![]() |
Paytm crisis deepens; taming of the alpha founder
Want this newsletter delivered to your inbox?
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 Daily Top 5
We'll soon meet in your inbox.
Paytm’s peers and users have gone back to re-strategise as the fintech firm untangles the regulatory knots. The latest on this and more in today’s ETtech Top 5.
Also in this letter:
■ Ola’s valuation slashed further
■ Tech talent gets cheaper
■ DGGI probing Mahadev Online Book
![Paytm ED investigation Paytm ED investigation](https://img.etimg.com/photo/msid-107431104/Paytm ED investigation.jpg)
As Paytm Payments Bank navigates regulatory hurdles imposed by the Reserve Bank of India (RBI), its customers and competitors are redrawing their plans with the fintech group.
De-risking: Banks looking to take over the accounts are waiting for the RBI to indemnify them on the KYC and money laundering issues, sources told us, adding that One 97 Communications, which has a loan sourcing business with seven non-banking financial companies, will also be impacted.
![Paytm business snapshot Paytm business snapshot](https://img.etimg.com/photo/msid-107431445/Paytm business snapshot.jpg)
Also read | Read our top stories on Paytm crisis
At least half a dozen banks, including HDFC Bank, Yes Bank and Axis Bank, are engaged in discussions with Paytm on how to ensure seamless transactions for customers.
Partners back away: Shriram Finance vice chairman Umesh Revankar said it will revisit the partnership with Paytm, which was forged in July 2023.
“This platform has been with us for a few months and only Rs 24 crore worth of business has been done. We will continue to service those customers. But, yes, in light of the recent developments, we will be revisiting our relationship with Paytm," he said.
Shares tank: Shares of One 97 Communications fell another 10% on Monday to their lower circuit limit at Rs 438.35 on BSE as the regulatory crisis deepened.
In the last three trading sessions, including today, the stock has lost 42.4% of its value, or Rs 20,500 crore in market capitalisation.
Following two successive days of 20% losses in Paytm, stock exchanges have reduced the lower circuit limit to 10%.
![Paytm Paytm](https://img.etimg.com/photo/msid-107433783/Paytm.jpg)
Wallet biz on the block? Meanwhile, as per a report by The Hindu Business Line, HDFC Bank and Jio Financial are said to be among the frontrunners to acquire Paytm’s wallet business, which is housed under Paytm Payments Bank.
It also said that as part of a larger bailout plan, Jio may offer to acquire Paytm Payments Bank. Shares of Jio Financial Services on Monday rallied 14% to the day's high at Rs 288.75 on the BSE
Catch up quick: We reported earlier today that Paytm leadership met senior executives over the weekend to reassure employees and address concerns about the future of the embattled fintech firm.
![upi market share by volume upi market share by volume](https://img.etimg.com/photo/msid-107431203/upi market share by volume.jpg)
Meanwhile, the crisis has reignited the debate on the proposal for a ceiling of 30% market share by volume for unified payments interface (UPI) apps, we reported.
Also read | ED, GST authority flagged several violations by Paytm earlier
According to a person briefed on the matter, NPCI is likely to take RBI approval before allowing any migration of merchants or banking partners with regards to Paytm UPI usage.
Read our detailed coverage
L-R: Paytm’s Vijay Shekhar Sharma and Byju’s founder Byju Raveendran
Hi, Samidha here. This past week, the Indian startup world has been whiplashed like never before. Two of its biggest names, Paytm’s Vijay Shekhar Sharma and Byju’s founder Byju Raveendran, face what’s arguably an existential challenge to the businesses they have built.
Did it come as a shock to the people closely tied to the ecosystem? Not really. For the wider population, however, these developments tarnish the image of the new-age economy and its entrepreneurs who have been lionised.
Rock star founders | Having had a ringside view, it’s fair to say that Sharma and Raveendran epitomise the solo, alpha, go-for-broke founder the technology world prizes immensely. They are also in some ways bigger than the companies they have built. While one cannot write them off (think Adam Neumann who came back to raise tons of venture capital after the WeWork debacle) there are many lessons for the wider technology world especially in a market like India.
Boom-bust cycle | Every technology boom cycle, like the recent 2021 hyper funding period, creates a series of messy events which unfold subsequently. Carcasses emerge once the dust settles. That’s what we are seeing. The excesses of easy money (read a zero interest rate regime in US) ended in severe blows being dealt to these companies recently. While the reset in technology industry is underway and the funding squeeze continues, the near-collapse of Paytm Payments Bank and Byju’s is reflective of how lack of governance, compliance and transparency and a culture which side-steps these critical issues can run you down.
Read the full column here.
Ola founder and managing director Bhavish Aggarwal
A fund operated by US investment major Vanguard marked down the fair value of ride-hailing platform Ola’s parent ANI Technologies to $1.88 billion as of November 30. It is 74% lower than the last valuation at which the company raised funds in December 2021.
Some math: This also marks a 29% cut from Vanguard’s previous fair value of $2.65 billion as of August 31, according to filings with the US Securities and Exchange Commission (SEC).
Vanguard had earlier revised the valuation of its shareholding in ANI Technologies by 24% to $3.5 billion which was the value as of May 31 last year.
FY23 report card: ANI Technologies narrowed its standalone loss by 65% to Rs 1,082 crore in the last financial year, from Rs 3,082 crore in FY22. Its sales surged 63% to Rs 1,987.5 crore from Rs 1,220 crore.
On January 25, Ola Cabs’ new chief executive Hemant Bakshi said fleet-wide electrification and premiumisation will drive growth for the ride-hailing company going ahead. Bakshi said the company had turned profitable based on earnings before interest, taxes, depreciation and amortisation (Ebitda) for FY23.
The great valuation reset: Besides Ola, multiple other Indian consumer internet companies have seen their valuations being revised by US investors in recent weeks.
Funds managed by financial services giant Fidelity reduced the valuation of Meesho and Pine Labs last month. Meesho’s fair value was set at around $4.1 billion as on October 31, 2023, down from around $5 billion two months earlier. Meesho was valued at $4.9 billion after it raised $570 million in 2021.
Pine Labs' fair value was cut to $3 billion from $4.7 billion as on August 31. The Peak XV Partners-backed company was valued at over $5 billion after it raised $150 million in 2022.
![hiring hiring](https://img.etimg.com/photo/msid-107431641/hiring.jpg)
In the ongoing funding winter, mass layoffs and regulatory troubles at startups have made talent more affordable, experts told us.
Tell me more: A glut of resumes in the job market from laid-off employees, and those looking to exit troubled companies like Byju’s, is leading to a sharp reset of salaries from the stratospheric levels scaled in the post-Covid hiring frenzy of 2021-22.
While employees of cash-strapped edtech firm Byju’s have been in the job market for a while now, regulatory troubles at Paytm have made a number of its staffers jittery, driving them to explore other options.
Swiggy and Flipkart’s announcements of workforce cuts have also added to the supply of talent who were highly paid, recruiters said.
Quote unquote: “A rationalisation of salaries is overdue post the last couple of years' aberration of high funding and salaries. So, the downcycle will also be steeper,” said Anshuman Das, chief executive of Longhouse Consulting.
Tech folks better off: While tech and product professionals have more takers and can move at flat or 10-15% lower salaries, many others are taking a 20-30% cut.
The overall situation in consumer internet right now is tough, but tougher if the candidate is in roles like HR, sales or marketing, said Ashish Sanganeria, senior partner at executive search firm Transearch.
![layoff plans layoff plans](https://img.etimg.com/photo/msid-107431670/layoff plans.jpg)
Startup staff on the edge: The latest layoffs have injected further anxiety into an already terrible job market, ET reported on February 1. Flipkart has initiated a process to reduce its team by 5-7%, impacting between 1,100-1,500 people.
Paytm is letting go of over 1,000 employees, while food-delivery major Swiggy is preparing to cut 350-400 jobs.
![mahadev app mahadev app](https://img.etimg.com/photo/msid-107433455/mahadev app.jpg)
The Directorate General of GST Intelligence (DGGI) is investigating Mahadev Online Book, an allegedly illegal betting application, and its promoters for suspected violation of GST rules and non-payment of tax.
Details: The app, banned in India, is already under the scrutiny of the Enforcement Directorate and police in multiple cities including Mumbai and Hyderabad over allegations of money laundering, illegal betting and match fixing.
Also read | Mahadev betting syndicate resurfaces with new avatars, deepfake tactics
Pending dues: The DGGI suspects the GST dues to be around Rs 30,000 crore, officials in the know said. "...this would include the interest and penalty accruing since 2018-19 when the application was floated," said a senior official.
Background: Last year, between September and November, the DGGI had issued showcause notices to real money gaming (RMG) firms seeking a demand of over Rs 1.12 lakh crore in total. Several of these companies have contested the demands before high courts and the Supreme Court.
Also read | ETtech Explainer: What is the Mahadev app case troubling Bollywood celebrities?
Today's ETtech Top 5 newsletter was curated by Megha Mishra in Mumbai and Erick Massey in New Delhi.
Also in this letter:
■ Ola’s valuation slashed further
■ Tech talent gets cheaper
■ DGGI probing Mahadev Online Book
Customers, competitors redraw plans with Paytm
![Paytm ED investigation Paytm ED investigation](https://img.etimg.com/photo/msid-107431104/Paytm ED investigation.jpg)
As Paytm Payments Bank navigates regulatory hurdles imposed by the Reserve Bank of India (RBI), its customers and competitors are redrawing their plans with the fintech group.
De-risking: Banks looking to take over the accounts are waiting for the RBI to indemnify them on the KYC and money laundering issues, sources told us, adding that One 97 Communications, which has a loan sourcing business with seven non-banking financial companies, will also be impacted.
![Paytm business snapshot Paytm business snapshot](https://img.etimg.com/photo/msid-107431445/Paytm business snapshot.jpg)
Also read | Read our top stories on Paytm crisis
At least half a dozen banks, including HDFC Bank, Yes Bank and Axis Bank, are engaged in discussions with Paytm on how to ensure seamless transactions for customers.
Partners back away: Shriram Finance vice chairman Umesh Revankar said it will revisit the partnership with Paytm, which was forged in July 2023.
“This platform has been with us for a few months and only Rs 24 crore worth of business has been done. We will continue to service those customers. But, yes, in light of the recent developments, we will be revisiting our relationship with Paytm," he said.
Shares tank: Shares of One 97 Communications fell another 10% on Monday to their lower circuit limit at Rs 438.35 on BSE as the regulatory crisis deepened.
In the last three trading sessions, including today, the stock has lost 42.4% of its value, or Rs 20,500 crore in market capitalisation.
Following two successive days of 20% losses in Paytm, stock exchanges have reduced the lower circuit limit to 10%.
![Paytm Paytm](https://img.etimg.com/photo/msid-107433783/Paytm.jpg)
Wallet biz on the block? Meanwhile, as per a report by The Hindu Business Line, HDFC Bank and Jio Financial are said to be among the frontrunners to acquire Paytm’s wallet business, which is housed under Paytm Payments Bank.
It also said that as part of a larger bailout plan, Jio may offer to acquire Paytm Payments Bank. Shares of Jio Financial Services on Monday rallied 14% to the day's high at Rs 288.75 on the BSE
Catch up quick: We reported earlier today that Paytm leadership met senior executives over the weekend to reassure employees and address concerns about the future of the embattled fintech firm.
![upi market share by volume upi market share by volume](https://img.etimg.com/photo/msid-107431203/upi market share by volume.jpg)
Meanwhile, the crisis has reignited the debate on the proposal for a ceiling of 30% market share by volume for unified payments interface (UPI) apps, we reported.
Also read | ED, GST authority flagged several violations by Paytm earlier
According to a person briefed on the matter, NPCI is likely to take RBI approval before allowing any migration of merchants or banking partners with regards to Paytm UPI usage.
Read our detailed coverage
- Breaches piling up for seven years at Paytm Payments Bank
- Paytm in talks to migrate payments, settlements from Paytm Payments Bank
- After series of ‘violations’, Paytm may lose Payments Bank licence
- ETtech Explainer: how will RBI move impact customers
- Paytm’s earnings likely to take a Rs 300-500 crore hit
- Brokerage firms warn of ‘regulatory overhang’ around Paytm’s future
- Shock and awe: Founders decry RBI action against Paytm
- Paytm will keep working beyond February 29, assures founder Vijay Shekhar Sharma
Full Stack by Samidha Sharma | Alphas, cowboys and the strong, silent types
![Vijay Shekhar Sharma and Byju Raveendran Vijay Shekhar Sharma and Byju Raveendran](https://img.etimg.com/photo/msid-107433432/Vijay Shekhar Sharma and Byju Raveendran.jpg)
Hi, Samidha here. This past week, the Indian startup world has been whiplashed like never before. Two of its biggest names, Paytm’s Vijay Shekhar Sharma and Byju’s founder Byju Raveendran, face what’s arguably an existential challenge to the businesses they have built.
Did it come as a shock to the people closely tied to the ecosystem? Not really. For the wider population, however, these developments tarnish the image of the new-age economy and its entrepreneurs who have been lionised.
Rock star founders | Having had a ringside view, it’s fair to say that Sharma and Raveendran epitomise the solo, alpha, go-for-broke founder the technology world prizes immensely. They are also in some ways bigger than the companies they have built. While one cannot write them off (think Adam Neumann who came back to raise tons of venture capital after the WeWork debacle) there are many lessons for the wider technology world especially in a market like India.
Boom-bust cycle | Every technology boom cycle, like the recent 2021 hyper funding period, creates a series of messy events which unfold subsequently. Carcasses emerge once the dust settles. That’s what we are seeing. The excesses of easy money (read a zero interest rate regime in US) ended in severe blows being dealt to these companies recently. While the reset in technology industry is underway and the funding squeeze continues, the near-collapse of Paytm Payments Bank and Byju’s is reflective of how lack of governance, compliance and transparency and a culture which side-steps these critical issues can run you down.
Read the full column here.
Ola’s valuation slashed by 29% to below $2 billion
![Ola Electric Ola Electric](https://img.etimg.com/photo/msid-107431463/Ola Electric.jpg)
A fund operated by US investment major Vanguard marked down the fair value of ride-hailing platform Ola’s parent ANI Technologies to $1.88 billion as of November 30. It is 74% lower than the last valuation at which the company raised funds in December 2021.
Some math: This also marks a 29% cut from Vanguard’s previous fair value of $2.65 billion as of August 31, according to filings with the US Securities and Exchange Commission (SEC).
Vanguard had earlier revised the valuation of its shareholding in ANI Technologies by 24% to $3.5 billion which was the value as of May 31 last year.
FY23 report card: ANI Technologies narrowed its standalone loss by 65% to Rs 1,082 crore in the last financial year, from Rs 3,082 crore in FY22. Its sales surged 63% to Rs 1,987.5 crore from Rs 1,220 crore.
On January 25, Ola Cabs’ new chief executive Hemant Bakshi said fleet-wide electrification and premiumisation will drive growth for the ride-hailing company going ahead. Bakshi said the company had turned profitable based on earnings before interest, taxes, depreciation and amortisation (Ebitda) for FY23.
The great valuation reset: Besides Ola, multiple other Indian consumer internet companies have seen their valuations being revised by US investors in recent weeks.
Funds managed by financial services giant Fidelity reduced the valuation of Meesho and Pine Labs last month. Meesho’s fair value was set at around $4.1 billion as on October 31, 2023, down from around $5 billion two months earlier. Meesho was valued at $4.9 billion after it raised $570 million in 2021.
Pine Labs' fair value was cut to $3 billion from $4.7 billion as on August 31. The Peak XV Partners-backed company was valued at over $5 billion after it raised $150 million in 2022.
Tech talent gets cheaper as startups, ecommerce cut rolls
![hiring hiring](https://img.etimg.com/photo/msid-107431641/hiring.jpg)
In the ongoing funding winter, mass layoffs and regulatory troubles at startups have made talent more affordable, experts told us.
Tell me more: A glut of resumes in the job market from laid-off employees, and those looking to exit troubled companies like Byju’s, is leading to a sharp reset of salaries from the stratospheric levels scaled in the post-Covid hiring frenzy of 2021-22.
While employees of cash-strapped edtech firm Byju’s have been in the job market for a while now, regulatory troubles at Paytm have made a number of its staffers jittery, driving them to explore other options.
Swiggy and Flipkart’s announcements of workforce cuts have also added to the supply of talent who were highly paid, recruiters said.
Quote unquote: “A rationalisation of salaries is overdue post the last couple of years' aberration of high funding and salaries. So, the downcycle will also be steeper,” said Anshuman Das, chief executive of Longhouse Consulting.
Tech folks better off: While tech and product professionals have more takers and can move at flat or 10-15% lower salaries, many others are taking a 20-30% cut.
The overall situation in consumer internet right now is tough, but tougher if the candidate is in roles like HR, sales or marketing, said Ashish Sanganeria, senior partner at executive search firm Transearch.
![layoff plans layoff plans](https://img.etimg.com/photo/msid-107431670/layoff plans.jpg)
Startup staff on the edge: The latest layoffs have injected further anxiety into an already terrible job market, ET reported on February 1. Flipkart has initiated a process to reduce its team by 5-7%, impacting between 1,100-1,500 people.
Paytm is letting go of over 1,000 employees, while food-delivery major Swiggy is preparing to cut 350-400 jobs.
DGGI probing Mahadev Online Book for possible non-payment of GST
![mahadev app mahadev app](https://img.etimg.com/photo/msid-107433455/mahadev app.jpg)
The Directorate General of GST Intelligence (DGGI) is investigating Mahadev Online Book, an allegedly illegal betting application, and its promoters for suspected violation of GST rules and non-payment of tax.
Details: The app, banned in India, is already under the scrutiny of the Enforcement Directorate and police in multiple cities including Mumbai and Hyderabad over allegations of money laundering, illegal betting and match fixing.
Also read | Mahadev betting syndicate resurfaces with new avatars, deepfake tactics
Pending dues: The DGGI suspects the GST dues to be around Rs 30,000 crore, officials in the know said. "...this would include the interest and penalty accruing since 2018-19 when the application was floated," said a senior official.
Background: Last year, between September and November, the DGGI had issued showcause notices to real money gaming (RMG) firms seeking a demand of over Rs 1.12 lakh crore in total. Several of these companies have contested the demands before high courts and the Supreme Court.
Also read | ETtech Explainer: What is the Mahadev app case troubling Bollywood celebrities?
Today's ETtech Top 5 newsletter was curated by Megha Mishra in Mumbai and Erick Massey in New Delhi.
Want this newsletter delivered to your inbox?
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 Daily Top 5
We'll soon meet in your inbox.