👩🏽‍💻 What 2024 holds for India’s SaaS sector, banks, fintechs, and more

The most interesting news selected specially for you! 07 January 2024 [View in Browser]( Hello, In today's newsletter, we will talk about: - The future of India’s SaaS sector - Forecast 2024: Banks and fintechs forge new paths amid regulatory overhaul - The funding winter of 2023 - 2024: The year of IPOs for Indian startups - Real-money gaming firms’ tax problem Here’s your trivia for today: What’s the most expensive home in the world? --------------------------------------------------------------- SaaS The future of India’s SaaS sector The Indian SaaS industry has not only weathered economic downturns but has also stood tall amid the funding winter in 2023. Projections paint a promising picture, with a joint report from SaaSBOOMiand McKinsey & Company setting a revenue range of $50-70 billion and an enterprise value of $500 billion by 2030. “The SaaS ecosystem has to adapt to the change faster, and those who do not tap into the opportunity or fail to pivot will find it even harder down the line. The year 2024 will be a make-or-break year," says Manav Garg, CEO of Eka Software and Founding Partner at Together Fund. Outlook 2024: - India's SaaS market is expected to reach $50 billion in ARR by 2030. The increase in the number of early-stage companies surpassing $10 million in revenue signifies a robust foundation for expansion, says Anant Vidur Puri, Partner, Bessemer Venture Partners. - AI-focused investments are at the core of many new SaaS funds. Together Fund launched Fund II in early 2023 as a $150 million early-stage fund with an AI-first investment strategy. In December, SenseAI Ventures launched its inaugural venture capital fund. - Platform-as-a-Service is expected to expand, offering developers a flexible platform for SaaS app creation. Moreover, SaaS platforms will prioritise mobile-first development as mobile usage rises. [Read More]( --------------------------------------------------------------- From the CapTable Forecast 2024: Banks and fintechs forge new paths amid regulatory overhaul In the swiftly transforming arena of Indian finance, the alliance between traditional banks and fintech entities is set to further reshape the industry in 2024. While industry lobbies may claim that the symbiotic relationship formed by the convergence of innovative technologies and financial services, one may legitimately ask: where, precisely, are these new possibilities for customer-centric solutions materialising? Especially considering the huge regulatory moat that banks have vis a vis fintechs. Amidst the regulatory upgrades orchestrated by the Reserve Bank of India (RBI) in the year 2023, Indian fintechs have had to navigate a period of turbulence. Rather than hastily attributing any challenges to the regulator, the industry must acknowledge that the era of regulatory arbitrage is diminishing, with 2024 poised for additional tightening. While some uncertainties persist, it's evident that the RBI is not inclined to transform fintechs into digital banks. At least for now. Key Takeaways: - The era of regulatory arbitrage appears to be at an end for Indian fintechs in 2024. - Traditionally associated with rapid expansion, fintechs must navigate a more trying environment that places a premium on sustainable business models. - Banks, on the other hand, must walk the talk on digital banking. This requires comprehensive process overhauls backed by substantive governance measures. - The government, too, has major calls to make. Post the 2024 elections, will it finally bite the bullet on privatising India’s public sector banks? [Continue Reading]( --------------------------------------------------------------- Venture Capital The funding winter of 2023 2023, venture capital inflow in the Indian startup ecosystem fell more than half over last year. This was the lowest amount raised by Indian startups in the last seven years. The total venture capital funding raised by Indian startups last year was $10.8 billion compared to $23 billion in 2022. Even the number of deals was lower by 34%. Slowdown: - In 2023, monthly VC funding crossed $1 billion only five times for the entire year. It had a bearing on the overall amount raised by the Indian startup ecosystem. - Indian startups witnessed a drop in funding across every stage—early, growth, and late. However, the debt category saw an increase in activity. - In 2023, only three startups—PhonePe, Lenskart, and Ola Electric—crossed $500 million in total funding. [Read More]( --------------------------------------------------------------- In-depth 2024: The year of IPOs for Indian startups hasn’t been a blockbuster year for Indian startups in the IPO markets. However, experts feel that 2024 might be the comeback year for startup IPOs as founders have understood that the market rewards profitability and predictability based on past experience. As of now, startup unicorns such as Ola Electric and FirstCry have already filed their IPO papers with market regulator SEBI. Market bound: - Today, there are several factors which are in favour of startups that are aiming for an IPO. At the same time, there has been a sharp learning curve for startups where the business focus is on sustainable growth with a clear goal of achieving profits. - The data from the financial portal Chittogarh shows there were 58 IPOs in 2023 on the mainboard of the stock exchanges as against 40 in 2022 and 63 in 2021. - Ola Electric has already filed its DRHP with an aim to raise Rs 5,700 crore, while FirstCry aims to garner Rs 1,816 crore. [Read More]( --------------------------------------------------------------- Gaming Real-money gaming firms’ tax problem revised tax slabs—which came into effect on October 1—saw ripple effects across most real-money gaming (RMG) firms, with both big and small players, such as Mobile Premier League, Hike Rushing Gaming, and Spartan Poker, resorting to layoffs. Despite dealing with the heat of the new tax regime, real-money gaming companies are optimistic about their fortunes in 2024 and hope to find ways to absorb the impact of GST this year. Game on: - As per the amendments to the Integrated GST Act, offshore online gaming platforms must register with the Indian government and pay 28% tax in accordance with the domestic law. - The government–in a bid to tackle unregulated offshore entities–has made it clear that separate rules related to this will be issued. - While gaming companies welcome the government’s move, they say that, for India to be recognised as an ideal destination for international players, the current legislation might have to be amended. [Read More]( --------------------------------------------------------------- News & Updates - [Not allowed:]( Semiconductor equipment maker ASML was barred by the Dutch government from exporting some of its tools to China. ASML said a license for the shipment of its NXT:2050i and NXT:2100i lithography systems in 2023 has “recently been partially revoked by the Dutch government.” - [Crypto markets:]( Bitcoin tumbled on Wednesday, giving back all of its gains from the rally earlier this week. The price of bitcoin was last lower by 6% at $42,159.37, according to Coin Metrics. On Tuesday, it climbed as high as $45,913.30, its highest level since April 2022. - [American Dream:]( Investors ploughed $123.1 billion into cash in the seven days to Wednesday, marking the largest such inflow since March 2023 and a record for the first week of a year, Bank of America said in a report. BofA said investors bought $10.6 billion of bonds and $7.6 billion of stocks, but they shed $0.8 billion of gold. Did you know? What’s the most expensive home in the world? Answer: Buckingham Palace, valued at approximately [$4.9 billion](. We would love to hear from you! 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