In the first 6 months of 2023, fintech groups scattered across India raised $1.4 billion as a funding push, this appears to be a big amount but as we put this in comparison with past year activities, we find a drastic drop of 67%.
Tracxn which is a platform dedicated to market research indicates so.
Last year, during the same period, they managed a $4.3 billion raise.
The sluggish trend has sustained since the second half of 2022 when there was a collection of $1.5 billion only.
But the report chills us with the finding that India occupies the third rank as the destination for venture funding while US and UK capture the first and second position respectively.
Such saw a big drop of 81% and the trend is unchanged from the beginning of 2022 itself.
As for the seed stage funding, it also registered a big decline of 71%.
But for the late-stage funding, the scenario appears pretty favourable with a $1.1 billion push.
It is thrilling that in the first 3 months of the ongoing year, fintech amassed thick funding of $1.2 billion which translates to more than 80% of the funding in the entire 6 months period.
The latest figures hint at the choked funding and this gets tough with every passing month and this heralds trouble for the Indian start-ups.
In this field, payment alternative lending and those offering digital insurance appeal to maximum funding.
As for the talk of crypto and looking at the first 6 months of 2023, this sector pulled only $5.6 million.
If we look at the trends prevalent around the world, those in the payment sector pulled 55% of the funding and the same scenario occurs in the US too where payment start-ups win favours at length and get a boost of venture dollars.
In this field, PhonePe raised funding to the tune of $750 million while its valuation has been $12 billion and such figures make it one of the top 10 payment start-ups of high value on the planet.
Although, no addition of new unicorns but 7 companies saw $100 million plus of thumping funding.
In the first half of 6 months this year, a report of 19 new acquisitions is a thrill to calculate.
Talking of the mega acquisitions this year, Trillion Loans come to light which is an NBFC taken by BharatPe which is to the tune of $36 million.
In the same league, we have UPwards sought by LendingKart that hovers around $12 million.
In April, a fistful of Indian sleuths dining pristine casual wear raided Byju’s office in Bengaluru confiscating laptops and alleging gross foreign exchange violations on the part of the most treasured ed-tech start-up.
An ocean away, while all this was happening, the firm’s founder Byju Raveendran was sauntering his condo in Dubai, gulping cups of black coffee and “managing” calls from top investors.
After all, the $1 billion equity fundraise sailed into trouble and most of the investors were based in the middle east.
Mr Raveend-ran is said to have broken down in tears while shielding his company finances. This was what those who called him, told the media.
Troubles brewing for Mr Raveendran for quite some time, for some months. Discounting the raid made by financial guards, his tutoring start-up could not submit financial records on time.
Many investors in the US accuse him of concealing half a billion dollars and this attempt prompts lawsuits.
On Tuesday, July 25, Prosus NV, which was one of the prime investors in the company, declared to abandon the board seat citing poor governance and neglect of the director’s consent.
Byju’s and Raveendran stress cleanliness maintained across the corporate vertical.
But on looking at their interviews given by the distinguished people who had decision-making power in the company over the course of the past 6 months, we find a range of challenges that Indian start-ups face (and suffer).
Actually, venture capital in India is within the set limits and firms like Byju’s look overseas for succour.
But last year, the scenario changed completely, choking the start-up funding entirely.
At present, as global capital is hard to access, companies face immense scrutiny on corporate governance.
Legal Notice To Akash Founders For Share Transfer
According to sources, the founders of Aakash Educational Services allegedly refused to complete a share swap that was unconditionally agreed upon as part of the sale of Aakash Educational Services Ltd (AESL).
Think and Learn Pvt Ltd, an education technology startup that operates under BYJU’S brand name, has sent a legal notice to the founders of Aakash Educational Services.
In 2021, BYJU’S paid about USD 940 million in cash and shares to acquire the 33-year-old brick-and-mortar coaching centre AESL.
Following the deal, TLPL held 43% of the company’s shares, with Byju Raveendran holding the remaining 27%.
About 18% of AESL is still owned by the founding family of Chaudhry, and the remaining 12% is owned by Blackstone.
As it was more tax advantageous for the seller Chaudhrys, the arrangement called for the merger of AESL and TLPL.
However, TLPL has triggered the unconditional fallback agreement and sent a notification to Chaudhrys asking for the implementation of the swap arrangement due to NCLT delays in the proposed merger.
However, according to three sources with knowledge of the situation, the minority owners have declined to exchange their equity stake in AESL with the company’s parent, TLPL.
The 2021 acquisition cost roughly 70% in cash, with the remaining 20% to be deducted from TLPL equity.
Sources claim that Blackstone and the Chaudhry family have written to BYJU’s in recent weeks, declining to carry out the share swap following the terms of the original agreement despite a TLPL notification delivered in March.
The Chaudhry family’s ownership in TLPL would be just under 1% after the existing share swap commitment is fulfilled.
They added that Chaudhrys are considering a cash payout rather than an exchange since they fear requests from the tax authorities, especially those about GST, in the swap arrangement.
BYJU’S declined to comment on the development, and AESL did not respond to a question.
According to sources, the share swap was a crucial component of the acquisition contract. The goal was to complete the share exchange through the combination of AESL and TLPL, enhancing Chaudhrys, the seller’s, tax efficiency.
The education company Aakash anticipates ending the fiscal year 2023 with Rs 3,000 crore in sales, marking a three-fold increase since being acquired by BYJU’s.
