Indian fintech funding plunges 63% in 2023, reaching $2 billion - Business Guardian
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Indian fintech funding plunges 63% in 2023, reaching $2 billion

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In 2023, financial technology (fintech) startups in India witnessed a notable decline in funding, amassing a total of $2 billion—a stark 63% drop from the previous year’s $5.4 billion, according to data sourced from Tracxn and reported by Financial Express (FE). This dip reflects a broader trend of reduced funding across various sectors, signifying a significant slowdown in the fintech domain compared to its funding zenith in 2021 when it attracted a massive $8.4 billion.

Despite the funding downturn, the Indian fintech sector maintained its global standing as the third-highest funded in 2023. Additionally, the sector’s substantial growth has positioned it as the fourth-highest funded startup ecosystem globally within the fintech arena, based on cumulative funding till date.

The decrease in funding rounds for fintech firms in 2023 was conspicuous, witnessing a substantial drop from 504 rounds in 2022 to 144 rounds last year. Among the standout segments within fintech, alternative lending, payments, and banking tech emerged as the top performers. Alternative lending firms secured the most considerable funding within the sector, totalling $835 million in 2023.

The decline in funding rounds was more pronounced in early-stage and seed-stage financing than in late-stage rounds. Late-stage rounds saw a 56% decrease to $1.4 billion, while early-stage rounds plummeted by 73% to $489 million, and seed-stage rounds experienced a 69% decline to $145 million.

Specifically, payment startups amassed $753 million in funding in 2023, while those focused on banking tech services raised $331 million from investors, both segments witnessing a significant downturn compared to the previous year’s figures.

Amidst these funding shifts, only five funding rounds exceeding $100 million were recorded among fintechs in 2023. Notable recipients included PhonePe, Perfios, InsuranceDekho, KreditBee, and Mintifi. PhonePe led the way with the largest round of $623 million, followed by Perfios at $229 million and InsuranceDekho at $150 million.

InCred emerged as the sole unicorn in the Indian fintech space in 2023, a notable decline compared to five unicorns in 2022. Additionally, two fintechs—Zaggle and Veefin—launched their initial public offerings (IPOs) during the year, a decrease from five such IPOs in the preceding year.

The funding landscape across Indian cities showcased Bengaluru leading in fintech funding, followed by Mumbai and Jaipur. Peak XV Partners (formerly Sequoia Capital India), Y Combinator, and LetsVenture were among the top investors supporting fintech growth in the country.

The shift in funding dynamics within India’s fintech sector reflects broader market trends and investor sentiment. The decline in funding rounds, particularly in early-stage and seed-stage financing, indicates a cautious approach among investors, possibly driven by market uncertainties or a recalibration of risk appetites. However, despite the funding contraction, certain segments like alternative lending, payments, and banking tech managed to sustain investor interest, showcasing resilience amidst the challenging investment landscape.

The reduced number of unicorns and IPO launches in the Indian fintech space in 2023 signifies a more discerning approach by investors, emphasizing quality over quantity. This trend aligns with a maturing ecosystem where investor scrutiny and a focus on sustainable growth become increasingly paramount. While the funding landscape witnessed a contraction, the continued interest of notable investors like Peak XV Partners (formerly Sequoia Capital India) and Y Combinator underscores enduring confidence in the long-term potential of India’s fintech market.

Bengaluru’s prominence as the leader in fintech funding underscores the city’s robust ecosystem and supportive infrastructure for burgeoning startups. The city’s continued appeal to investors and innovators alike reflects its conducive environment for fostering fintech innovation. Mumbai and Jaipur also emerge as notable players in the fintech funding arena, contributing to India’s diverse and evolving fintech landscape, highlighting the growing geographical spread of fintech innovation and investment opportunities across the country.

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Air India, BIAL Partner to Create South India’s Top Aviation Hub

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Air India and Tata Group airlines will partner with BIAL to improve airport services and connectivity at Bengaluru’s Kempegowda International Airport, including setting up an exclusive lounge for premium passengers.

Air India and Bangalore International Airport Limited (BIAL) have entered into an agreement aimed at bolstering Bengaluru’s status as a premier aviation hub for southern India. The collaboration seeks to enhance air travel connectivity to and from India over the next five years.

Under the agreement, Air India, along with other Tata Group airlines such as AIX and Vistara, will work closely with BIAL to improve international connectivity, operational efficiency, and passenger experience at Kempegowda International Airport, Bengaluru (KIAB or BLR airport). This includes plans to strengthen the group’s presence at the airport and establish a dedicated domestic lounge for premium and frequent travelers of Tata Group airlines.

Furthermore, Air India has signed a memorandum of understanding (MOU) with the Government of Karnataka to develop maintenance, repair, and overhaul (MRO) facilities at the Bengaluru airport. This partnership aims to stimulate the MRO ecosystem and create over 1,200 new job opportunities in the state.

Campbell Wilson, CEO and MD of Air India, emphasized the importance of airline-airport synergy in enhancing customer experience and operational efficiency. He expressed enthusiasm for strengthening Air India’s relationship with BIAL and expanding its presence at the airport, as well as establishing a major MRO center.

Hari Marar, MD and CEO of Bangalore International Airport Limited, highlighted the BLR airport’s commitment to becoming the international gateway in Southern and Central India. He stated that the collaboration with Air India aligns with the Ministry of Civil Aviation’s vision of developing Indian airports as hubs and aims to enhance the passenger experience. Marar also expressed ambitions to capture a significant share of long-haul routes from Bengaluru Airport over the next five years.

In related news, Air India announced the appointment of Jayaraj Shanmugam as its Head of Global Airport Operations, effective April 15. Shanmugam, who previously served as the chief operating officer (COO) at BIAL, brings extensive experience to his new role.

The collaboration between Air India and BIAL represents a significant milestone in the transformation of Bengaluru into a key aviation hub in the region. By leveraging each other’s strengths and resources, the partnership aims to not only enhance air connectivity but also contribute to the economic growth of Karnataka by generating job opportunities through the establishment of MRO facilities.

Jayaraj Shanmugam’s appointment as the Head of Global Airport Operations further solidifies Air India’s commitment to optimizing its airport operations and providing a seamless travel experience for passengers. His extensive experience in airport management, coupled with his previous role at BIAL, positions him well to drive operational excellence and efficiency within the airline.

As the aviation industry continues to evolve, alliances between airlines and airports are becoming increasingly vital to meet the growing demands of travelers and enhance overall competitiveness. The strategic collaboration between Air India and BIAL sets a precedent for future partnerships in the aviation sector, emphasizing the importance of cooperation and synergy to achieve common goals.

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March sees strong growth in Indian pharma market, up by 9.5%

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The Indian pharmaceutical market (IPM) experienced a notable 9.5 percent increase in sales in March, reflecting robust value growth across various therapy segments, except for respiratory. According to data from research firm Pharmarack, all therapies demonstrated positive value growth, contributing to the overall expansion of the market.

Sheetal Sapale, Vice President-Commercial at Pharmarack, noted that while many pharmaceutical companies showed double-digit value growth, unit growth remained a challenge. The growth in sales during March was primarily driven by value growth and new introductions, particularly in the anti-diabetic segment.

Several factors contributed to the uptick in sales, including new product introductions and patent expiries. For instance, there were multiple launches in the hematinic market following the loss of exclusivity rights for iron supplement Orofer FCM in October 2023. Additionally, patent expiries for drugs like Linagliptin and Dulaglutide further fueled competition in the anti-diabetic segment.

In March, Alkem emerged as one of the few companies reporting positive unit and value growth, with a 15.1 percent increase in value and an 11.3 percent increase in units sold. Other key players such as Cadilla, Fourrts, and Natco Pharma also witnessed double-digit value and unit growth during the month.

The top-selling medicine brands in March included Glaxo Smith Kline’s Augmentin and USV’s Glycomet GP, with Augmentin achieving sales of Rs 73 crore. Despite facing challenges in unit growth, Augmentin reported a 10 percent increase in value sales. Mankind’s Manforce condom brand retained its position as the third top-selling brand, despite negative unit and value growth.

Cipla’s Foracort inhaler maintained its fourth position in the respiratory segment, with sales totaling Rs 50 crore. Abbott’s Type 2 diabetes/weight management drug Rybelsus demonstrated remarkable growth, with a double-digit value growth rate of 7 percent and a staggering 75 percent increase in units sold in March.

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McDonald’s buys all Israeli franchise restaurants amid boycotts

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Aljazeera said that McDonald’s announced it will purchase its 30-year-old Israel franchise from Alonyal Ltd., taking back control of 225 outlets that employ more than 5,000 people. After US fast-food business Alonyal announced that it would be giving free meals to the Israeli soldiers in response to the October 7 bombing by Palestinian group Hamas, there were protests and boycotts. While McDonald’s is a global corporation, its franchises are typically locally owned and operate independently. Its CEO, Chris Kempczinski, said previously that the company had seen “meaningful business impact” in several markets in the Middle East and some outside the region due to the Israel-Hamas conflict, as per Aljazeera.

“For more than 30 years, Alonyal Limited has been proud to bring the Golden Arches to Israel and serve our communities,” Omri Padan, CEO and owner of Alonyal, said in a statement on Thursday. According to Aljazeera, McDonald’s added that it “remains committed to the Israeli market and to ensuring a positive employee and customer experience in the market going forward.” Following the transaction’s completion in the coming months, McDonald’s will assume ownership of Alonyal’s outlets and operations, maintaining its current workforce. However, the terms of the transaction were not disclosed by the companies involved. In February, Kempczinski said that the war had had a “disheartening” effect on sales in Middle Eastern countries and other Muslim-majority nations such as Malaysia and Indonesia. “So long as this conflict, this war, is going on, we’re not expecting to see any significant improvement in this,” Kempczinski said in a conference call. “It’s a human tragedy, what’s going on, and I think that does weigh on brands like ours.”

During October–December, sales growth for the fast-food chain’s Middle East, China, and India division was only 0.7 percent, significantly lower than market projections of 5.5 percent. This decline follows calls for a McDonald’s boycott by customers in Muslim countries, prompted by Alonyal’s announcement. Consequently, franchisees in nations like Egypt, Jordan, and Saudi Arabia distanced themselves from the donations, collectively pledging millions of dollars in aid to Palestinians in Gaza.

While Chicago-based McDonald’s is known as one of the United States’ most iconic brands, most of its restaurants worldwide are locally owned and operated. Another prominent Western fast-food chain, Starbucks, has also faced boycott campaigns due to its perceived pro-Israeli stance and alleged financial ties to Israel. CEO Laxman Narasimhan told journalists in February that Starbucks saw a “significant impact on traffic and sales” in the Middle East but also in the US, where protesters campaigned against the Seattle-based company, calling for it to take a stand against Israel.

Domino’s, a US-based pizza maker with franchises around the world, also faced blowback after posts on social media claimed without evidence that it had also given free food to Israeli soldiers. The brand’s same-store sales dipped by 8.9 percent in Asia in the second half of 2023, mainly because consumers in Malaysia associated it with the US, an Israeli ally, a company official said.

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Disney CEO targets password-sharing, following Netflix

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Disney CEO Bob Iger has revealed plans to tackle password-sharing on the company’s streaming platform, set to commence in June. Iger stressed in a CNBC interview the importance of consolidating the streaming industry, with the initiative aimed at boosting subscriber growth and improving profitability. He articulated aspirations for achieving double-digit margins for the business.

This move mirrors actions taken by streaming giant Netflix, which experienced a substantial surge in subscribers after cracking down on password-sharing, surpassing Wall Street’s expectations by adding nearly 22 million subscribers in the latter half of last year.

Iger’s announcement closely follows a proxy battle against Disney’s activist investors, including Nelson Peltz, who had criticized Disney’s performance in the streaming-television sector. Reflecting on the outcome of the proxy vote, Iger expressed satisfaction with the resounding endorsement of the board’s strategies, particularly concerning CEO succession. Moreover, Iger has also hinted at ongoing plans regarding partnerships for ESPN.

The victory in the proxy battle strengthens Iger’s position as Disney endeavors to revitalize its film and television franchises, achieve profitability in its streaming division, and establish partnerships for ESPN’s digital expansion.

Last year, Netflix expanded its crackdown on password-sharing to over 100 countries, extending beyond the United States. As part of its efforts to address market saturation and explore new revenue avenues, the platform implemented restrictions on password-sharing and introduced a subscription option supported by ads.

Emails were sent out to customers in 103 countries and territories, including key markets such as the United States, Britain, France, Germany, Australia, Singapore, Mexico, and Brazil, in May 2023. These emails reiterated Netflix’s policy that accounts should only be used within a single household.

To ease the transition, Netflix provides paying customers with the option to add an extra member from outside their household for a supplementary monthly fee. In the United States, this fee amounts to $8 (Rs 660). Members are also given the ability to transfer a person’s profile to maintain their viewing history and personalized recommendations, ensuring a seamless experience.

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India’s Ayurveda market to reach Rs 1.2 trillion by FY28

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The Ayurveda product market in India is poised for substantial growth, with projections indicating a remarkable increase in market value to Rs 1,20,660 crore ($16.27 billion) by FY28 from the current Rs 57,450 crore ($7 billion), according to a study conducted by Ayurveda tech startup NirogStreet.

The surge in the Ayurveda product market can be attributed to several factors, including the escalating demand for natural and herbal remedies both domestically and internationally. Additionally, the rise in the number of Ayurvedic medical practitioners, coupled with government initiatives and the emergence of new entrepreneurs in the sector, has further fueled the market’s expansion.

NirogStreet’s survey revealed that the overall market for Ayurveda products and services is expected to grow at a Compound Annual Growth Rate (CAGR) of 15 percent from FY23 to FY28. Specifically, the product and service sectors are anticipated to witness growth rates of 16 percent and 12.4 percent, respectively, during this period.

The survey also shed light on the Ayurvedic manufacturing landscape in India, estimating its value at Rs 89,750 crore ($11 billion) in FY22. This figure encompasses the value of exports, amounting to around Rs 40,900 crore ($5 billion), with imports estimated at Rs 8,600 crore ($1 billion).

Participation in the survey was significant, with approximately 7,500 manufacturers from 10 states, including Uttar Pradesh, Bihar, Madhya Pradesh, Delhi, Haryana, Rajasthan, Punjab, Maharashtra, Jammu and Kashmir, and Kerala.

At a recent CII AYUSH Conclave, Padmashri Vaidya Rajesh Kotecha, Secretary, Ministry of AYUSH, emphasized the importance of positioning AYUSH products in global markets and fostering innovation within the ecosystem. He highlighted that the AYUSH sector has witnessed remarkable growth, reaching $24 billion in a span of 10 years.

In light of this exponential growth trajectory, NirogStreet underscored the significant potential of the Ayurveda product market to become a key contributor to India’s economy.

The recent surge in the Ayurveda product market underscores a broader global trend towards holistic and natural wellness solutions. As consumers increasingly prioritize health and well-being, Ayurveda’s ancient wisdom and emphasis on holistic healing are gaining traction worldwide.

India’s rich heritage in Ayurveda positions it as a global leader in this burgeoning industry. The country’s vast array of medicinal herbs, traditional knowledge, and skilled practitioners serve as key assets in driving the growth of the Ayurveda sector. However, amidst the promising growth prospects, challenges persist, including the need for stringent quality control measures, standardization of products, and greater awareness about Ayurveda’s efficacy. Addressing these challenges will be crucial in ensuring the sustainable growth of the industry and maintaining consumer trust.

The endorsement of Ayurveda by government authorities and the proactive role of industry stakeholders in promoting innovation and research are essential steps towards realizing the full potential of the sector. In conclusion, the projected growth of India’s Ayurveda product market signifies a transformative shift towards holistic wellness and natural remedies. With concerted efforts from both public and private sectors, the Ayurveda industry is poised to emerge as a significant driver of economic growth while enriching lives with its time-tested principles of well-being.

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Byju’s accused of breaching loan terms, share sale restricted by arbitrator

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An Indian ed-tech startup, Byju’s, is facing fresh challenges as it grapples with allegations of breaching loan agreements worth $42 million, according to a confidential order seen by Reuters. The company, once valued at $22 billion, has encountered a series of setbacks, including regulatory probes and management controversies, leading to a significant decline in its valuation to approximately $250 million.

MEMG Family Office, led by Indian billionaire doctor Ranjan Pai, initiated arbitration proceedings against Byju’s in March, alleging non-repayment of loans totaling $42 million. The dispute revolves around the failure to transfer certain shares of a Byju’s group company, Aakash Education, as per the pre-agreed terms.

An arbitrator, appointed under Singapore International Arbitration Centre rules, has issued an order prohibiting Byju’s from selling 4 million shares of Aakash Education, equivalent to a 6% stake based on last year’s agreement. The arbitrator’s order indicates a case of breach of the loan agreement, according to the April 4 order, as reported by Reuters.

Byju’s has not yet commented on the matter. However, a source close to the company revealed that negotiations are underway with MEMG to resolve the dispute, suggesting that the order may not significantly impact Byju’s operations.

During the arbitration proceedings, Byju’s cited difficulties in obtaining timely approvals from certain investors necessary for the share transfer, as stated in the order. Additionally, the company has faced challenges in accessing recently raised funds due to a legal dispute with some investors, resulting in delays in staff payments, as highlighted in an internal memo last month. Furthermore, in February, a U.S. unit of Byju’s filed for Chapter 11 bankruptcy proceedings in a Delaware court, listing liabilities ranging from $1 billion to $10 billion, adding to the company’s financial woes.

The escalating legal battles and financial woes facing Byju’s have cast a shadow over its once-stellar trajectory in the Indian startup ecosystem. The company, which was hailed as India’s biggest startup with a valuation of $22 billion in 2022, has seen its fortunes plummet amid a string of controversies and challenges.

The allegations of mismanagement and breach of loan agreements have further dented Byju’s reputation, raising concerns among investors and stakeholders about the company’s ability to navigate its current predicament. The emergence of regulatory probes and management upheavals has added fuel to the fire, exacerbating uncertainties surrounding the company’s future prospects.

The arbitration proceedings initiated by MEMG Family Office, led by prominent Indian entrepreneur Ranjan Pai, underscore the growing tensions between Byju’s and its creditors. The failure to adhere to pre-agreed terms and the subsequent legal dispute have not only tarnished Byju’s standing but also raised questions about its governance and financial stewardship.

Moreover, the revelation of Byju’s struggles in accessing funds and meeting its financial obligations, including staff payments, paints a grim picture of its operational challenges. The bankruptcy filing by its U.S. unit further underscores the severity of the situation, with liabilities stretching into the billions of dollars.

Amidst the turmoil, Byju’s faces a critical juncture as it grapples with the fallout from its recent setbacks. The company’s leadership, including CEO Byju Raveendran, is under intense scrutiny, with calls for accountability and decisive action to address the mounting concerns.

As Byju’s endeavors to navigate through turbulent waters, the outcome of its legal battles and efforts to restore investor confidence will likely shape its trajectory in the fiercely competitive ed-tech landscape. The challenges ahead are daunting, but Byju’s resilience and ability to adapt may ultimately determine its fate in the evolving startup ecosystem.

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