Breaking: RBI deals a body blow to Paytm 

• The central bank has barred Paytm Payments Bank from accepting fresh deposits, credit transactions, or top-ups after February 29, 2024 (effectively bringing all operations of the payments bank to a halt)

One quick thing: Import duty on mobile phone parts reduced to 10% 

In today’s newsletter: 

• Flipkart chief on governance, payments and more
• Funding surge for early-stage startups
• Inside Google's plans to speed up execution

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For men may come and men may go, but I go on forever.

Perhaps, nothing describes Flipkart CEO Kalyan Krishnamurthy better than this. 

Krishnamurthy has been the one constant amid wider changes, sometimes turbulent, at Flipkart in the last decade:

• The departure of its storied founders Sachin and Binny Bansal
  
  
• Walmart acquiring a majority stake 
  
  
• The exit of early investors such as Accel and Tiger Global

At the headquarters of Flipkart in Bengaluru, where we met one of India's most influential internet bosses, Krishnamurthy tells us he has the best job in the world.

"What job can be better than this? Influencing the quality of life of hundreds of millions of users, right?" he said.

At a time when the startup ecosystem is grappling with frauds and compliance lapses, the Flipkart boss said that the solution is to have more independent directors on company boards.

• Shareholders and management are too closely involved with the company for them to raise tough questions, according to him

Until recently, the easy option for growth involved acquiring more new users by attracting them with freebies and discounts. However, times have changed. 

Flipkart has now shifted its focus to encouraging existing users to make more frequent purchases for further growth.

“We are not focused on expanding that 500-600 million user base to 800 million,” Krishnamurthy said.

Its new initiatives in areas like travel, health and financial services are geared in that direction.

As Flipkart prepares to launch its payment product within a month, the CEO said he has no ambitions to become a large fintech company.

• The aim is to increase frequency of usage and make some extra money while doing so

Read the full interview

January is proving joyful for early-stage startups and investors, while later-stage players remain in a wait-and-see mode, hoping for better deal flow in the coming months.

Early-stage startups are defying the trend, displaying signs of recovery. 

• Data shows that there were 37 deals in January, while the same period last year had 40 deals.

• The total size of investment slightly decreased to $129 million, a 14% decline from the $150 million recorded in January 2023

Meanwhile, both growth and late-stage funding experienced a substantial drop, with each falling over 40% year on year for the month.

The sharp decline in late-stage investments has resulted in an overall dip in investments for Indian startups in January.

• New-age tech companies recorded only $366 million in funding across 53 deals in January, marking a 64% drop from the $1,027 million recorded in 48 deals in December, Venture Intelligence data shows

The month also saw a substantial y-o-y decline of 54% from the $792 million secured in 70 deals during the same period last year.

This follows the year 2023, during which the so-called funding winter had already impacted investments in startups amid a correction in valuations for Indian new-age tech companies.

Anand Lunia, founding partner of IndiaQuotient, in an earlier conversation with us said that there is an increased concentration at the seed-stage because of a fall in series A, B and later deals.

“...The deal momentum continues to be bullish, we announced eight new investments and several follow-ons in 2023 and we see that momentum continuing in 2024,” said Dipanjan Basu, co-founder and partner, Fireside Ventures, the most active investor of January 2024. 

Go deeper

Google parent's growing artificial intelligence ambitions are coming at a cost. 

Alphabet is currently locked in an expensive battle for AI leadership with rivals Microsoft, Meta and OpenAI. 

• The company saw its capital expenditure (capex) shoot up to $11 billion in Q4 2023 as it ramped up spending on technical infrastructure, led by servers and data centres
  
  
• Google said this capex is expected to become "notably larger" in 2024

This has resulted in the tech giant reengineering its cost base to support this rapid spending. 

"Through this, we are being disciplined in how we run the company," CEO Sundar Pichai said.

Pichai said teams are focusing on key priorities and simplifying their organisational structures to execute tasks in a faster manner.

• In the past month, Google has laid off over a thousand employees across various divisions, with more job cuts anticipated throughout the year

Revenues from Alphabet's flagship search advertising business, however, fell short of analysts' estimates.

• These results overshadowed an otherwise strong end to the year.

Find out more

• Microsoft, Alphabet, and Advanced Micro Devices' underwhelming quarterly results caused AI-related companies to lose $190 billion in stock market value. 

• Hyderabad-based Kore.ai has secured $150 million in funding led by FTV Capital to drive AI-powered customer and employee experiences for global brands.

Are you ready for Budget 2024? 

But before all the serious stuff begins...we decided to challenge ChatGPT to channel Finance Minister Nirmala Sitharaman's spirit and write a hilarious budget speech. 

• You won’t believe what it came up with. Check it out!

P.S: Don’t forget to tune in to Moneycontrol.com tomorrow for all the Budget updates. We will bring you the latest news, analysis, and insights on how the Budget will affect you and the country.

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