A row that started over what constitutes free speech in India has hit a crescendo as
Also in this letter:
RBIlooks at fintech, neobanks
- FamPay’s huge funding round
- Apna.co’s valuation grows 5X
Twitter may have lost its intermediary status
Twitter appears to have lost its intermediary status in India as it is yet to comply with the country’s revised regulations that came into effect on May 26, top government officials told ET.
Why it matters: The microblogging platform could now be equally liable under the law for any unlawful content (say, obscene pictures or impersonation) on its platform as the person posting such content. The company may no longer be able to claim protection under the ”safe harbour” clause.
The San Francisco-based firm is yet to appoint three key executives—required by India’s new IT rules to be permanent employees—despite several nudges from the government including a “last notice” sent on June 5. It has appointed a lawyer as its grievance and nodal officer on a contractual basis, which is not in accordance with the law, sources told us.
Twitter had earlier said it will “strive to comply with applicable law”, but plans to ask for changes to portions of the rules that inhibit free speech. The government later accused the company of seeking to undermine the country’s legal system.
Regulatory system for digital banking intermediaries likely
Hi, Ashwin here. The Reserve Bank of India is weighing a more formalised regulatory and supervisory mandate for India’s burgeoning digital banking ecosystem.
What’s happening: A central bank team has been taking stakeholder views from various industry forums as well as banks to come up with scope and definitions for new classes of digital banking intermediaries that have mushroomed at the intersection of finance and technology.
Neobank, a buzzword in both global and Indian fintech circles, is also being studied.
What’s that? Neobanks are digital entities without any physical branches that offer — independently or in partnership with traditional banks — either a select or full range of banking services.
- In India, firms such as Razorpay, Open, Niyo and Jupiter as well as global giants such as Amazon and Revolut are all attempting to scale these offerings.
Regulatory uncertainties loom large, however.
Challenges in India: Currently, these banking intermediaries are loosely regulated and don’t have a definition of their own. They operate through different models where their regulations follow the nature of their partnership with licensed banks.
For instance, a neobank that opens bank accounts for its corporate customers may need a business correspondent licence, whereas some firms that work with merchants on offering current account and expense management services would have to apply for the payment aggregator licence.
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ETtech Done Deals
■ Apna.co, a professional networking platform for blue and grey collar workers, has raised $70 million in a new round from marquee US investors—Insight Partners and Tiger Global.
Superfast growth: Apna.co’s valuation has zoomed five times to $570 million in just about three months. Founder CEO Nirmit Parikh said that his startup has grown by 50 times in size over the last year. That’s one of the main reasons for the two-year-old company to have managed to raise this much cash at this stage.
What’s in a name? ‘Apna’ means ours in Hindi. During our chat with Parikh, he referred to the popular song ‘Apna Time Ayega’ from the movie ‘Gully Boy’ at least twice explaining how the song has been an inspiration behind the startup’s broad vision to enable blue- and grey-collar workers towards getting better work and improving livelihoods.
- Parikh seems to be really inspired by the song as one would find that the holding company of Apna is named ‘ApnaTime’ Tech Pvt. Ltd.
■ FamPay, which offers payments and financial services to teenagers, has secured $38 million in one of the largest Series A funding rounds by an Indian startup in recent years. Elevation Capital, formerly SAIF Partners, led the new round of funding.
New investors: Besides Elevation Capital, General Catalyst, Rocketship VC, and Greenoaks Capital have joined the round as new investors in the two-year-old startup.
Why it matters: Just the sheer size of it, at this stage. Sources told us it was initially looking to raise anywhere between $20 million and $25 million in its Series A funding round, but strong investor interest made the startup expand the size to $38 million.
The deal values FamPay at $150-170 million, sources said.
What does it do? It essentially enables teenagers to have a quasi-digital banking account, with the approval of their parents. It could be their ‘pocket-money’ or any such allowances given by the parents in the FamPay account which a kid can use to pay online or offline. These kids are digitally savvy enough to make online payments for their food orders or anything else. Of course, parental controls apply.
■ Fintech platform Flexmoney said it has raised $4.8 million in funding led by Pravega Ventures. The Series A round also saw participation from Silicon Valley-based Z5 Capital as well as other individual investors.
■ Omnichannel men’s innerwear brand XYXXhas picked up Rs 30 crore in its Series A round, led by DSG Consumer Partners and Synergy Capital Partners. Existing investor Sauce.VC also participated in the round.
■ Direct-to-consumer beauty and personal care startup Pilgrim has landed close to Rs 13 crore in its Series-A round, led by Fireside Ventures, Rukum Capital and founding teams of Boat, NoBroker, and the founder-CEO of Bewakoof.com.
■ Private equity veteran Rohan Ajila and Manipal Group chairman Gautham Pai’s consumer-focused SPAC has raised $170 million through an IPO in the United States. The consumer sector-focused special purpose vehicle called Global Consumer Acquisition Corp. will acquire companies with an enterprise value of $500 million to $1 billion.
IT firms reskilling clients’ staff
India’s three largest IT services firms—Tata Consultancy Services (TCS), Infosys and Wipro—are reskilling and certifying employees of clients in diverse technologies, amid a global digital transformation drive.
- Some organisations want these IT services companies to completely take over their employee retraining and skilling efforts, executives from TCS, Wipro and Infosys told ET.
Why now? The push from the client side to reskill their workers has grown stronger over the last 15 months after the Covid-19 pandemic forced organisations to transition to a remote working model, forcing them to reimagine how to upskill and train their employees. They hope to train the client workforces in app development, data science, artificial intelligence, and industrial Internet of Things.
Nearly all modes of payment, digital and cash, saw a monthly decline in May owing to subdued economic activity in India amid the second wave of Covid.
Cuemath eyes new funding at $1 billion valuation
Edtech startup Cuemath plans to raise at least $100 million in a new financing round this year, its chief executive said, as the company targets a valuation of $1 billion by the end of 2022, Reuters reported.
- India’s edtech sector has witnessed a significant inflow of capital as students switched to online learning owing to the Covid-19 pandemic.
The Google-backed education technology startup had bagged $40 million in Series C funding led by LGT Lightstone Aspada and Falcon Edge-managed Alpha Wave Incubation in December last year.
Last week, Byju’s became India’s most valued startup after $340 million funding from investors such as the UBS Group, Zoom founder Eric Yuan, Blackstone, Abu Dhabi sovereign fund ADQ and Phoenix Rising–Beacon Holdings.
Another outage at HDFC Bank
HDFC Bank’s mobile banking app suffered an hour-long outage Tuesday afternoon. The reason for this downtime is not known yet.
In December last year, the Reserve Bank of India had stopped HDFC Bank from launching any new digital initiatives or issuing credit cards before they convincingly fix their systems— a move unprecedented in the Indian banking system.
While HDFC Bank submitted an outage control plan to the RBI in January this year, it has already suffered three digital outages in recent months. RBI had also appointed an external IT firm to carry out a special audit of HDFC Bank’s IT infrastructure in February this year.
Why does this matter? Continued disruptions in its digital services may deal a big blow to its prospects of resuming its credit card business and expanding its digital payments play. HDFC Bank is one of the largest card issuers in the country with 14.9 million outstanding credit cards and 37 million debit cards as of April 2021.
Top Stories We Are Covering
Encouraging entrepreneurship: Quess Corp has set up a new unit called Quessworks to encourage employees to innovate and create business solutions that can be independently marketed to clients.
More antitrust trouble for Amazon, Flipkart: The Competition Commission of India (CCI) plans to expedite a restarted probe into allegations of anti-competitive behaviour at Amazon and Walmart’s Flipkart, even as the country intensifies scrutiny of Big Tech firms.
More jobs incoming: UST, a digital transformation solutions firm, will increase headcount at its Hyderabad office to 1,000, and then double it by adding a thousand more by the end of 2023.
Global Picks We Are Reading
■ Inside Amazon’s employment machine (NYT)
■ Nvidia’s $40 billion takeover of Arm faces new foe (The Information)
■ Tim Berners-Lee’s World Wide Web code up for auction as NFT (Reuters)