Also in this letter:
■ Early-stage investors still betting on Web3 solutions
■ Despite lower projected attrition, margin impact to remain high for IT firms
■ Digital India Act to cover social media, OTT, metaverse and more
PhonePe plans fresh ecommerce foray via ONDC
Cofounder and CEO of PhonePe, Sameer Nigam
Digital payments company PhonePe is scripting a detailed plan to fuel its ecommerce plans as it integrates with the government’s Open Network for Digital Commerce (ONDC).
Previous forays: The fintech player’s online commerce ambitions aren’t new.
It made attempts previously with offerings such as Switch, loosely based on the ‘super app’ concept, and Stores, which was aimed at facilitating hyper-local discovery of merchants.
What’s new? While PhonePe Switch and Stores still exist, the Walmart-owned company will now launch a separate consumer app by the end of the month on ONDC, India’s infrastructure bid to break the dominance of ecommerce giants Amazon and Walmart-owned Flipkart.
PhonePe’s buyer app will be a consumer-facing platform that will allow shoppers to choose various products from sellers. Its name remains under wraps.
PhonePe is a leading payments player in the Unified Payments Interface (UPI) digital railroad and will make a splash into ecommerce with the hyper competitive grocery category.
Grocery for starters: Launching in its home ground Bengaluru, the battleground for pilot projects, PhonePe will slug it out against quick commerce players including Zepto, Swiggy Instamart and others.
The company has set up an independent team and will be adopting an intra-city model to solve hyperlocal commerce, founder and chief executive Sameer Nigam told ET in an interview.
Breaking away: It has earmarked up to $15 million for its ONDC entry, and the capital will be deployed over the next 18 months, Nigam said. PhonePe is looking to break away from its Flipkart roots after being acquired in 2016 as an idea-stage startup.
Early-stage investors still betting on Web3 solutions
Cofounder and CEO of CoinSwitch Kuber, Ashish Singhal
Despite the bloodbath in the cryptocurrency market and skepticism around the utility of Web3 solutions, early-stage founders from India in this sector continue to attract funding from investors.
What’s going on? Last week, CoinSwitch Kuber launched a $10-million Web3 Discovery Fund. It will cut checks between $25,000-250,000 for services, products, and infrastructure startups in the sector, Ashish Singhal, cofounder and CEO of CoinSwitch Kuber, told us.
The fund will also give these startups access to marquee investors such as Tiger Global, Sequoia Capital, Ribbit Capital and Coinbase Ventures.
Early-stage investor Elevation Capital, a partner for the discovery fund, plans to expand the team evaluating this sector and continues to have a “high capital commitment” for Web3 startups, said Vaas Bhaskar, principal at the fund, which has backed Polygon and announced six investments in the last 12 months.
Proof of traction: As valuations correct and FOMO dies down in the market, venture capitalists are focusing on Web3 startups with some proof of customer traction. The sobering down of sentiments and funding has impacted the wider tech industry, as we reported in July.
But for Web3, at least half a dozen financing deals are in the works across infrastructure, analytics, and gaming as the sector draws interest from both crypto-native and traditional funds.
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.
Despite lower projected attrition, margin impact to remain high for IT firms
Indian IT service providers will face margin pressure unless they can add better pricing to the already projected benefit of lower attrition rates, experts said.
During the first quarter top IT companies such as Tata Consultancy Services (TCS), Infosys, and Wipro reported an impact on margins of 150-240 basis points from salary hikes.
They have put in place measures like better utilisation, cost optimisation and pricing across top skill sets to control cost pressures, indicating that the margin impact had largely bottomed out, but experts are wary.
During the April-June quarter, the IT large caps missed margin estimates due to the inflated talent expenses despite strong revenue performance.
Even if these pressures are mitigated, there are still pent-up costs which need to be passed through if margins are going to fully recover, said Peter Bendor-Samuel, chief executive of IT consultancy Everest Group.
Digital India Act to cover social media, OTT, metaverse and more
The Digital India Act (DIA), the upcoming digital regulatory framework, will cover crimes on Twitter, Facebook, and the metaverse, and will monitor OTT platforms like Netflix and Amazon for content that could spread misinformation or incite violence, two people aware of the development told us.
The Ministry of Electronics and IT (MeitY) is rushing to roll out DIA, which will have specific guidelines around child and women’s safety. The new regulation will replace the existing IT Act 2000 by the winter session, ET has learnt.
DIA hopes to cover anything and everything that is digital: from social media platforms, OTT platforms, and online apps, to blockchains and the metaverse.
“It has been 22 years since technology legislation was enacted in the country, and since then a lot of innovations in technology have taken place. We are in the fifth generation of technology transformation and have entered into the Meta world and next generation communication,” Gulshan Rai, the first national cyber security coordinator for the Prime Minister’s Office, told ET in response to a query sent to MeitY.
Foxconn chairman Liu spots ‘upgrade in govt efficiency’
Taiwan’s Foxconn will expand in India amid improvements in the overall industrial environment and an “upgrade in government efficiency,” chairman Young Liu said, underlining the South Asian nation’s growing importance for the world’s largest contract manufacturer amid tensions with China.
“We think India will play a very important role in the future. So, overall, I think our development in India, I see it actively heading in a positive direction – that is, it is going to get better and better,” Liu told investors and analysts during the company’s second-quarter earnings call last week.
Liu had in June met Prime Minister Narendra Modi and officials in the Ministry of Electronics and IT (MietY) with updates on electric vehicle (EV) manufacturing and product expansion in electronics and semiconductor manufacturing.
We reported earlier that the company was building another facility inside its Foxconn Hon Hai facility near Chennai where it makes iPhones.
Other Top Stories By Our Reporters
Digit Insurance files DRHP for Rs 1,250 Cr IPO: Digit Insurance has filed draft documents for its initial public offering (IPO), and the digital insurance company is looking to raise Rs 1,250 crore from a fresh issue of shares and an offer for sale (OFS) of 10.94 crore equity shares.
Beauty & personal care drives ecommerce growth: Ecommerce sales volume grew 69.4% in FY22 compared to 44% in FY21, according to a report by Unicommerce in collaboration with Wazir Advisors. The beauty and personal care category continued to drive this growth, with a 143% increase in volumes year-on-year.
SBI chairman on loans for startups: SBI chairman Dinesh Khara on Tuesday said his bank is reaching out to startups through exclusive branches which will prevent founders from selling their equity to investors for want of a loan. “There is no source of funds like debt for startups,” he said.
HCL Tech to expand ties with hyperscalers: HCL Technologies, India’s third largest software company, plans to expand partnership with hyperscalers and follow a diversified product and service strategy among measures to tap a larger total addressable market, Chairperson Roshni Nadar Malhotra said.
Global Picks We Are Reading
■ Connection unstable: Kashmir’s influencers seek internet fame but can’t get online (Rest of World)
■ Google’s new robot learned to take orders by scraping the web (Wired)
■ US approves nearly all tech-export requests to China, data shows (WSJ)
