Also in this letter:
■ Swiggy’s Instamart expands to 25 cities
■ Sebi may allow AIFs to extend lifecycle by two years
■ Servify raises $65 million in pre-IPO round
Digital lending complaints fall after RBI issues new rules
The Reserve Bank of India’s new digital lending guidelines have already started having a positive impact.
What’s going on? The number of complaints from victims of fraudulent apps has fallen since the guidelines were released earlier this month, according to people who work in the customer protection space.
Under the new rules, RBI-regulated entities are required to disclose all costs up front in a digital loan product to customers and are not allowed to scrub or read borrowers’ smartphones.
For fraudulent loan apps, this has been the general mode of operation. These apps often gain access to borrowers’ data from their phones and subsequently blackmail or harass them into repaying the loan with huge interest.
Fewer complaints: As per data from the SaveThem India Foundation, a non-profit organisation that helps victims of cybercrimes, the number of complaints on digital lending applications (DLA) and bank recovery has fallen significantly.
“From August 11, when the RBI put out the guidelines, till August 23, we have seen the number of distress and complaint calls on our helpline go down from a little over 200 to less than 100 a day,” Pravin Kalaiselvan, the director of the foundation, said.
“This comes after we saw a big spike from the beginning of 2022 where we have had over 5,500 complaints filed via our Google Forms alone.”
Survey firm Local Circles also said that the number of complaints had fallen by 30-40% in the past four weeks. It based the finding on preliminary disaggregated data in the form of posts and comments.
Swiggy’s Instamart expands to 25 cities
Swiggy’s two-year-old quick commerce grocery business Instamart has been used by nine million customers and expanded to over 25 cities since it began operations, a senior executive told us.
Cut the burn: During the funding boom last year, quick commerce grocery startups attracted significant venture capital interest despite no proven profitable unit economics.
But as appetite for cash-guzzling businesses dips amid global headwinds, there is increased pressure on these startups to reduce cash burn.
Instamart, for which Swiggy had earmarked $700 million last December, “managed the cost from day one” and has reduced burn month on month, said Karthik Gurumurthy, senior vice-president and head of Instamart.
Ultra-fast promise: Instamart aims to deliver groceries in 15-30 minutes through a network of seller-owned dark stores that emerged from the learnings of Swiggy Stores, a hyperlocal delivery marketplace for groceries and other essentials that shut last year.
The company will not emphasise slotted delivery or incentivise customers to choose slower delivery to improve unit economics, Gurumurthy said.
“If you were to trade off between the last-mile cost versus the fixed cost which actually goes into every order, basically it is the fixed costs that’s what you will be typically able to save when you club orders,” he said.
“But if you were to actually think of it, the majority of the delivery costs for any delivery business is actually dependent on the last mile.”
Sebi may allow AIFs to extend lifecycle by two years
The Securities and Exchange Board of India (Sebi) is considering a plan to allow alternative investment funds (AIFs) to extend the life cycle of investment products that are set to be wound up by two more years, people with direct knowledge of the matter told us.
Details: Under the current rules, a close-ended AIF can have a fund life of minimum three years and maximum 10 years. However, this 10-year period can be further extended by two more years if the AIF obtains the consent of investors. Sebi is mulling an extension of another two years beyond this, implying a total fund life of 14 years. However, this may come with caveats.
Significance: Several private equity and venture capital funds are in the last few months of their lifecycle and, with liquidity tightening, are finding it hard to offload unlisted investments.
We reported on August 11 that AIFs scheduled to wind up in the next few months have been struggling to sell their holdings in unlisted ventures and startups, as investors stay clear of risky investments.
ET Ecommerce Index
We’ve launched three indices – ET Ecommerce, ET Ecommerce Profitable, and ET Ecommerce Non-Profitable – to track the performance of recently listed tech firms. Here’s how they’ve fared so far.
Servify raises $65 million in pre-IPO round
Device management startup Servify has raised $65 million in funding as a part of its pre-initial public offering (IPO) round, led by Singularity Growth Opportunity Fund.
Existing investors including Iron Pillar, Beenext, Blume Ventures and DMI Sparkle Fund, and new investor AmTrust also participated in the funding. Sources told us the funding takes Servify’s valuation to about $800 million.
The funding round hasn’t closed yet and could see another $7 million infusion from strategic partners such according to the company’s founder and chief executive Sreevathsa Prabhakar. The final closure – expected by mid-September – would take round size to $72 million.
The startup is eyeing a stock market listing in the coming 18-24 months.
ETtech Done Deals
■ Edtech startup Brightchamps has acquired Singapore-based Schola, a live-learning platform for kids to develop communication and English skills, in a $15 million cash and stock deal. The company aims to use the acquisition to bolster its presence in the K-12 education segment.
■ TVS Motor Company said it has invested Rs 85.41 crore (about $10.6 million) for a 48.27% stake in Narain Karthikeyan’s startup DriveX, a pre-owned two-wheeler platform.
■ Deconstruct Skincare, a Bengaluru-based startup, has raised $2 million in funding led by Kalaari Capital’s flagship program CXXO and Beenext. The company will use the capital for research and development, hiring, and expansion as it aims to become a Rs 100-crore brand in the next two years.
■ AI-led sales pipeline readiness startup RevSure AI said it has raised $3.5 million in funding led by Innovation Endeavors, along with angel investors Katrin Ribant, Rick Scanlon, and Sharath Keshava Narayana.
TWEET OF THE DAY
Hyperscalers’ slowdown could dent cloud revenue of IT firms
A third of the revenues of IT service providers could be hit by the dip in growth rates of the three largest cloud hyper-scalers – Amazon Web Services (AWS), Microsoft Azure and Google Cloud.
Chinese cloud service providers have already said that growth had slowed due to market regulations, while AWS, Azure and Google Cloud reported a 7% lower incremental revenue in the first half of this year than in the previous year.
Analysts said the scope for application modernisation – which has contributed to a bulk of incremental revenue for top IT firms including Tata Consultancy Services (TCS), Infosys, Wipro and HCL Technologies – was still large, though a trickle down effect would be unavoidable.
IT companies earn around half of their revenues from digital solutions, most of which is directly linked to cloud offerings from the hyper-scalers.
Other Top Stories By Our Reporters
Standing committee summons Twitter execs: The Standing committee on Communications and Information Technology, chaired by Congress’ member of Parliament Shashi Tharoor, has summoned Twitter India executives on Friday to hear their views on ‘Citizens’ Data Security and Privacy’. The news comes a day after Twitter’s former head of security Peiter Zatko alleged the Indian government forced Twitter to keep one of its agents on the payroll.
Nasscom Foundation expands digital skilling programmes: IT industry body Nasscom’s CSR arm Nasscom Foundation aims to impact 100 million lives by 2026 through its digital learning, skilling and employability programs, said a senior executive. With the top goal of enabling women’s entrepreneurship, the foundation expects to impact over 25 lakh lives across 15 states by the end of this year, chief executive Nidhi Bhasin told ET.
Global Picks We Are Reading
■ Right-wing groups are exploiting open source intelligence to spread propaganda in India (Rest of World)
■ Peloton to start selling bikes, apparel through Amazon (WSJ)
■ Email doesn’t suck. It’s email clients that need improving (Wired)
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