One quick thing: Amidst a funding winter, a founder and a gaming giant are doubling down on Indian startups.

• While Zerodha’s Nithin Kamath is committing Rs 1,000 crore via Rainmatter, Krafton is pledging $150 million. 

In today’s newsletter:

• Spotlight on UPI Lite 
• Losses mount for Ola, Ola Electric
• 12.5 million subscribers ditch Disney+ Hotstar

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UPI Lite users, rejoice!

The Reserve Bank of India today raised the transaction limit of UPI Lite to Rs 500 from Rs 200 per day.

This is a small joy for users, but it also has implications beyond that.

In September 2022, the National Payments Corporation of India (NPCI) launched UPI Lite, a feature that allows quick small-value transactions by optimising the processing resources of banks, thereby reducing transaction failures.

• UPI Lite users can conduct transactions of up to Rs 500 a day without the need for a pin, which drastically reduces the transaction time as well as potential payment failures.
  
  
• The UPI Lite balance ceiling has been left unchanged at Rs 2,000 to contain the risks associated with relaxing two-factor authentication

Additionally, the RBI launched conversational payments on the UPI through AI, allowing users to engage in conversations with AI systems to make payments.

The adoption of UPI Lite among consumers is growing rapidly, and the RBI’s move is a clear indication that the initial adoption and feedback have been positive among users as well.

• Paytm, PhonePe, and Google Pay, which together account for 93% of all UPI transactions, have added the UPI Lite feature to their apps

• Small ticket transactions have put pressure on banks to expand their capacity, even though UPI offers no revenue model
  
  
• Lite being an on-device offline wallet means that many of these transactions will not hit bank servers

Aggressively promoting UPI Lite is essential for NPCI to achieve its target of one billion transactions per day without hiccups. The platform already processes close to 10 billion transactions per month and is growing at more than 40% annually.

Dig deeper

Ola’s Bhavish Aggarwal is walking a tightrope. 

On the one hand, he is preparing for a grand public listing for Ola Electric early next year. On the other hand, the business is incurring mounting losses.

Ola Electric’s loss widened to Rs 784 crore in FY22, up 293% from Rs 199 crore in FY21. The company’s expenses also increased to Rs 1,240 crore in FY22.

• Its consolidated revenue from operations grew nearly 400 times to Rs 373 crore in FY22 

• It is important to note that Ola Electric started selling its scooters in December 2021. Before that, the company was primarily focused on offering battery charging and swapping facilities

The parent company of Ola Electric, ANI Technologies, also saw its losses increase to Rs 1,522.3 crore in FY22, up 36.3% from the previous year.

All startups are under pressure to report strong profitability, but Ola Electric is facing even more heat as it plans to go public. As many experts say, the ‘public market can be merciless’. 

• To add to Ola’s woes, its long-time investor Vanguard has slashed the company’s valuation by 35%

Find out more

Trouble, trouble, trouble...

It is likely that this Taylor Swift song has been echoing in the Disney Star offices since late last year.

Disney+ Hotstar has been setting records for the past three quarters, but of a different kind: Subscriber declines.

• The streaming service lost 12.5 million paid subscribers for the quarter ended July 1, 2023, marking the biggest-ever subscriber drop since April 2020

For comparison, the Disney-owned streaming service's subscribers plunged to 40.4 million for the quarter from a peak of 61.3 million in the quarter ended October 2022.

The decline in paid members was due to a product adjustment from one that was centred around the IPL tournament to a more diversified one with other sports and entertainment offerings, said Disney's interim CFO Kevin Lansberry.

• Disney CEO Bob Iger also said that they will prioritise markets that will help them turn their business into a profitable one. This comment comes amid speculation that the entertainment conglomerate is exploring a sale or a joint venture for its India business.

The Disney chief's recent cost-cutting measures also appear to be paying off, resulting in reduced losses in its streaming unit.

• Disney's direct-to-consumer segment, that comprises all its streaming services, narrowed to $512 million for the quarter, from $1.06 billion in the same quarter last year. The media conglomerate aims to make Disney+ profitable by the fiscal year 2024.

Read more about how Disney performed in the last quarter

The National Company Law Tribunal (NCLT) has also approved the merger of Zee Entertainment and Sony Pictures Networks India (SPNI), paving the way to create a $10-billion media giant in the country. This could create more challenges for Disney Star's India operations.

Traditional FMCG companies like Marico and ITC have been acquiring smaller D2C brands. These deals allow the giants to plug gaps in their portfolios, while giving the D2C startups an exit. The primary reason for the "slump sales" of D2C startups has been their inability to scale, but the founders have still managed to make a lot of money.

“Look, I'm a young founder, I want to reap the benefits of what I’ve built. Rs 1,000 crore in the bank at the age of 70 is not as valuable as a couple of $100 mills (millions) in my bank account today,” said a founder, who sold their D2C startup to a large FMCG player, asking not to be named.

Find out more

• China's internet giants have placed orders worth $5 billion for high-performance Nvidia chips, which are essential for building generative AI systems.
  
  
• Google has introduced a new grammar check tool in Search that identifies and suggests corrections for grammatically incorrect phrases or sentences.

In a world where we're constantly looking for ways to reduce our reliance on fossil fuels, scientists have come up with a novel way to harvest energy from everyday human movement: electrically conductive foam.

The team from the University of West Scotland (UWS) has developed a new type of triboelectric nanogenerator (TENG) that uses graphene foam to convert mechanical energy into electrical power. 

• A team has created a prototype floor sensor that can power an Arduino computer with footsteps.

Find out more

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