Cred continues fintech consolidation; Dailyhunt parent sacks 150 employees

Also in this letter:
■ Parent firm of Dailyhunt and Josh to lay off 150 workers
■ RBI to launch first pilot for retail digital rupee on Thursday
■ Musk goes to war with Apple over ads pullback, 30% commission

Cred to buy CreditVidya as fintech consolidation continues

Fintech startup Cred said on Tuesday it has agreed to buy credit underwriting software provider CreditVidya in a mix of equity and cash. The acquisition is subject to requisite approvals from National Company Law Tribunal (NCLT).

After the acquisition, CreditVidya will continue to operate independently and its more than 200 employees will get access to Cred’s employee stock ownership plan (Esop).

Founded in 2012, CreditVidya provides a loan underwriting platform that helps banks and non-bank financial companies (NBFC) assess credit better.

Consolidation time: The acquisition comes at a time when the Indian lending sector is headed for consolidation, as Reserve Bank of India’s (RBI’s) first set of digital lending rules – issued in September – emphasise the role of regulated entities such as non-banks and reduce lending-distribution platforms to mere direct-selling agents.

We reported on November 25 that digital payments major PhonePe was set to acquire buy-now-pay-later platform ZestMoney, marking a big consolidation move in the digital lending sector.

Between the lines: While CreditVidya focusses on including first-time borrowers in the credit economy, Cred has largely focussed on people with credit cards and high credit scores.

Cred has been ramping up its credit play over the past two years. In September it said it would pay $10 million to acquire a minority stake in peer-to-peer (P2P) non-banking financial company LiquiLoans. It is also an investor in debt marketplace CredAvenue and operates an active credit line for its customers with Cred Cash.

Parent firm of Dailyhunt and Josh to lay off 150 workers

VerSe Innovation, the parent company of news aggregator Dailyhunt and short-video platform Josh has laid off around 150 employees – about 5% of its 3,000-strong workforce.

Salary cuts, too: The company has also implemented an 11% salary cut for employees who earn more than Rs 10 lakh a year.

In April, the company had raised $805 million from investors including CPP Investments, Ontario Teachers’ Pension Board, Luxor Capital, Sumeru Ventures and Sofina Group in a round that valued it at $5 billion.

VerSe cofounder Umang Bedi told us, “Considering the long-term viability of the business and our people, we have taken steps to implement our regular bi-annual performance management cycle and made performance and business considerations to streamline our costs and our teams.”

TikTok ban beneficiary: VerSe Innovation launched Josh in 2020, after the Indian government banned Chinese short-video platform TikTok. Earlier this year, TikTok’s parent Bytedance, which was an investor in VerSe, sold its stake to other investors.

Year of layoffs: VerSe Innovation joins a long list of tech startups and Big Tech companies that have laid off workers and implemented other cost-cutting measures amid a slowdown in funding this year.

Dozens of Indian startups have laid off over 15,000 employees combined this year, including Byju’s, Vedantu, Unacademy, Ola, Meesho, Chargebee, Cars24, and Udaan. Funding for Indian startups fell to $2.7 billion in the September quarter from nearly $12 billion during the same period last year, according to data from Venture Intelligence.

And as of late November, more than 85,000 tech workers in the US have been laid off this year, according to a Crunchbase News tally.

Also Read | Unacademy’s Gaurav Munjal says rival Classplus ‘definitely overvalued’

RBI to launch first pilot for retail digital rupee on Thursday

The Reserve Bank of India said on Tuesday it will launch a pilot for the retail version of its central bank digital currency (CBDC), the digital rupee, on December 1. It said the pilot will cover select locations in a closed user group comprising participating customers and merchants.

Details: Users will be able to transact with the retail CBDC through a digital mobile wallet offered by participating banks.

The RBI has chosen eight banks to participate in the pilot. The first phase will begin with State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank. Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will join in later.

The pilot will be rolled out first in Mumbai, New Delhi, Bengaluru and Bhubaneswar before being extended to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla.

Crypto turmoil continues: Meanwhile, troubled crypto firm BlockFi has filed for bankruptcy in the US, as the dramatic collapse of FTX continues to reverberate across the industry.

Bitfront, a US crypto exchange backed by Japan’s Line Corp, said it will cease operations in a few months, adding the decision was not connected to ”recent issues related to certain exchanges that have been accused of misconduct”.

Infographic Insight: Decentralised finance (DeFi) and Web3 were the primary targets of early-stage startup funding from some of the top private investors in the third quarter (July-Sept), research firm Pitchbook said on Tuesday, even as overall venture capital investments declined.

But the outlook for funding in the current quarter has darkened owing to the collapse of FTX earlier this month.

Elon Musk declares war on Apple over ads pullback, 30% commission

To say that Elon Musk thrives on chaos is a huge understatement. After sacking many of Twitter’s top brass, laying off more than half of the company’s employees and telling the rest to commit to a new “hardcore” Twitter or quit, the world’s richest man has decided to pick a fight with the world’s richest company.

Apple tweet storm: Over the past 24 hours, Musk has accused Apple of threatening to block Twitter from its app store without saying why, and said it has all but stopped advertising on the social media platform. He said Apple was pressuring Twitter with content moderation demands and asked whether it “hates free speech”.

Also on the list of Musk’s grievances was the up to 30% fee Apple charges developers for in-app purchases.

Twitter under Musk is working on a revamped version of its premium service Twitter Blue, which will cost users $8 a month but net the company 30% less, thanks to Apple’s commission.

Apple shuns Twitter: The world’s most valuable firm spent an estimated $131,600 on Twitter ads between November 10 and 16, down from $220,800 between October 16 and 22, the week before Musk closed the Twitter deal, according to ad measurement firm Pathmatics.

In the first quarter of 2022, Apple was the top advertiser on Twitter, spending $48 million and accounting for more than 4% of total revenue for the period, the Washington Post reported, citing an internal Twitter document.

Urban Company awards stock options worth Rs 5.2 crore to 500 partners

Urban Company said it has awarded company stocks worth Rs 5.2 crore to about 500 of its ‘service partners’ across India under its partner stock option plan (Psop). When it announced the plan in March, the company said it aimed to award stocks worth Rs 150 crore to thousands of service partners over the next five to seven years.

Details: It said 30% of Psop recipients were women partners from its beauty & wellness vertical. Bangalore had the most number of partner shareholders at 26%, followed by Delhi-NCR (22%), Mumbai and Pune (16% combined), and Hyderabad (15%).

Protests: Urban Company’s decision to set aside stock options for gig workers came a few months after hundreds of women beauticians protested against the company in October 2021, demanding better pay. The company told us then it would not shy away from “doing the right thing for its stakeholders”.

Fipkart’s record buyback: On Tuesday morning we reported, citing sources, that Flipkart will soon buy back stock options worth $700 million from current and former employees as part of PhonePe’s new financing round. This will probably be the biggest Esop buyback to date in the Indian startup ecosystem.

Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant in Mumbai and Siddharth Sharma in Bengaluru. Graphics and illustrations by Rahul Awasthi.