PhonePe's pre-IPO challenges; VC funds get AI edge
PhonePe's pre-IPO challenges; VC funds get AI edge
Also in the letter:
PhonePe's 5% dilemma: Payments still dominate revenue as it gets IPO-ready
Driving the news:
Poor timing of entry.
A focus on insurance, typically a push product with limited scalability compared to lending.
A sluggish scale-up in stock broking, where competitors have raced ahead.
Hesitant start to credit:
PhonePe has taken a conservative approach to lending. It prioritised secured loans, which are harder to distribute and offer thinner margins.
It entered the consumer credit market only after it had cooled, amid tightening regulations.
This cautious strategy has helped keep its loan book clean, but it has also constrained revenue growth.
Meanwhile, the credit market has become intensely competitive, with players like Paytm, BharatPe, Cred, and Groww rapidly expanding.
Steady growth:
Also Read:
Indian VC funds leverage AI to evaluate deals, boost workflows
Driving the news:
What VCs use AI for:
Researching potential deals
Identifying target portfolio companies
Conducting due diligence
Productivity boost:
Quote, unquote:
Also Read:
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Other Top Stories By Our Reporters
Social media abuzz about toxic work culture at Ola Krutrim after employee's 'suicide':
Zoho founder warns of LLM-led job disruption in software development:
Kaynes Semicon opens chip design centre in Oman:
Global Picks We Are Reading
Happy Monday! Digital payments leader PhonePe is struggling with diversifying its revenue streams on the road to IPO. This and more in today's ETtech Morning Dispatch.■ Ola Krutrim's workplace woes■ Zoho founder's AI warning■ Kaynes' Oman forayPhonePe is preparing the prospectus for its initial public offering (IPO) after closing the last financial year with over Rs 5,000 crore in revenue and profit, excluding Esop expenses. But a key challenge looms: diversifying its revenue streams Despite venturing into insurance, wealth broking, digital lending, and managing these verticals for a few years, PhonePe still derives 95% of its revenue from core payments. While the company has built undeniable strength in this space, its newer businesses have struggled due to:PhonePe remains the clear leader in payments. It has capitalised on UPI to build strong businesses in merchant payments, offline card acceptance, online payment aggregation, and orchestration platforms. While these provide some diversification, the Walmart-backed fintech is still primarily a payments-first company and is some way from evolving into a full-stack fintech platform.Indian venture capital funds are increasingly turning to artificial intelligence (AI) to automate tasks that junior staff and analysts once handled.The shift to AI has compressed timelines—what once took a week now just takes a day or two. Still, some experts caution that technology alone can't replace the human element in venture investing.AI agents like ChatGPT and Claude are enabling VC funds to assess markets and opportunities far more quickly than traditional methods. Firms with portfolio management responsibilities also use AI to analyse performance data.'Generative AI tools distil information and give us synthesised versions to help us understand an industry, a company or its opportunity,' Rajeev Kalambi, general partner at Catus Venture Partners, told ET.ETtech Top 5 and Morning Dispatch are must-reads for India's tech and business leaders, including startup founders, investors, policy makers, industry insiders and employees.Interested? Reach out to us at spotlightpartner@timesinternet.in to explore sponsorship opportunities.Bhavish Aggarwal, founder, KrutrimSocial media has been abuzz with posts about toxic work culture at Ola's AI arm, Krutrim , after a machine learning engineer at the firm allegedly took his life on May 8.Sridhar Vembu, founder of software-as-a-service (SaaS) firm Zoho, has sounded an alarm over the potential disruption in software jobs driven by the adoption of large language models (LLMs) and modern tooling.Kaynes Semicon, a subsidiary of Kaynes Technology India, opened its first overseas chip design centre in Muscat, Oman, in partnership with the nation's ministries of transport, communications and information technology, and labour.■ Airbnb is in midlife crisis mode ( Wired ■ How the Signal knockoff app TeleMessage got hacked in 20 minutes ( Wired ■ Crypto high rollers are hiring bodyguards to deter kidnappers ( Bloomberg
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