One quick thing: PhonePe's Rs 2,800 cr data localisation push

In today’s newsletter: 

• Zomato's billion-dollar ammunition
• Paytm tweaks lending play with FLDG
• What went down at Navi

Was this newsletter forwarded to you? You can sign up for Tech3 here

Zomato is piling on the ammunition as rival Swiggy gets set to make its public market debut

Zomato plans to raise up to Rs 8,500 crore (over $1 billion) in fresh capital, marking the company's first fundraise since its IPO in 2021. 

"We need to enhance our cash balance given the competitive landscape and the much larger scale of our business today...We want to ensure that we are on a level playing field with our competitors, who continue to raise additional capital," said Zomato chief Deepinder Goyal. 

The move comes as Swiggy prepares to raise over $1.4 billion in its IPO next month and Zepto's ongoing rapid fundraising spree.

Zomato recently acquired Paytm's entertainment and ticketing business to give a boost to its 'going-out' segment and the upcoming District app, which is set to launch in about four weeks.

• This will likely put investors in a dilemma: Should they invest in the IPO of loss-making Swiggy or participate in the fundraise of the profitable Zomato, which some say is overpriced (Decisions, Decisions!)

Also Read: Swiggy to sponsor Shark Tank Season 4, excludes Zomato founder Deepinder Goyal as part of deal

Speaking of profits...

Zomato reported a 389% jump in its net profit to Rs 176 crore in Q2FY25 from Rs 36 crore in Q2FY24. 

• Revenue increased 69% to Rs 4,799 crore for the quarter from Rs 2,848 crore as more customers ordered in

Blinkit, the quick commerce arm, saw its revenue more than double to Rs 1,156 crore in Q2FY25 from Rs 505 crore in Q2FY24.

• Quick commerce's gross order value (GOV) jumped to Rs 6,132 crore for the quarter vs food delivery's GOV of Rs 9,690 crore. (How long before q-comm takes the lead?)

• Blinkit’s revenue share from Delhi-NCR has dropped to 40% as it strengthens its hold over other regions

From our Zomato-Blinkit coverage:

• MC Interview: Food delivery will have to change, 10-minute deliveries can be a gamechanger, says Zomato’s Deepinder Goyal

• From downbeat Grofers to thriving Blinkit: Inside Zomato's brahmastra

• Zomato-owned Blinkit to set up express dark stores for 30-minute delivery of high-value items

• Blinkit junks 'zero notice period' policy as talent hunt simmers in quick commerce

As revenue hits a rough patch, Paytm seems to be diving into new “risker” strategies to spark growth.

In a major policy shift, Paytm has inked its first First Loss Default Guarantee (FLDG) agreement with SMFG India Credit, moving from just distributing loans to taking on risk.

• Paytm will guarantee up to Rs 225 crore in default losses for loans disbursed by SMFG through its platform
  
  
• This means Paytm will cover the first loss if borrowers fail to pay
  
  
• The company currently holds a portfolio of Rs 1,651 crore under this model

Until now, Paytm has steered clear of guarantees in its co-lending partnerships. However, tightened norms around lending may have led Paytm to change its stance.

“This is an emerging market practice, and we aim to align with it. We're confident this will lead to increased revenue without altering our profit projections,” founder Vijay Shekhar Sharma said.  

During the second quarter ending September, Paytm bounced back into profit thanks to the sale of its entertainment ticketing business to Zomato.

• The firm posted a profit of Rs 930 crore, a turnaround from a Rs 290 crore loss last year
  
  
• Without this exceptional gain of Rs 1,345 crore, Paytm would still be in the red, facing a loss of Rs 495 crore—up 70% compared to last year

However, it did manage to cut its sequential loss by almost 41% from Rs 840 crore in Q1, thanks to cost-cutting measures.

• Revenue ticked up by 11% QoQ, but it’s still down 34% compared to last year

Dig deeper

A decade ago, he led the consumer internet revolution. Now, his fintech dreams are hitting a wall.

Sachin Bansal's fintech venture, Navi Finserv, has hit a major roadblock. 

• The non-banking financial company (NBFC) has been ordered to halt lending operations due to alleged usurious practices

This setback marks the second major regulatory hurdle for Bansal in recent years. 

• Earlier, his microfinance arm, Chaitanya MFI, was denied a universal banking license

Navi Finserv's troubles stem from its aggressive lending tactics. The company was accused of charging high interest rates, including penal charges and compounding effects, leading some customers to pay interest rates as high as 60%.

• The RBI ombudsman received many complaints and discovered social media platforms flooded with grievances

• While Navi management was earnest in discussing RBI’s concerns, things did not change on the ground

The NBFC model is inherently risky, as it caters to a segment often overlooked by banks. 

To be profitable, NBFCs need to grow rapidly, but this can sometimes lead to aggressive lending practices.

“All NBFCs are aggressive. That is the nature of the business. In fact, that is the only business model,” said a fintech founder.

Find out more

SurveyMonkey's CEO, Eric Johnson, is facing a common hurdle that global tech firms face in India: convincing cost-conscious consumers to pay for premium services.

• The online survey firm is investing in India by opening an office in Bengaluru and plans to double its employee base there by 2025

The company's CEO, Eric Johnson, acknowledged that while they have a large base of free users, converting them to paid customers is difficult due to India's price-sensitive market.

Find out more

• The US is finalising rules that will restrict certain investments in Chinese AI and require US investors to notify the Treasury Department about some such investments.
  
  
• AI acceleration cloud system provider Neysa raised $30 million in a Series A funding round, co-led by existing investors NTTVC, Z47  and Nexus Venture Partners.

Chinese researchers have recently set a new land speed record for humanoid robots. 

• STAR1 can sprint at 8 mph. And what is the secret? A pair of sneakers

In a Gobi Desert showdown, STAR1, outfitted with athletic footwear, outpaced its barefoot counterpart. 

Watch the video

Note: By subscribing to Tech3 you have already made the right choice. Top it up with a premium offering, the Moneycontrol Pro Panorama, a newsletter that gives you a sharp take on macros, markets, business and finance. Sign up for Pro from this link to get this newsletter in your inbox and also a host of content enjoyed by over a million subscribers.