One quick thing: DealShare exodus continues as third co-founder, Sourjyendu Medda, exits

In today’s newsletter: 

• SoftBank to restart India investments by mid-2024
• Mixed earnings from TCS, Infosys; headcount declines
• ByteDance-owned Resso exits India

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After an 18-month-long hiatus, the Japanese samurai's spending blade is set to spring into action!

With startup valuations returning to more grounded levels, SoftBank could be back to signing deals by mid-year, Sumer Juneja, head of India and EMEA at SoftBank Investment Advisers told us in an exclusive interview.

“As Seed and Series A/B deals have picked up in the second half of 2023, you will see an increase in the pipeline for growth investors (like us)...,” Juneja said, adding that most investors were sorting out their own houses last year, hence dealmaking was slow.

In times of scarce capital, investors like SoftBank thrive as the quality of founders improves.

• Juneja points to Delhivery, Lenskart, Policybazaar, and OfBusiness, all seeded during periods of limited capital access, which have now become world-class companies

He believes that the same will hold true for companies funded in mid-2023 onwards, when capital was again scarce.

SoftBank, having witnessed the IPOs of Zomato, PB Fintech, and Delhivery, is now preparing for the next wave of IPOs, including Swiggy, Ola Electric, and FirstCry. The experience has yielded valuable lessons for the investment giant.

• One key takeaway is the growing influence of Indian mutual funds in determining the success of an IPO

IPO-bound companies should also consider leaving some returns on the table for retail investors, Juneja said.

Find out more

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High furloughs, fewer work days and no immediate impact of interest rate cuts 

This pretty much sum up the commentary from India's two largest IT services companies, TCS and Infosys, during their third-quarter earnings conferences.

Despite being a mixed set of numbers, TCS performed well, surpassing our poll estimates on all metrics, including net profit, revenue, and EBIT margins.

TCS’ report card:

• Revenue increased 4% YoY to Rs 60,583 crore
  
  
• Net profit grew 2% YoY to Rs 11,058 crore
  
  
• Operating margins improved by 50 bps QoQ to 25%
  
  
• Deal wins stood at $8.1 billion, without a single mega deal 

Meanwhile, Infosys delivered a shock, slashing its revenue guidance for the third consecutive quarter to 1.5-2% for the full year.

Infosys’ report card:

• Net profit declined 7.3% YoY to Rs 6,106 crore
  
  
• Revenue edged up 1.3% YoY to Rs 38,821 crore
  
  
• Operating margins dipped 70 bps quarter-over-quarter to 20.5%
  
  
• Large deals came in at $3.2 billion

Both companies reported major headcount declines.

• TCS' headcount dropped for the second consecutive quarter, falling by 5,680 employees
  
  
• Infosys' headcount fell by 6,101, marking its fourth consecutive quarter of decline

The world's most valuable startup is withdrawing one of its last active products from the Indian market.

Chinese tech giant ByteDance will shut down its music streaming service Resso in India by the end of January, nearly four years after its launch. 

• This decision follows the app's removal from Google Play and Apple App Store due to an order from the Indian government

ByteDance said it will offer Resso users a full refund of their remaining subscription fees.

Resso launched in India, Indonesia, and Brazil in 2020, offering music streaming through both free and paid subscription plans. In May 2023, it transitioned to a premium-only service, phasing out the free tier.

• India was Resso's largest market in terms of downloads and monthly active users. By May 2023, the app had surpassed 250 million installs since its launch

ByteDance launched a new premium music streaming service, TikTok Music, in Indonesia and Brazil in July 2023, replacing Resso in these markets. The service has since expanded to countries such as Australia, Mexico, and Singapore.

• However, sources indicate that TikTok Music is not coming to India

In recent years, ByteDance has experienced a turbulent journey in India, marked by the suspension of several of its apps, including TikTok, Helo, and CapCut, by the government due to national security concerns. These suspensions became permanent in January 2021.

• The launch in India seems unlikely, as TikTok Music shares the same app publisher as TikTok, whereas Resso was published by a separate company called Moon Video Inc

Go deeper

• OpenAI is in talks with media giants CNN, Fox, and Time to license content for training ChatGPT and featuring it in their products.
  
  
• Five-year-old AI startup Humane laid off 10% of its workforce, citing cost-cutting ahead of launching its first $699 AI pin, a screenless smartphone alternative.

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