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Homebound startups restructure; offline push by D2C brands
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Happy Wednesday! Homegrown startups are stepping on the pedal for their move back home. This and more in today's ETtech Morning Dispatch.
Also in the letter:
■ India’s own foundational model
■ ThinKuvate Rs 100-crore fund
■ IBM on India’s AI plans
Razorpay cofounders Harshil Mathur (left) and Shashank Kumar
Payments major Razorpay has kicked off a restructuring to bring its half-a-dozen India units under one single entity linked to the reverse-flip of its holding company to India from the US, sources told us. This will also help trim its tax outgo.
Growwing trend: Stock broking firm Groww’s cofounder Lalit Keshre said in a May 9 post on X that the company’s migration from the US was complete. Groww has accounted for around $60-70 million in tax payout. However, a couple of formalities are still pending with regard to its reverse-flip to India—including tax payment. Shareholders of its US unit now hold shares in the India entity, sources added.
Tell me more: Quick commerce firm Zepto has secured board approval to file an application in Singapore to move domicile to India. However, it will file the application only after the close of its ongoing funding round.
![Flipping in focus May 2024 Graphic ETTECH Flipping in focus May 2024 Graphic ETTECH](https://img.etimg.com/photo/msid-110316878/Flipping in focus May 2024 Graphic ETTECH.jpg)
Taxing times: All said, companies are undertaking restructuring and other measures to minimise their tax outgo as it can dent their cash reserves. Companies like Razorpay are working with Deloitte on moving domicile here from the US. Razorpay and Groww have common investors like Tiger Global, Peak XV Partners and Y Combinator.
![Country road May 2024 Graphic ETTECH Country road May 2024 Graphic ETTECH](https://img.etimg.com/photo/msid-110317179/Country road May 2024 Graphic ETTECH.jpg)
Why now: For fintechs like Razorpay, Groww, Pine Labs, the move back home serves to align themselves with the regulatory framework in India. Financial services regulators want companies and subsidiaries to be domiciled here. Additionally, moving holding entities is linked to future plans for a domestic IPO.
Also read | Singapore court clears Pine Labs plea to move domicile to India
![D2C BRANDS OFFLINE STORES THUMB IMAGE ETTECH D2C BRANDS OFFLINE STORES THUMB IMAGE ETTECH](https://img.etimg.com/photo/msid-110316870/D2C BRANDS OFFLINE STORES THUMB IMAGE ETTECH.jpg)
Direct-to-consumer (D2C) firms are opening offline stores as soon as raising their first round of funding, with omnichannel being an important part of their strategy right from the beginning.
Driving the news: Startups like Snitch and Newme in the fast fashion space, Solethreads and Neeman’s in the footwear segment, quick-service restaurant startup Boba Bhai, luggage brand Mokobara and beauty brand Pilgrim have all moved to open offline stores much faster than mature brands such as Mamaearth, Sugar Cosmetics and Boat.
![New age brands Whats in the offing May 2024 Graphic ETTECH New age brands Whats in the offing May 2024 Graphic ETTECH](https://img.etimg.com/photo/msid-110316891/New age brands Whats in the offing May 2024 Graphic ETTECH.jpg)
Know more: New-age brands are relying on data from online sales to draw up a list of cities and localities where they should focus for their offline stores, as they combine traditional real estate knowledge with their own shipping data to target the right micro-markets.
Diversification plan: D2C brands are looking beyond metros when opening physical stores. Snitch is targeting smaller cities like Vadodara, Surat, Vijayawada and Dehradun, while Pilgrim has stalls in Nashik and Thane.
Also read | About 90% of Indian retail market will remain offline: Accel’s Prashanth Prakash
![FOUNDATIONAL AI MODEL GOVERNMENT USE CASE THUMB IMAGE ETTECH FOUNDATIONAL AI MODEL GOVERNMENT USE CASE THUMB IMAGE ETTECH](https://img.etimg.com/photo/msid-110316902/FOUNDATIONAL AI MODEL GOVERNMENT USE CASE THUMB IMAGE ETTECH.jpg)
The union government plans to build its own version of a foundational model for artificial intelligence (AI) with an initial outlay of Rs 2,000 crore for the project, sources told ET.
What's happening: The foundational model will be customised for use by Indian companies, entrepreneurs, academics and researchers. This proposed initiative may be led by the IndiaAI Innovation Centre to be set up by the ministry of electronics and information technology under the Rs 10,000-crore India AI Mission, people in the know said.
![SDD SDD](https://img.etimg.com/photo/msid-110317126/SDD.jpg)
Quote, unquote: “The government will likely tap eminent higher education institutes and prominent researchers working on AI in the private sector to work on the foundational model,” a senior official said, adding that it could be a large action model (LAM) or a large multimodal model (LMM).
Why does it matter: To train these models, the government plans to use publicly available data, digitised records of books, journals and research papers from public libraries. It will also use any other anonymised non-personal data that is volunteered either by companies, startups or researchers, another official said.
The foundational model will also be trained on publicly available global datasets and open-source tools for machine learning.
Falguni Nayar, CEO, Nykaa
Nykaa makes Rs 7.17-crore Esop allotment ahead of Q4 results: FSN E-Commerce Ventures, which runs beauty and fashion retail brand Nykaa, has granted 4.05 lakh shares under its employee stock option plan (Esop). This comes ahead of the Mumbai-based company’s March quarter results, due Wednesday.
ThinKuvate launches Rs 100-crore maiden India fund: ThinKuvate India Fund, the company’s first India-focused fund, will take a sector-agnostic approach and invest up to Rs 3 crore as an initial amount in startups. It aims to invest in 12-15 startups every year.
‘India needs open-source AI models for cultural and linguistic representation’: India needs open-source artificial intelligence (AI) models to ensure cultural and linguistic representation and to maintain sovereign capabilities in the technology, two senior executives of American multinational technology company IBM said at a media roundtable.
■ Nvidia’s rivals take aim at its software dominance (FT)
■ The graying gig economy (Rest of World)
Also in the letter:
■ India’s own foundational model
■ ThinKuvate Rs 100-crore fund
■ IBM on India’s AI plans
Flipback Tax: Razorpay restructures to cut levy; Groww pegs tax outgo at $70 million
![Razorpay FLIPPING BACK TAXES Razorpay FLIPPING BACK TAXES](https://img.etimg.com/photo/msid-110316835/Razorpay FLIPPING BACK TAXES.jpg)
Payments major Razorpay has kicked off a restructuring to bring its half-a-dozen India units under one single entity linked to the reverse-flip of its holding company to India from the US, sources told us. This will also help trim its tax outgo.
Growwing trend: Stock broking firm Groww’s cofounder Lalit Keshre said in a May 9 post on X that the company’s migration from the US was complete. Groww has accounted for around $60-70 million in tax payout. However, a couple of formalities are still pending with regard to its reverse-flip to India—including tax payment. Shareholders of its US unit now hold shares in the India entity, sources added.
Tell me more: Quick commerce firm Zepto has secured board approval to file an application in Singapore to move domicile to India. However, it will file the application only after the close of its ongoing funding round.
![Flipping in focus May 2024 Graphic ETTECH Flipping in focus May 2024 Graphic ETTECH](https://img.etimg.com/photo/msid-110316878/Flipping in focus May 2024 Graphic ETTECH.jpg)
Taxing times: All said, companies are undertaking restructuring and other measures to minimise their tax outgo as it can dent their cash reserves. Companies like Razorpay are working with Deloitte on moving domicile here from the US. Razorpay and Groww have common investors like Tiger Global, Peak XV Partners and Y Combinator.
![Country road May 2024 Graphic ETTECH Country road May 2024 Graphic ETTECH](https://img.etimg.com/photo/msid-110317179/Country road May 2024 Graphic ETTECH.jpg)
Why now: For fintechs like Razorpay, Groww, Pine Labs, the move back home serves to align themselves with the regulatory framework in India. Financial services regulators want companies and subsidiaries to be domiciled here. Additionally, moving holding entities is linked to future plans for a domestic IPO.
Also read | Singapore court clears Pine Labs plea to move domicile to India
Offline stores are trending as new set of D2C firms emerge
![D2C BRANDS OFFLINE STORES THUMB IMAGE ETTECH D2C BRANDS OFFLINE STORES THUMB IMAGE ETTECH](https://img.etimg.com/photo/msid-110316870/D2C BRANDS OFFLINE STORES THUMB IMAGE ETTECH.jpg)
Direct-to-consumer (D2C) firms are opening offline stores as soon as raising their first round of funding, with omnichannel being an important part of their strategy right from the beginning.
Driving the news: Startups like Snitch and Newme in the fast fashion space, Solethreads and Neeman’s in the footwear segment, quick-service restaurant startup Boba Bhai, luggage brand Mokobara and beauty brand Pilgrim have all moved to open offline stores much faster than mature brands such as Mamaearth, Sugar Cosmetics and Boat.
![New age brands Whats in the offing May 2024 Graphic ETTECH New age brands Whats in the offing May 2024 Graphic ETTECH](https://img.etimg.com/photo/msid-110316891/New age brands Whats in the offing May 2024 Graphic ETTECH.jpg)
Know more: New-age brands are relying on data from online sales to draw up a list of cities and localities where they should focus for their offline stores, as they combine traditional real estate knowledge with their own shipping data to target the right micro-markets.
Diversification plan: D2C brands are looking beyond metros when opening physical stores. Snitch is targeting smaller cities like Vadodara, Surat, Vijayawada and Dehradun, while Pilgrim has stalls in Nashik and Thane.
Also read | About 90% of Indian retail market will remain offline: Accel’s Prashanth Prakash
Govt saying aye to laying strong AI foundation
![FOUNDATIONAL AI MODEL GOVERNMENT USE CASE THUMB IMAGE ETTECH FOUNDATIONAL AI MODEL GOVERNMENT USE CASE THUMB IMAGE ETTECH](https://img.etimg.com/photo/msid-110316902/FOUNDATIONAL AI MODEL GOVERNMENT USE CASE THUMB IMAGE ETTECH.jpg)
The union government plans to build its own version of a foundational model for artificial intelligence (AI) with an initial outlay of Rs 2,000 crore for the project, sources told ET.
What's happening: The foundational model will be customised for use by Indian companies, entrepreneurs, academics and researchers. This proposed initiative may be led by the IndiaAI Innovation Centre to be set up by the ministry of electronics and information technology under the Rs 10,000-crore India AI Mission, people in the know said.
![SDD SDD](https://img.etimg.com/photo/msid-110317126/SDD.jpg)
Quote, unquote: “The government will likely tap eminent higher education institutes and prominent researchers working on AI in the private sector to work on the foundational model,” a senior official said, adding that it could be a large action model (LAM) or a large multimodal model (LMM).
Why does it matter: To train these models, the government plans to use publicly available data, digitised records of books, journals and research papers from public libraries. It will also use any other anonymised non-personal data that is volunteered either by companies, startups or researchers, another official said.
The foundational model will also be trained on publicly available global datasets and open-source tools for machine learning.
Other Top Stories By Our Reporters
![Nykaa Nykaa](https://img.etimg.com/photo/msid-110316910/Nykaa.jpg)
Nykaa makes Rs 7.17-crore Esop allotment ahead of Q4 results: FSN E-Commerce Ventures, which runs beauty and fashion retail brand Nykaa, has granted 4.05 lakh shares under its employee stock option plan (Esop). This comes ahead of the Mumbai-based company’s March quarter results, due Wednesday.
ThinKuvate launches Rs 100-crore maiden India fund: ThinKuvate India Fund, the company’s first India-focused fund, will take a sector-agnostic approach and invest up to Rs 3 crore as an initial amount in startups. It aims to invest in 12-15 startups every year.
‘India needs open-source AI models for cultural and linguistic representation’: India needs open-source artificial intelligence (AI) models to ensure cultural and linguistic representation and to maintain sovereign capabilities in the technology, two senior executives of American multinational technology company IBM said at a media roundtable.
Global Picks We Are Reading
■ TikTok and the evolution of digital blackface (Wired)■ Nvidia’s rivals take aim at its software dominance (FT)
■ The graying gig economy (Rest of World)
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I agree to receive newsletters and marketing communications via e-mail
![](https://img.etimg.com/photo/msid-81268931,quality-100/et-logo.jpg)
Thank you for subscribing to Morning Dispatch
We'll soon meet in your inbox.