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Happy Wednesday! Investors are backing wealthtech startups with many scooping up new capital despite the stress in the fintech market. Details on this and more in today’s Morning Dispatch.



Also in this letter:


■ Q4 IT earnings preview

■ Sridhar Narayan is new Perfios CBO

■ Byju’s lays off about 500 staffers


Investors bet on wealthtech startups Dezerv, Stable Money


wealthtech startups

Even as many fintech startups struggle to shore up venture capital money due to the ongoing funding squeeze and regulatory actions in the space, wealthtech startups are catching investor interest.

Driving the news: Wealthtech platforms Dezerv and Stable Money are set to close $30 million and $17 million in equity funding, respectively. While Dezerv is looking to raise the capital from Premji Invest, Stable Money is likely to rack up funds led by RTP Global.

Go deeper: While these early-stage startups have almost stitched up their rounds, mutual fund distributor Scripbox is scouting for a fresh investor. Sources told us that Accel, one of its early investors, wants to take a secondary, i.e. sell some of its shares through this deal.

Wealthtech startups in focus

Listed stock broker Angel One recently informed the stock exchanges that it is looking to raise around $240 million in a fresh issue of shares.

Background: Dezerv, founded in 2021, has reported Rs 1,000 crore in revenues in FY23. It offers wealth management and curated advisory platforms for working professionals.

Stable Money is a fixed-instrument investment platform which started with fixed deposits. It eventually wants to diversify into other fixed-income investment options such as corporate bonds. One of the people in the know told us that Stable Money is yet to start monetising in a major way, but is getting a lot of user attention.

Also read | Gold loan startup Rupeek is staring at a down round


PhonePe, Paytm eye sound box advertising; FMCG firms sign up for pilots


PhonePe and Paytm soundboxes

To augment their revenue streams, payments firms PhonePe and Paytm are looking to run audio advertisements on millions of sound boxes they have deployed across general and modern trade retail outlets.

Pilot in process: Large fast-moving consumer goods (FMCG) companies, including Cadbury parent Mondelez and Tata Consumer Products, are participating in the experiment, we have learnt.

“There will be a 4-5 second audio spot that will run after every few transactions on the soundbox. The experiment is being conducted with retail grocery stores in some cities with FMCG and CPG (consumer packaged goods) brands,” a person in the know said. “If the frequency of ads is very high, there will be a blind spot, and the effectiveness of the ads will reduce.”

Major market: As per industry estimates, about 10 to 12 million sound box devices have been deployed across the country, and such a move could help the fintech companies monetise this asset.

View point: Advertising experts said the move will open up an avenue for companies to do brand advertising, in addition to running promos, and augment impulse-buying.

“Soundbox ads would have spillover reach to audiences who are in the shop…and there are different targeting opportunities – by state, language, pin code,” said Sairam Ranganathan, chief digital officer, Wavemaker India (a GroupM company).


Q4 earnings preview: Gradual recovery on the cards for IT majors


IT sector

Indian IT majors HCLTech and Tata Consultancy Services (TCS) will likely pull ahead of their top-tier software rivals as the outsourcing industry starts to put out fourth-quarter earnings next week.

Expertspeak: “Recovery of furloughs and ramp-up of recently won large deals should aid revenue growth. Accordingly, for most of our coverage companies, we see YoY revenue growth to start recovering from 4QFY24,” BNP Paribas analyst Kumar Rakesh said in a report.

For the likes of TCS, Infosys, HCLTech and Wipro, it expects 4QFY24 constant currency (cc) organic revenue growth at -1% to +1%, while mid- and small-caps could report 1-3% QoQ (quarter on quarter) USD organic revenue growth.

‘Bottomed out’: “We think the industry has bottomed out. Signs of improvement in the global economy, macro indicators and strong deal wins in recent quarters should translate into revenue growth acceleration in FY25, in our view,” BNP Paribas added.

Also read | Tide seems to be turning for IT as hiring mandates rise 50% in February

Estimates from Jefferies: “We expect aggregate revenue growth for our coverage to remain subdued at 0.3% QoQcc in 4QFY24 as continued pressure on discretionary IT spends limits the pace of recovery from furloughs. We expect only two firms in our coverage – TCS (+1.4% QoQcc) and Coforge (+2% QoQcc) – to deliver QoQcc revenue growth, led by deal ramp ups.”

Catch up quick: Q3 and partly Q4 of a fiscal year are seasonally weak quarters. In the third quarter ending December 2023, most IT earnings were hit by muted revenues and profit numbers. Infosys trimmed its FY24 revenue guidance, while Wipro had modest estimates.

Among global technology majors, Accenture, Cognizant and Capgemini lowered or slowed their FY24 (ending in August) guidance due to continued pressure on clients’ IT budgets.


Other Top Stories By Our Reporters


Perfios

Sridhar Narayan, chief business officer, Perfios

IPO-bound Perfios appoints Adobe’s Sridhar Narayan as CBO | Fintech-focused software startup Perfios, which is considering a domestic initial public offering by 2025, has hired former Adobe India’s financial services head Sridhar Narayan as its chief business officer.

Byju’s lays off about 500 staffers, nearly half from tuition centre business | Troubled edtech Byju’s has laid off about 500 staffers, largely across sales and marketing functions, at a time when it is struggling to raise capital for day-to-day operations, as per sources familiar with the development.


Global Picks We Are Reading

■ Apple Store Employees Say Coworkers Were Disciplined for Supporting Palestinians (Wired)

■ Landmark UK bitcoin freezing order had links to £5bn China fraud (FT)

■ Snapchat’s Friend-Ranking Feature Adds to Teen Anxiety (WSJ)

William Murphy

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