer needs,” Malik explained.

Will the break-even milestone deliver the all-elusive profitability for PlanetSpark, and become a rare profitability story in India’s edtech landscape? Watch this space.

[Edited By Kumar Chatterjee]

The post How Binny Bansal-Backed PlanetSpark Reached Break-Even And Beat The Edtech Blues appeared first on Inc42 Media.

Everything everywhere all at once. It’s not just Hollywood sci-fi — in India’s bustling fintech ecosystem, that’s what super apps want to be. And, that’s the pitch that Vijay Shekhar Sharma used before Paytm’s public listing and towards the latter years of its life as a private company.

The idea of super apps — from payments to ecommerce to investments to insurance and more — has travelled from China to India, but so far we have not really seen this approach unlock the revenue value that had been promised.

Relying on UPI payments for customer acquisition, super apps today are still bleeding money on verticals and if Paytm epitomised the trend at one time, now, with its payment business disrupted in 2024, the fintech giant is shedding parts of its super app empire.

The deal with Zomato for Paytm Insider was a clear sign, which was followed by the stake sale in PayPay in Japan. Sources claim Paytm’s gaming venture First Games is likely to be offloaded next. And with CEO Sharma proclaiming in 2024 that payments will be the biggest focus area going forward, could other verticals also step out of Paytm’s umbrella?

Catching Up With Paytm’s Super App Dream

“Vijay [CEO Sharma] always wanted to play a bigger game – more like India’s answer to WeChat or Alibaba with huge data of consumers at his disposal. The hypothesis could have come from Chinese investors in Paytm who were the biggest internet giants,” a veteran fintech investor, who had invested in Paytm earlier, said.

UPI transactions, which constituted the majority share of digital payments, became a non-monetisable entity after the introduction of the Zero MDR regime in 2020.

It eliminated the merchant discount rate (MDR) charged on transactions using UPI, which is today the largest digital payment mode in India. For Paytm and other UPI apps, the zero MDR is a major revenue leech, especially because of the incessant customer acquisition spending.

The biggest blow to the startup came early last year, when the Reserve Bank of India cracked the regulatory whip on Paytm Payments Bank, setting Paytm back by more than a year in terms of revenue.

This froze the company’s wallet business and disrupted its lending business. Merchant payments also suffered as Paytm had to scramble for new banking partners, and there was an RBI-mandated review by banks and NBFCs on how digital loans were being distributed. This impacted the overall revenue of Paytm in FY25 and towards the end of FY24.

We will dive into the financial comparison with PhonePe, Paytm’s closest payments super app competitor, later in this piece, but first, a look at how much of the Paytm super app promise is even intact compared to what it was just two years ago.

Games: Next In Line?

After the sale of Paytm Insider to Zomato last year and divesting from PayPay, Sharma claimed that the company is on track to report profitability in the next two quarters. When we tested these claims last week, experts and analysts ruled out the possibility of Paytm racing to profitability unless the company succeeds in raising revenue significantly in the next two quarters.

As the fintech startup banks on UPI incentives, it will have to struggle hard to attract more customers while regaining its market share. Another way of shoring up the bottom line is selling off more assets.

This is where the focus is turning to First Games. The gaming venture turned around from a loss of INR 21.6 Cr in FY23 into a profit of INR 10.6 Cr in FY24. But revenue for the year suffered a steep 50% slump to INR 213 Cr.

First Games – a distinct app offering rummy, fantasy sports, ludo and fantasy cricket – saw its monthly downloads falling sharply from 1,50,000 in September 2024 to 1,00,000 in February 2025, according to data sourced from app intelligence platform Similar Web.

Industry insiders and sources within the company point to the gaming venture being potentially sold off especially after the revenue chill in the real money gaming industry.

“We would like to clarify that the information provided by your sources is factually incorrect and misleading. First Games is a profitable company and remains focused on expanding its operations, while also receiving market interest from time to time. Any speculation regarding an acquisition is inaccurate,” Paytm spokesperson said.

Paytm’s Sharma has not touched on the gaming business revenues and other metrics for the past few years in public disclosures and announcements. The vertical has raised $20 Mn over the course of two internal funding rounds, data from Inc42 Datalabs shows.

“Gaming would need an altogether different focus and investment, for which Paytm might not be in an appropriate position. With the competition in the industry getting intense and international gaming companies foraying into India, focus has also shifted to developing gaming architecture and building gaming studios to attract the userbase which will require a consistent line of investment,” the founder of a gaming studio startup in Bengaluru told Inc42.

If sources are to be believed, First Games may well go down the path of the company’s movies and live entertainment booking business Paytm Insider. Paytm Insider fetched INR 2,048 Cr, but it had an adjusted EBITDA of INR 29 Cr in FY24, around 10% of the revenue for the fiscal year.

The Insider deal also attracted the high multiple because Zomato saw it as an investment for inorganic growth; it’s not clear whether First Games offers such an upside to any potential acquirer. But with the gaming vertical seeing a slowdown, First Games might not necessarily see a massive deal like Insider.

Regardless, it’s clear that selling off an asset has a positive impact on the bottom line and very often the stock price as well. Paytm went on a mini rally after the Insider deal was signed with Zomato, gaining from INR 620 in August to INR 850 in November 2024. The Zomato deal also added cash on the books of Paytm, which helped it turn a profit.

Ecommerce & Insurance: Mixed Fortunes

One reason why Paytm is now shedding parts of the super app is its failure to capitalise on a large user base. Ecommerce is the best example of this, but insurance and investments will fill the gap for Paytm, at least that’s the hope.

Sources within the Paytm parent One97 said that CEO Sharma was bullish on taking another shot at ecommerce early last year, after the early success and subsequent downfall of Paytm Mall, which was built on the promise of 300 Mn users.

But the fintech giant’s focus on core businesses after the RBI whip last year led the management to rethink the ecommerce plans. A beta version of the ecommerce vertical was thrown open for a closed group for testing as early as April 2024, but as of now, there’s no clarity on when this would be launched officially, if at all.

While Paytm said it cannot reconfirm when the ecommerce business will be relaunched, for now, the Paytm app is offering grocery and non-grocery offerings in partnership with retail stores and brands on the Paytm app through ONDC network.

With the ecommerce trajectory unclear, Sharma was always keen on the underpenetrated insurance market in India and took on insurtech players like PB Fintech, InsuranceDekho, Acko and Go Digit.

Paytm gave up on the general insurance licence after listing due to the expensive nature of this business. Instead, it chose to become an insurance aggregator and distributor.

According to Paytm’s management commentary for Q3 FY25 results, under the insurance distribution model, the focus will be primarily on distributing small-ticket life and non-life insurance policies. This is a model which depends on volume and Paytm would be banking on the fact that its user base is still strong enough to unlock the upside in the insurance business, even without the licence.

Paytm’s insurance broking subsidiary posted a net profit of INR 8.3 Cr on revenue of INR 30.6 Cr in FY24, according to the company’s filings with the MCA, but Paytm has not disclosed insurance distribution commission income separately thus far, preferring to club it with other financial services such as lending commission.

The Paytm Money Trump Card

The other more clear silver lining is Paytm Money, the company’s stockbroking arm that offers systematic investment plans (SIPs), mutual funds (MFs) and stock investments, which has kept the startup’s super app dream alive.

An upbeat public market in 2023-24 helped Paytm’s wealthtech business post a 48% on-year surge in revenue to INR 198 Cr, while profit zoomed 68% to INR 71 Cr. Sharma declared during Q3 FY25 results that investment tech will continue to be a major focus.

In Q3 FY25, wealthtech and marketing verticals together contributed INR 267 Cr in revenue to overall INR 1,828 Cr revenue from operations.

Admittedly, this scale is much lower than Groww or Zerodha. The latter reported INR 9,372 Cr in revenue and INR 5,496 Cr in profits in FY24.

Groww’s revenue in FY24 was INR 3,145 Cr, but with just INR 300 Cr in profits, a very narrow margin at least in comparison to Zerodha.

One reason for this profit disparity is that Groww’s marketing costs in particular are pretty high compared to Zerodha. Paytm will likely be in the same boat as Groww, as it also leverages marketing and ads for customer acquisition.

Plus, SEBI tightened the regulations in futures and options (F&O) trading last year, and higher long-term capital gains (LTCG) tax has resulted in a slowdown for investment platforms such as Groww and Zerodha. In sync with the industry trends, Paytm Money saw its monthly downloads fall from 400,000 in September 2024 to below 100,000 in February 2025.

However, Paytm Money recently received approval from the SEBI to act as a research analyst, which brokerage firm Motilal Oswal claimed opens a new opportunity for the company to diversify into wealth management, thus, potentially unlocking a “new stream of fee-based income”.

Vijay Shekhar Sharma’s plan of creating India’s first super app was not new, but it was bold and many predicted that it would take decades for India to replicate the Chinese success story.

But even a decade later, Paytm is not in the right place. Faisal Kawoosa, a technology analyst who founded Techarc, blamed the fragmented nature of the Indian market, unlike in China, where consolidation is fuelled by strict regulations.

“Consumer behaviour in India is massively distinct and what works in one geography may not work well in another. In Paytm’s case, there is definitely a first-mover advantage, and users develop an affinity for an app that first serves a use case. Whosoever comes next has nothing substantial to differentiate that could trigger a switch for consumers,” Kawoosa said.

He cited the example of WhatsApp. Everyone uses it for chat, but rarely for payments.

The Competition Catches Up

Paytm held the first-mover advantage in the super app game, but in terms of the revenue, payments, lending and investments are the primary contributors. The other parts of the super app business, from ecommerce to ticketing to insurance distribution, were extras that fintech apps added over the course of time as their user base grew.

PhonePe was the closest competitor to Paytm in terms of revenue as of FY24. PhonePe reported operating revenue of INR 5,064 Cr in FY24, compared to Paytm’s INR 9,978 Cr. But in the nine months since then (till December 2024) Paytm has fallen behind. The Delhi NCR-based giant’s FY25 annual revenue is on course to match PhonePe’s FY24 numbers.

Paytm’s revenue for Q1, Q2 and Q3 FY25 has been trending 35% lower on a YoY basis compared to these respective quarters in FY24. If this trend continues, Paytm could finish FY25 with around 30%-35% lower revenue than FY24, which would put its annual income in the ballpark of INR 5,300 Cr.

In fact, if PhonePe maintains the revenue growth rate seen in FY23 and FY24 — 77% and 74%, respectively — it could well emerge as the leading fintech app in India by revenue by March 2025.

Expanding into multiple verticals has also often triggered consumer discontent in the Indian markets which, in turn, makes the idea of a super app difficult to take flight.

“If someone is using Paytm for payments and booking railway tickets, as soon as Paytm announces another service, consumers sort of feel offended by the fact that these apps have started to ‘push’ services limiting consumer’s right to choose. It looks like they are forcing you to buy from specific partners,” Kawoosa said.

Paytm is not the only one to encounter this challenge. PhonePe, CRED and others have all gone for the platform approach, even the likes of BharatPe and Groww are heading there, but Paytm was the pioneer in many ways and as it revisits the super app question, will others look to capitalise?

Update | March 24 | 8:45 IST

Story has been updated to include Paytm’s response.

[Edited By Kumar Chatterjee]

The post How Paytm’s Super App Machine Came To A Grinding Halt appeared first on Inc42 Media.

Is the Paytm jigsaw falling into place? Perhaps, at least going by the words of Vijay Shekhar Sharma, the founder of the embattled startup. 

Once the poster boy of India’s startup ecosystem and the most outspoken founder, Sharma went largely silent since the Reserve Bank cracked the whip on his the Paytm Payments Bank over regulatory discrepancies last year. One of the pioneers in India’s digital payments space, Paytm has since been quietly trying to put back the pieces of the puzzle.

“We are committed to working on profitability. We have not made any profit in the last few years. I can tell you very happily that with the team and the effort in the business that we have done, we are clearly committed to delivering profit in the next quarter,” Sharma said at an event last month.

As the fintech startup goes full throttle to turn profitable, it has stepped up focus on the merchants’ side of the business, lender partnerships and regaining the UPI market share.

Over the last one month, Paytm made several announcements including partnership with RBL Bank to offer its sound box, card machines to its merchant partners, UPI-enabled trading facilities for retail investors, UPI statement downloads, deployment of QR scan machines during the Mahakumbh for merchants and traders, and integration of Perplexity-enabled AI engine for Paytm users. 

Detailed queries sent to Paytm over the course of profitability remained unanswered at the time of publishing this story. 

Sharma’s fintech venture One97 Communications Ltd, which runs Paytm, came under stress since the central bank almost quashed its dream of making profits in 2024 after a sombre public listing in 2021. The RBI blew the lid off compliance gaps in operations that effectively led to the suspension of the Paytm Payments Bank. The year also saw the company shutting down a few business verticals, selling out some others, and laying off employees. 

The management commentary in the December 2024 quarter earnings call seemed to be focussed on profitability more than ever. The company narrowed its consolidated net loss by 6% to INR 208.5 Cr in the third quarter of FY25 from INR 221.7 Cr a year back, although its revenue suffered a steep 36% decline to INR 1,827 Cr in this period. 

Reading between the lines, however, shows that even though Paytm managed to reduce its indirect expenses by roughly 7.5% to INR 1,000 Cr in Q3, its direct costs grew 13% sequentially, as against a slower topline growth of 10% from INR 1,659 Cr over the previous quarter. This indicates that the revenue growth is a result of higher spending on payments processing charges, cashback and incentive costs and other direct expenses. Much of this spending has gone towards reclaiming the market share.

In fact, the 2024 RBI action on Paytm Payments Bank has set Paytm back by more than a year in terms of revenue while competition kept heating up.

The market, however, reacted to the way VSS, as the Paytm founder is referred to, painted the picture of a revival. The company’s shares traded in the black till the end of last year, though the stock took a beating after the markets turned bearish this year. 

The regulatory headwinds for Paytm didn’t stop with the RBI whip. The company came under the glare of the Securities and Exchange Board of India (SEBI) and the Enforcement Directorate (ED) in quick succession over regulatory lapses. This, too, weighed on the battered stock this year. 

While laying out the blueprint for profitability, Sharma reiterated that Paytm will focus on payments, credit, and wealth management through the next two years. “Very clearly, payments are our foundation and we believe that payments can make profits on a standalone basis,” he was quoted as saying in various media reports. He added that Paytm was also aiming to be a compliance-first organisation that would ensure that adhering to regulations would not be limited to just one officer. 

He said the company aims to serve 200-250 Mn people and is recalibrating its strategy around credit distribution. But, in the meantime, the competition has intensified with the cohort of super apps – from PhonePe to CRED to Flipkart-backed Super.Money, Navi and others – looking to capture Paytm’s lost market share.

It’s hard for the fintech startup to face the challenge with a looming topline. The cost-cutting option, too, seems bleak as market analysts feel that it is overstretched and cannot afford to further reduce the costs considering the scale it operates at. Global investment firm UBS, for instance, maintained its ‘neutral’ rating on Paytm but said that to crack the profitability code, Paytm cannot rely on cost-cutting anymore and needs to scale its revenue to reach breakeven. 

Sharma has set the deadline for attaining profitability for the first quarter of fiscal 2025-26. The Paytm management, as per its earnings call, is also planning to bring down the ESOP costs in the next few quarters to narrow the gaps between EBITDA before ESOP costs and PAT. 

Does this appear too ambitious a target or is it within the reach of the fintech giant? Inc42 looked into the strategy for its road to profitability and spoke to some industry leaders and analysts to see how far is Paytm from its target. 

Payments: The Primary Revenue Lever 

Payments continue to be the main revenue driver for Paytm. It cushioned the fintech giant from the repeated regulatory setbacks in FY24 and FY25.

Despite the shakeup in the payments business after the RBI revoked the licence of the Paytm Payments Bank and revenues from the business plunged 40% to INR, 1,1003 Cr in Q3 of FY25, payments continued to make up 45% of the overall revenue pie with the gross merchandise value (GMV) in this vertical crossing INR 5.01 Lakh Cr, surpassing the year-ago figure. 

Paytm makes money by charging commissions from merchants or service providers for value-added services like bill payments, ticket booking, and food ordering. 

Its sound boxes and other monthly subscriptions from its merchant base have also been major revenue drivers in the payments business, even as the number of subscription-paying merchants increased marginally to 10.17 Mn in Q3 of FY25 from 10 Mn a year back. 

Paytm’s Q3 disclosures, however, reveal that the payments business suffered in terms of consumer payments, which stayed flat, if not dipped, last year. This has possibly led to a sharper loss in the shrinking UPI market share from 10% in early 2024 to 6.8% in January 2025.

“In December 2024, we had 1,000 Cr merchant transactions and we had 1,232 Cr total transactions. I think it’s fair to say that if you take a year-on-year view, then the merchant side of the business has grown, whereas the consumer side of the business, even adjusted for discontinued businesses, has been flat or slightly de-grown,” CFO Madhur Deora said in the Q3 earnings call.

In such circumstances, Paytm may offer incentives and cashback to onboard new users, but this will also mean pressure on margins due to increased operational expenses.

“In such a case, Sharma is going to try to hold on to his loyal consumer base by offering them reduced take rates, waiving off subscriptions in some cases, and staying focussed on adding good products to the platform. UPI will, anyway, not give Paytm an immediate revenue boost due to the Zero MDR rule,” a senior vice-president at a rival fintech firm said, requesting anonymity. In Zero MDR (merchant discount rate), the merchant doesn’t pay any fee for accepting payments. 

“If Paytm is to scale its topline, it needs new strategies to attract consumers and merchants and, at the same time, reduce marketing costs since the focus is on profitability,” the fintech executive quoted above added.

Paytm has lined up a three-pronged strategy to move the needle in the payments business. First, the incoming UPI incentives from the government in Q4 of FY25 will boost the margins. Second, the company will sign up more merchants for its devices. And, third, it will take back the inactive devices from the market, refurbish, and redeploy them to reduce the expenses in the next two quarters.

According to Sachin Dixit of JM Financial, Paytm is likely to turn profitable in Q4 FY25 and sustain that profitability for the full year in FY26.”There could be one-off quarter where seasonality and wage rises might result in minor losses if the company ramps up consumer onboarding. But despite this, we foresee a good revenue jump on the back of being able to onboard UPI users while containing costs simultaneously.” Dixit added.

The UPI-linked Rupay credit cards are expected to open another monetisation avenue for the payments business. “We are witnessing a growing trend of customers linking RuPay credit cards to payment apps and using them for UPI transactions. This allows merchants to accept credit card payments via UPI QR codes,” Paytm said in an earlier statement. 

Lending Products: The Margin Drivers  

Paytm had briefly paused its collection services for lending business and only banked on a loan distribution model after the RBI crackdown and exit from postpaid loans in May 2024. There were general industry concerns on unsecured lending and deterioration in asset quality that drove its lending partners to rethink their ties with Paytm.

The management commentary and the subsequent statement from Sharma have, however, stated that the lending business, especially merchant lending, gained strong momentum, with the average ticket size doubling to Rs 2 lakh in 2024-25.

Paytm gradually returned to loan distribution and collection services for its lending partners, invoking the first loss default guarantee (FLDG) in some cases. It charges the lending partners sourcing fees as well as collection fees for the disbursals.

Under the FLDG agreement, Paytm is expected to cover a certain amount of loss in case the borrower defaults on repayments. This is expected to boost the lender’s confidence in a tie-up and will likely drive larger loan disbursals and higher volumes for the fintech firm.

Sharma said that the company is banking on its lending business to improve profits and is not fixated on one model. “This entirely depends on the lending partners and their preferences,” he said. Compliance with strict underwriting and improved collection practices continues to be the priority for the company to satisfy its lending partners.

Following the exit from some loan business verticals, Paytm’s loan product consumers have dropped significantly to 5.9 Lakh in Q3 of FY25 from 8.1 Lakh a year ago. The hit is likely more on personal loans than merchant loans.

The revenue from financial services, primarily lending products, had declined by 17% on-year in Q3 of FY25 to INR 502 Cr from INR 607 Cr. But, on a quarterly basis, it surged 34%. In terms of disbursals, personal loan categories continue to see a decline from INR 1,977 Cr in Q2 of FY25 to INR 1,7146 Cr in Q3 of FY25. Merchant loans remained the bright spot, growing to INR 3,831 Cr from INR 3,303 Cr, with a significant portion under the DLG model.

The company has stepped up its focus on large-ticket loans and added thrust on merchant loans to secure profits in the next few quarters.

“There are concerns in invoking the FLDG model for loan collections where Paytm may have to bear the costs for loan defaults, however, if the company manages to push the disbursals substantially in the next few quarters, the FLDG costs may be covered. This remains a risk for the company. The FLDG costs may majorly dent the revenue and the margin if there are more loan defaults,” a senior fintech executive quoted above said.

Paytm said that in order to hedge FLDG costs and associated risks, it is evaluating the creditworthiness of merchants for loans based on their cash flows and with added options like daily repayments. 

Wealthtech, Marketing: The Next Growth Zone

Paytm has been steadily growing its marketing wing for brands and merchants to advertise on the platform or provide value-added services that fetched INR 267 Cr in revenues in Q3 of FY25, as against INR 268 Cr in the previous quarter.

The company exited the events and movie ticket booking business last year by selling it to Zomato for INR 2,048 Cr, which had jacked up both the bottomline and the topline for the September quarter. Paytm is not focussing on business segments that include entertainment or travel booking or insurance and will continue to provide third-party application services for the service providers. 

“Paytm was into too many things at one point. However, what we learned from the experience was that we first need to set our core payments business and financial services vertical right and check the compliance requirements. So, we shut down some verticals and sold a few,” Sharma said.

He also mentioned that the company was bullish on the wealth management business, which runs on a separate app, Paytm Money. “Paytm Money and Insurance are still work-in-progress businesses. There is an increased attention on mutual fund distribution because I think that we are able to sign up a big number of customers from there,” the Paytm CEO said in the Q3 earnings call. 

The focus on wealthtech business will also add to the funnel of mutual fund and SIP customers, he said. 

The challenge for Paytm Money will be to rope in new users since a majority of the wealthtech businesses have seen erosion in active user base with retail investors cashing out of the public markets during a prolonged bear run. Both SIP accounts and MF investments have reportedly continued to decline from the end of 2024 amid equity market correction and investors re-evaluating their portfolios.

Again, without promotional incentives, it might be challenging for Sharma and his team to compete with strong vertical players like Groww, Zerodha and Angel One, which have an existent loyal customer base and will try to retain a majority of their user base at least when markets remain subdued. 

But, since Paytm clarified that these businesses are still a work in progress, they would not want to invest major capital there immediately and wait for the market to revive. 

A majority of the brokerages and investment firms have revived their outlook on Paytm’s business and upped the target price for the stock with expectations of profitability as soon as Q4 of FY25 or Q1 of FY26, pretty much in line with what Sharma said. 

The target may be achievable in this quarter or the next after receiving the UPI incentive. It, however, must be noted that Paytm will have to massively beef up its merchant subscription services and disburse more loans while keeping bad loans at bay in this period.

“Sharma has been overseeing it all, building this company from the ground up to $10 Bn more. But from here on, as he builds more scale, he needs to hire more quality leaders for these crucial business verticals which are almost the lifeline for Paytm and keep the governance and compliance in check,” a seasoned fintech investor said, refusing to be identified. 

The path to profitability will be non-linear for Paytm in FY26, but at least Sharma and his team have a chance to make an apt response to some of the harshest critics who had given up on one of the country’s largest fintech companies last year.

[Edited By Kumar Chatterjee]

The post Paytm Says Profitability Is Around The Corner, But What’s The True Picture? appeared first on Inc42 Media.

Two phrases – often used, but not overused just yet, and certainly not misused – have come to redefine India’s booming startup economy over the last couple of years. If ‘quick commerce’ is the answer to the rapid acceleration in the way we live, then ‘as a service’ is the solution to our evolving lifestyle. And the two concepts have not just coexisted but helped each other thrive. 

As green became the new black, electric vehicles (EVs) emerged as one of the most sought-after industries for both entrepreneurs and investors.  In step with the evolving dynamics in the startup ecosystem came EV-as-a-Service (EVaaS), which soon turned a promising vertical and was set to see explosive demand in the coming years.

The government push for green mobility to cut down on fossil fuels has been driving the $54.4 Bn EV market in India at 2.4 times annual acceleration to reach $132.2 Bn by 2030. This has translated into heightened investments from venture capital firms and sealing of B2B and B2C partnerships in startups that pioneer EV services from vehicle leasing and fleet management to charging infrastructure and last-mile delivery logistics.

Zypp Electric zeroed in on this opportunity since its birth in 2017. It transcended from leasing electric vehicles to providing end-to-end solutions for EV management to corporates, capturing both the B2B and B2C segments. 

The EV startup, a brainchild of Akash Gupta and Rashi Agarwal, has so far raised $55.5 Mn from the likes of Indian Angel Network, VCs, 100Unicorns, and Gogoro. It now plans to raise $35 Mn (INR 300 Cr) more from multiple investors, sources had earlier told Inc42.

Zypp saw its revenue zoom 168% to INR 292.7 Cr in FY24 from INR 109.1 Cr a year back, though its net loss surged 125% to INR 91.1 Cr from INR 40 Cr.

Agarwal, who is the chief business officer, said Zypp Electric is on course to cross the INR 1,000 Cr revenue milestone in FY25, making a substantial increase with an IPO on the horizon. “We are also confident that we will achieve EBITDA positivity within the year,” she told Inc42.

While the EV startup has so far only been partnering with OEMs for leasing EVs to their clients, Agarwal said the company plans to co-develop EVs in partnership with OEMs in the near future.

EV-as-a-Service has become an appealing proponent, especially catering to quick commerce, ecommerce and ride-hailing industries where fulfilling last-mile delivery capabilities is crucial. With the rapid adoption of quick commerce, she believes that electrification of delivery fleets will be a natural progression for these platforms where companies like Zypp Electric can chip in. 

Agarwal spoke to Inc42 as a part of the Griffin Dialogues series.

Here are the edited excerpts from the conversation:

Inc42: Zypp Electric has crossed an important revenue milestone in FY24, but the losses have continued to grow. 

Rashi Agarwal: In FY24, our revenue nearly doubled from the previous year. We closed the year with INR 290 Cr in revenue. Although we had initially targeted INR 480 Cr, this still represents an impressive 80% year-over-year growth trajectory. 

Our losses have not grown in proportion to our revenue growth. With each passing year, we are making strong strides towards EBITDA positivity and long-term profitability.

Inc42: What have been the major drivers of this revenue surge? Where do you see the demand coming from?

Rashi Agarwal: Zypp Electric operates in an industry-agnostic model, catering to multiple sectors, including ride-hailing, ecommerce, food delivery, and quick commerce. Demand has never been a challenge for us, rather, it has been accelerating rapidly, especially with the explosive growth of the quick commerce segment over the past year. As a result, Zypp Electric has solidified its position as a dominant and preferred EV-as-a-Service provider across industries.

Our substantial revenue growth in FY24 has been driven by our ability to scale efficiently and secure partnerships with major ecommerce and mobility players. In fact, we have 60,000 to 80,000 Letters of Intent (LOIs) from clients, yet we have only been able to service about 20% of this demand. The key to our continued success lies in scaling our fleet, expanding operations strategically, and consistently meeting SLAs (service level agreements) to ensure seamless service delivery.

With a strong demand pipeline, our focus remains on rapid-yet-sustainable expansion to bridge the gap between available fleet capacity and market needs. We are also aiming at higher operational efficiency, and expansion of our EV-as-a-Service model to drive profitability.

Inc42: Big ecommerce companies have been developing their own delivery fleets. In such a scenario, how do you bank on partnerships with big corporates?

Rashi Agarwal: Zypp Electric does not operate on a rental model for ecommerce clients. Instead, we provide comprehensive last-mile delivery solutions. Unlike simply leasing EVs, our model ensures seamless fleet management, optimisation, and high utilisation, which are essential for large-scale logistics operations.

While major ecommerce players like Amazon and Flipkart have been in the industry for over a decade, they have largely relied on third-party logistics partners, rather than developing their own dedicated delivery fleets. Managing a large EV fleet goes beyond just procuring Vehicles – it requires a robust ecosystem of fleet utilisation, spare parts management, theft and vandalism control, rider sourcing, financing, and overall operational efficiency. We have a dedicated team of 1,400+ professionals solely focused on ensuring that our fleet runs at over 90% utilisation while meeting stringent SLAs.

Given the complexities involved, we do not foresee major ecommerce companies shifting towards full-fledged fleet ownership. Even if some explore the possibility, the sheer scale of demand in the logistics space ensures that there is ample room for multiple players. Our focus remains on strengthening our partnerships with corporates by offering a scalable, cost-efficient, and sustainable last-mile delivery solution.

Inc42: What is your strategy to go public, given the current market scenario? Have you set any timelines for an IPO?

Rashi Agarwal: An IPO is definitely on the horizon for Zypp Electric. We are strategically working towards this goal with a clear focus on achieving profitability and strengthening our financial position.

Our plan is to be IPO-ready by the end of next year, aligning our growth trajectory with market conditions and investor expectations.

In the meantime, our priority remains on scaling operations efficiently, going EBITDA positive, and ensuring sustainable growth, which will position us well for a successful public listing.

Inc42: We have seen Zypp raising money in quick succession from VCs. What, according to you, is so compelling about this company that makes it stand out even in an increasingly crowded EV-as-a-Service vertical?

Rashi Agarwal: First, Zypp Electric is the largest EV-as-a-Service player in India, running a fleet of over 22,000 electric scooters across key cities like Delhi-NCR, Mumbai, and Bangalore.

Next, what sets us apart is our ability to cater to a wide range of industries – from quick commerce and ecommerce to ride-hailing and logistics. Given the surge in demand, particularly from the quick commerce sector, Zypp Electric has positioned itself as an indispensable partner in the ecosystem.

On the VC front, what makes Zypp compelling is our strong market positioning and our ability to choose the right partners. We are in a phase where companies want to work with us, and our ability to scale effectively puts us in a comfortable position for growth. 

The ecommerce sector in India still has a long way to go, with penetration at just 20-21%. As this sector expands, Zypp Electric is poised to grow in direct proportion, which makes us a highly attractive investment option.

EV-as-a-Service is not just a trend, it is a necessity for the future of sustainable urban mobility. With growing demand and continued expansion in last-mile logistics, Zypp Electric is uniquely positioned to lead this space.

Inc42: How do you see the EV regulations in India? The government has doled out incentives to EV makers. How much has this helped the industry?

Rashi Agarwal: The government has been highly supportive of EV adoption, rolling out multiple incentives through central and state subsidies, including FAME I and FAME II. These initiatives provided a significant boost in the early stages of EV adoption, accelerating industry growth and making EVs more accessible. While subsidy support has gradually tapered, the government remains committed to pushing EV adoption through regulations and incentives.

For instance, in Delhi, ecommerce companies are mandated to transition entirely to EVs by 2030. Such regulations set a strong precedent for other states to follow and can drive large- scale electrification. Additionally, the lower 5% GST on EV rentals is a great enabler for fleet expansion. However, there are areas where policy refinements can further accelerate EV adoption.

On the taxation front, one key aspect is GST on last-mile delivery services by EVs, which is at 18%. Reducing this to 5% – in line with EV procurement and rentals – would incentivise ecommerce companies to switch to electric fleets more aggressively. A nationwide regulatory push, similar to Delhi’s mandate, would also be beneficial, as a large portion of two-wheelers on Indian roads today are used for last-mile deliveries.

A structured approach, with clear timelines and incentives, can create a massive shift from ICE to EVs, significantly contributing to India’s sustainability goals. As an industry leader, Zypp Electric continued to work closely with stakeholders to drive this transformation at scale.

Inc42: What kind of hurdles or challenges EV companies are facing?

Rashi Agarwal: The EV industry has made significant progress, but there are still some challenges that need to be addressed to boost large-scale adoption and achieve operational efficiency. One of the major hurdles for fleet-based businesses like ours is the lack of the right vehicle that meets our unique demands.

In the last-mile delivery segment, EVs often change from one rider to another, which leads to higher wear and tear, increased servicing needs, and operational downtimes. While the industry has made advancements in battery technology and vehicle durability, there is still a gap in developing a robust, long-lasting product tailored for high-utilisation business models.

Another challenge is inadequacy of charging and battery-swapping infrastructure. While swapping is emerging as a scalable solution, ensuring seamless availability of charging points remains critical for sustained fleet efficiency. Additionally, financing solutions for EVs, including more accessible leasing and credit options for fleet operators and riders, are crucial for accelerating adoption.

At Zypp Electric, we are continuously working with OEMs, battery providers, and infrastructure partners to address these challenges and enhance the EV ecosystem to make mass-scale operations efficient.

Inc42: What is your long-term vision for Zypp and its employees?

Rashi Agarwal: Our long-term vision at Zypp Electric is to drive a complete transition from internal combustion engine (ICE) vehicles to electric mobility, making last-mile logistics 100% sustainable. As a company, we are committed to not only accelerating EV adoption but also creating a strong ecosystem that supports clean and efficient transportation solutions.

For our employees, this vision translates into continuous learning, innovation, and growth opportunities. We believe that the people at Zypp are at the heart of this transformation. We are building a workplace that fosters leadership, skill development, and career progression, ensuring that every individual contributes meaningfully to our mission.

Our goal is to scale Zypp into the most trusted EV-as-a-Service platform, helping businesses across industries accelerate while empowering our workforce with the tools and opportunities to thrive in the evolving mobility landscape. We aim to redefine urban logistics, reduce carbon footprints, and create a cleaner, greener future for all.

Inc42: You have recently announced partnerships with battery charging and battery swapping companies. What business partnerships do you plan ahead?

Rashi Agarwal: As we expand our ecosystem, strategic partnerships remain key to Zypp Electric’s long-term vision. Apart from our recently announced collaborations with battery swapping companies, we have also forged deeper partnerships with OEMs. 

Given that one of our biggest challenges is getting the most robust and efficient EV for our operations, we aim to co-develop vehicles with OEM partners that are tailor-made for high-utilisation commercial use.

We are also exploring partnerships with recycling and scrapping companies. As our fleet scales, vehicle lifecycle management will become crucial, and responsible disposal or second-life usage of batteries and EV components will be a natural next step. Through these collaborations, we aim to create a sustainable and circular EV ecosystem, ensuring that Zypp not only drives EV adoption but also builds a future-ready infrastructure for the industry.

Inc42: How do you align your business goals with investor interests? What are the key learnings from your fundraising journey?

Rashi Agarwal: Our business goals and investor interests are fundamentally aligned towards a single objective – building a profitable and self-sustaining company. We are working relentlessly towards making Zypp Electric profitable, and our plan to go public next year reflects our commitment to both long-term growth and investor value.

Our fundraising journey has been a continuous learning experience. We have emerged more and more refined in terms of approach after every round – whether it’s understanding the key business metrics better, optimising operational efficiencies, or making necessary pivots based on market realities. In fact, we have pivoted our business model three times to align with industry demands, and many of these decisions were shaped by insights gained during our fundraising process.

One key learning for me has been that founders should not get emotionally attached to a particular way of doing business. Adaptability is critical. No matter how strong is our initial conviction, if the market signals the need for change, we must be willing to pivot quickly. Many startups struggle because they resist the change for too long. At Zypp, our ability to make bold, Data-driven decisions swiftly have been instrumental in our success.

Inc42: While you scale your business and generate wealth for the employees, as a leader how do you align this with personal wealth or investment ambitions? 

Rashi Agarwal: I firmly believe that true wealth is created by building and scaling businesses, not just by earning salaries. My goal has always been to generate wealth not just for myself, but also for my team and employees. A successful IPO in the next two years will play a crucial role in achieving this, allowing everyone who has contributed to Zypp’s growth to benefit from its success.

On a personal level, I see wealth creation as a long-term strategy where the right investments play a crucial role. Compounding is a powerful tool, and having a well-diversified portfolio ensures stability and growth. One principle I strongly adhere to is focusing on what I truly understand – whether in business or in investments. If an expert can manage my investments better than I can, I believe it’s worth paying for that expertise, rather than taking unnecessary risks.

Ultimately, wealth creation – no matter personal or professional – is about making informed, strategic decisions and surrounding yourself with the right people to execute them effectively.

[Edited By Kumar Chatterjee]

The post What Will Drive Zypp Electric To INR 1000 Cr Milestone? appeared first on Inc42 Media.

While walking tightrope, a little support helps go a long way, but the success at the end of the rope hinges on the fine balance. That’s the way Jupiter founder and CEO Jitendra Gupta thinks. 

The chief executive of neobanking startup Jupiter believes that a partnership with a traditional lender may help neobanks dodge some regulatory headwinds more easily. Still, the key to success remains in its ability to innovate solutions with undeterred focus on customer satisfaction.

Jupiter is the second in its league to be close to acquiring a stake in a traditional bank. Multiple media reports said that Jupiter’s deal to pick up a 26% stake in Mauritius-based SBM Bank is awaiting the approval from the Reserve Bank of India. Sources told Inc42 that the fintech company may look to further increase its stake in SBM Bank after the initial approval. 

In 2023, Bengaluru-based fintech startup Slice became the first startup to acquire North-East Small Finance Bank.

Gupta, a serial entrepreneur, founded Jupiter in 2019 to offer a range of financial services, such as debit cards, SIPs, mutual funds, personalised savings options, expense management, and UPI payments. Jupiter has raised more than $170 Mn to date from investors like PeakXV Partners, QED Investors, and Matrix Partners and was valued at $710 Mn.

The fintech company managed to narrow its losses by 16% to INR 275.94 Cr in the year ended March 2024 (FY24) from INR 327.04 Cr in the previous fiscal on the back of strong revenue growth and wider margins. The startup’s operating revenue jumped 404% to INR 35.85 Cr during the period under review from INR 7.11 Cr in FY23.

In an exclusive interaction with Inc42 as part of Griffin Dialogues, Gupta shared that while fintechs will look to strengthen their partnerships with traditional banks in an increasingly strict regulatory environment, the new-age companies need to provide unique solutions to the existent problems to sustain and also attract VC funding. 

As Jupiter scales in revenue, brings down losses, and strengthens its employee base, Gupta said, it is pertinent to strengthen the company’s board, celebrate diversity as the culture within the organisation, and ensure employee engagement. 

Edited excerpts from the interaction: 

Inc42: For fintechs, partnerships with traditional banks or acquiring stakes in them is now considered crucial to ensure long-term regulatory compliance and monetisation. How do you see this?

Jitendra Gupta: Partnerships with traditional banks or acquiring stakes in them can certainly give fintech companies an edge in regulatory compliance and open up monetisation opportunities. However, it is essential for fintechs to stay true to their core mission and values. While strategic partnerships can bring value, the focus should remain on building independent, customer-first platforms that are future-proof.

True innovation comes from thinking beyond traditional boundaries – whether through partnerships or by forging an independent path. In the long run, the key isn’t just who fintechs partner with, but the value they create for users and how effectively they scale while maintaining that value.

Inc42: How do you think fintechs can ensure there is no impact on innovation despite the regulatory hurdles?

Jitendra Gupta: Regulatory hurdles are natural in any growing industry, but they shouldn’t stifle innovation. In fact, regulation can help build trust and create a more secure environment for users. The key is to integrate compliance early into the innovation process, ensuring that new products and features are developed with regulatory standards in mind from the start.

Inc42: How does Jupiter navigate the regulatory hurdles and target profitability? 

Jitendra Gupta: Our vision at Jupiter is simple: Redefine how people interact with their money, making financial services seamless, intuitive, and human. We’re doubling down on creating experiences that genuinely add value, whether through smarter savings, simplified investments, or partnerships that expand possibilities for our users.

As I said, regulatory scrutiny is natural in any maturing industry, and I believe it pushes us to build stronger, more resilient businesses. For fintechs, the focus must shift towards balancing innovation with responsibility. Profitability, in this context, is not just about numbers, it’s about building long-term trust and delivering services that users are happy to pay for.

For us, it’s about being strategic with growth while ensuring we never lose sight of our customers’ needs.

Inc42: Jupiter has successfully secured funding, despite the uncertainty in the fintech ecosystem. What’s your message to young fintech founders on fundraising?

Jitendra Gupta: The key to successful fundraising isn’t just about the money. It is about building a compelling vision and a product that delivers real value to customers. At Jupiter, this has been at the heart of our conversations with the investors.

For young fintech founders, my advice is simple: stay focused on solving meaningful problems and don’t be swayed by short-term market trends.

Investors want to back teams that have a deep understanding of the problem they’re solving and the ability to execute consistently. Keep your eye on the long-term vision, adapt when necessary, but always stay true to your purpose.

Inc42:  How do you see the VC sentiment towards the fintech ecosystem in India?

Jitendra Gupta: It is certainly more promising than ever. 

Customers in India are adopting fintech products at an unprecedented pace. I believe the long-term outlook for Indian fintechs is incredibly strong. India’s financial ecosystem remains underpenetrated and fintechs have a significant role to play in bridging that gap. VCs are becoming more discerning, looking beyond the growth-at-all-costs mentality and focusing on sustainable business models, strong unit economics, and clear paths to profitability.

The market will always reward businesses that create real value, not just in terms of revenue, but in trust, user experience, and long-term impact.

Inc42: Did you see any shift in investor expectations after the RBI crackdown on fintechs? 

Jitendra Gupta: Yes, there has definitely been a shift in investor expectations. Investors are now placing greater emphasis on businesses that demonstrate strong compliance frameworks and the ability to adapt to evolving regulations. 

Inc42: How does Jupiter align its long-term business goals with investor expectations?

Jitendra Gupta: The key to aligning with investor expectations in today’s environment is to stay focused on user experience, compliance, and profitability.

The focus is no longer just on rapid growth, but also on building sustainable businesses without compromising user trust or operational integrity. At Jupiter, we have always prioritised building a business that balances innovation with responsibility. We understand that the path to long-term success lies in creating a compliant, transparent, and customer-centric platform.

Inc42: How have you strengthened your board to ensure compliance in corporate governance?

Jitendra Gupta: At Jupiter, corporate governance is at the core of everything we do. We believe that strong governance practices are essential for building a sustainable business that earns the trust of users, investors, and stakeholders. Our board plays a crucial role in shaping the company’s strategic direction, ensuring accountability to our mission while adhering to regulatory requirements.

We have assembled a board with leaders from diverse backgrounds, bringing deep expertise in fintech, technology, and regulatory compliance. This ensures that our decisions are well-informed and aligned with our long-term goals.

We also foster a culture of integrity and transparency within the company. Regular audits, adherence to best practices in financial reporting, and a commitment to ethical decision-making are key pillars of our governance framework.

Inc42: As a leader, how difficult is it to scale the team, yet remain cost-effective and create value for employees?

Jitendra Gupta: Scaling a team while staying cost-effective and creating value for employees is all about measuring the ROI (return on investment) on every decision. Ensuring the right prioritisation allows for objective, unbiased decision-making.

Creating value for employees means fostering a culture of continuous learning and maintaining strong feedback channels to keep the team motivated and engaged. Scaling isn’t just about adding numbers, it’s about building a resilient, high-impact team that aligns with the company’s long-term goals.

Inc42: What does it take to structure a team effectively, scale operations, and create long-term value for employees? As a leader, how have you evolved to manage a rapidly growing organisation?

Jitendra Gupta: Structuring a team effectively starts with ensuring that every individual is aligned with the company’s mission and values. It’s about fostering a culture where each person feels a sense of ownership and accountability, and where cross-functional collaboration is seamless. I believe in empowering teams with autonomy while providing the right resources and support to help them succeed.

Scaling operations requires a clear focus on building systems and processes that can grow with the company, without losing the agility that makes a company successful. It’s also about ensuring that as the team expands, the core culture and values remain intact.

Personally, I’ve evolved by becoming more hands-on with the team dynamics, actively listening to challenges and ideas, and focusing on creating a transparent, feedback-driven culture. As organisations grow, leadership must adapt, not just to scale operations, but also to nurture a strong sense of purpose and connection within the team.

Inc42: Tell us how you approach personal wealth management. What guiding principles influence your financial decisions beyond Jupiter?

Jitendra Gupta: Personal wealth management is about balancing growth while maintaining a fair approach to risk. For long-term wealth creation, a consistent and patient investment strategy is the key.

One of the guiding principles that influence my decisions is staying aligned with my long-term goals, giving back to the community to create a broader impact, and taking calculated risks. I also believe in the importance of liquidity and flexibility, so I keep a portion of my wealth in accessible, less volatile assets to ensure I can act quickly when opportunities arise. Additionally,I prioritise continuous learning and improving my financial acumen to make better, more informed decisions.

[Edited By Kumar Chatterjee] 

The post Jupiter CEO Jitendra Gupta On Going Beyond Bank Tie-Ups, Building Under Regulatory Scrutiny appeared first on Inc42 Media.

What’s buzzing in the startup zone? It’s profitable growth. 

This buzzword echoed clear and loud at fintech major Razorpay’s FTX 25 event last week, where startup founders, government stakeholders, investors and enterprises converged to talk about the state of the ecosystem. 

Although fintech and the financial services industry was at the heart of it all, we even got a glimpse of how startups are practicing greater financial discipline, more insights on the rapid strides by quick commerce, how GenAI is shaping up and of course, startup IPOs. 

In many ways, IPOs are the trigger for the profitable growth trend among Indian startups. 23 startups are in various stages of preparing for public listings by the start of 2025 — many of which were at FTX talking about the reality of listing publicly and the process behind it. Profitability was once again at the front and centre.  

“Unlike the VC ecosystem, the public markets are not forgiving. There are shorter periods of wait and, therefore, the way startups were operating a few years ago in terms of growth and profit targets are distinct. The VC capital has not become scarce, but the sentiment of the private investment community has changed,” Gaurav Jain, senior vice-president at sovereign wealth fund GIC, told Inc42 on the sidelines of the event. 

Startups are now reviewing investment cycles every week, instead of every quarter, and turned to AI to track the pulse of changing consumer preferences and suggest discount bonanzas around consumer loyalty. “Not just growth, it is the sustenance of profits after IPO which has become a crucial metric,” said Arpit Chug, chief financial officer of Razorpay.

Even listed new-age majors such as Paytm, Nykaa, Zomato, Mamaearth, Ola Electric, Swiggy and others have yet to show consistent profits, let alone profitable growth. Some of them are trading well below their issue price, highlighting the need to maintain a positive cash flow as a means to protect valuation. 

As a veteran VC quipped: “IPO is only an event for a company. The real marriage is what happens after the IPO.” 

Zepto’s Finance Playbook Ahead Of IPO 

Of course, that’s a bit too early for many of the startups at the event. Many are still getting themselves ready even before the real work begins. 

Quick commerce unicorn Zepto’s IPO will be closely followed and looks nearer than anticipated after the company completed shifting its domicile from Singapore to India, according to CFO Ramesh Bafna, who had previously led the finance function at Myntra and Flipkart.

“To be honest, the nature of the company I am involved in right now is pretty different from my earlier stints with corporates or startups. We know that quick commerce as an industry is changing. But even we had not expected such rapid pace of change. Within a year, the quick commerce industry has undergone a vast change with non-grocery items now being delivered vastly. This requires monitoring capital expenditures, investment cycles not even quarterly but weekly,” Bafna said.

Investment cycles vary according to seasons or short demand spikes which is unlike any other corporate, so even experienced CFOs need to rethink their approach. 

“Setting the narrative, maintaining consistency in your financial performance and putting internal milestones in the public domain, real-time analysis of GMV to cash flow, setting up audit committees and governance plans – these are some of the important measures we put in place as we head for the public listing,” Bafna said.

Startups Chase Consumer Loyalty 

Customer acquisition costs often narrated the market share gains over the last few years, but as startups seek profitable growth, many are actually considering how to reduce CAC by increasing customer satisfaction, rather than just discounts. 

Whether it is a fintech or an insurance tech or a traveltech or a simple retail business, customer loyalty scores high among the goals for marketing and sales teams at unicorns and soonicorns. 

Over the years, the markets have matured and the companies are now sitting on huge data to devise their next strategy of scaling revenue. Customer loyalty can be built on leveraging this data.

Discounts are not completely out of the picture, but only loyal, repeat customers might enjoy these perks, as the focus now shifts squarely on profitability. 

“We operate a large chain of domestic airports in India. And we do not spend a lot of capital on CAC because the customer literally walks into our airports for travel purposes. However, are we giving discounts to every traveller? Certainly not,” Nitin Sethi, chief digital officer for consumer services at Adani Group, said.

Sethi added that customer engagement data tells the company where it should spend money to reward customers “Similarly, the challenge for startups is to identify and retain its loyal base of consumers and establish a consumer loyalty programme which ensures retention.”  

Various fintech companies operating in the cards or payments space have also strengthened their customer loyalty programmes over the years in partnerships with hospitality and ecommerce companies.

But switching loyalties is just a click away, with nothing really keeping customers loyal to any one platform. And that’s another challenge that startups will have to tackle after turning profitable, if they have to unlock profitable growth. 

The Raging AI Storm

It’s impossible to avoid talking about AI when we talk about the startup ecosystem. No wonder, generative AI, large language models, small language models, agentic AI dominated multiple conversations at the Razorpay FTX event, besides profitability and IPOs. 

The Indian startup ecosystem has fostered more than 200 GenAI ventures that have raised more than $1.2 Bn since 2020. The use case of GenAI in startups across industries or verticals is now becoming more and more specific with each small or big startup involved in building a layer or tool on top of the foundation models.

Insurtech firm Acko’s CEO Varun Dua cited an example of how his company has been testing GenAI models for months in health insurance for determining patient criteria, scanning through the diagnostic tests, swiftly scanning patient information for disbursing reimbursements, and so on.

For Zepto, the GenAI applicability has helped in managing dark stores, SKUs and prioritising speed.

While the Indian startup ecosystem is still developing specific use cases to build on top of the foundational models, industry leaders are also debating on what has led to India lagging behind China and the US in developing LLMs.

“No matter how much we talk about the growth of the Indian economy, the fact is that India remains a consumption market and collaboration with some of the biggest tech companies for using their foundational models is turning expensive. India needs to think from a build perspective. What are we doing to develop the foundational models?” wondered Brij Singh, cofounder and chief executive of Snow Mountain AI.  

“This will not need regulatory concern, VC funding is there anyway. This will require deep research and study for building architecture which we could export to other countries like China did with DeepSeek.”

The post Razorpay FTX: IPO Wave Pushes Startups To Talk Profitable Growth appeared first on Inc42 Media.

An incredibly loud whisper is echoing in India’s once-bustling edtech space: BYJU’S came, BYJU’S ruled, and BYJU’S killed. From Aakash to WhiteHat Jr to Great Learning to EPIC and dozens of other companies — the fall of BYJU’S, once valued at $22 Bn, has also reversed the trajectories of startups that had looked to bank on BYJU’S scale to grow. 

Even through the turmoil, two of these acquisitions showed resilience, not only succeeding in stepping out of the blues, but also making significant progress in going back to profits. 

Aakash Educational Services went from being owned by the Chaudhry family to BYJU’S and now to Ranjan Pai’s family office, which today holds a majority stake in the coaching giant.

On the other hand, Great Learning was unique in the sense that its three founders continued to run the business even after being acquired by BYJU’S. And Great Learning cofounder and CEO Mohan Lakhamraju believes that this has allowed his company to survive the BYJU’S disaster.

For context, BYJU’S acquired Great Learning in 2021 in a $600 Mn deal, but the CEO said that this amount was less than what BYJU’S was actually willing to offer. 

“At the time of the acquisition, we opted for $100 Mn less than what was proposed because we wanted this company to be run independently with the founders at the helm. Of course, we have seen the fate of the companies that BYJU’S acquired where the operations and workforce were integrated,” Great Learning cofounder Lakhamraju told Inc42.

The Inside Story: Great Learning’s Experience Under BYJU’S 

Founded by Lakhamraju, Arjun Nair, and Hari Krishnan Nair in 2013, Great Learning was acquired by BYJU’S for its upskilling platform, which targetted courses in data science and artificial intelligence in partnership with top global institutes such as IIT Bombay, Johns Hopkins University and Duke University.

This was BYJU’S first attempt to enter the tech skill development space, as the edtech giant looked to branch out beyond test prep after raising more than $1 Bn in 2021. But unlike the others which BYJU’S has either written off or shut down, Great Learning has survived attempts by BYJU’S to sell off the company.

Lakhamraju revealed that as BYJU’S was teetering on the brink of bankruptcy, it wanted to sell Great Learning in 2023-24 to pay off a part of the $1.5 Bn debt being recalled by US creditors.

“Yes, Great Learning was up for sale at one point. But it didn’t materialise. BYJU’S was to pay a certain amount as a part of the deal. That wasn’t honoured either. So, we took back the equity in response to non-payment of the cash component. The equity held by Think & Learn [BYJU’S parent company] was eventually shifted to the lenders of BYJU’S,” the Great Learning CEO explained. 

Bengaluru-headquartered Great Learning is now being controlled by its three founders and BYJU’S creditors who will be on their way out once they recover the debt, as per a contract signed between them and the Great Learning founders.

Despite these challenges, the company has managed to scale up operations spread across India, the US, the UK, and the UAE with learners from over 50 countries. However, the CEO did not disclose the extent of the debt that has to be repaid by Great Learning to take the creditors off the books. 

Lakhamraju added that unlike shareholders, the creditors’ goals are aligned with the cash flow situation of Great Learning and since the company is profitable, he does not foresee any challenges in settling the debt in the near term. 

Paving The Path To Profitability 

“We have been profitable since FY24, with our net profit at $1.5 Mn (around INR 13 Cr). This is on a consolidated level with a major portion of our revenues coming from overseas geographies. Our revenues grew 23% on-year to $118 Mn (around INR 1,000 Cr) in FY24 on a consolidated basis,” the CEO said. 

The turnaround in Great Learning’s India business from INR 341 Cr loss in FY23, makes an interesting case study in the domestic edtech market, where profitable ventures are a rarity. 

The only exception was PhysicsWallah, which has also fallen into losses after a major investment spree in FY24.  

Given this reality, Great Learning’s profitability is certainly a rarity. “We have been profitable for quite some time and maintain healthy cash flow to channel growth, which is why we don’t have any immediate plans of capital raise or a public listing. The objective really is to sustain the growth, tap newer markets and if we go public in future, to sustain that profitability,” the CEO said, without going into a geography-wise breakdown of the revenue. 

What exactly changed between FY23 and FY24? 

Lakhamraju said the company banked on AI — more on this below — to become more efficient and mitigated the potentially higher workforce costs as it scaled up. The company lowered its customer acquisition costs (CAC) by leveraging AI, which served as a smart lever for topline growth

The CEO claimed that the company did not have to rely on layoffs in the past year to trim costs, and currently, it has 1,700 employees. “The upskilling space in India has also turned hugely competitive over the recent years which mandates that the companies now have to target newer markets and integrate AI to make their operations efficient,” he said. 

Upskilling, particularly in the executive education space, is a capital-intensive business model. For a venture like Great Learning, it involves deployment of funds for partnering with top-notch global universities, roping in renowned educators, and upgrading the course module at regular intervals.

“When it comes to some of the highly skilled courses in the tech domain, Great Learning has partnered with reputed global universities to offer diploma and degree level certifications. A majority of such courses cost INR 2 Lakh and above for a learner as upskilling has become crucial in today’s job market,” the Great Learning CEO said.

The platform has more than 12 Mn learners in premium courses that cover generative AI, Python programming, data science and machine learning and data analytics. Partner universities such as  Northwestern University, University of Arizona and Johns Hopkins University work with the startup to design the curriculum for these courses. 

While the edtech startup does not guarantee placements, Lakhamraju claims that executives who graduated from Great Learning’s courses received as much as a 50% hike in salary, besides a general increase in the number of job offers from corporations worldwide.

The startup’s target audience is primarily middle management executives who want to level up and unlock new growth paths within their organisation or within the broader tech industry. With GenAI disrupting traditional software operations and development cycles, more and more executives — particularly within the tech industry — are looking to fortify themselves against potential role displacement. 

Gaining The Gen AI Edge 

Through the past six months, Great Learning has been testing course modules powered by OpenAI’s APIs to offer low-priced upskilling courses to freshers and engineering graduates both in India and abroad. 

Lakhamraju said that these courses are designed to be independent of human intervention. The courses are operated by AI teachers and AI mentors – as he likes to call them – without the need for any manual workforce, which makes the course a lot more affordable. 

“The pricing of these courses starts at INR 1,500. We are trying this model out in India first and later in other countries. This is primarily because we have huge datasets available from learner behaviour in India. Introducing this in India, therefore, was a natural progression. In overseas geographies, we are pricing it higher,” the cofounder added. 

Great Learning currently sees 50% of its annual revenue coming from the US markets, but the AI-powered modules could accelerate the India revenue base as well. 

To be clear, this is not a first-of-its-kind innovation in the edtech ecosystem. Several other startups have tried out integrating with AI, Gemini and DeepSeek foundation models. Indeed, BYJU’S itself tried to create an AI platform for its test prep users. 

Great Learning, however, claims that it is adding value beyond course curriculum by bringing in doubt resolutions, mock interviews, project analysis, and real-time coding support for learners.

“India produces 1.5 Mn engineering graduates every year, which is more than any other country. We are only scratching the surface of Gen AI models and allied innovations and the new job entrants need to be made future ready to be able to use the technology as well as get upskilled. The pricing of the courses is attractive too, though we are not offering any job guarantees,” the CEO added.

Most recently, Great Learning announced that all its AI-powered programmes will come under an umbrella brand Glaide – a combination of GL (Great Learning), AI and aide. 

“Great teachers are few in number and most learners never get to experience the magic of learning from them. This is what we are trying to solve using AI. We are leveraging AI to bring that same magic of great teachers to everyone!” Lakhamraju exclaimed.

The AI integration, according to the Great Learning leadership, will set its course for the next phase of growth with the possibility of a revenue boost from a price-sensitive market like India. And that’s how the startup is carving a future for itself outside of the BYJU’S umbrella. 

Recently, we have seen some founders looking to reacquire sold startups from the new ownership as a means to reestablish businesses that have gone off the track. The most recent example is of Sirona, where the founders are looking to buy back the company from the Good Glamm Group, in a bid to break free from the crisis-hit house of brands. 

Great Learning’s journey in the past year — amid the bankruptcy proceedings at BYJU’S — is characterised by a deep and singular focus on the business, rather than the corporate governance mess at BYJU’S. 

This has allowed Great Learning to live up to its potential and compete with the likes of Eruditus, upGrad and others in this space. Not long ago, Great Learning was on the chopping block, but now, it’s broken free of those shackles, and has put the BYJU’S experience behind it.

[Edited By Kumar Chatterjee]

The post Life After BYJU’S: How Great Learning Built A Profitable Future Away From The Tainted Giant appeared first on Inc42 Media.

Cryptocurrency is not illegal, but it isn’t legal, either.

The fate of cryptocurrencies in India stays cryptic in a largely unregulated environment, despite repeated scams taking a major toll on investor confidence. While the government’s plan to float its very own digital currency adds some faith in the digital asset, raging headwinds of malicious trade and unfavourable macro fundamentals have deepened the uncertainty in the market. Only a few homegrown companies have stood firm even in such times of turbulence. 

“Stability is what we need at this hour,” believes Ashish Singhal, who cofounded CoinSwitch, which is one of the only two cryptocurrency unicorns in India.

Singhal, who is also the co-founder of the crypto exchange and aggregator, hopes that the government will soon bring in regulations and then, it’s all about compliance. “It’s a game of patience. We’re dealing in a new-age product that is yet to be understood by a wider mass. The situation is improving and I’m sure it’s going to get momentum very soon.” 

While sticking to its transparent business model which, according to him, gave CoinSwitch Kuber the strength to face the volatile environment, the company has expanded into other fintech verticals like wealth management.

“If we believe in stability, then we must make our core business operations more stable before we jump on the fintech bandwagon rushing for public listing,” says Singhal. 

The Bengaluru-based company has been trying to rebuild investor confidence and is also leading awareness in cryptocurrencies working under the purview of the Reserve Bank of India (RBI) and the Securities and Exchange Board of India RBI (SEBI).

Singhal was one of the cryptocurrency leaders in India to speak for the victims of the $230 Mn hack on WazirX in 2024. In a freewheeling chat with Inc42 as part of the Griffin Dialogues series, he shares how he would have handled the situation differently. 

“If a company isn’t able to cover the full extent of the losses immediately, it should still take partial responsibility. Like managing part of the repayments from the company’s treasury, and the rest perhaps through shares in the company or future revenue streams,” he says.

Edited excerpts 

Inc42: Regulations around crypto assets have stabilised to some extent. What kind of impact do you see on the crypto industry in India?

Ashish Singhal: The re-election of Donald Trump has definitely made things better for the crypto community. His supportive stance on crypto assets could inspire other countries to adopt more favourable regulations as well. In fact, we’re already seeing this happen. 

Earlier this week, Department of Economic Affairs (DEA) secretary Ajay Seth said the government is revisiting its discussion paper on crypto based on recent developments around the world. The government’s view is also changing gradually. A few years back, the conversation was majorly about whether to impose a complete ban on crypto. But today, the focus has shifted towards creating a proper policy framework. 

We have also seen some concrete steps in this direction such as a tax system for crypto transactions, which requires exchanges to register with the Financial Intelligence Unit (FIU), and even drafting of a detailed discussion paper on digital assets.

While the government is still taking a cautious and careful approach, these developments show that the regulatory environment is maturing. This is a positive sign for the long-term, sustainable growth of the virtual digital assets (VDA) industry in India.

Inc42: We’ve seen a lull in VC funding for the crypto industry. Do you see any likely revival in the VC sentiment for the crypto industry in India?

Ashish Singhal: The Web3 sector in India is mainly hamstrung by the lack of regulation. We know this is a new version of the World Wide Web that uses blockchain technology and decentralisation. While it is completely legal to invest or trade in crypto, we could use more regulatory clarity and better tax structures to unlock its true potential.

The crypto industry has incentives built into it, so venture capital doesn’t need to come from traditional VCs only. Anyone can back a project for as little as INR 100 and that’s the beauty of tokens. If you think a project has potential, you don’t need to be a high net worth individual or an accredited angel investor to back it. By simply buying the token, you can invest in the project.

So, when you see the markets going up, when users are buying tokens or cryptos, you’re essentially seeing hundreds of projects raising venture capital from millions of investors around the world.

Inc42: Are you looking to raise further capital or planning a public listing? 

Ashish Singhal: We believe securing stability is the most important aspect at the moment for the business. Accordingly, our primary focus is to build and enhance features across CoinSwitch and Lemonn to make investing simpler and more accessible. This will help us build a more stable position in the market. At this stage, we are well-capitalised and not looking to raise further capital or considering an IPO. However, we remain open to possibilities and may revisit this conversation in the coming years.

Inc42: Coming to wealthtech, we have seen a lot of activity on this front through the last two years. You have designed an all-new platform for this. How has the business fared so far? 

Ashish Singhal: We ventured into wealthtech space with Lemonn in 2024. Our platform is designed with focus on new investors, reflecting Lemonn’s commitment to clarity and simplicity.

Only about 6% Indians invest in stocks today. We aim to raise this number and make investing as accessible and effortless as possible. The features are customised, targeting the needs and requirements of new investors, and helping them with discovery and decision making.

We noticed that many users were looking for well-researched, easy-to-understand stock recommendations. So, we introduced the ‘Analyst Rating’ feature, which shares curated stock picks from 40 experts. It’s been a hit as 29% of our users rely on these recommendations to guide their investments.

In less than a year, we’ve launched a wide range of products, including stocks, mutual funds, IPOs, F&Os, and margin trading facility (MTF) on the platform. Last month, Lemonn crossed 1 Mn users and is now among India’s top 50 brokers. This growth reflects the trust our users have placed in us, and we’re just getting started.

Inc42: As you expand into a wider ambit, you need to recast your business as well as the human capital. How have you gone into restructuring the workforce and the verticals over the past one year?

Ashish Singhal: Our organisational structure is straightforward and designed to foster growth and innovation. PeepalCo serves as our parent brand that supports the development of distinctive brands under one unified umbrella. Each brand operates in autonomy so that they have enough room to innovate and move faster.

Under PeepalCo, both CoinSwitch and Lemonn operate as thriving independent brands, each led by a dedicated leadership team. Balaji Srihari heads CoinSwitch and Lemonn is led by Devam Sardana.

Inc42: What cultural values or practices have you implemented to ensure Coinswitch remains agile and innovative even as it scales?

Ashish Singhal: At PeepalCo, we believe that a company’s culture is the foundation of its agility and innovation. As we scale, we remain committed to a dynamic, customer-first mindset, ensuring that we don’t just grow – we evolve with purpose. As an organisation, we have six core values. These aren’t just words, they are the principles that keep us agile, innovative, and focused.

• Crazy about customers: Our success is measured by our user experiences. We take their challenges personally and go the extra mile to solve them, ensuring that investing is seamless, secure, and accessible for all.
• Where logic meets magic: Innovation thrives at the intersection of data-driven insights and bold ideas. We ground our decisions in analytics while embracing creativity to redefine what’s possible.
• Lights, cameras, bias for action: While we think deliberately, we act decisively, leading by example and turning ideas into impact.
• No hate, just innovate: Disruption happens when diverse minds come together. We foster an inclusive, positive culture where differences fuel innovation and everyone has a voice.
• Stand up for your beliefs: Innovation demands courage. We encourage open, respectful debates and take ownership of our commitments, ensuring that every decision aligns with our larger vision.
• Together we scale: Growth is meaningful when it’s shared. We build with empathy, collaboration, and trust, knowing that real progress comes from working together towards a common goal.

Inc42: You operate in a complex regulatory environment, how have you built the capacity to adapt quickly to policy changes? What role do you see for collaboration with regulators in shaping the fintech ecosystem?

Ashish Singhal: At CoinSwitch and Lemonn, compliance has been a core principle from day one, ensuring that regulatory shifts do not translate into disruptions. Trust and transparency drive our approach. We have always maintained stringent KYC checks and a robust compliance framework to uphold industry standards.

Our dedicated compliance team navigates the evolving regulatory landscape, making sure we fully follow the VDA (virtual digital asset) regulations and SEBI’s framework for stock brokers. With internal governance, regular risk assessments, and proactive planning for different policy scenarios, we’re able to adapt quickly and smoothly to any changes.

We also believe that working closely with regulators is essential for building a responsible, innovation-friendly fintech ecosystem in India. For any fintech startup, it’s important to prioritise this partnership because we’re handling our users’ financial assets. Regulations are there to protect both users and platforms, and we’re committed to supporting and aligning with these frameworks to create a safer, more transparent financial environment for everyone.

Inc42: As you talk of regulations and compliance, what comes to mind is the shock that was triggered by the $230 Mn WazirX hack. Founders like you have stressed for more transparency with the users. But how do you ensure that at CoinSwitch?

Ashish Singhal: At CoinSwitch, transparency with our users has always been a top priority. That’s why we were the first in India to introduce regular Proof of Reserves (PoR) disclosures that are verified by a reputed third-party auditor as per standards prescribed by the Institute of Chartered Accountants of India.

With PoR, our users can easily verify that CoinSwitch maintains a 1:1 or higher holdings ratio. This means we securely hold assets equal to or more than the total crypto and INR balances of our users, ensuring that they can withdraw or redeem their funds anytime at ease.

But that’s not all. We have a host of other measures too to safeguard user assets. Let me give you a rundown.

• Enterprise grade custody: We work with the best custody providers to store crypto. Our custody providers insure assets in storage and in transfer.
• ISO/ IEC 27001:2022: CoinSwitch is ISO/IEC 27001:2022 certified, which highlights our dedication to implementing robust information security practices.
• Multi party computation (MPC): By eliminating a single point of compromise throughout the key lifecycle, MPC ensures a highly secure environment for storing, transferring, and issuing digital assets.
• Robust policy engine: We use robust policy engines that enable us to set up approval policies for transactions. This allows us to configure a list of rules that make transactions safer.
• Risk management: We follow strict fund management practices to minimise risks. The majority digital assets are stored in cold wallets. At any point, we have less than 5% of our assets on hot wallets and third-party exchanges. This allows us to work with multiple partners and minimise systemic risks.
• Customer support: We are here for you 24/7. If you face an issue with the CoinSwitch app or account, or if you require any other assistance, you can reach us @Csksupport.
• Financial strength: As you witnessed at the time of the alleged cyber attack, we made our users whole by using our own treasury. Our financial strength allows us to act in the interest of users and absorb external shocks to an extent. We have raised significant capital and are backed by some of the largest global investors.

Inc42: You talked of a customer-first mindset. What has been the most effective strategy to navigate investor expectations while aligning them with your vision? This also takes us to the lessons that other founders can learn from your journey…

Ashish Singhal: At PeepalCo, transparency and clarity in long-term vision have been the key to managing investor expectations.

We prioritise sustainable growth over quick wins, making sure our product innovations truly meet market needs. Honest, data-backed communication helps us build trust, and being adaptable allows us to handle any regulatory changes smoothly.

For anyone planning to start their own venture, one of the biggest lessons is to raise capital with a purpose, not merely out of an urgency. It’s important to have a vision in a general direction which can turn into large outcomes. When you focus on building a profitable, mission-driven business, you attract long-term partners and outsized outcomes.

Inc42: How would you have handled a WazirX kind of situation differently?

Ashish Singhal: Well, I firmly believe that a company’s first priority should always be to protect its users. This is an everyday exercise and doesn’t start after you’re hacked. In such situations, the affected company should absorb losses internally whenever possible, rather than shifting the burden onto their users.

You, as a company, absorb the impact. You go into the market, continue to innovate, and generate more revenue to recover from the losses.

However, if a company isn’t able to cover the full extent of the losses immediately, it should still take partial responsibility. Like managing part of the repayments from the company’s treasury, and the rest perhaps through shares in the company or future revenue streams.

In more severe situations, companies should explore options like finding a buyer or undergoing liquidation to minimise losses to users. While this process might take longer, it ensures that users receive at least the minimum of what they’re owed, plus potentially something extra.

Corporate accountability and user trust should be non-negotiable. Protecting customers’ interests should always be at the heart of any recovery strategy.

[Edited By Kumar Chatterjee]

The post Going Beyond Crypto: Why CoinSwitch Puts Compliance Before ‘Quick Growth’ Hacks appeared first on Inc42 Media.

Does Zomato want to zoom into the trail of big tech name-changers? 

Perhaps so. But, whether Deepinder Goyal’s Eternal will be the game-changer for the flagship food delivery brand is a $30 Bn question that only time can answer. 

If anything this rebranding of the startup signifies, it is the chief executive’s ambition to build a big business empire that would shroud how a slowdown in India’s INR 5.5 Lakh Cr food delivery sector is fast eating into Zomato’s bottomline.

Eternal will spread the cover on the troubled core of the business, while also bringing in subsidiaries like Blinkit, the quick commerce venture, and going-out app District under it.

Mark Zuckerberg thought much in the same line when he brought in Meta that covered embattled social media giant Facebook and his investment in Metaverse, although Larry Page adopted Alphabet to separate Google search engine from his other ventures, and Steve Jobs dropped Computers from Apple only to indicate his interest in a wider gamut of products. But it was perhaps Elon Musk’s simple affinity for the letter X that had unseated Twitter.  

What played behind the rechristening of the Brand Zomato within two months of featuring in the big league of top 30 public companies? There could be apprehension of a broad-based slowdown in the sector triggered by sluggish consumption that hasn’t spared its arch-rival Swiggy, too. 

A sustained deceleration in food delivery through the last two quarters drove Zomato’s profit down 57% on-year to INR 59 Cr, while its gross order value (GOV), which grew 17% over last year to INR  9,690 crore, recorded a meagre 2.3% rise sequentially. For Swiggy, the losses widened to INR 799 Cr in Q3 of this fiscal from INR 574 Cr a year earlier. Its stock price skidded below the issue price on February 6 after the company announced its quarterly results. 

An image makeover seemed to be the only way for Goyal and his team in the face of this changing market dynamics.

The broader management commentary from Swiggy and Zomato, which together command more than 90% share in the food delivery sector in India, was that there “was a broad-based consumption slowdown in urban India” that led to the tapered demand. The Union Budget for FY26 offered some optimism for the sector. A higher threshold for taxable income at INR 12 Lakh per year fuelled hope of a boost to discretionary spending and a consequent revival in demand. 

Userbase, Order Value Degrowth Spoils The Broth

What leaves a bitter taste in the mouth for the food delivery giants is an incremental growth in their gross order value (GOV) and monthly transacting users (MTU). The last two quarters have indicated that the platforms struggled with marginal rise in the two most vital metrics for the segment even in a conventional peak season. 

Sequentially in FY25, Zomato’s GOV increased only 2.3% to INR 9,913 Cr in Q3 and by 4% to INR 9.690 Cr in Q2. Its MTU, in fact, declined from 20.7 Mn in Q2 to 20.5 Mn in Q3, while in Q1, it stood at 20.3 Mn.

For Swiggy in FY25, the GOV grew by 3.4% to INR 7,436 Cr in Q3 and by 5% in Q2 to INR 7,191 Cr. Its average MTU grew marginally from 14 Mn in Q1 to 14.7 Mn in Q2 to 14.9 Mn in Q3.

Sateesh Meena of Datum Intelligence pointed out that new user onboarding and order frequency from the existing users – that translate into higher GOV and MTU – has stagnated over the past couple of quarters. 

“Besides the macroeconomic headwinds, the food delivery sector has been facing a saturation for quite some time now, especially in the existing markets which cover India’s top 8-10 metro cities. The December quarter was expected to see some turnaround in spending because of festivities, but that was not the case with online food delivery. MTU declining or increasing marginally is also a worrying sign, reflecting that the order frequency is not increasing. It mandates that both Zomato and Swiggy will have to revisit their playbook to attract new users,” Meena said. 

Flavour Fallacy In Newer Markets  

A look at the consumption pattern across the country shows that rural markets have outpaced their counterparts in cities when the Economic Survey 2025 and the Union Budget 2025-26 computed the consumption growth. Food delivery startups couldn’t reap from this shift because these are majorly dependent on the urban markets. 

Zomato has been dragging its feet on expansion since it rolled back operations from more than 200 cities in 2023. Swiggy, on the other hand, turned bullish on the Tier 2 and 3 towns and even introduced its 10-minute food delivery service across 400 cities. The revenue lever, however, failed to jack up the topline and margins for the company significantly. 

According to the food services players, the remote markets have their own set of challenges in terms of infrastructure and logistics. “These are very specific and different from one place to another,” said a Bengaluru-based quick service restaurant (QSR) chain owner. The consumer behaviour in smaller cities of India is very distinct from large metros. Lack of sufficient manpower, coupled with higher commission for smaller restaurants, in these cities act as crippling factors for online food delivery expansion, he argued. 

In major cities, the delivery platforms set up cloud kitchens in high-demand areas, which saves on logistics and infrastructure, but in smaller cities, the demand is usually scattered. “Accordingly, the go-to-market strategy for such cities would be entirely different from what Zomato and Swiggy have been doing so far.” 

This is what perhaps keeps the food delivery giants quiet on returns from non-metro cities, although they had earlier claimed that these markets had the potential to bring in 50% of their order volumes.   

Simmering Prices And Lukewarm Demand

Food delivery services saw one of the steepest price rises when Zomato and Swiggy reworked their unit economics and hiked their platform fees last year. With most of the capital deployed in expansion and execution of their quick commerce businesses, the food delivery business got pricier and fetched better margins.

The platform fees component has increased as much as 400% since last year. Zomato had earlier told the BSE the platform fee hike was a regular exercise. “Such changes in our platform fee are a routine business matter and are done from time to time and may vary from city to city,” it had said in a filing last October.

The platforms also introduced surge fees for peak hours, besides raising commissions from restaurant partners. “There is a ripple effect of hiked commissions charged from platforms. With commissions as much as 30-40%, the restaurants are at a huge disadvantage and have resorted to raising the prices on their menus applicable to the delivery platforms. This makes the dine-in more affordable and makes the food prices vary considerably between online and offline,” Bengaluru QSR chain owner told Inc42. 

Any GST hike on the restaurant food sale or delivery is being passed on to the customer which also makes food delivery costlier. 

Market analysts said food delivery services have turned 20-30% costlier between 2023 and 2024. This might have dented the demand in cities, especially among GenZ and millennial consumers.

A general trend of lower discretionary spends, fostered by macroeconomic uncertainties, have also taken a toll on food delivery demand, slowing down consumption from the middle-income groups, the analysts said. 

The duopoly of Swiggy and Zomato in the sector came under threat with the rolling out of the government-backed Open Network For Digital Commerce (ONDC). It tried attempting cheaper food delivery services through buyer platforms like Magicpin and Ola, but these platforms need to heavily incentivise the consumers and charge lesser commissions from the restaurant partners to grab a sizeable market share. 

Some sources said that Ola and Magicpin have created some dent in cities like Delhi NCR and Bengaluru but they would need heavy capital to take on the giants. 

New Revenue Levers In Quick Bites

As quick commerce paced up in most markets, the food delivery players too jumped on the bandwagon, with Swiggy and Zomato rolling out their 10-minute delivery formats for consumers on the go in metros and in Tier 1 and 2 cities. Swiggy said in its third quarter report that its 10-minute food delivery service Bolt made up 9% of the volume and the company has since begun extending the service to remote towns. 

On the speed track, as Bolt faced tough fights from both Zomato-backed Bistro and a more seasoned Zepto Cafe, Swiggy launched Snacc as a separate app earlier this year for delivery of prepared meals, beverages, and fast food within 15 minutes. 

All the players in the 10-minute food delivery space have claimed that they do not charge additional delivery fees or surge fees from consumers. But the model requires the platforms to build in-house cloud kitchen facilities, partnerships with third-party vendors, and better logistics.

“Data has shown us time and again that bringing down delivery time creates incremental demand for restaurant food. For example, when we started managing last-mile delivery for restaurants (compared to restaurants delivering orders themselves earlier), we were able to bring down the delivery time from 45+ minutes to around 30 minutes, which led to meaningful expansion in demand,” CEO Goyal wrote to Zomato shareholders. 

“We believe something similar can happen with 10-15-minute deliveries. This is also the reason why we experimented with Zomato Instant, but we could not find the right economic model and hence shut it down. Our learning here was that 10-minute deliveries would be possible only if we ensure kitchen networks are dense (and thereby cut down travel time), while also bringing down kitchen preparation time. Doing this consistently and profitably is not an easy problem to solve,” Goyal said.

Swiggy said in its management commentary that with Snacc, it is testing a different use-case for consumers linked to low-involvement consumption, where variety is not central to consumption. “We believe both the models are playing in the 10-minute food delivery segment, but catering to different need states and consumption occasions. We therefore intend to play in both the paradigms, and hope to outpace category growth,” it said in its letter to shareholders.

It is, however, remains to be seen if these new ventures will help the food delivery biggies attract more users and increase the order frequency.

“It should not be the case of the existing users trying out 10-minute deliveries which typically will have lesser AOV (average order value) at the expense of larger orders. That is not going to help their cause either,” alerted Meena of Datum Intelligence. “The only revenue moot is to either attract new consumers or increase the frequency.”

Alternate Cuisine For Change Of Taste 

For now, for both Swiggy and Zomato, the demand slowdown in online food delivery is being compensated with rise in revenue from dining-in and going out businesses. Zomato’s going out business, which includes events and dine-ins, the GOV has increased by 35% on-quarter and 191% on-year to INR 2,495 Cr in Q3 of FY25, whereas for Swiggy, the going-out business GOV grew 11% sequentially and 47% annually to INR 821 Cr in the same quarter. 

A surge in going out experiences and timely foray into these verticals will effectively act as buffers for Swiggy and Zomato from the slowdown in online food delivery, but eventually the aggregators will need a sustainable strategy to get their core business back on track.

[Edited By Kumar Chatterjee]

The post Zomato, Swiggy’s Wall: Has Food Delivery In India Hit A Dead End? appeared first on Inc42 Media.

Flipkart is taking a reverse flip to shift its domicile from Singapore to Gurugram. As it makes a fresh push to go public, the company has lined up a host of other changes that were crucial to meet the regulatory guidelines for foraying into the Indian capital market. 

The $36 Bn ecommerce giant dusted off its IPO dream after parent Walmart last year gave it the go-ahead to list in the next 12-18 months. Flipkart went on to restructure its board and the leadership to make its mega IPO boom. It is, however, yet to accelerate its cost-cutting drive and work on its subsidiaries that are still making losses. 

Walmart is wary of the challenges that Flipkart and arch rival Amazon India have faced from the regulators over the past few years, starting from allegations related to FEMA and FDI violations to abuse of competitive laws. 

So it only makes sense for Flipkart to shift the narrative from being seen as a firm controlled by a US retailer to a homegrown company as it gears up for a fresh dash for the capital market. 

Despite projecting itself as an Indian company, which makes it different from Amazon, Flipkart has long been dubbed by local retailer bodies and regulators as a foreign entity that could push the ubiquitous kirana stores out of business.  

No wonder, Flipkart wanted to change that narrative. The decision to reverse flip from Singapore to India is aligned to its listing goals and to bypass further regulatory hurdles since more than 80% of it is owned by the US retail giant.

The company will have to cough up heavy taxes as was seen in the reverse flip by another Walmart subsidiary, PhonePe, which cost the payments unicorn $1 Bn as per most reports.

For Flipkart, the stakes involved and tax outgo is likely to be higher. 

A $36 Bn privately held company listing on Indian stock exchanges is being seen as a seminal moment for the startup ecosystem. There’s also a loud buzz among industry insiders that the Flipkart float will be much bigger than that of Paytm’s or Swiggy’s, which were by far the largest IPOs by new-age companies. 

A mega IPO of such magnitude means preparations have to be in full swing. Sources in the company shared that the employees have started getting feelers of stricter profit targets, foray into new verticals, and higher revenues.

Let’s delve deeper into Flipkart’s IPO playbook.  

Flipkart’s Reshuffle

“Flipkart has been exploring new office spaces in Gurugram since December 2024. A 100-200-seater facility is what Flipkart has been looking for,” a senior executive at one of the real estate firms the company is talking to for its new office space, told Inc42. 

Last year, the company took its first steps towards a potential IPO by strengthening its board. Flipkart brought in Dan Bartlett, Walmart executive VP for corporate affairs, as a director. 

Bartlett had already been closely monitoring Flipkart operations since the 2018 takeover by Walmart, but this appointment was seen by many as one made with IPO on the horizon. At Walmart, Bartlett oversees public policy initiatives, corporate real estate, and leads sustainability programmes.

Around the same time, the Flipkart board brought back former SoftBank managing partner Lydia Jett, after closing a $1 Bn funding round led by Walmart in which Google also invested $350 Mn.

Flipkart CEO Kalyan Krishnamurthy rejigged the top deck at the ecommerce firm after a host of vertical heads, including that of travel booking platform Cleartrip, fintech payment app heads and growth initiative heads stepped down last year.

The company also trimmed its workforce by 5%-7% reportedly through a performance review exercise. The Flipkart leadership, particularly the SVPs, have been under tremendous pressure since last year to deliver that might have caused large-scale exits at senior levels.

An internal source, however, also indicated pressure from poaching by quick commerce rivals like Zepto, Swiggy Instamart and Blinkit. 

Zepto, for instance, recently appointed Karan Attri from Flipkart as assistant director of marketing. It also roped in Shreyansh Modi to head its monetisation and growth initiatives after he left Flipkart.

Swiggy, on the other hand, appointed Amitesh Jha, Hari Kumar and Kanika Tiwari – all from Flipkart – for its quick commerce vertical Instamart as the CEO, CBO and head of the monetisation initiatives, respectively. 

Zomato-backed Blinkit too rushed in, picking Vipin Kapooria as its CFO late last year. Kapooria was senior finance director at Flipkart. 

“For any company headed towards an IPO, a spate of senior-level exits signals worry, especially when the capital flush rivals are offering fat salaries and Flipkart on the other hand will look to achieve profitability and not spend on employee costs beyond its budget. Hence, it will be interesting to see how the marketplace navigates challenges under these circumstances,” an ecommerce analyst who tracks Flipkart told us, choosing to stay anonymous.

Flipkart’s Road To D-Street 

Flipkart’s way to the Bombay Stock Exchange will see plenty of more twists and turns. Today, the focus is squarely on profit. The ecommerce major has looked to ensure that most of its subsidiaries reach break-even levels as the company is eyeing a strong bottom line. 

Flipkart grew its topline by 21% to INR 17,907 Cr in FY24, while it shrank its losses by 41% to INR 2,258 Cr. 

Flipkart generates income through seller commissions and advertising. The advertising earnings surpassed its marketplace fees in FY24, shows the company’s financial report. 

CEO Krishnamurthy told the employees in a townhall earlier this year that the company was inching close to profitability with cash burn going down significantly on a month-on-month basis.

Last October, Walmart CFO Davin Rainey said in the US retail giant’s Q3 earnings call that Flipkart posted a double-digit growth in revenue and customer base during its annual sales event. The top Walmart executive also said that Flipkart’s advertising income in FY24 at nearly INR 5,000 Cr has also majorly helped US major to grow its advertising revenue by 50%. 

Festive season sales fetched nearly $14 Bn in revenue in 2024 for all ecommerce platforms in India, according to a report by consulting firm Redseer. Flipkart and Amazon clocked 80% of the revenue share in festive season sales with various quick commerce players and Meesho also improving upon their sales growth.

“Flipkart has been a preferred buying medium for slightly higher priced smartphones for the past many years because of the attractive pricing and its partnerships with mobile companies. This helped it grab a major share in the festive season sales with mobile phones accounting for 60% of the pie,” a senior ecommerce analyst said. 

According to the analyst, consumer trends are shifting to premium smartphones, gadgets and other categories like home decor, beauty, electronics and fashion also gaining traction. “Flipkart, as a marketplace, will have to offer better services beyond the medium-priced smartphone category to prevent any dent in the market share,” they added.  

Quick Commerce: Is Late Entry Good Enough? 

The wave of quick commerce, triggered by the likes of Blinkit, Zepto and Swiggy Instamart, has given ecommerce giants like Amazon and Flipkart a tough time since last year when it comes to delivering in 10 minutes.

Not only are the quick commerce players grabbing the market share of ecommerce marketplaces in groceries, but now these instant delivery startups have forayed into high-margin driver categories like fashion, electronics, large appliances, too. 

This means that Flipkart and Amazon are left with no choice but to revisit the delivery strategy. Flipkart tried instant deliveries with Flipkart Quick, launched a few years ago, promising grocery deliveries in 30 minutes.

At that time, even e-tailing giants banished the idea of instant deliveries working in a market like India. Fast forward to 2024, Flipkart held talks with various quick commerce players, including Zepto, and almost defunct Dunzo to acquire these companies.

Flipkart had last August rushed to launch Minutes, a 10-15-minute delivery feature, on the app. The company is expected to leverage its massive logistics fleet through Ekart and warehouse capabilities to shore up its quick commerce ambitions after it gave up on its idea of acquiring an existing player.

Dunzo chief executive and cofounder Kabeer Biswas, who joined Flipkart last month, is likely to head the quick commerce initiative, though no formal announcement has been made as yet.

For now, Flipkart has offered accessibility to products in grocery, home decor and electronics for quick deliveries in select cities. The analysts say that Flipkart’s existent advantage in mobile phone categories could help it drive higher average order value (AOV) even if it is not able to scale up the volumes.

Our conversations with the quick commerce leaders reveal that the industry is ripe for multiple players in the game and will require capital for the next few years before consolidation, which makes sense for Flipkart to make its late but significant entry into an aggressively growing market. 

The challenge the Bengaluru-based ecommerce firm might face is balancing the costs involved while expanding its quick commerce business and aiming for an IPO which requires it to chase profitability at all costs.

Will Myntra Be The Golden Goose?

Perhaps the biggest turnaround in Flipkart’s business for the last one year was when its fashion marketplace Myntra made profits. It turned around from a loss of INR 782 Cr in FY23 to a profit of INR 31 Cr in FY24 with the revenues growing 14.7% to INR 5,121 Cr. 

What was the game plan? Myntra brought down its expenses substantially which helped the Flipkart subsidiary to turn profitable. In fact, multiple sources believe that Myntra may potentially go for a separate IPO as it sits on a massive 40-45% fashion ecommerce market share in India where it competes with the likes of Amazon Fashion, Reliance-owned Ajio and Nykaa Fashion. 

The year 2024 saw Myntra recasting its in-house (private label) brands, partnering with international beauty and fashion companies and onboarding Indian D2C brands to strengthen its revenue play.

It has also introduced features for premium and Gen Z consumers delivering from international locations to India.

 The strategies have so far worked in Myntra’s favour in the fashion category, though it is now testing waters in beauty and home decor spaces where it competes with well established, niche players. 

Reliance Retail’s efforts to relaunch its $10-Bn fast fashion brand Shein in India too may dent Myntra’s commanding market share in the segment. Like Myntra, Shein too operates in the mid-priced fashion turf, appealing to GenZ and millennial consumers.

“Reliance will launch the Shein brands on Ajio, unlike in its earlier avatar, where it was a separate marketplace. This may worry Myntra but at the same time, with Walmart’s backing, Myntra should also be able to exclusively rope in popular fast fashion brands from overseas which would give it a competitive edge,” an ecommerce analyst said.

The Cleartrip Factor

Cleartrip, Flipkart’s online travel and hotel booking platform, has struggled to keep its losses under control even when revenue increased sharply, like in FY24. 

The online travel aggregator’s net loss jumped 18.5% to INR 810.3 Cr in FY24 from INR 683.8 Cr in the previous fiscal, while revenue from operations was just under INR 100 Cr. 

The OTA also saw a spate of exits with its CEO Ayyapan Rajagopal, CFO Aditya Agarwal, and CBO Prahlad Krishnamurthy calling it quits last year.

Cleartrip later appointed former Swiggy executive Anuj Rathi as the CEO, and he will have a big task on his hands. While Cleartrip’s biggest competitors such as ixigo, MakeMyTrip and EaseMyTrip are profitable, the Flipkart-owned platform needs to pare down its operational costs to get closer to its rivals. 

At the moment, the situation does not look promising for Cleartrip. In FY24, the platform spent a staggering INR 524 Cr on discounts to grab the market share. 

Optimising the customer acquisition cost and reducing discounts will be the top priorities for the new CEO ahead of an IPO for the parent company. 

EKart: A Tale Of Contrasting Sides

Despite being one of the earliest ecommerce companies equipped with a logistics arm, Flipkart-owned EKart Logistics has suffered a drop in revenues by 5% to INR 12,115.3 Cr in FY24, while its losses mounted five-fold to INR 1,718.4 Cr.

Besides servicing Flipkart sellers, Ekart provides end-to-end solutions for the wholesale and retail clients of Flipkart and has partnered with brands and SMEs to fulfil their last-mile delivery requirements.

Ekart has also onboarded the government-backed ONDC network to provide logistics services to the sellers. 

The ecommerce logistics space is simmering with horizontal players like Amazon and Meesho also launching their in-house logistics support and vertical players like Shadowfax, Ecom Express and Loadshare cashing in on the quick delivery boom. 

It’s time for Ekart to plug its gaps to make the best use of the rapid strides the logistics industry is making with both quick commerce and ecommerce zooming in the fast lane.

Super.Money: Flipkart’s Latest Big Bet 

The launch of its own payments app, Super.Money, was a surprise move from Flipkart. The company has reportedly pumped $35 Mn – $40 Mn into Super.Money, helping it emerge as one of the top six UPI apps in India in December 2024, amassing 100 million transactions a month. 

Flipkart’s fintech push came as a surprise because fellow Walmart company PhonePe tops the UPI league and has a host of payment products such as insurance, stock investments and lending on its platform.

But Flipkart sees plenty of depth in the financial services and payments market, as evidenced by its recent push to acquire new users. 

Super.Money is looking to attract users by offering cashbacks and incentives for transacting on Flipkart, Myntra and other sister platforms. The strategy seems to align with Paytm, PhonePe and CRED that have also built super apps centred around UPI.

But even these giants have had a tough time scaling up with profits. Even Paytm and PhonePe with over INR 5,000 Cr in fintech revenue cannot lay claim to this landmark yet. 

Building monetisable products around UPI has turned out to be a slow-growth strategy and involves plenty of cash burn to acquire and retain users. Building profitable super app plays around UPI is therefore proving to be a bottleneck for the entire fintech ecosystem. 

The only way out is scaling up and hoping that the economies of scale come into play. 

But this will take years in the case of Flipkart, and despite building a host of platforms that could one day be linked to each other, the ecommerce giant is still struggling to get to terms with its losses. 

Profits have eluded Flipkart just as they did Amazon for almost the first decade of its existence. Having been founded in 1994, Amazon only reported its first year of profits in 2002. 

In Flipkart’s case, it’s been nearly 18 years since the company started operations. But even after nearly two decades, the company is yet to crack profits. This just shows the extent of the uphill trek for the ecommerce giant, but it cannot afford to go into a massive IPO without profits in its corner. 

That’s the Herculean task for Krishnamurthy & Co in the year ahead.

[Edited By Kumar Chatterjee]

The post Flipkart’s IPO Gameplan: How The $36 Bn Ecommerce Giant Is Gearing Up appeared first on Inc42 Media.

Finance Minister Nirmala Sitharaman breathed fresh life into the salaried middle class with the Union Budget 2025 by announcing zero income tax for anyone earning up to INR 12 Lakh a year.

“This government under the leadership of PM Modi has always believed in the admirable energy and ability of the middle class in nation building. In recognition of their contribution, we have periodically reduced their tax burden,” she told a House waiting keenly for the mega announcement. 

“From 2019 to 2023, we have periodically raised the nil tax slab which was up to INR 7 Lakh in 2023. I am now happy to announce that there will be no income tax up to an income of INR 12 Lakh.This benefit will be up to INR 12.75 lakh for salaried individuals, including standard deductions of INR 75,000.” 

The House broke into the “Modi, Modi” slogan as soon as the finance minister declared the huge exemption in personal income tax in her budget speech.    

Sitharaman asserted that the measure has been introduced to boost savings, consumption and investments for providing significant relief to the middle class. She also proposed to revise the tax slabs in the new tax regime under various income brackets which will benefit individuals across income groups. 

Experts called it a bold and huge move since the government will have to forego about INR 1 Tn ($11.6 Bn) in tax revenues to provide more cash in the hands of the people. In fact, the government had read the writing on the wall that it needed to step in to boost private consumption which had been slacking over the last couple of years. 

The Economic Survey 2025 pointed out that the private final consumption expenditure (PFCE) strengthened in the first half of FY25, growing 6.7% over the last year, primarily because of robust rural demand.

It said the FMCG sales have been moderate in the first half of this fiscal due to lower urban demand. This had reflected earlier too in the weak financials of top retail companies. Management commentaries from some major FMCG companies like HUL hinted at financial stress in middle-income urban households which led to lower spendings.

Budget Boost To Broad-Based Consumption 

The government’s thrust to boost consumption by increasing the purchasing power of low and middle income groups, coupled with investments in tourism, social security to gig workers, and credit to farmers is being lauded as a comprehensive measure which will ensure higher overall liquidity in the market. 

“This really is a 360-degree budget which takes care of the fact that India will add 100 Mn middle income households in the next few years from where the private consumption stems. While we see the personal income tax measures as a silver lining, we have to take a finer look at how the investments in smaller sectors and infrastructure will continue. There is also a greater likelihood of capital markets doing well in the long term with people investing more in stocks as disposable incomes grow,” Anand Ramanathan, partner and leader of consumer, products and retail sector at Deloitte, told Inc42.

Ramanathan acknowledged that there was a deceleration of urban demand in the last quarter with sales volumes in mass-market segments declining as much as 10% sequentially. 

He was seconded by Siddarth Pai,  the founding partner, chief financial officer, and ESG officer of 3one4 Capital. According to Pai India’s growth path will be more reliant on consumption, as opposed to China’s, which was led by manufacturing. 

“The degrowth in consumption, signalled by the FMCG companies in India, raised alarm bells. Decreasing consumer spending and a throttling of consumer credit by the RBI slowed the Indian economy dramatically. This led the government to boost the disposable income available to a vast majority of Indians through increased tax rebate. This will increase consumption, GST and corporate income – kickstarting a virtuous cycle of investment and further economic growth,” Pai said. 

Relief To Consumer Internet Companies 

Large consumer internet companies like publicly listed Swiggy, Zomato, Paytm and smaller D2C startups will see marked growth in revenues fuelled by demand from the middle income groups, analysts and industry leaders believe. 

New-age companies such as Zomato, like many FMCG firms, posted weak financials in the December quarter because of factors like tepid demand. 

D2C startups, with a few exceptions, have also been at the receiving end of a slump in urban demand, especially among GenZ and millennials.

With an overall increase in the cash reserves across income brackets, there is a likelihood of the new-age companies being on stronger revenue trajectories, according to experts.

“If you look even at the trajectory of listed consumer internet companies like Zomato, there has been slowed growth in the last quarter due to slackening demand. With higher disposable incomes, it will drive higher volumes of spending with a majority of the salaried employees still earning below INR 15 lakh. This will impact the revenue trajectory as well as stock performance of publicly listed internet companies like Swiggy and Zomato, which bet on consumption,” Pai told Inc42. 

Ramanathan predicts a sizeable spending on quick commerce and ecommerce platforms. “The income groups in the range of INR 3 lakh to INR 30 lakh have been driving the e-commerce sales rapidly. However, when it comes to stock performance of new-age companies, demand alone will not be a factor, which will contribute to their public markets growth. Their path to profitability will be the most significant deciding factor,” he said.

[Edited By Kumar Chatterjee]

The post FM’s Tax Gift: Will Budget 2025 Fuel India’s Consumer Economy? appeared first on Inc42 Media.

Clensta cofounder and chief business officer Ashish Mishra has quit the company amid a deepening cash flow crisis and the beauty company’s inability to raise funds for the past several months.

Mishra told Inc42 he is moving away from Clensta but will be soon launching a separate venture in the beauty and personal care space in partnership with other HNIs and founders.

“I stepped down from my role at Clensta in October 2024. The decision came after we started exploring a possible acquisition for Clensta as this did not align with my long-term goals,” Mishra said.

The cofounder further said that his decision to quit the company was communicated in October 2024, but he stayed on to wrap up issues related to pending salaries of employees.

According to an email sent by Mishra to Clensta employees in October, the management was in talks with investors and lenders to figure out an immediate solution to pay the pending salaries.

Mishra added that the management was expected to submit a plan to the investors after which some funds could have been released for payments to logistic partners as well as employees.

How The Clensta Story Soured

Mishra was incidentally brought on board from Mamaearth parent Honasa, where he was heading the company’s offline business and international expansion. At Clensta, Mishra was  elevated to the position of cofounder and was tasked with transitioning the company towards a retail-first strategy.

But the stiff competition in the BPC space meant that Clensta had to stay ahead of the curve on innovation. By all indications, the company’s products did not meet the new-age standards, as indicated by their weak presence in relevant channels such as quick commerce.

The D2C beauty and skincare startup has raised $12 Mn since inception in 2016, and counts Parineeti Chopra, Keiretsu Capital, Indian Angel Network, Inflexion Point Ventures, Venture Catalyst among others as investors. Clensta’s last fundraise was a $9 Mn Series B round in July 2023.

But just over one year later after this infusion, the company hit the growth wall, similar to other D2C companies such as Melorra and TagZ Foods in recent times.

Sources told Inc42 about discontent within the ranks at Clensta in August 2024, when salary payments were first halted. Current and former employees allege that Clensta’s cash flow condition has worsened in the past year, as the company was unable to move inventory quickly enough to earn revenue.

“Both the management and finance department are responsible for the current mess as the audit inventory could not be carried out in due time which has also raised doubts among potential investors,” one of the sources told us in October last year

Other sources added that cofounder Puneet Gupta had informed employees at the time that they might need to look for other jobs soon unless there is an infusion.

However, a Clensta spokesperson told Inc42 that the company is in the process of raising an equity and debt round “from some of the world’s largest investors”.

The spokesperson also claimed that a ‘Big Four’ audit firm has been roped in by the incoming investors for financial due diligence. But two months down the line, any possible talks with investors seem to have fallen through as indicated by Mishra’s resignation and its stated reason.

The post Clensta Cofounder Ashish Mishra Quits; To Launch New Beauty Venture appeared first on Inc42 Media.

As Bengaluru-based B2B seafood startup Captain Fresh is all set to go public by the end of this year, founder and  Group CEO Utham Gowda believes could mean breaking into the highly commoditised consumer market in Western markets in the near future, as well as shoring up supply chain further for global operations.

The company, currently valued at $500 Mn, is also looking to raise up to $100 Mn in a pre-IPO round amid increasing interest in domestic and international investors. It has so far mopped up nearly $17 Mn from a clutch of investors such as Motilal Oswal Alternates and Venture Soul Partners for this pre-IPO infusion.

According to Gowda, the company plans to use the fresh capital to fund growth and expansion ahead of the potential $300 Mn-$400 Mn public offer. And although he refused to share details on the valuation, earlier reports mentioned that Captain Fresh could list at a valuation of over $1 Bn.

At that valuation, the startup would potentially be trading at close to 6X its revenue. Captain Fresh recorded a 70% year-on-year increase in its revenue to INR 1,395 Cr and lowered its net loss by 29% to INR 229 Cr in FY24.

While 2025 is expected to be another windfall year in terms of public listings with new-age Indian companies rushing for IPOs, Captain Fresh will be unique for being the first Indian B2B seafood startup to go public. The ambitious IPO is expected at a time when Indian seafood exports are on a phenomenal growth trajectory, surpassing INR 60,000 Cr so far in FY25, according to finance ministry data.

The government also proposed to reduce the custom duty on materials used in processing and storage of frozen shrimp and fish products to keep up the momentum.

While Captain Fresh doesn’t serve seafood consumers in the US, Europe and other countries directly, it deals with storage, processing and simplifying the supply chain of seafood producers and exporters in India and Southeast Asia. This makes it a B2B supplier rather than a brand, but Gowda revealed that the company plans to enter the B2C segment as well.

Gowda told Inc42 that the company will eventually look to enter the B2C seafood sector in places like the US and Europe, while keeping a majority of its supply-side operations in India. Acquisition of prominent overseas brands could therefore be essential to its core business strategy going forward, beyond the IPO. 

Edited excerpts from a conversation

Inc42: Majority of the workforce at Captain Fresh is based in India, whereas more than 85% revenue comes from outside India. The supply-side operations and markets are in entirely different geographies. What are the obstacles in driving synergies between these sides?

Utham Gowda: Almost 98% of our business is outside of India from a demand standpoint. Now, you need to see how we evolved as a company. When we started the journey, 100% demand and supply were coming from India, then obviously we diversified, and the demand side gradually shifted to offshore markets.

In FY25, we are on track to cross $525 Mn-$550 Mn in topline with 60% demand coming from the US and majority of the rest from Europe.

About 4%-5% of the demand comes from the Middle East, while India is less than 2%-3% in terms of overall business contribution. India makes up around 30% of the supply side, while we source about 40% from Indonesia, Vietnam and the Philippines. Europe contributes close to 20% and Latin America the rest 10%.

We have been profitable for the last two-and-a-half quarters. This is a PAT-positive figure with our EBITDA trending towards $22 Mn-$23 Mn.

When it comes to our workforce, 50% of our 350-400 employees work from India. We also have offices in France, Poland and the UAE. India has been predominantly our technology hub from where we develop all our tools and also manage the overseas operations. Our finance and legal teams too operate out of India.

Inc42: You have an asset-light business model. There are so many steps involved in the sourcing of seafood, packaging, and exporting. Will you elaborate on the business model to tell us how you have managed all this without owning any assets?

Utham Gowda: Yes, we don’t own any farms or vessels. What we have is a bunch of technology tools or operating systems that help stakeholders. It could be a fisherman or a farmer or a factory owner. Our tech platform helps these stakeholders stay engaged with us. Our business model is simple: We buy and sell the inventory. We don’t sell the software.

Our revenue model is not based on subscriptions of our tech assets. It is an enablement that we use these technology tools for. It is a supply chain enablement tool where we are able to work with the stakeholders and gain access to their inventory which we sell in overseas markets.

Close to $400 Mn out of the $550 Mn revenue comes from the US. Our strength is actually on the east of the Mississippi, which is the Southeast US and a little bit of Pacific as well, which is the California area. We store our inventory across 18 or 20 locations in the US and we service almost 500 to 1,000 customers who are largely wholesalers who eventually sell to casual dining and fine dining restaurants across the US.

We have also acquired a couple of brands which feature among the top four or five in the US as far as the seafood category is concerned. We have also made some acquisitions in Europe. We typically get bulk orders from large overseas brands and retailers on a six-month to one-year contract.

Inc42: But how does Captain Fresh simplify the supply chain side issues for fish farmers, especially when it comes to exports? 

Utham Gowda: On the supply side, there are broadly two sets of stakeholders. First, the fishermen. As long as we can generate and showcase a demand on the platform that keeps us connected, they keep up the supply and, in most cases, also manage the logistics by delivering the products to our locations.

These locations are essentially the partner factories. They make the second stakeholder in the process. So, if you take, let’s say, the Indian landscape, we have partnered with nearly six such factories. We also have partners in Indonesia and the Philippines. Now we have started in Europe, too.

Inc42: And these are franchise partners or do you own a part of these factories?  

Utham Gowda: We do not own any factory. We enter into one-or-two-year contracts with factories that typically suffer from underutilisation. These are mostly mid-level factories without any front-end in the consumer market and without any sales or marketing machinery or in some cases they also don’t have the strength that we have on the supply side.

Our tech platform helps us source from all parts of the Indian coast. We pass on some of these benefits to the factory partners, but the biggest benefit for them is that we are able to fill up the factory capacity. We have our own front-end demand in the US and Europe.

This is where technology comes into play in a big way. We are able to drive the operations in the factory using our remote management with the help of the tech tools we have. At the start of our exports business, we had around 25 people in each of the factories across various steps because we wanted to control the quality of production and performance. Today, we can manage each factory with just four or five persons, because technology takes care of the rest of the things. This part of the value chain is very similar to what, let’s say, Zetwerk does or Infra.Market does in categories like fabrication or construction materials.

The output from the factory in our case is largely frozen products or value added products which typically have a shelflife of 20-24 months. The input to the factories, on the other hand, is a fresh product which has a shelflife of under three days. The frozen products are exported to the end-market, which is ourselves in this case, and then through our distribution brands, we sell them to retail chains.

Inc42: You seem to be shifting from asset-light model to owning brands through acquisitions. Right?

Utham Gowda: Any incremental capital that we raise is always going to be towards inorganic growth. As you can see, the business is already throwing up cash. So, we don’t really think we need money for organic initiatives.

Due to confidentiality limitations, I won’t be able to share specific details, but I can definitely confirm that acquisition is a very large part of our growth strategy and all the incremental capital raise – be it in the private realm or in the public realm – will go towards a lot of these initiatives in the US and Europe where the seafood market opportunities still lie hugely untapped.

Inc42: Coming to the IPO bit, what is the strategy of the company in terms of maintaining the profitability streak?

Utham Gowda: The IPO is obviously the primary goal. We believe we can do an IPO because we have been profitable and we see clear levers of how this profit can nearly double in the next four to six years. We believe this is the right time to go to the public market because of the runway in terms of the prospects of profitability. There are multiple steps towards the IPO and having a healthy balance sheet is a primary condition. We require investments and some of it may include secondary raises.

Inc42: What is the time horizon you are looking at? 

Utham Gowda: We are looking at the end of 2025.

Inc42: Most of the listed Indian startups have markets in India. Captain Fresh, however, sells mostly outside India. What makes you confident that the Indian public market will be able to understand the dynamics of your business model?

Utham Gowda: Take the Nifty 50 pack, for instance, and take a look at the companies that are dependent on dollar revenues. You’ll be amazed that they make up the majority of the market cap for the index. This group includes IT services firms, auto component makers and speciality chemicals and manufacturing companies.

I think our theme is right up the alley in terms of that and I’ll explain why. We are basically playing the digitisation wave 2.0, while digitisation wave 1.0 continues to be played out by large players like Infosys and TCS. Digitisation 2.0 is about bringing mid-tier companies which includes retailers in the US to forefront of digitisation.

If you look at our customers – wholesalers and distributors in the US – there is a lot of supply of seafood but there is very little data that goes along with the seafood because the entire value chain is very fragmented. Now, with the emergence of digitisation wave 2.0, you have vertical SaaS players with the ability to do both supply chain and inventory and not just sell softwares.

This is an IP that is created in India and it is a control tower that is run from India, which means that there is substantial control over everything that happens across the world. So, we believe India is the best place to list because this is where the value is getting accumulated in terms of both IP data and also in terms of the growth levers.

Inc42: Will Captain Fresh venture into the B2C space too?

Utham Gowda: Brands in the US and Europe are definitely exciting for us, but it is too early. I always believe that this is a commodity which means that the first thing that you need to solve is the supply chain before you start putting your brand out there.

We will obviously follow the same sequence as we’ll continue to work on the supply chain side and when we feel confident we would definitely love to explore the branded play in the US and European markets.

For us, the logic is very simple: You have supply and you have the ability to sell that supply in high per-capita income markets, which means that you can make more margin selling there.

[Edited By Kumar Chatterjee]

The post Captain Fresh’s IPO Playbook: Tapping Global B2B Opportunity, Acquisition Plans & B2C Ambitions appeared first on Inc42 Media.

November 2024: it was a cool evening in Delhi, when the general partner of a Bengaluru VC firm frantically sought help to get a pizza from Leo’s delivered from one corner of the city to another.

It was an order that neither Zomato nor Swiggy could fulfil, so the VC turned to Borzo for help, finally receiving the order and carrying the pizzas back to Bengaluru on a night flight.

But before that happened, I asked him — what about Dunzo?

It was a tongue-in-cheek suggestion meant to evoke some kind of banter — this being a Bengaluru VC in Delhi. Besides, this is exactly what Dunzo did for years. But all I got was a smirk and waving of the hands: “Dunzo is done, bro!” said the curly-haired VC.

There’s no denying Dunzo’s journey has been remarkable, even if things have not gone as planned. So this Sunday, we see how Dunzo lost its edge and magic. And what next for founder Kabeer Biswas and employees left waiting for their final dues?

But after a look at the top stories from our newsroom this week:

• Netradyne’s Unicorn Run: India’s first unicorn startup of 2025 is looking to develop its own foundational models for its AI-powered fleet safety and video telematics solutions after raising $90 Mn in its Series D this week
• India’s AI Framework: In light of the Draft AI Guidelines, India’s AI industry stakeholders are cautiously optimistic, even as some worry that heavyhanded policy might end up stifling innovation. Here’s our deep dive into what the guidelines mean and what startups are saying
• Startups Eye Mahakumbh Gold: Mahakumbh 2025 is big business for startups, especially the burgeoning spiritual tech segment, which is looking to capitalise on a potential $1 Bn opportunity at the holy gathering over the next month

Dunzo: From Delivery To Disaster 

Some companies become bywords for their businesses — it’s usually a mark of success and brand equity. For years, Dunzo was considered a verb for hyperlocal deliveries, but today, it’s a mere shell of its former self.

The company reached a valuation of $744 Mn, but it grew its cult on the basis of word-of-mouth referrals and customer success when it launched way back in 2014. At that time, Amazon and Flipkart weren’t even thinking of quick deliveries — they didn’t care about bringing retailers online, but Dunzo did, and built a strong base of loyal customers in Bengaluru who swore by the service.

It also expanded to other cities such as Pune, Mumbai and Delhi gradually, creating a big buzz in all these markets as the only player offering hyperlocal deliveries.

In fact, quick commerce was not even coined, and Dunzo was delivering groceries and cigarettes in a matter of minutes before the pandemic. If anything, Dunzo gave everyone a taste of what Instamart, Blinkit and Zepto later offered.

It was on the shoulders of Dunzo that these giants created their playbooks to some extent. But as we have recounted several times in the past two years, the emergence of quick commerce as a category somehow created a panic within Dunzo. Even Reliance infusing $200 Mn into the company could not save it.

Despite many firsts to its credit and having raised nearly $450 Mn over its lifetime, Dunzo has struggled to stay afloat, is struggling to find a buyer and has left hundreds of employees and several vendors disgruntled over non-payment of dues.

CEO and cofounder Kabeer Biswas, has reportedly moved on to Flipkart Minutes, but is dealing with legal challenges from vendors and employees. The former have moved the NCLT to initiate insolvency proceedings against the company, while employees have filed police complaints against Biswas due to unpaid salaries.

Sources say that the startup has carried out as many as 12 rounds of layoffs in its entire lifetime, with most of the layoffs happening since 2022.

With over $70 Mn in financial liabilities, Dunzo’s potential sale looks impossible, several industry sources told us. “Unlike in 2021-2022, a business like Dunzo today can be built within a week. There is literally no distinction between the quick commerce businesses but their execution. Dunzo has majorly failed in its execution and missed the bus,” an industry player and a third party vendor with Dunzo told us.

The Gloom After The Golden Years 

Even before Dunzo, Kabeer Biswas had earned his entrepreneurial stripes with Hopper, a startup he sold to Hike before setting off on a new adventure.

Biswas, along with his friends Mukund Jha, Dalveer Suri and Ankur Agarwal, floated a WhatsApp group to organise and aggregate hyperlocal deliveries from retailers in select areas of Bengaluru.

This was when the CEO met Dunzo’s first investor Lightrock and its partner Sahil Kinney. Incidentally, this was also when India’s hyperlocal ecosystem was booming. Dozens of hyperlocal startups mushroomed up between 2015 and 2016, but no one survived the hype cycle like Dunzo.

By 2018, its model was unique in the Indian startup ecosystem, but after the pandemic, the likes of Zomato and Swiggy tried to ape Dunzo to deliver essentials. This was the precursor for the quick commerce wave that soon followed.

Between 2015 and 2022, Dunzo raised funds from the likes of Google, Lightrock, Lightbox, Alteria Capital, and of course, Reliance. Overall, Dunzo secured more than $450 Mn from equity and debt investors.

This despite the company not showing the kind of revenue growth that should be expected of a startup that has raised millions in funding.

In fact, Dunzo’s consolidated loss in FY22 widened 2X from FY21 to INR 464 Cr and total revenue stood at INR 67.7 Cr. And the losses only ballooned the next year (April 2022 to March 2023). The Bengaluru-based hyperlocal delivery startup’s loss surged to a staggering INR 1,801 Cr, but operating revenue only increased to INR 226.6 Cr.

The company has not filed audited financials for FY24, but it’s hard to imagine the financial situation improving after the downturn of 2023.

It was during the FY23 period that Dunzo made a big push for quick commerce with Dunzo Daily. It was not a mistake by any stretch of the imagination, but scaling up quick commerce  and maintaining presence with local retailers was a hard balance even for Dunzo.

Quick commerce — as evidenced by Zepto, Instamart and Blinkit — requires a singular focus, feet on the ground and more than enough traction to attract further capital infusion.

Dunzo on its part set up dark stores in Bengaluru, Delhi NCR and Mumbai and hired workforce for these stores and for delivery, and also started acquiring inventories from retailers. For the first few months everything was going fine.

Dunzo Daily kept pace with Instamart and Blinkit on delivery time, and was keeping up with the SKU build up. But scaling this up proved a bridge too far for Biswas and Co.

A partner at a Bengaluru-based VC firm and Dunzo investor told us, “The difference was that Zomato kept infusing money into Blinkit, Swiggy raised a billion dollars, Zepto convinced investors that it will play 15-minutes delivery in the long term. As for Dunzo, it offered quick deliveries, but was never among the top three players.”

The Reliance Factor

A senior industry player quoted above in the story mentioned that Reliance tried to add B2B deliveries to Dunzo’s bucket and pushed for JioMart partnerships, but this did not prove enough to keep the B2C operations going.

There was just not enough gas in the tank for Dunzo to accelerate. “The inability to scale its revenue in comparison to a much younger rival like Zepto in FY22 and FY23 cornered Dunzo. Reliance really doesn’t like to be the fourth or fifth player in any industry and its Dunzo bet did not pay off at all. It also made it difficult for the company to raise funds at a lower valuation,” a former Dunzo senior executive told us.

Sources added that Reliance had at one point offered to acquire Dunzo, but Biswas was not willing to exit at that point. In fact, most observers would agree that Biswas tried everything to keep the operations going even as other cofounders departed the company.

Cofounders Suri and Jha left at a crucial time, leaving Biswas to man the fort even as it seemed to be crumbling. One does wonder whether Biswas skipped a beat by turning down acquisition offers from Reliance and others, including Flipkart in 2024, as per reports.

Even before their departure, it was clear that besides Biswas, the other founders were left with very little equity in the company after diluting their stake over the years.

After infusing $200 Mn in the company, Reliance held more than 25% stake in the company, and Google owned close to 19%.

The next biggest investor was Lightbox which held 12%, while early investor Lightrock held 3.86% stake in Dunzo after the last round. That might seem small, but the three founders held a mere 3.95% stake in the company after that massive $250 Mn round, with Biswas himself owning about 3.6% equity.

Dunzo had the right idea — after all, the rise of Zepto, Blinkit and Instamart and the Cambrian explosion of quick commerce startups in 2024 is a validation of the business model.

But it failed in execution, even though it had a marked advantage when Covid hit. It was the only scaled up player on the ground for hyperlocal deliveries, but this first mover advantage was squandered.

If you ask any of the quick commerce platforms, the focus has been on growth and not profits. So Dunzo was not the only player to not have solid unit economics, but it failed to show the kind of progress on growth either that the likes of Zepto displayed.

Continuous investments are necessary in quick commerce today for customer acquisitions and engagement, adding to the SKU capacity and bolstering product assortment beyond groceries. Dunzo didn’t survive long enough in the game to come to this point in evolution.

Where To, From Here?

Even till the very end, Biswas held faith that things can be turned around. But with Dunzo’s website going down this week (and coming back up days later), the writing seems to be on the wall.

Employees are naturally irate over the situation after not receiving salaries for more than a year.

“Kabeer assured employees that he is trying to stitch together a funding round and this requires investors’ approval. This went on for nearly a year. Many employees quit on their own and there were also multiple rounds of layoffs. Talks with Flipkart were on for a long time, until we heard one day Kabeer is moving to join Flipkart Minutes. He stopped communicating with the employees towards the end of 2024,” a former employee who recently quit the company said.

Even as Biswas remains mum on the fate of Dunzo and whether he has indeed joined Flipkart Minutes, employees have lost patience and taken their complaints to the police.

Biswas happens to be one of the directors on the Dunzo board along with Hong Jin Kim, the managing director at South Korean firm STIC Investments. This makes the CEO accountable for fiduciary lapses, especially the non-payment of statutory taxes.

“It is hard to imagine Dunzo without Biswas. With him quitting the company, the revival looks bleak. It is an unfortunate saga of how we lost an iconic brand. Another case of investor-founder friction after the founders gave up their majority stakes and expanded too soon without a plan for the future,” the investor quoted above told us.

According to industry sources, the best Reliance can do now is acquire the Dunzo brand, which  still has some lingering value left among the ashes of the former giant. “The tech stack is a non-entity in today’s world where open source protocols are available and APIs can be built in no time. However, Dunzo’s user data in major cities could interest Reliance for its own ecommerce ambitions,” an industry analyst said.

There is also a remote possibility of Biswas convincing Flipkart Minutes to acquire Dunzo for a $10 Mn to $20 Mn deal in order to save his legacy. However, this would require Reliance as well as Walmart’s approval, which seems unlikely to come any time soon.

Which is why it’s looking like Dunzo is done, indeed.

Sunday Roundup: Tech Stocks, Startup Funding & More

• Blinkit Arms Up: Zomato has infused around INR 500 Cr (about $57.7 Mn) in Blinkit as the quick commerce vertical looks to expand its service base and category assortment.
• OYO’S Secondary Deal: Early backers of OYO, including Lightspeed Venture Partners, are reportedly in talks to sell a portion of their stake in a secondary sale likely to value the IPO-bound company at $3.9 Bn

• Policybazaar Dips: Shares of PB Fintech settled at INR 1,725.55 after falling as much as 6% on Friday, days after the company’s offices were raised by GST authorities
• Deeptech Fund: Speaking at the Startup Policy Forum’s inaugural event, former NITI Aayog CEO Amitabh Kant has called for a deeptech-focussed fund of funds (FoF) for startups

The post How Dunzo Lost Its Edge appeared first on Inc42 Media.

In 2024 the lines between edtech and offline education services companies became blurred more than ever. If we were talking about acquisition of schools, colleges and tuition centres by edtech startups in 2020 and 2021, the last two years turned the narrative — with edtech startups  on sale, looking to get acquired by offline education companies.

And this meant that the relevance of edtech was also up in the air for most of last year. Most edtech platforms had overlapping products and services and overestimated the total addressable market (TAM) particularly as the long-term impacts of the pandemic receded

The biggest impact was the downfall of BYJU’S, but ripple effects have been felt across the industry. Even as the investments in the edtech sector recovered to some extent in 2024 compared to a year ago, they were nowhere close to the peak of 2021 and 2022. And it’s been slow growing, which has impacted profitability as well. 

The disruption from GenAI is also yet to be felt fully in edtech, as use-cases are still evolving.

Even so, 2025 promises to be not as bleak as 2023 and 2024 for the edtech sector. The year may also throw some surprising trends for the sector including the first public listing, but the resolution of the various issues at BYJU’S and the future of the company will also be keenly watched.  

As we look ahead to 2025, here’s what investors, industry experts and edtech founders told Inc42 about the year ahead for India’s edtech industry.

The End Of The BYJU’S Saga 

The fallen edtech giant pretty much dominated the headlines in the edtech sector throughout 2024, but all for the wrong reasons. 

With numerous legal conflicts in the US and in India from creditors, investors and vendors, the edtech giant went into insolvency proceedings last year and this has diminished the hopes of a revival in 2025.

Even as CEO Byju Raveendran continues to talk about a comeback and with speculation about another education venture, the company seems to be on its last legs. 

Raveendran’s former close confidantes and BYJU’S investors say the chances of a comeback are slim to none.

“There are too many legal hiccups now in India. He has made enemies out of some of the biggest VCs and the legal authorities have already been after him. Even his impending arrest in case ED finds anything suspicious in the money laundering case is not ruled out. Hence at least in 2025, there is a limited chance of Raveendran’s voluntary arrival in India,” an investor in BYJU’S wishing not to be named told us.

The fate of the erstwhile $22 Bn company is the most pertinent question in Indian edtech today and could still spell more bad news for the ecosystem. 

The Supreme Court’s final decision on the petition filed by the US lenders is awaited. Plus, the NCLT’s earlier insolvency order against BYJU’S remains effective, and the possibility of the company being liquidated to recover debt and dues is high. 

In all likelihood, BYJU’S may be unable to find a potential buyer in the time that the resolution profession and the committee of creditors still has on their hands. And in this situation, any assets would be auctioned off by authorities, ending the tumultuous chapter of the edtech startup.

Do-Or-Die Battle For Unacademy 

The future of Unacademy comes up for debate every year, with speculation around a potential acquisition coming up in 2023 and also in 2024. 

Unacademy CEO and cofounder Gaurav Munjal had to deny reports about Unacademy’s acquisitions each time. However, according to multiple sources who have worked closely with Munjal, the company was unable to arrive at an agreement around the potential valuation of the deal with  K-12 Techno or Allen Careers Institute.

The test prep company, which once commanded a valuation of $3.4 Bn, was said to be in conversations with acquirers for a valuation of $800 Mn- $900 Mn.

“There were serious problems with Unacademy’s path to profitability and besides Unacademy Centres which contributed a majority of revenues to the firm, the online learning platform wasn’t exactly an industry breakthrough. The offer on the table was to merge with an offline education giant but with a steep valuation cut and that’s why the talks failed,” one of the sources quoted above added.

In December 2024, Munjal clarified on social media that Unacademy is not up for sale after the company saw a 30% growth in its offline learning business with unit economics improving considerably.

While the edtech startup witnessed a degrowth in its online test preparation business, unit economics of this vertical “improved significantly”, Munjal claimed.

Further, he said that cash burn at the group level has declined 50% this year and the company has a healthy cash reserve of $170 Mn with no debt and a runway of over four years.

However Munajl’s real test in 2025 would come how fast he is able to scale the Unacademy Centres which also had its share of problems in 2024 including teacher exodus and cutbacks. Besides this, the company has seen the exit of several key leaders in the past 18 months, which has put Unacademy in a leadership vacuum.  

Uncacademy as per our sources is now cutting costs and also strengthening its YouTube channel to improve acquisition of students. It is also training educators to meet the demands of the hybrid teaching model, where teachers are available both online and offline. Will these steps bring Unacademy back to its glory days? 

Physics Wallah’s $500-600 Mn IPO On The Cards 

Perhaps not surprisingly, Physics Wallah has emerged as the first among edtech companies in India to go for an IPO. 

On the back of a fresh $210 Mn Series B funding in 2024, expansion of its offline centres and addition of new verticals, PW ỉs on track to make the most of the positive sentiment in the public markets. 

PW on its part has started the leg work and has Axis Capital, Kotak Mahindra Capital, Goldman Sachs, and JP Morgan as the investment bankers for its IPO. It converted into a public limited company in December 2024.

The startup also appointed former Blinkit CFO Amit Sachdeva as its CFO in November 2024, in preparation for this public listing journey. Having already converted to a public limited company, PW would be looking to raise $500 Mn-$600 Mn through the IPO at a nearly $5 Bn valuation.

Sources told Inc42 that the edtech company is in the process of completing third-party audits of its books post which it plans to file its DRHP papers with SEBI. “This will take at least six months and the listing is likely to happen towards the second half of 2025,” one senior executive at PW said.

However with PW slipping into losses in FY24  and in the wake of its IPO ambitions in 2025, sources also said that the edtech firm will be strictly on a cost cutting drive in the run up to the IPO.

Gen AI Disruption To Deepen

Generative AI is both an opportunity and a disruption for the edtech ecosystem in India, and thus far we have only seen a glimpse of both these aspects.

In 2024, edtech startups looked to increase their adoption of open source large language models (LLMs) to bring in personalised learning modules, improve content generation, create better course structures and to reskill the workforce.

Two of the biggest edtech unicorns in India — upGrad and Physics Wallah — are well on their way to adopt LLMs at various levels to enhance user experience and simplify their operations.

Mayank Kumar, cofounder and MD of edtech giant upGrad, earlier told Inc42 that the edtech startup has adopted AI to ensure learners understand fundamental concepts more effectively. The startup is using AI to create curricula and enhance the content experience of students. Incidentally, Kumar stepped down from upGrad in 2024 to launch a new venture in the upskilling and job placements category.

Similarly, edtech major PhysicsWallah introduced an in-house AI platform fashioned “Alakh AI” which it claims serves as a personal AI tutor and assistant for students, enabling personalised learning and testing.

Industry analysts say that the edtech companies will continue restructuring their business models in 2025 driven by deeper GenAI adoption, which could also result in workforce reduction for educators and course creators. 

“Customer service is a huge workforce area in edtech which is to some extent now being replaced by AI chatbots. Further, AI assistants also allow educators to create content swiftly, reduce turnaround time for assessments and feedback. It also enhances real-time interaction with students,” a Bengaluru-based founder of an AI-first edtech startup told Inc42. 

Moreover, the government’s push to enroll more school students for AI courses under National Education Policy (NEP) is also expected to generate demand for AI tutoring, create opportunities for edtech startups in the K-12 space to offer personalised learning in AI courses as the demand picks up in 2025.

Consolidation Wave Imminent In Edtech 

According to Inc42’s Indian Tech Startup Funding Report, 2024, the year gone by saw investments into the sector significantly improve to $568 Mn from $283 Mn. However what is more interesting is that the investments in 2024 spread over 29 deals, whereas the deal count in 2023 was 47.

This indicates that growth and late-stage deals and large ticket sizes became the driving trend in edtech in 2024, spearheaded by Physics Wallah’s $210 Mn raise.

As investors largely focussed on sectors like fintech, enterprise tech, AI and ecommerce in the seed to growth stages, early stage edtech investments remained muted.

Investor caution was apparent throughout 2024 as the VCs wanted edtech founders to continue the push for stronger unit economics and path to profitability.

In terms of the M&A activity too, 2024 was a slow year, with Genius Teacher’s acquisition by Schoolnet India and Adda 247’s acquisition of test prep platform Ekagrata Eduserv being the only prominent deals.

“Investor sentiment in India’s edtech sector is shifting toward companies that exhibit resilience and sustainable growth. There has been a broader trend in the market, where investor caution has led to a preference for larger, fewer funding rounds, driven by the same focus on quality and stability in a challenging macroeconomic environment,” Ashwin Damera, founder and CEO of Peak XV-backed Eruditus, told Inc42.

However, industry watchers expect more M&As to get through in 2025 as smaller startups become streamlined thanks to the adoption of AI models and after cost-cutting in key areas. 

Analysts say that the bigger companies may keep an eye out for acquisitions in niche verticals as expansion will play out majorly in 2025. However, valuations may continue to see a big downward correction, relative to 2021-2022 numbers. 

“Investors are now looking for real growth metrics in any edtech up for sale instead of vanity metrics like MAUs, DAUs. They also need a track record of financial discipline over the last couple of years rather than a sudden dip in costs,” commented a veteran partner at an early stage VC firm.

Study Abroad, Upskilling To Shine Bright

Despite some headwinds in the edtech industry after the pandemic, some verticals have shown strong growth momentum including study abroad, education financing, upskilling and reskilling. That’s in addition to the persistent traction for test prep in India ever since edtech emerged in 2011-2012.  

According to government data, the number of Indian students studying abroad has significantly grown over the past few years from 907,404 in 2022 to 1.33 Mn in 2024 with Canada, US and UK as popular study destinations.

As per data collated by Prodigy Finance, engineering and MBA streams are extremely popular choices for Indian students going abroad, but as the education landscape evolves, many students are exploring courses beyond traditional STEM and MBA.

“2024 has been a pivotal year for the study abroad sector, driven by shifting global trends and evolving student priorities. Sustainability, digital tools for personalised guidance, and emerging non-traditional destinations have reshaped international education. Students increasingly seek interdisciplinary programmes aligned with global challenges like climate action, healthcare innovation, and tech-driven solutions,” Daljeet Sandhu, CEO of study abroad platform Dalton AI Portal said.

However, within this segment, challenges such as fluctuating visa policies and rising education costs are growth hurdles. Startups also need to capitalise on the hybrid learning opportunity in the global market. 

With AI/ ML continuously evolving the landscapes of different industries, upksilling and reskilling platforms will continue to show traction and grow in adoption. 

“In 2025, upskilling and reskilling will drive India’s edtech landscape. As AI, machine learning, and other cutting-edge technologies continue to disrupt industries, the demand for a highly skilled workforce is only set to surge. According to the Workplace Learning Report 2024 by LinkedIn, 4 in 5 people want to learn more about how to use AI in their profession which indicates an unprecedented need for AI-focused upskilling,” Eruditus’ CEO Damera said.

He added that the edtech companies will have to step up and offer tailored courses to fill an increasing demand supply gap in fields like data science, cyber security and AI.

[Edited By Nikhil Subramaniam]

The post Edtech In 2025: The Rise After The Fall? appeared first on Inc42 Media.

Reliance Retail, the largest shareholder in troubled hyperlocal startup Dunzo, has written off its $200 Mn investment in the company, multiple sources privy to developments told Inc42. 

Reliance is also not involved in any talks to infuse funds into Dunzo or acquiring it in a distress sale after the company’s cash crunch and retreat from quick commerce in the past 24 months.

Meanwhile, Dunzo cofounder and CEO Kabeer Biswas according to our sources is leading talks with high net worth individuals and family offices for an acquisition deal that would value the startup at INR 300 Cr ($25 Mn-$30 Mn).

“Reliance has assured Biswas that they will be supporting him to salvage Dunzo. But they are not interested in buying Dunzo. They had made a buyout offer 2-3 years ago offering to buy the hyperlocal startup at a near unicorn valuation, which Biswas declined. But after quick commerce startups entered the industry and Dunzo’s inability to scale beyond a few cities, Reliance had absolutely no interest in Dunzo,” one of the sources quoted above said.

Notably, Reliance Retail senior executives Ashwin Khagiwala and Rajendra Kamath had stepped down from Dunzo’s board along with the representatives of other investors including Lightrock and Lightbox in 2023.

If the company is acquired for the reported price of $30 Mn, it would be a staggering discount on the $770 Mn valuation commanded by Dunzo during its last funding round, when Reliance infused the funds. 

Biswas has reportedly also held talks with Flipkart, Swiggy, Tata Group and Zomato for a buyout, but has failed to secure any success. 

Queries sent to Reliance Retail and Biswas did not elicit any response at the time of publishing this story. The story will be updated as and when they respond.

Sources added that although Dunzo is still operational in parts of Bengaluru, it has shut down in other cities. Currently, the company is sticking to its older model of connecting local retailers to online consumers. 

Earlier this week, it was reported that Biswas is close to quitting the company and has communicated his decision to investors. The CEO intends to step out after seeing through any potential acquisition deal.

How Reliance’s Biggest Startup Investment Tanked

In January 2022, Dunzo raised a $240 Mn funding round in which Reliance Retail invested $200 Mn. This was Reliance Retail’s largest investment in the Indian startup ecosystem. 

The other notable investments from Reliance Industries include the INR 1,340 Cr deal to acquire edtech startup Embibe, as well as the acquisitions of Clovia (INR 950 Cr) and NetMeds (INR 620 Cr).

At the time, it was seen as something of a strategic investment. Dunzo and Reliance intended to enter into partnerships, where the former would enable hyperlocal logistics for Reliance’s retail store network as well as JioMart. 

While Dunzo had survived the hyperlocal boom and busy cycle of 2015, by 2022, the game had changed. Quick commerce was well and truly in fashion and Dunzo’s model was feeling antiquated. While the startup launched Dunzo Daily to compete with Blinkit, Instamart and Zepto, it just couldn’t scale it beyond Bengaluru, Mumbai and Delhi. 

In hindsight, it’s clear that the $240 Mn infusion was not enough to tap the quick commerce opportunity, but the rapid rise of Zepto had created a third challenger in the race against Zomato’s Blinkit and Swiggy-owned Instamart. Dunzo was just not able to capitalise on this opportunity like Zepto did. 

Given Dunzo’s problems, Reliance Retail is looking to explore the quick commerce opportunity with JioMart. And for the past two years, Dunzo’s cash situation has worsened, leading to severe cutbacks, a lengthy list of dues to vendors as well as the exit of founders and key leaders. 

Dunzo saw its losses widen over 3X to INR 1,801 Cr in FY23 from INR 464 Cr in the preceding fiscal. The financial turmoil caused delays in salary payments for both current and former employees, as well as outstanding dues to vendors.

The startup did secure $6.2 Mn in debt funding and shifted focus from 15-20 minute deliveries to 60-minute deliveries to cut down costs.

However, Dunzo’s total debt including those of its vendors and outstanding tax as per sources could be in the range of INR 80 Cr which Biswas hopes to clear if the company manages to get a buyout deal.

[Edited By Nikhil Subramaniam]

The post Exclusive: Reliance Retail Writes Off $200 Mn Dunzo Investment appeared first on Inc42 Media.