Also in this letter:
■ Tesla executives meet Invest India CEO
■ Panel wants focus on potential unfair practices by digital companies
■ Toyota eyes manufacturing setup in India
Dunzo’s business in free fall amid severe cash flow issues
Hi, Soumyajit here in Bengaluru. Dunzo’s quick commerce business has been severely hit due to the ongoing cash crunch faced by the company. We have some details on the current situation.
Scale Down: The scale of operations is down to about a fifth from last year’s peak. From around 5.5 million transactions in June last year, Dunzo Daily orders are now hovering at around 1-1.5 million, according to sources.
Also read | Dunzo’s downfall: from startup star to sinking ship?
Gradual, but accelerated: While Dunzo’s been scaling back operations to save cash, the pace picked up earlier this year as funding took longer to close. Dunzo ran around 150 of its own dark stores till about the middle of last year, but that’s no longer the case.
Dark and down: Its own dark stores’ count is now down to just about seven, and in Bengaluru only. The Reliance Retail and Google-backed firm is mostly operating the Dunzo Daily business through 70-75 partner stores across the country. It has third-party partner stores in Bengaluru as well.
Another pivot? Sources close to the company, however, said a number of Dunzo’s third-party partner stores are also exploring setting up their own dark stores, but these are yet to be finalised. However, there’s no clarity yet on the arrangement between Dunzo and its third-party partners.
Recent troubles: Dunzo, meanwhile, continues to be in talks with investors to secure new financing, even as it attempts to clear pending dues of its vendors and salaries for employees. It has had to postpone staff salary for June and July to September while it announced its third round of layoffs on July 21.
Credit better bet for fintechs eyeing expansion: PBFintech’s Yashish Dahiya
Yashish Dahiya, who cofounded insurance marketplace Policybazaar with Alok Bansal back in 2008, has seen the insurance industry from up close. He’s also one of those few fintech entrepreneurs who managed to take his company public, allowing many of his early investors an exit. Today, he’s sitting pretty as one of the largest distributors of insurance policies in India.
Talking to ETtech from Dubai, Dahiya spoke on a wide range of subjects around insurance. From the adoption of technology in the sector to new licences being given out by insurance regulator IRDAI and even the lack of health cover for Indians.
Here are a few of his contrarian, yet interesting, views on the industry:
- Creation of a bubble: The nascent insurtech sector is focused too much on distribution. This is not a billion-dollar revenue opportunity. The overall revenues in thedistribution in India stand at around $5 billion. But 95% of this commission needs to be passed on to agents who sell these policies. So, the sector has an overall distribution revenue opportunity of $250 million. Not too large.
- Reality is still offline: The industry needs to invest in data and analytics to be future ready, but that’s still a 20-year view on the sector. Still, 95% of all policies in India are sold offline – and there’s no magic wand to change that instantly.
- Ditch the coffee, get insurance: Insurance in India is perhaps one of the cheapest in the world, but most Indians still prefer to pay Rs 1,000 at a coffee shop and not buy a health cover. Indians should appreciate what the sector regulator has done for them and buy health and term covers to keep themselves and their families safe. Corporate insurance is never enough to offer protection.
- Fintechs should chase opportunities in credit: Insurance is a misunderstood industry. Psychologically, people love to engage with things they do not understand. Fintechs who have a large consumer base should try to sell them credit products rather than insurance. Insurance is a difficult product to sell with limited profit margins.
- Funding winter: Founders got so used to getting free cash during the boom years of 2020-21, that what I would call a slight rainfall is being made out to be a hurricane. I think 2001 was a hurricane, 2008 was close to one. But currently, there is enough money in the system to be deployed by investors, just that they are asking the right questions now.
Also read | What is really happening with digital credit in India
Tesla executives meet Invest India CEO, may meet Piyush Goyal
Amid Tesla reinvigorating its plans to set up a manufacturing presence in India, senior executives of the company met the newly appointed CEO of Invest India Nivruti Rai on Thursday.
What more: Executives of the electric car company are also likely to meet Union commerce and industry minister Piyush Goyal in a few days to discuss the plans to set up car and battery manufacturing facilities in India, sources told us.
Musk’s meet with Goyal: People in the know said that Tesla CEO Elon Musk had a meeting with Goyal virtually about two weeks ago and discussed how Tesla can set up a manufacturing presence in India.
Catch up quick: Tesla has held talks with Union government officials, exploring the possibility of getting its auto parts and electronics chain to India, as well as discussing possible incentives and tax breaks, as reported on July 13.
In June, Tesla CEO Elon Musk said the company will be in India “as soon as humanly possible”. His comments followed a meeting with Prime Minister Narendra Modi, who was on a state visit to the US.
Panel wants focus on potential unfair practices by digital companies
Big tech companies could now face heightened scrutiny for anti-trust practices in India as well. The Parliamentary Standing Committee on Finance headed by Jayant Sinha has asked a government panel on digital competition law to be on the lookout for anti-competitive practices these companies may possibly indulge in.
Tricks of the anti-trust trade: The House committee has asked the panel to focus on ten anti-competitive practices that large players can potentially resort to, including deep discounting, exclusive tie-ups, mergers and acquisitions, restricting third party applications and advertising and lack of platform neutrality.
This is part of an action-taken report, submitted in Parliament on Thursday, on the committee’s earlier recommendations on the “Anti-competitive Practices by Big Tech Companies”.
Committee’s views on Big Tech: In its December 2022 report, the panel suggested that the government define systemically important digital intermediaries who have power to potentially distort fair trade rules. It had also suggested a digital competition law and setting up of a digital markets unit within the Competition Commission of India (CCI).
Toyota in talks to set up manufacturing facility for auto ancillaries in India
Toyota is getting aggressive with its EV strategy. The carmaker, which plans to introduce 10 new EV models by 2026 and sell 3.5 million BEVs globally by 2030, is mulling setting up an independent auto ancillary unit in India.
Advantage, Toyota: Setting up an EV components’ facility gives Toyota an advantage if it plans to launch an EV in India as using in-house components could reduce the price of its vehicles. This could also be a strategic move that puts the Japanese carmaker at the forefront of the EV industry while also allowing it to later capitalise on the investment by launching EVs
Quote, unquote: “Toyota wants to bring their supply chain to India,” a source told ET. “That conversation is slowly opening up. It will mostly be for auto ancillaries. They have one industrial park in Bangalore as a joint venture with Toyota Kirloskar. This one they want to do as a standalone.”
SaaSBoomi halves SaaS firms’ 2030 enterprise value in new forecast
SaaSBoomi, a collective of software-as-a-service (SaaS) and product company founders, has marked down the projected enterprise value of Indian SaaS startups by 2030 to $500 billion from $1 trillion.
Earlier projection: In its 2021 report, SaaSBoomi had assigned the $1 trillion projection to Indian SaaS companies based on public SaaS companies’ revenue multiples. It also projected an increase in revenue by $50-$70 billion, which the company has maintained in its latest report.
Silver lining: The report also said Indian SaaS companies have been exceeding earlier revenue projections, raking in $7 billion so far in 2023. Revenue has shot up 169% from $2.6 billion in 2020. The report also highlighted the global growth of the SaaS market, which has expanded to $420 billion, at a 38% compound annual growth rate.
Other Top Stories By Our Reporters
Info Edge, Rahul Yadav’s 4B Networks to enter arbitration after forensic audit issues: Consumer internet group Info Edge has initiated arbitration proceedings against its portfolio company 4B Networks, founded by Housing.com cofounder Rahul Yadav, after the startup failed to provide crucial information about its operations and management for a forensic audit.
Govt will help to build ecosystem for chip manufacturing: Rajeev Chandrasekhar | The government is committed to creating a globally competitive component ecosystem, one of which is going to build a semiconductor ecosystem, minister of state for electronics and information technology, Rajeev Chandrasekhar, said on Thursday.
Global Picks We Are Reading
■ Fake Russian influencers are going viral on Chinese social media (Rest Of World)
■ Twitter CEO Linda Yaccarino courts Hollywood in push for star power (Financial Times)
■ OpenAI can’t tell if something was written by AI after all (The Verge)
