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In today’s newsletter:

• Cred's growth strategy in a curious spot
• For Fidelity, Gupshup is no longer a unicorn
• SoftBank's India portfolio nearing profitability

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The premise behind installing Cred by customers is that it is an app for paying credit card bills. 

However, despite a significant increase in credit card spending in the country, the value of credit card bill payments made through the app is not keeping up with this growth.

Cred's share in the country's credit card bill payment has dropped, suggesting that many customers may not be using the app as frequently. 

• Cred often uses credit card bill payments as a ruse to attract and engage wealthy customers. The next step is to get them to buy products and services on the app

Cred has a customer base of around 11 million, mostly high-income customers with high credit scores. 

The company has also had good success in selling personal loans under Cred Cash, a highly successful and profitable business.

If users are not visiting the app as often for credit card bill payments, how will Cred sell them products? One strategy is to offer them UPI payments as a solution. 

• Cred has experienced a 50% growth in UPI transaction volume in the last six months

But that does not make a significant impact. Its market share in UPI payments remains minuscule at 1.5%. The UPI payments market is dominated by PhonePe and Google Pay. Can Cred compete with these giants?

Find out more

The season of markdowns is upon us, with asset management companies (AMCs) lowering the fair value of unicorns almost daily.

In the latest markdown, Fidelity Investments has marked down the fair value of cloud-based chatbot Gupshup by a third.

• While this may seem like just another markdown, it virtually kicks the company out of the coveted unicorn club

Fidelity has marked down the fair value of Gupshup by 31.6% as of March 31 this year, effectively valuing the company at $957 million.

• Gupshup was last valued at $1.4 billion when it raised its largest-ever round of $240 million

• It has raised over $380 million to date

While Fidelity has marked down the company, Neuberger Berman has kept its valuation intact as of December 2022.

The fair value adjustments are based on the AMCs’ internal assessment of the internal and external environment. While this does not imply a permanent reduction in the startup's valuation, it does provide potential investors with valuable insights.

Unlike most unicorns, Gupshup has been profitable, which means that the company may not need immediate fund infusion. 

• The company, founded almost two decades ago, had a revenue of Rs 1,132 crore in FY22 and a profit of Rs 39.2 crore

Find out more

SoftBank and its portfolio companies have become frugal masters over the last 15 months.

While SoftBank's deal-making pace may have slowed down, its investee companies have unleashed their cost-cutting ninjas to improve unit economics with impressive agility.

And it looks like it is working!

A report by Bank of America (BofA) suggests that about 40% of SoftBank's India portfolio companies are either very close to or above break-even.

• SoftBank has invested a total of $15 billion in nearly 30 companies in India, with 21 of them being unicorns

These companies have done a 'good job' in cutting costs materially in the last 6-9 months, potentially extending their runways, BofA said.

• BofA further highlighted that as of March 2023, approximately 94% of SoftBank's investee companies had at least a 12-month cash runway

The BofA report also highlighted a shift in SoftBank's investment approach since 2019, when it established an on-ground team in India. 

The report pointed out several key aspects of this shift:

• Focus on India-specific models
  
  
• Change in benchmarks for entry valuation- from $5 billion to $2 billion
  
  
• Slashing of cheque sizes to $100-150 million from $1 billion
  
  
• More collaboration with domestic PE/VCs

Go deeper

Chennai-based Prasanna Venkatesh went from being a high school dropout to a data scientist after upskilling with the help of open-source material and online courses. The 23-year-old techie now earns a salary of Rs 20 lakh per annum after three years of experience in the field.

• He is not alone. Amid a bleak employment market, job-seekers across sectors are now focusing on tech upskilling to stay relevant in the techade. However, are Indian firms open to hiring non-tech candidates with relevant skills?

Here’s what experts have to tell you before you switch to a tech career as a non-traditional aspirant.

On May 31, 2008, the space shuttle Discovery took off from NASA's Kennedy Space Center in Florida, marking a spectacular and on-time launch for its STS-124 mission to the International Space Station. 

In its payload bay, Discovery carried the Japanese Pressurized Module, a large science laboratory, along with an accompanying robotic arm. (Picture credit: NASA)

• Coinbase CEO Brian Armstrong has issued a warning that the United States' restrictive crypto policies could ultimately benefit "adversary nations" such as China.

• US prosecutors may drop charges against former FTX CEO Sam Bankman-Fried if the Bahamas government objects, court filings reveal.

Ever dreamt of having your own robot butler, the ultimate promise from the realm of science fiction? This might soon become a reality!

Enter Alfie, the brainchild of Prosper Robotics - a startup founded by former OpenAI employee Shariq Hashme.

Alfie, the household robot, glides smoothly on wheels, performing an array of tasks. Need your home to sparkle? Alfie cleans. Desire a neatly organised living space? Alfie is at your service. Even the mundane chores like ensuring your plants stay hydrated are within Alfie's capabilities. 

Find out more

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