Eldercare startup Goodfellows has raised an undisclosed amount of funding from veteran investor Ratan Tata. 

According to PTI’s report, Tata said, “No one minds getting old till you actually get old and also added that getting a good-natured companionship, which we take for granted, is a challenge. 

Founded by Shantanu Naidu, who is currently working as a general manager in RNT, Tata Group, Goodfellows provides intergenerational friendships to elderly people. In essence, it employs educated graduates up to the age of 30 years to assist elderly people in carrying out daily tasks or merely conversing with them.

Naidu said, “Goodfellows wants to scale up across the country but would prefer to go slow without compromising on the quality of the companions it hires.” 

Naidu is an MBA graduate from Cornell University. Prior to founding Goodfellows, he set up anti-poaching devices and tech-enabled dog collars making startup Motopaws and counselling platform On Your Sparks, as per his LinkedIn profile. Motopaws was also backed by Ratan Tata in the initial stages.

Tata added by saying, “You do not know what it is like to be lonely until you spend time alone wishing for companionship.”

In May, Tata also led fuel distribution startup Repos Energy’s INR 5.6 Cr Pre-Series A funding round. The funding round was a mix of equity and debt. 

As of now, Goodfellows is in the beta phase and is closely working for 20 elders for the last six months. It is looking to expand its services to other Indian cities including Pune, Chennai and Bengaluru in the near future.

In the elderlycare segment, it is likely to face competition from the likes of GetSetUp, 60Plus India and Alserv. 

As per 2011 India’s census data, India has over 100 Mn elderly people. These figures are anticipated to have grown by now. The report further estimated that the country’s eldercare business to reach the value of $5 Bn in 2011.

The post Ratan Tata Backs Eldercare Startup Goodfellows appeared first on Inc42 Media.

On August 10, 2022, the Reserve Bank of India (RBI) issued the first set of much-awaited regulatory framework for digital lending. The central bank has taken a stand on key issues and has shared clarity on areas such as direct loan disbursal to borrower account, consent of borrowers before increasing credit limit, among others.

The process of framing the guidelines for the burgeoning sector had begun a long ago. The initial work started in January 2022 after RBI constituted a working group on ‘digital lending to share a report which came out in 11 months.

Inc42 spoke to over two dozen fintech leaders, founders, regulated entities and analysts to understand how they are viewing the regulatory framework, and the sentiments are almost the same across the fraternity. Most regulated players are looking at the guidelines as a positive step, with digital lending fintechs finally getting recognised as an agent of a bank/ NBFC and legally permitted to do business.

Also, there are areas where the RBI is still seeking details. This includes:

• Scope of the financial literacy centres
• Centre for Financial Literacy
• Electronic Banking Awareness and Training Programmes (E-baat) to be expanded to include digital lending
• Baseline technology standards for digital lending apps
• Adoption of ethical AI by digital lenders among others

Jupiter founder and CEO Jitendra Gupta said that the guidelines will open up future opportunities for fintechs with a deeper understanding of existing regulations and compliances to operate in the digital lending ecosystem, which would become a $350 Bn market opportunity by the end of FY23.

The guidelines are also expected to build trust and increase the risk appetite of consumers to go for newer channels of digital credit.

Irfan Mohammed, Chief Business Officer, Financial Services at Yubi, believes that the RBI’s acceptance of WGDL’s recommendations is a welcome move for all in the fintech, financial services and lending ecosystem. It offers the incumbents and stakeholders the much-needed direction and clarity to plan and move forward.

In June, the RBI issued a notification for non-bank fintech players, prohibiting them from loading prepaid payment instruments (PPIs) with credit lines. It was identified that although the PPI instrument should be backed by funds owned by a customer, a few fintechs were using it as a PPI being backed by a third-party credit line.

The release of digital lending guidelines is seen as another step in building a strong regulatory framework for fintechs around their role of co-branding with credit cards, as the guidelines clearly state that  No involvement of third-party lending service providers (LSPs) through prepaid payment instruments (PPI) or Escrow pool accounts is permitted.

“Besides financial and operational discipline, it (the guidelines) will aid in building customer confidence in the digital lending ecosystem and increase their willingness to explore newer avenues and will ultimately benefit the larger goal of financial inclusivity for all,” CASHe Vice Chairman & MD Joginder Rana said.

State Of Digital lending Ecosystem

For a long time now, the RBI has taken the primary role of protecting consumer interest in the financial services sector. As per the findings of the WGDL, as many as 600 out of the 1,100 lending apps available for Indian Android users across 80 application stores were illegal apps. These digital lending apps were found to charge high-interest rates, adopt unacceptable and high-handed recovery methods and operate in an opaque manner.

Following the central bank’s clarification on loading of PPIs using credit lines, many fintech companies, such as OneCard, Slice, Uni, Jupiter Edge, Mobikwik, among others, which had earlier found grey areas in the regulations to start digital lending products, were forced to halt or restructure their lending operations.

However, what’s interesting is how the RBI has recognised the role of fintechs in the lending ecosystem. Lending, in India, was always considered an exclusive domain of banks, NBFCs, state-owned cooperative banks, and other regulated entities. While fintech startups were pushing for almost a decade to join the bandwagon, there were no clear directions.

Now, the RBI’s latest guidelines have made a clear distinction between the existing groups of regulated and non-regulated digital lenders. Even non-regulated entities have been recognized in the digital lending ecosystem through LSPs (Lending Service Providers) and DLAs (Digital Lending Apps) under the new guidelines.

Giving more clarity, the RBI also said that the DLAs include “mobile and web-based applications with a user interface that facilitate borrowing by a borrower from a digital lender. DLAs will include apps of the REs (regulated entities) as well as operated by LSPs which are engaged by REs for extension of any credit facilitation services”.

More Regulatory Pressure On Digital Lending Fintechs

Sanjay Kao, EVP APAC at Lentra, one of the leading enterprise SaaS companies empowering lenders in the digital lending ecosystem, compared the digital lending landscape in the country  before the release of RBI guidelines with the early years of Unit Linked Insurance Plan (ULIPs), when lack of regulation led to unhealthy practices such as charging of exorbitant commissions, giving the industry an ill repute. Once regulated, there was an overall acceptance of ULIPs as an investment instrument, resulting in healthy growth, he said.

Overall, the guidelines are expected to increase regulatory pressure on the regulated entities such as banks and NBFCs which in turn will have to make sure the adoption of guidelines at the end of fintechs. With power getting concentrated with regulated entities (REs), the fintechs will have to comply with the guidelines and work in cohesion with the existing lending infrastructure of the country.

Here are some other vital regulatory impacts that fintechs will have to consider and change their strategies accordingly.

No Breather For The Likes Of Mobikwik, Slice, Jupiter Edge

Inc42 earlier reported how in the absence of any clear guidelines, fintechs tied up with banks and NBFCs as third-party credit lines. It led to the emergence of three key groups, i.e:

• Fintech + banks (OneCard – credit card);
• Fintech + NBFCs + bank (Slice, Uni – prepaid card);
• Fintech + non-bank PPI + bank (Jupiter Edge – prepaid card)

However, according to the guidelines for digital lending, all loan disbursals and repayments are required to be executed only between the bank accounts of the borrowers and the regulated entities (REs) without any passthrough/ pool account of the LSP or any third party.

Since the disbursements will always be made into the bank account of a borrower, it puts rest to all the speculations about the other business models.

Jupiter’s Gupta explained that the money would need to come directly from bank/ NBFC and there cannot be a third party (fintech) as they cannot operate funds, as per the central bank’s guidelines.

Experts believe that this would lead to emergence of newer banking solutions, with fintechs partnering banks and NBFCs for underwriting, loan disbursement, collection, among others.

BNPL Also Comes Under Regulation 

The WGDL recommended the RBI to treat new digital lending products such as buy now pay later (BNPL) as a part of lending, if not in the nature of operational credit by merchants. According to the guidelines, “REs shall ensure that LSPs, if any, associated with such deferred payment credit products shall abide by the extant outsourcing guidelines issued by the Bank.”

This implies that fintechs such as ZestMoney, LazyPay, among others, engaged in the microcredit segment will have an opportunity to continue and scale up in the lending segment under regulatory purview.

Also, according to the new regulations, any lending sourced through DLAs (either of the RE or of the LSP engaged by RE) will be required to be reported to Credit Information Companies (CICs) by REs, irrespective of its nature or tenor.

All new digital lending products extended by REs over merchant platforms involving short-term credit or deferred payments will also be required to be reported to CICs by the REs.

In simple terms, all short-term/ BNPL loans would now be treated like a loan and would require KYC adherence as well as bureau reporting. This has the potential to affect user experience as there will be stricter controls on money movement and bureau reporting even for products like small-ticket BNPL loans.

APR To Add More Transparency To Micro Credit Lending

The REs will need to disclose upfront the all-inclusive cost of digital loans as an Annual Percentage Rate (APR). The APR shall be based on an all-inclusive cost and margin including cost of funds, credit cost and operating cost, processing fee, verification charges, maintenance charges, among others, except contingent charges like penal charges, late payment charges, etc.

The fintechs will be required to disclose the APR to the borrowers upfront as part of the Key Fact Statement (KFS). This is likely to adversely impact small ticket/ short-term loan offering fintechs, which survive on processing fees and “Flat Rate on Principal instead of Reducing Balance”, and may charge upwards of 30% and in some cases, more than 50% on APR basis, as specified by Sameer Singh Jaini, founder and CEO, The Digital Fifth in a LinkedIn post.

To simplify this, let’s take an example here. Under the flat rate interest mechanism, suppose a borrower takes a –

• Principal amount of INR 100, 000 at an interest rate of – 5.5% for a tenure of 10 years (120 months)
• This implies a Flat rate interest of Rs 458
• Then monthly installment will be (100,000/12)+458 = INR 1292 (to be paid irrespective of principal paid during the tenure)
• Interest paid at the end of tenure will be 35.5% (also known as effective interest rate), repaying an amount of INR 155,040

However, in the reducing balance interest mechanism, the interest is calculated only on the principal amount left so the customer ends up saving more. With the current RBI guidelines, now those fintechs charging a flat rate on principal will thus have to bear costs or upfront ask for a higher interest rate, which may result in reduced customer acquisition.

Stringent Data regulations

According to the guidelines, the data collected by DLAs should be need-based, should have clear audit trails and should be done with prior explicit consent of the borrower.

The guidelines also states that the DLAs will be required to provide an option to borrowers to accept or deny the consent for the use of specific data, including the option to revoke previously granted consent, besides the option to delete the data collected from borrowers by the DLAs/ LSPs.

The key things fintechs will have to keep in mind going forward are:

• REs to ensure that LSPs engaged by them do not store personal information of borrowers except for some basic minimal data (viz. name, address, contact details of the customer, etc.).
• In any case, DLAs should desist from accessing mobile phone resources such as file and media, contact list, call logs, telephony functions, etc.
• A one-time access can be taken for camera, microphone, location or any other facility necessary for the purpose of on-boarding/ KYC requirements only with the explicit consent of the borrower.
• No biometric data should be stored/ collected in the systems associated with the DLA of REs/ their LSPs, unless allowed under extant statutory guidelines.
• REs to ensure that all data is stored in servers located within India while ensuring compliance with statutory obligations/ regulatory instructions.
• DLAs should provide the key information like data required in the process, its storage, outsourcing and purging, among others, clearly in their privacy policies, distinctly reflected on the loan providers’ websites.

Increase In Costs Of Operation

The guidelines further highlight that any fees, charges, etc. will be payable to fintechs in the credit intermediation process shall be paid directly by the lenders and not by the borrower. Besides, a minimum 90 days cooling off period needs to be given to the borrower.

While the regulated entities will have to comply with marginal changes, the directive requires adherence to changes such as updating the app which will augment the cost for a few companies, and lead to increase in tech and security cost for fintechs, explained Swapnil Bhaskar, Head of Strategy at Niyo.

Further, REs will also need to ensure that they and the LSPs engaged by them have a suitable nodal grievance redressal officer to deal with fintech/ digital lending related complaints. This will also lead to additional costs for fintechs.

Next, as stated by RBI, with recommendations pertaining to First Loss Default Guarantee (FLDG) are under examination. But for now, the regulated digital lending entities will have to adhere to Master Direction – Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021.

“The interim approach suggested in the recommendations have eliminated the perceived capital arbitrage between on-book and off-book lending which was subject to interpretations in the past due to the absence of any specific capital adequacy guidelines on FLDG structures. As per the recommendation press release, all regulated entities acting as originating partners giving FLDG are required to maintain 15% capital which will help balance systemic risks in the co-lending industry,’ said one of the executives from a leading NBFC.

Digital Lending: The Way Forward

The digital lending guidelines’ recognition of the role of fintechs in the lending segment offers a plethora of opportunities and will require the fintechs to proactively work with the regulators and develop solutions under the regulatory umbrella. In turn, the regulators must help fintechs to adapt to the guidelines, and bring in innovation while protecting customer interests.

Fintechs also need to put in place adequate and transparent risk management controls. This will increase customer confidence and market acceptance, and provide the financial stability that will enable them to thrive in a more regulated business environment.

According to MyShubhLife CEO and founder Monish Anand, digital lending will no longer be just a technology-driven convenience model but would also evolve as a multi-layered system thriving on core fundamentals of banking, putting customer interest first, and providing easier access to organised credit with increased transparency.

The fintechs are also hopeful that the RBI will now show more trust in them. Ranvir Singh, founder and MD of Ring, said that fintechs have proven credibility when it comes to linking credit cards on UPI, and expects RBI may also allow NBFCs to issue their own credit cards without the need to have a co-branding partner bank. As of now, only SBI Card and Bank of Baroda (BoB) Card are the two NBFCs allowed to issue credit cards.

The fintech community is now eagerly waiting for the next set of guidelines pertaining to First Loss Default Guarantee (FLDG), and framework for web-aggregator for loan products. The RBI is also looking to set up a self-regulatory organisation covering regulated entities (REs) and DLAs/LSPs in the digital lending ecosystem to curb malpractices and bring in an added layer of code of conduct.

The post Decoding RBI’s Digital Lending Guidelines From The Lens Of Fintech  appeared first on Inc42 Media.

Bengaluru-based insurtech startup Go Digit General Insurance Limited has filed its draft red herring prospectus (DRHP) with markets regulator Securities And Exchange Board of India (SEBI). The startup is planning to raise INR 1,250 Cr through a fresh issuance of shares. 

Besides, the IPO offer will also consist of an offer-for-share component (OFS) in which one of the promoters – Go Digit Infoworks Services Limited – will offload up to 109 Mn equity shares, while few other shareholders will also sell a small number of shares. 

The shares will be listed on the National Stock Exchange (NSE) and the BSE.

As per the shareholding pattern of Go Digit General Insurance, Go Digit Infoworks Services owns around 83.65% stake, or 72,95,65,220 equity shares, of the Virat Kohli-backed unicorn. The other major shareholders in the startup are:

• TVS Shriram Growth Fund (3.56%)
• A91 Emerging Fund (3.36%)
• Faering Capital (3.36%) 
• Wellington Hadley Harbour AIV Master Investors (1.49%)
• Sequoia Growth Investments (1.04%)

Meanwhile, Go Digit Infoworks has three shareholders –  founder Goyal owns 14.96% stake in it, Oben Ventures has 39.79% stake, and FAL Corporation owns 45.25% stake in the company. 

Oben Ventures LLP, which was originally incorporated as a private limited company, is also owned by Goyal who owns 99.99% stake in it. The remaining 0.01% stake is owned by Sameer Bakshi. 

As per Inc42’s estimates, Digit Insurance founder Goyal owns about 45.75% stake in the IPO-bound unicorn. Apart from this, Prem Watsa’s FairFax Asia, which was an early investor in Digit Insurance, owns 37.8% stake in the startup through FAL Corp. 

The startup’s net loss widened 141% in the financial year 2021-22 (FY22) to INR 295.8 Cr from  INR 122.7 Cr in FY21. The loss stood at INR 175.2 Cr in FY20.

The operating loss from the insurance business stood at INR 375 Cr in FY22, a 102% jump from INR 185.4 Cr in FY21.

Digit Insurance will join the likes of PolicyBazaar and LIC who are engaged in the insurtech business and are listed on Indian stock exchanges. 

The post Decoding IPO Bound Digit Insurance’s Shareholding Pattern appeared first on Inc42 Media.

Touting PhonePe at its Q2  earnings call, American retail giant Walmart on Tuesday (August 16) said that the digital payments company is witnessing a strong growth in India.

PhonePe recorded annualised total payments volume (TPV) north of $830 Bn in the quarter ending July 2022, Walmart said, adding that PhonePe is witnessing 3.1 Bn monthly transactions.

“…if you look at the largest digital payment companies outside China in the world, PhonePe, after a very brief history, is already roughly two-thirds the size of that (China) and what is going to be the largest market (India) in the world. It is a very exciting opportunity,” Walmart chief financial officer John David Rainey said.

Underlining PhonePe’s future plans, Walmart also said that the digital payments giant is looking to strengthen its financial services segment as well, with a specific focus on insurance.

“What is encouraging is how they (PhonePe) are approaching this thing. They are not only looking at payments but also at merchant services. And that two sided network is an important part of it,” Walmart said. 

In response to a question, the company also said that it is deploying PhonePe’s knowledge of the space in other markets such as Mexico.

“Their knowledge and their ability to share that knowledge around the world, and help other markets such as Mexico from a best practices (perspective) and what they should do, has been incredibly invaluable…,” Walmart said.

Walmart owns both PhonePe as well as ecommerce major Flipkart.

On Tuesday, Walmart reported a 8.4% growth in its revenue to $153 Bn in the second quarter (Q2) of 2022. On similar lines, the US-based retail major’s international sales rose 5.7% to $24.4 Bn. Net income grew 8.4% to $5.1 Bn.

PhonePe is India’s biggest digital payments company, accounting for nearly half of the transactions processed on the Unified Payments Interface (UPI). In July 2022, PhonePe accounted for 47.7% of the total transaction count, while it formed 49.4% of the total transaction volume.

Last month, PhonePe confirmed that it is moving its headquarters to India. The announcement also gave heft to reports that the fintech player is soon looking to list on Indian bourses. 

PhonePe claims to have more than 385 Mn registered users and over 30 Mn merchant outlets in India. It competes with the likes of Google Pay and Paytm in the highly-competitive Indian digital payments market.

The post PhonePe An ‘Exciting Opportunity’, Had Annualised TPV Of $830 Bn In Q2: Walmart appeared first on Inc42 Media.

American retail giant Walmart on Tuesday (August 16) said that its global advertising business surged in the quarter ending July 2022, largely on the back of strong performances by Flipkart and the company’s US-based advertising arm. 

“Global advertising business grew nearly 30%, led by Walmart Connect in the US and Flipkart advertising,” the company said in its quarterly Q2 report.

The retail major also had positive words for its ecommerce offering, saying Flipkart continues to meet its expectations. 

“Flipkart continues to meet our expectations and the team is gearing up for Big Billion Days. I travelled to India last month and was impressed by how the Flipkart and PhonePe teams are innovating for the customer and driving growth,” Walmart chief financial officer John David Rainey said.

On the performance of its ecommerce vertical, Walmart said that ecommerce net sales contributed 19% of total net sales in the international market. 

During an earnings call, Walmart executives also said that Flipkart’s spun off fintech arm PhonePe is looking to strengthen its financial services segment. 

Walmart owns both ecommerce major Flipkart and fintech giant PhonePe

While Walmart registered double digit growth in key markets such as Mexico, Canada and China, it did not divulge the details of its performance in India. The company reported a 8.4% growth in its total revenue to $153 Bn in the second quarter of the financial year 2022-23 (FY23). Its international sales also rose 5.7% to $24.4 Bn in the quarter ended July 2022.

The growth was partially driven by rising inflation that has pushed up prices across the globe.

Flipkart primarily competes with the likes of US-based ecommerce giant Amazon and homegrown Snapdeal in India. 

Of late, Flipkart has been under a lot of scrutiny. Trade bodies such as the Confederation of All India Traders (CAIT) have called for action against the ecommerce player citing deep pricing tactics and anti-competitive behaviour of the company.

The situation has been compounded by the recent crackdown by authorities on ecommerce marketplaces. In May, it was reported that the investigative arm of the CCI was reviewing documents that suggested financial dealings between ecommerce platforms, including Flipkart, and their preferred sellers.

According to an Inc42 report, India’s addressable ecommerce opportunity is projected to reach $200 Bn by 2026. Besides, the number of ecommerce shoppers in India surged past 140 Mn in 2021, as per the report.

The post Flipkart, Walmart Connect Helps Walmart’s Global Ad Business Grow 30% In Q2 appeared first on Inc42 Media.

Shares of foodtech giant Zomato surged more than 4.05% on Tuesday (August 16) to close at INR 64.25 on the BSE.

The shares of the Gurugram-based company surged to an intraday high of INR 67.35, but pared some of the gains later. 

This represents a reversal of fortunes for Zomato, which was under intense selloff in the last few months. The stock has gained over 58% in about 20 days since touching its all-time low of INR 40.55 on July 27.

The shares of the Deepinder Goyal-led company have surged over 37% so far in August. Recently, Zomato said that it will achieve overall business adjusted EBITDA breakeven between the fourth quarter of the current fiscal and the second quarter of the financial year 2023-24 (FY24).

Shares of Zomato were on a downward spiral over the last few months due to market volatility and concerns over acquisition of loss-making quick commerce startup Blinkit. The end of the lock-in period for its pre-IPO investors in July after one year of listing also added to the woes. Investors such as Uber, Moore and Tiger Global offloaded their stake in the food delivery startup after the lock-in period expired.

Zomato’s market cap stood at INR 50,887.33 Cr at the end of trading on Tuesday.

Following the footsteps of Zomato, a good number of new-age tech stocks also grew marginally on Tuesday. Shares of logistics unicorn Delhivery rose 0.32% to INR 557.15 on the BSE after days of downward spiral. 

Fintech player PB Fintech, the parent company of Policybazaar, also rose 0.77% to INR 577.50, while shares of beauty ecommerce platform Nykaa grew marginally by 0.1% to INR 1,399.75.

Meanwhile, shares of Paytm declined for the second consecutive session, falling 0.48% to INR 783.40 on Tuesday. 

The benchmark index BSE Sensex rose 0.64% to close at 59,842.21 points on Tuesday, while Nifty50 also grew 0.72% to 17,825.25.

The post Respite For Zomato: After Months Of Turmoil, Shares Rally 58% In 20 Days appeared first on Inc42 Media.

For a long time, the online gaming sector was seen as a miniscule segment of the media and entertainment industry in India. However, with the number of online gamers in the country reaching 390 Mn in 2021 and generating a revenue of nearly $1.3 Bn, the situation has changed now. Gaming is no more merely a kid’s play in India; rather it has emerged as one of the bright spots in the Indian entertainment industry.

While the gaming industry in the country has been on a growth trajectory for the last 5-6 years, the Covid-19 pandemic provided a major boost to the sector in the last couple of years. The sector minted its first unicorn Dream11 in 2019, with two more startups – MPL and Games 24×7 – joining the coveted club in 2021 and 2022, respectively. Meanwhile, gaming company Nazara Technologies made its debut on stock exchanges last year.

Touted as the sunrise sector in India, gaming has also been acknowledged by the government as one of the potential sectors for job creation. The Information and Broadcasting Ministry constituted an Animation, Visual Effects, Gaming and Comics (AVGC) promotion task force earlier this year to recommend ways to realise and build domestic capacity for serving Indian as well as global demand.

However, despite these positive developments, regulatory instability is one issue that has been plaguing the industry for the last two years. A number of states such as Telangana, Andhra Pradesh, Tamil Nadu, Karnataka, Kerala issued several notifications to ban online gaming over the last few years.

Although various high courts struck down these notifications when challenged legally, the proposals for ban have left the industry confused and also caused major setbacks initially.

While some of the states sought to prohibit all real money gaming activities, Kerala sought to prohibit Rummy when played for stakes. In many cases, the line between gambling and gaming gets blurred as users have to put some amount of money into both fantasy sports and real money gaming.

For the uninitiated, fantasy games are virtual games where players build make-believe teams of real players of a given sport, whereas real money gaming involves skill-based games such as Ludo, Poker that let users play for real money.

Due to the lack of resemblances among the nature of regulations brought by different states, the complexity in regulation has been burdening the overall gaming ecosystem. Hence, the industry is now calling for uniform guidelines by the central government.

Confusion Around Games Of Skill And Games Of Chance

Under the List-II of the Seventh Schedule of the Constitution of India, states have the power to legislate ‘sports’ and ‘betting and gambling’. While different states have taken different measures to regulate gambling and sports, the distinction between ‘games of skill’ vs ‘games of chance’ has not been made many times.

Despite recommendations and court observations to exempt skill-based games from the purview of gambling, the states have repeatedly amended existing laws or created new guidelines to ban any form of online gaming based on the logic that it could take the form of betting as well.

“The question that has always remained in the online gaming space is whether it’s a game of skill or a game of chance. The other issue is whether the game involves real money or does not involve real money. The third thing is whether the game is something like betting on an event which has not happened thus far or may happen in the future. These are the three main issues,” a legal expert, who didn’t want to be named, said.

As per the Gambling Act, its clauses are not applicable to ‘games of mere skill’. However, ‘mere skill’ has not been defined in the Act. This lack of definition of a game of skill is a major issue, Ketan Godkhindi, chief strategy officer at Witzeal Technologies, said.

Moreover, there is a common notion prevalent among the larger mass that anything which is online gaming is nothing more than betting or gambling, he added.

According to industry experts, the need of the hour is to have a clear definition for skill-based gaming, as well as standard parameters on how it can be distinguished from games of chance.

Conflict Within The Online Gaming Industry

Adding to the woes of the online gaming industry, the regulatory uncertainty has caused a rift within the industry as well. As per an industry source, there is no consensus among the gaming industry stakeholders on the legal challenges. In cases where online gaming does not contain any element of betting, many of the industry stakeholders are of the view that they are being involved in unnecessary controversy with real money gaming.

According to the founder of an esports startup, the different bodies, such as All India Gaming Federation (AIGF), Federation Of Fantasy Sports (FIFS), E-Gaming Federation (EGF), are working in different directions and some of these industry bodies only look out for a few big names.

Online Gaming Industry Facing The Heat Of Regulatory Instability

The unexpected bans enforced by different states have also impacted the business of gaming startups.

According to Mitesh Gangar, cofounder and director of PlayerzPot, whenever any state imposes a ban, the gaming operators lose the user base of that state, which directly or indirectly impacts the revenue. For instance, when the Tamil Nadu government banned online gaming with stakes last year, PlayerzPot immediately lost around 15% of its user base.

Moreover, these incidents also impact a company’s growth perspective as it has to rework long-term strategy and budget allocation, Gangar added.

Echoing similar sentiment, Yash Pariani, founder and CEO of House of Gaming, said, “Unexpected bans make it difficult for new businesses and startups to plan their entry into the industry. Initially, PubG was India’s most popular esport. Following its ban, Freefire’s popularity skyrocketed, and BGMI quickly followed suit. However, the numerous brands make it difficult for startups not only to devise an entry strategy, but also to strategise sustenance.”

According to Witzeal’s Godkhindi, the sudden bans also put pressure on the technology teams as the systems have to be reframed overnight. To take immediate action to comply with the orders, priorities change overnight which eventually causes disruption in the overall strategy. These incidents also impact the confidence of young entrepreneurs, partners, advisers, direct-indirect employees, he added.

More importantly, the regulatory instability makes it difficult for gaming startups to attract investors, a founder of a real money gaming startup said. Although the investors realise the potential of the gaming sector, they become cautious about making any investment decisions.

The Way Forward

As per Richa Singh, cofounder of FanClash, the immediate need is to develop a gaming ecosystem with a unified national regulatory structure that can thrive under reasonable laws and oversight.

“The industry expects a clear definition of and distinction between skill vs chance-based online gaming and for the taxation to be levied on the platform fee rather than the entry fee. In the long run, self-regulation via esports industry players might help bring better clarity stemming from a deeper understanding of the nuances amongst different businesses in the sector,” Singh said.

Amid all the chaos, there have been some developments at the central government-level lately, giving a ray of hope to the troubled industry. In June, an inter-ministerial committee was set up to oversee the gaming industry in the country. The panel will work on regulations for the online gaming industry and identify a nodal ministry to look after the sector.

While the overall process may take a long time, the industry believes it can rely on self-regulation before any concrete guidelines from the government come into effect.

The post Can Pan-India Regulations End Policy Flux For Online Gaming Startups? appeared first on Inc42 Media.

Ecommerce solutions platform Graas has raised more than $40 Mn as part of the first close of its Series A funding round. The round was led by venture capital (VC) firm Kejora-led special purpose vehicle (SPV) Galaxy, Performa, Integra Partners, Yuj Ventures and AJ Capital.

The round also saw participation from multiple angel investors from India and South-East Asia (SEA).

A part of the fundraise will be used to fully acquire Pune-based direct-to-customer (D2C) platform Shoptimize and Chennai-based marketplace specialist SELLinALL. As part of the deal, founders of both Shoptimize and SELLinALL will join the board of Graas and will work as part of the consolidated entity. 

The startup will also use the investment to scale up operations in the Southeast Asia region and ramp up hiring across multiple verticals. 

Graas, in a statement, said that it would also deploy the capital to launch its ‘Growth-as-a-Service’ (GaaS) technology solution. The platform would equip brands with automated ecommerce recommendations to streamline their bottomline. 

Founded in 2022 by Prem Bhatia and Ashwin Puri, Graas uses artificial intelligence (AI) and machine learning (ML) to scale growth for ecommerce companies. Essentially, the startup integrates traditional data silos with its AI and ML engine to predict trends and insights.

“Graas’ vision is to demolish data silos, increase brands’ speed to market and create a streamlined, informed approach to marketing, inventory and content management – all in one dashboard. As a result, we are already seeing exponential increases in our clients’ growth via our solution and that’s why we have defined a new category for Graas – GaaS,” its CEO and cofounder Bhatia said.

The startup’s product suggests recommendations and executes them across multiple fronts including brand communications, inventory management, warehousing and last mile logistics.

Graas serves more than 250 customers and claims to process more than 45 Mn data points every month across over 4 Mn stock keeping units (SKUs). It currently has more than 350 employees across 11 offices in seven countries.

“The intersection of AI, ecommerce, adtech and fintech presents a multi-billion dollar opportunity in Southeast Asia and India. Partnering with Graas is exciting for us because they have not only seen this gap in the market, but have created a solution that defines an entirely new category”, Integra Partners MD Jinesh Patel said.

In the ecommerce solutions space, Graas competes with other major players such as Shopify, NetSuite SuiteCommerce, Wix, among others.

According to a report, the global ecommerce software market was valued at $7.15 Bn at the end of 2020. This number was projected to soar to $20.58 Bn by 2027, growing at a compounded annual growth rate (CAGR) of 16.3% in the period under consideration. 

The post Ecommerce Solutions Provider Graas Raises $40 Mn To Scale Operations, Ramp Up Hiring appeared first on Inc42 Media.

Walmart-owned fintech PhonePe is looking to mark its entry into the government’s Open Network for Digital Commerce (ONDC) with a consumer-facing app to further its ecommerce ambitions. To that respect, PhonePe is working on a yet unnamed hyperlocal grocery delivery app.

The app is currently being piloted in Bengaluru and PhonePe will look to take on the likes of Zepto, Dunzo, Blinkit, Swiggy Instamart and more importantly, Flipkart Quick.

The Walmart-owned fintech startup had made its ambitions to facilitate ecommerce at an ONDC meeting back in February 2022.

Vivek Lohcheb, VP, offline business at PhonePe, had said, “PhonePe will play the role of buyer and seller application on ONDC. In the first phase of the launch, we will enable Grocery and F&B in Bengaluru. Lakhs of merchants are set to benefit from ONDC effortlessly.”

PhonePe was acquired in 2016 by Flipkart.

To be sure, PhonePe has tried its hand at online commerce twice. First with Switch, which was loosely based on the concept of a super app and Stores, which was to facilitate the hyperlocal discovery of merchants.

However, a separate buyer app will be launched later this month, Sameer Nigam, founder and CEO of PhonePe, told ET in an interview. Nigam added that the fintech has earmarked up to $15 Mn for its entry into the ONDC. It will be deploying the said capital over the next 18 months.

Incidentally, the hyperlocal commerce app will be a standalone one and not be a part of PhonePe’s main app. Nigam was cited in the aforementioned interview as saying that launching a separate app will allow the startup to differentiate between the payments and the commerce customers.

PhonePe’s parent Walmart brought up the fintech’s growth over the past few quarters at its Q2 earnings call yesterday (August 16). 

Walmart chief financial officer John David Rainey said, “…if you look at the largest digital payment companies outside China in the world, PhonePe, after a very brief history, is already roughly two-thirds the size of that (China) and what is going to be the largest market (India) in the world. It is a very exciting opportunity.”

The Bengaluru-based fintech is far from the first fintech startup that is gunning for ONDC. Paytm might as well prove to be its biggest competitor as Vijay Shekhar Sharma’s platform is looking to act as a buyer app itself via its subsidiary Paytm Mall.

The post PhonePe To Launch Grocery Delivery App For ONDC, Earmarks $15 Mn For Entry appeared first on Inc42 Media.

Insurtech startup MetaMorphoSys has secured $3 Mn in its Pre-Series A funding round led by Capital 2B along with angel investors–Pavitar Singh and Dhruv Dhanraj Behl. 

MetaMorphoSys will use the fresh capital to develop and scale its platform, expand product offerings and grow the sales team across geographies. It will also invest in building legacy integrations.

Including the current fundraising, MetaMorphoSys has raised a total investment of $4 Mn to date. 

“Insurance companies across the globe are using the MetaMorphoSys to launch their products, empower their sales force, settle claims, identify fraud and optimize the entire value chain from customer acquisition to customer engagement including embedded insurance,” said Amit Naik, CEO and cofounder of MetaMorphoSys Technologies. 

Founded in 2016 by Naik and Kewal Vargante, the Pune-based startup is a business-to-business (B2B) SaaS insurance platform. It helps insurance companies to launch several insurance products for travel, motor vehicles, property, life and business. 

In essence, MetaMorphoSys’ platform integrates with legacy systems of insurance companies while its APIs streamline their customers’ experience right from onboarding to servicing to processing claims.

“MetaMorphoSys has been architected to handle multiline insurance products across geographies including retail and group business with connectors to legacy and SaaS platforms” said Vargante. 

MetaMorphoSys’ offerings include product configurator, customer engagement and acquisition, sales analytics and recommendation engine, among others.

MetaMorphoSys claims to be providing services to insurance companies based in Hong Kong, Singapore, Indonesia, Vietnam and India. 

In 2020, the insurtech startup secured seed funding from Rohan Malhotra and Arjun Malhotra from Good Capital VC and Rahul Khanna from Trifecta Capital.

In India’s insurtech segment, it faces competition from the likes of Vital, SecureNow and Digit Insurance, which recently filed its DRHP. 

According to an Inc42 report, the country’s fintech market is projected to touch $1.3 Tn by 2025, growing at a CAGR of 31%. Of this, insurtech is a sub-sector that will account for 26% ($339 Bn) by 2025. 

The post Insurtech Startup MetaMorphoSys Raises Funding To Help Businesses Launch Insurance Products appeared first on Inc42 Media.

Crimes that will take place on social media platforms such as Twitter and Facebook and the Metaverse will fall under the purview of the Digital India Act (DIA), India’s upcoming digital regulatory framework.

Further, any content guidelines violations by OTT platforms such as Netflix and Amazon Prime including spreading misinformation or inciting violence will also fall under the DIA’s purview.

Earlier, it was reported that the proposed Digital India Act will oversee laws dealing with cybercrime and ecommerce. However, recent reports suggest that the government has extended the scope of the DIA.

According to an ET report, the Ministry of Electronics and IT (MeitY) is working to replace the existing IT Act 2000 by the winter session of the Parliament. The report added that MeitY is ‘rushing’ to get the legislation done in time, which will feature specific guidelines for women and children’s safety online.

The Digital India Act will cover everything digital, which includes social media platforms, OTT platforms and online apps, along with web3 applications including the metaverse and blockchain.

The regulators are looking at similar internet regulations across the world, such as Europe’s General Data Protection Regulation (GDPR) and regulations in Singapore and Australia to formulate the Digital India Act. The government has also formed a special committee to look at the regulation from technology and legal points of view.

It should be noted that the current IT Act is around 22 years old and since its enactment, the world of the Internet has changed drastically. 

Back when the IT Act was first written into law, tech giants including Meta and Twitter did not exist, with Google being a minor search engine. There were no concepts of digital financial and other digital crimes, and therefore, taking any action against digital crimes of today has become tricky.

More importantly, the Digital India act will place safeguards on child and women’s safety along with regulations against spreading misinformation.

The Digital India Act will also monitor content on OTT platforms such as Netflix and Amazon Prime to control the spread of misinformation. To that respect, the government will issue certain ‘content guidelines’ for OTT platforms as well. 

The DIA is also set to be the highest authority when it comes to such content, with the government being able to ask OTT platforms to take down content that violates the said guidelines.

Finally, the Digital India Act will also look to bring some basic guidelines for technology such as the metaverse and blockchain as there is a general sentiment that the current IT Act is inadequate to monitor crimes happening in these ecosystems.

For instance, most crypto-related offences are registered under the IT Act and other aspects of the Indian Penal Code that address financial crimes. This situation has allowed multiple crypto scams which have resulted in massive losses for Indians.

The post Digital India Act Will Monitor Social Media, Metaverse, OTT Platforms: Report appeared first on Inc42 Media.

Venture debt firm Stride Ventures has closed its second fund–Stride Ventures India Fund II with a corpus of $200 Mn. 

The fund will write off cheques between $4 Mn–$5 Mn to 60-70 startups over a period of four years.

So far, the sector-agnostic fund has backed startups working in diverse sectors including consumer, fintech, agritech, B2B commerce, healthtech, B2B SaaS, mobility and energy solutions. 

The fund’s portfolio includes Yubi (formerly known as CredAvenue), MyGlamm, Zepto, BluSmart, Uni, Upstox, WayCool, MensaBrands, MediBuddy, Wiz Freight, Perfios, Moneyview, VideoVerse, Chalo and Groyyo, amongst others.

The fund has received commitments from banks, marquee family offices, corporate companies, sovereign funds, private equity funds, insurance firms, and high-net individuals.

“Stride Ventures has already committed a chunk of the fund to industry-leading startups and our goal is to continue being a preferred lender while developing innovative alternate financing solutions for founders. Aligned to our mission we have effectively enabled them to scale their businesses whilst parallelly giving industry best returns to our investors,” said, Ishpreet Singh Gandhi, founder and managing partner of Stride Ventures.  

Set up in 2019, the Delhi-based venture debt company is led by Gandhi and Abhinav Suri. Both the partners hold experience in the banking industry. Some of the companies that they worked for include Citi, ANZ, IDFC, Kotak Bank, and Yes Bank.

“The current economic environment has made thriving businesses more amenable to debt transactions than ever before. The success of our second fund is a testament to this and with the continual support of our investors, we are certain that we will further contribute to accelerating the growth of the ecosystem,” said Apoorva Sharma, partner at Stride Ventures.

Stride claims to have infused over INR 1600 Cr in more than 70 companies across consumer, fintech, agritech, B2B commerce, healthtech, B2B SaaS, mobility and energy solutions.

In August 2021, Stride made the first closure of its second fund after raising INR 550 Cr. It also had a greenshoe option of INR 875 Cr. 

According to an Inc42 analysis, 78 venture capital funds were launched in the first half of 2022. These funds together raised over $12 Bn in the corresponding period.  

Some of the prominent VC funds are Sequoia Capital, General Atlantic, Elevation Capital, and Accel.

The post Stride Ventures Closes $200 Mn Worth Fund To Back 60-70 Startups appeared first on Inc42 Media.

Mumbai-based logistics company Shipyaari, which offers logistics services to D2C brands, exposed the personal data of its customers.

According to a TechCrunch report, the logistics company exposed the data of thousands of customers because of a leak in its internal shipment information, which lasted for months. The data leak was found by Indian security researcher Ashutosh Barot.

The leaked Shipyaari data included customer names, addresses, phone numbers, order invoice data and delivery status. Since the client tracking page was not password protected, anyone could view the same with the web address, Barot noted.

“The exposed information could later be used to perform targeted social engineering attacks and financial frauds,” Barot told TechCrunch.

A query sent by Inc42 to Barot and Shipyaari did not elicit a response.

Since the first detection of the leak in late 2021, Shipyaari has fixed the issue. The logistics major removed all the personally identifiable information, or PII, from its tracking page and put the tracking page behind a security wall that now requires an OTP for access. 

As a rule of thumb, logistics players allow users to check package tracking information by only using the order number or the invoice number. However, it should be standard practice to not display PII on tracking pages anywhere.

Founded in 2013 by Nayan Ratandhyara and Vishal Totla, Shipyaari claims to serve more than 25,000 pin codes, handling 5,000 shipments a day. The logistics company’s website also claims to have partnered with more than 6,000 active sellers across the country.

India has seen its fair share of data leaks over the last few years, but none was as impactful and as badly handled as the MobiKwik data leak last year. Impacting almost 100 Mn users, the data leak was the largest of its kind in the Indian startup ecosystem.

However, not only did MobiKwik threaten the researcher that pointed to the leak, Rajshekhar Rajaharia but also denied the breach altogether and laid the blame for customer data leaking on customers themselves.

MobiKwik, however, was not alone in last year’s data leaks. Since November 2020, data leaks at LimeRoad, BigBasket, Zee5, Chqbook, Upstox and Bizongo saw data of more than 37.5 Mn customers leaked. 

On the other hand, Domino’s India was the scene of a massive data leak, when data related to over 180 Mn orders appeared on the dark web.

India had been working on the Personal Data Protection Bill since 2017 but pulled it back after backlash from various corridors of the industry. The government cited various reasons for pulling the bill back, including an increased compliance burden on startups, and is working on a new bill.

The post Customer Data Leak Detected At B2B Logistics Company Shipyaari appeared first on Inc42 Media.

Venture capital firm Cactus Venture Partners (CVP) has made the first closure of its maiden fund after raising INR 350 Cr ($44 Mn). The fund has a corpus of INR 750 Cr ($94.4 Mn) and will likely close by the end of this year. 

The fund will primarily invest between $2 Mn and $5 Mn in 15 tech-enabled startups that are working in cleantech, healthtech, and B2B SaaS sectors over a period of three to four years. It will also make follow-on investments of up to $10 Mn. 

The fund claims to have received a 15% commitment from investment company General Partners. 

“The CVP team is a mix of founders, investors, and operational experts to help startups that have crossed the PMF stage accelerate their growth journey. The fund’s capital raise has proceeded at an exceptional pace and we are grateful to the support received from our early LPs in India and abroad,” said Anurag Goel, general partner at Cactus Venture Partners. 

Founded in 2021 by Cactus Communications’ cofounder Anurag Goel, seasoned investor Amit Sharma, and former banker and PE investor Rajeev Kalambi, CVP primarily invests in tech-enabled and D2C early-stage startups in India.

CVP portfolio includes tech-enabled risk management and monitoring platform Rubix Data Sciences, ayurvedic brand Auric, lifestyle brand AMPM, and SaaS healthtech platform Vitraya Technologies, as shared by the venture capital firm.

CVP aims to help entrepreneurs build sustainable and scalable businesses. It said that it helps its portfolio companies have access to its network, international markets, relationships and talent.

According to an Inc42 analysis, a total of 78 funds were set up in the first half of 2022. These funds concertedly received commitments of over $12 Bn in H1 2022. Some of the big VC funds that were launched in the corresponding period were Sequoia Capital, Elevation Capital, and Accel.

Most recently, venture debt firm Stride Ventures also sealed a $200 Mn worth second fund–Stride Ventures India Fund II to back 60-70 startups in India. 

The post Cactus Venture Partners Marks The First Closure Of Its Maiden Fund At $44 Mn appeared first on Inc42 Media.

Electric vehicle (EV) charging infrastructure startup Exponent Energy has raised $13 Mn in a Series A funding round led by Lightspeed. Its existing institutional investors including YourNest VC, 3one4 Capital, and AdvantEdge VC also participated in the round.

The startup plans to use the fresh funds to scale up the e-pump network to 100 location points per city, which would start with Bengaluru. Exponent Energy is also looking to streamline e-pack production and deliver more Exponent-enabled EVs. 

“Our technology already delivers a seamless charging experience, and with our vehicle partnership in place, we’ll scale-up our production and network presence,” said Arun Vinayak, cofounder and CEO of Exponent Energy. “This funding now allows us to execute even faster and make 15-min rapid charging the new normal.”

Earlier this month, the startup partnered with EV original equipment manufacturer (OEM) Altigreen Propulsion Labs and unveiled an electric three-wheeler that can be fully charged within 15 minutes.

So far, Exponent Energy raised $6 Mn in its Seed and Pre-Series A funding rounds from the family office of Hero Motocorp Chairman Pawan Munjal, Motherson Group, YourNest VC, and a few angel investors, among others.

Founded in 2020 by Ather Energy’s former chief product officer Vinayak and Sanjay Byalal, Exponent Energy’s aim is to simplify energy for EVs. The startup claims that its battery pack and charging station called the e-pack and e-pump can together unlock a 0% to 100% rapid charge within 15 minutes for EVs with any number of wheels while also providing a 3,000 cycle life warranty, and all these while using regular lithium-ion (Li-ion) cells.

“The need for enhancing EV battery performance, sustainability and most of all access and affordability has never been more pressing. We are confident that the technology is a real breakthrough, allowing EVs to become ubiquitous,” said Harsha Kumar, partner, Lightspeed.

In fact, it is true that EV charging infrastructure in India is still lagging behind, affecting a larger adoption of EVs, as range anxiety is undeniable especially for travelling long distances. For the electric two-wheeler, which has been growing in demand in the country, poor charging infrastructure continues to be one of the pain points hindering adoption.

Besides, long charging time is also one of the main pain points for both users and non-users of electric two-wheelers, a recent Redseer report noted.

As per the report, India currently has only about 3,000 EV charging stations, which is around six available charging stations per 1,000 EVs. This is in sharp contrast to a country like China, with the highest number of EV manufacturers, with about 200 EV charging stations per 1,000 vehicles.

A few other Indian EV charging infrastructure providers include ElectricPe, ElectiVa, TATA Power, Ather Energy’s Ather Grid, and EVRE, among others.

In an ‘optimistic scenario’, government think tank NITI Aayog sees 100% penetration of electric two-wheelers in the country by FY27. Meanwhile, the overall Indian EV market size is expected to expand at a compound annual growth rate (CAGR) of 94.4% between 2021 and 2030, as per a report.

The post EV Charging Startup Exponent Energy Raises $13 Mn To Expand Its E-Pump Network appeared first on Inc42 Media.

Fairfax and Sequoia-backed insurtech unicorn Digit Insurance is lining up to list on the stock exchanges later this year or in early 2023 and has filed the draft red herring prospectus (DRHP) for an initial public offering (IPO) with the Securities and Exchanges Board of India (SEBI).

Founded in June 2017, Digit Insurance is a full-stack digital insurance provider in the non-life categories such as motor, fire, marine, health and other segments. The current DRHP is bereft of many of the details pertaining to the IPO. But we do know that the offering will include a fresh issue worth INR 1,250 Cr and an offer for sale (OFS) of 109.45 Mn shares from existing shareholders. Unconfirmed reports peg the total size of the IPO at INR 5000 Cr.

The total offer size will be made clear in the subsequent filings with the market regulator, including the RHP before the subscription window. The company has named ICICI Securities, Morgan Stanley, Axis Capital, Edelweiss, HDFC Bank and IIFL Securities as the bookrunners for the IPO. Here’s a snapshot of the pertinent details of the Digit IPO.

The IPO would make Digit Insurance the second insurtech startup to go public after Policybazaar hit the stock exchanges last year. While Policybazaar is an insurance aggregator and marketplace, Digit has an Insurance Regulatory and Development Authority (IRDA) licence to create and sell general insurance policies i.e. in the non-life category. In fact, Policybazaar is a distribution channel for Digit.

Founded in 2017 by Kamesh Goyal, Digit Insurance offers insurance policies in multiple verticals. Digit claims to have served more than 25 Mn customers at the end of FY22 across car, bike, health and travel insurance segments. It claims to have issued more than 7.7 Mn policies till date, with the total assets under management coming up to INR 9,393 Cr by the end of the fiscal year.

Digit says the net proceeds from the offering will be used towards augmentation of its capital base and expansion of business and improving the solvency margin and solvency ratio, as well as increasing the brand visibility in the insurance space. Diving deeper into the DRHP, we are able to see the key people at the insurtech unicorn as well as it what it perceives to be risks in its sector, despite the massive insurance opportunity in India.

Unraveling Digit Insurance’s Shareholding 

Digit’s operations are split between two companies with Go Digit Infoworks Services Private Limited (GDISPL) acting as the promoter and the holding entity, and the business being run by Go Digit General Insurance Limited (Digit), which began life as Oben General Insurance Limited in 2016. In June 2017, Go Digit General Insurance Limited was registered as a fresh entity, as per the DRHP.

As for the shareholding in the company, the filing does not explicitly state how much stake founder Kamesh Goyal holds in the company. That’s because Goyal owns a stake directly as well as through another entity which is part of the promoter and holding entity GDISPL.

As seen in the visual below, Goyal is a 99.99% owner of Oben Ventures LLP, which owns 39.79% stake in GDISPL. Besides this, Goyal also directly owns 14.96% stake in GDISPL. It’s a bit of a Matryoshka Doll structure.

Given that GDISPL owns 83.65% stake in Digit, our estimate is that Goyal holds just over 45% stake in the company.

Besides GDISPL, Digit’s shareholders include A91 Partners, TVS Capital, Faering Capital, Wellington Hadley Harbor Partners, Sequoia Capital India as well as a host of angel investors and employees that have received ESOPs.

In 2021, Digit raised INR 121 Cr in a funding round which took its valuation to $4 Bn. According to reports earlier, the company is likely to go for an IPO at a valuation of $4.5 Bn – $5 Bn, however, this will only be cleared up close to the IPO date.

As per the DRHP, only the promoter entity will be offloading shares in the IPO along with other shareholders Nikita Mihir Vakharia, Mihir Atul Vakharia, Nikunj Hirendra Shah, Sohag Hirendra Shah, Subramaniam Vasudevan and Shanti Subramaniam.

None of the existing investors in the company are exiting the company by selling their shares at the time of the public offering. However, this could change in subsequent filings.

How Digit Earns Its Revenue

According to its FY22 financial report, Digit Insurance booked an operating loss before tax of INR 375.15 Cr, more than double the INR 185.49 Cr loss reported in FY21. Similarly, the startup’s loss after tax remained at INR 295.86 Cr, up 141% from the INR 122.76 Cr it reported the previous fiscal year.

The insurtech unicorn reported INR 6,095.24 Cr in premia received in FY22, which includes advance receipts, up from INR 3,616.79 Cr, a 68% increase. The total number of customers in motor, health and personal accident insurance increased by 41.5%, 17.9% and 11.6%, respectively.

Total investment income represents the income earned by the company from investment of assets, both policyholder and shareholder funds, and primarily comprises interest income, amortisation of premium or accretion of discount on debt securities.

Digit’s income from investments increased from INR 308 Cr in FY21 to INR 436 Cr in FY22, an increase of 41.7%, driven by an increase in the AUM thanks to growth in policies issued and new customers. Besides this the additional capital infusion from share issuances brought in gross proceeds of INR 1,026 Cr. The total investment income in FY20 was INR 177 Cr.

The overall AUM increased from INR 5,590 Cr in FY2021 to INR 9,393 Cr by the end of March 2022, which is a robust growth of 68% in the past two years.

According to the filing, the combined market size of non-life insurance products is approximately $11.83 Bn as measured by gross value of premia in FY2022 and this is estimated to grow to 19.46 Bn by FY2026. Private non-life insurers have captured a significantly higher market share, increasing from 40.3% in 2013 to 58.1% in 2022.

Digit claims the general insurance market remains fairly fragmented with no single private player holding over 10% market share as of March 31, 2022.

The Key People At Digit

Digit’s Board of directors include founder Goyal; CEO & MD Jasleen Kohli; Fairfax Holdings nominee Chandran Ratnaswami; former chairman and managing director of New India Assurance Company Limited Rajendra Beri; pathologist and Doctor of Medicine Vandana Gupta and Christof Mascher, a former COO at Allianz SE, who was appointed to the board in July 2022.

As for the key managerial personnel, the company has listed all the function heads in the DRHP as per SEBI’s Issue of Capital & Disclosure Requirements (ICDR).

Kamesh Goyal

Founder and chairman of the company, Kamesh Goyal is a science and MBA graduate from Delhi University and has several years of experience in the insurance industry. Before founding Digit, he was the CEO of Bajaj Allianz General Insurance and Bajaj Allianz Life Insurance.

Jasleen Kohli

The MD and CEO of Digit Insurance, Jasleen Kohli is an MBA graduate of K J Somaiya Institute of Management Studies and Research and was the head of operations of Bajaj Allianz General Insurance prior to joining Digit. She was appointed as the chief executive and MD in April this year and owns 0.07% stake in the company. Kohli will draw a salary of INR 9.8 Cr per annum besides perquisites and other benefits in FY23, and she earned a salary of INR 2 Cr in FY22 till March 2022.

Ravi Khetan

Ravi Khetan is the chief financial officer at Digit and has been with the company since May 2017, when it still operated as Oben Insurance. The qualified chartered accountant joined Digit from Bajaj Allianz General Insurance and was paid INR 4.7 Cr in FY22.

Nikhil Kamdar

Nikhil Kamdar is the appointed actuary and has been with Digit Insurance since January 2018, and previously worked with Swiss Re, Bajaj Allianz General Insurance, and Mercer Consulting (India). The total remuneration paid to him in FY2022 was INR 54.6 Lakh.

Other KMPs at Digit Insurance

Besides this, the KMPs at Digit as per the DRHP include chief technical and risk officer Rajeev Singh, chief investment officer Parimal Heda, chief compliance officer Rasika Kuber, company secretary and compliance officer Tejas Saraf, chief distribution officer Adarsh Agarwal, head of operations and moto claims Sharad Bajaj, chief marketing officer Vivek Chaturvedi, head of technology Gangadharayya Jadagerimath, chief HR officer Amrit Arora, associate VP Ganesan Ramesh.

It must be noted that KMPs in a DRHP include the core management personnel who may or not be included in the list of material KMPs post listing. As seen in the conflict of interest controversy in the Zomato-Blinkit acquisition, SEBI has different criteria in the ICDR and Listing Obligations & Disclosure Requirements (LODR) that govern KMP nominations.

Risks For Digit & Insurtech Players

Digit has outlined the typical risks associated with any startup looking to list such as the lack of profitability, the short life of the business, the possibility of a natural calamity increasing the number of claims, the potential threat of regulations and policy, the plethora of competition and more.

However, the real problem for insurtech startups is the fact that the focus of the government and the insurance regulator has been on increasing the accessibility, affordability of plans, and this makes it harder for companies to recoup the marketing and allied costs in acquiring customers.

The three As — affordability, accessibility and acquisition — have given insurtech startups plenty to think about.

The question is how to balance the push for affordability with the need to show profit margins. In the public markets, Digit will need to deliver consistent revenue accounts growth and profitability to prove long-term value to shareholders.

We will dive into the competitive landscape of general insurance in India and view how Digit stacks up to the legacy institutions, other public cos and startups. Watch out for that later this week, but back to the question of risks for Digit.

When it comes to affordability, the IRDA has consistently pushed to reduce the upfront costs to the insured so that India’s insurance penetration can be pushed up to global standards. According to IRDA data, insurance penetration in India went up in FY21 to 4.2% from 3.76% in FY20, but this is just above the global average of 4%, which is poor for a country with India’s population base.

This low coverage base is what makes insurtech such a huge opportunity. As per a senior leader at a B2B digital insurance platform, the government is doing everything it can to enable digital platforms since it believes technology can reduce the cost of insurance.

The second problem is accessibility, which the regulator has recently looked to solve by increasing the maximum number of insurance partners for banks. Here the objective is to provide customers as much choice as possible when they procure insurance through banking windows.

The final A of acquisition is where startups such as Digit Insurance might struggle to match the network of larger general insurance companies. However, startups might hope that the IRDA regulation around banking partners might help them reach a wider audience without overspending on marketing.

At the moment, Digit’s IPO is still months away and we won’t know for a while how exactly the market might change. Regulations are always a roving threat for fintech companies, and despite the large opportunity for insurance players, there is some heavy competition in this field. Plenty still hangs in the balance.

The post Decoding Digit’s DRHP And The Insurtech Unicorn’s INR 1250 Cr IPO Plans appeared first on Inc42 Media.

While the Tamil Nadu government is gearing up its efforts to regulate online gaming, the Esports Players Welfare Association (EPWA) has requested the government to distinguish games of skill from gambling. In a representation made to the government recently, the association requested the state to recognise skill games as a distinct sport and not club it along with gambling.

The government should provide a safe harbour for professional, amateur and casual online skill gamers as exemption from the ambit of any state related gambling or gaming legislations, the association also added in its representation.

According to Shivani Jha, director, EPWA, multiple legislations and putting skill-based games in the same bucket as gambling is leading to criminalisation of skill-based players. 

“While India is participating in international tournaments and developers are making new games, it is imperative for the state to regulate online skill based gaming,”Jha said.

She also noted that courts have repeatedly pronounced judgments stating the state government can only make laws on online gambling and not gaming, this ends up putting players at

risk and equating them with gamblers and criminals.

It is pertinent to note that the Tamil Nadu government recently invited inputs from various stakeholders, including parents, teachers, students, psychologists, social activists and online gaming service providers on the proposed legislation to regulate online games.

While inviting the inputs, the government said unregulated playing of online games is leading to learning and social disorders, adding that many countries have laws regulating or banning online games.

On the other hand, a committee headed by retired Madras High Court judge K. Chandru submitted its report to the Tamil Nadu government in June. The report is under active consideration for regulating online gaming in the state.

Considerably, Tamil Nadu is among one of the Indian states which enforced a ban on online gaming arbitrarily. Last year, it banned online games with stakes which was eventually struck down by Madras High Court. Later, the government moved to the Supreme Court to challenge  the Madras High Court judgment.

The post Esports Association Urges Tamil Nadu Government Not To Club Skill Games With Gambling appeared first on Inc42 Media.

Digital entertainment startup Rusk Media has raised over $9.5 Mn in its follow-on Series A funding round led by Seoul-based DAOL Investment and Audacity Ventures.

Existing investors–InfoEdge Ventures, Mistry Ventures and Survam Partners also participated in the round. 

Rusk Media looks to scale its content with its OTT partners in India and across the globe. Besides this, it also plans to build a UGC-led social gaming platform that will enable developers to create games via its IP assets. 

Adding the current fundraising, Rusk Media has secured $12 Mn in aggregate from investors to date. 

“We have confidence in Rusk’s competitiveness in IP creation across fiction, non-fiction, and e-sports entertainment. We believe Rusk is well positioned to become an entertainment powerhouse with their plans on their IPs and IP-led gaming platform,” said Chihoon Hyun, partner at DAOL Investment.

Set up in 2019 by Mayank Yadav, Rusk Media creates content for Gen Z and millennials. It operates two platforms–Alright! and Playground that, as per the startup, together garner more than 500 Mn viewership on a monthly basis. 

“With the behavioral shift of the digital native audiences – entertainment has transformed across 30-second snackable social videos, OTT shows, casual & AAA gaming,” Yadav said. 

Recently, Rusk Media along with NODWIN rolled out a gaming entertainment IP called Playground. The social media platform claims to have garnered over $200 Mn viewers and is likely to go international by January 2023.

Rusk Media cap table includes Nazara Games, NODWIN and InfoEdge Ventures, among others. Some of its clientele are Tinder, Vicks and Groww, among others. 

In December 2021, Rusk Media reported that Nazara’s subsidiary NODWIN acquired a 10% stake in the startup for an undisclosed amount. Prior to this, it also received commitments of INR 2.01 Cr from Nazara.

In the Indian digital entertainment sector, it competes with the likes of Kuku FM, Spartan Poker, and WinZO. 

According to a report, the country’s media and entertainment sector is anticipated to touch the $55-$70 Bn mark by 2030, growing at a CAGR of 17% by 2023.

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KNAB Finance Advisors Private Limited, a regulated non-banking financial company (NBFC) registered with the Reserve Bank of India (RBI), has raised $4.5 Mn in a mix of debt and equity round for its digital lending platform Abhi Loans. 

The funding round was led by DMI Sparkle Fund. The round also saw participation from other prominent angel investors such as Niten Malhan, Ashvin Chadha, S K Jain, among others.

The company plans to use the fresh funds for technology development and growth of loan book. KNAB Finance is building a digitally distributed and secure loan ecosystem with its product Abhi Loans.

Founded by Deepit Singh and Mandeep Chaudhary, Abhi Loans’ unique selling proposition is rapid approval and disbursement of loans against securities pledged as collateral. It is also entering the market with loans against shares and mutual funds.

As per KNAB Finance, while such lending products were earlier available, they were only high-value loan offerings for high-net-worth individuals. However, Abhi Loans offers the product to retail customers for smaller loan amounts starting from INR 15,000. 

Abhi Loans claims to provide capital to borrowers within 24 hours and any delay in reimbursement of the loan amount entitles the latter to a 50% waiver on processing fee. The rate of interest is fixed at 10.5% per annum throughout the loan tenure. 

“Loans against securities will be the first product in our portfolio. It will lay the foundation for many more innovative solutions,” said Singh, founder of Abhi Loans.

The Sparkle Fund, an alternative investment fund (AIF) of the DMI Group, was launched in 2017. It invests in early-stage startups and fintech companies.

Lending Tech Ecosystem In India

With India’s overall fintech market opportunity estimated to be $1.3 Tn by 2025, growing at a CAGR of 31% during 2021-2025, lending tech is likely to account for 47% ($616 Bn) in the broader fintech segment, as per an Inc42 report.

Though there are regulatory constraints in the lending tech space, the first set of digital lending guidelines published last week by the Reserve Bank of India (RBI) has removed some of the regulatory overhangs that kept the space in uncertainty for a long time.

In the recently published regulatory framework for the lending entities regulated by the central bank, the latter has not only prescribed business conduct requirements but also emphasised on data protection of borrowers.

A few other fundraising announcements in the digital lending sector in recent days include NBFC and lending tech startup Lendingkart securing INR 50 Cr in a debt funding round from InCred Capital and Yubi.

Fintech lending startup CredAble also raised $9 Mn from Axis Bank and OAKS Asset Management earlier this month. Besides, lending fintech startup Credit Fair raised $10 Mn in a mix of debt and equity round.

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Yes Bank has invested in Venture Catalysts Group Funds, an integrated incubator. However, the amount of the investment has not been disclosed. 

The fund has invested in two platforms, Beams Fintech Fund and 9 Unicorns Accelerator Fund.

Launched at the beginning of 2022, Beams Fintech Fund (Beams) has been investing in growth stage startups in the fintech space including in the embedded finance, SaaS for banks & FIs, SaaS for businesses, global enterprise SaaS, personal finance management and neo banking space. 

9 Unicorns Accelerator Fund has been launched by the founding members of Venture Catalysts.  It has already raised $100 Mn and is actively deploying from its maiden fund. 

Venture Catalysts Group Funds offers funding, mentorship, and networking to startup founders from the idea inception stage to the growth stages of the startup journey.

With these investments, the bank aims to cater to the ‘Future Tech Businesses of India’, bolster innovation in the technology space including financial sector, it said in a statement.

“We believe that this partnership is a step in the direction of becoming the go-to-bank for technology startups. India is at the cusp of a massive growth and the collaboration between banks and tech companies – especially with fintechs – will play a critical role in this journey,” said Ajay Rajan, country head, transaction banking, Yes Bank.

According to an official statement, the partnership aligns with Yes Bank’s long-term growth strategy of strengthening its foothold in India’s growing tech markets by investing in the founders of tomorrow. 

For the lender, collaborating with and supporting tech companies to ideate and experiment on various use cases such as agriculture, healthcare, commerce, education, logistics, open banking, supply chain finance, payments, digital banking, among others has been a key driver of  its innovation strategy, the statement added.

“We hope this partnership will encourage other banks and fintechs in the market to partner with groups like Beams Fintech Fund and 9 Unicorns Accelerator Fund. We are aiming to create a large ecosystem consisting of banks, NBFCs and fintech companies to support the tech ecosystem,” Naveen Surya, co-founding member of Beams Fintech Fund, said.

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