Since COVID-19, crushing candies 🍬 and drawing the ludo dice 🎲online has been one of the popular ways to keep ourselves entertained.

Even as we move back to our pre-COVID daily routine, the demand for online and mobile #games seems to only rise. 📱

➡️ 15 billion mobile game downloads in FY22

➡️ 8.5 hours of time spent per week on mobile games

➡️ ~$3 billion raised by Indian gaming companies over the last 5 years

Deeper internet and smartphone penetration in India has been a major factor behind the rise of online gaming in India. 📶

A recent development in the gaming sector is the live streaming of games. ♨️

➡️ ~17 million people stream eSports in India

➡️ Expected to grow to ~85 million in the next three years

And with a huge internet user base, cities beyond the metros will start becoming mobile gaming hotspots. 🏙️

You can read the unrolled version of this thread here: https://typefully.com/peeyushjain2020/Eg3Ecb8

Gaming & interactive entertainment in India

Time and money are running out. Really?

A thread 🧵

Since the beginning of 2021, the number of #unicorns created in India has risen from 40 to 108. Only America and China have produced more. In 2021, promising #startups had no trouble finding investors. That year investment in startups tripled to $35bn.

The momentum continued in 2022, with $3.7bn invested in March alone.

The environment has since cooled. Investment in December was only $900m.

One reason is the woeful performance of firms that went public in 2021 - @zomato, @FreshworksInc, @Paytm, @policybazaar and @MyNykaa.

The share price of each has tumbled ~60%. The poor performance means that other planned listings such as @pharmeasyapp will not now go ahead.

Acquisitions have been similarly hit. In October the $4.7bn purchase of @billdesk by @PayUindia was cancelled. Re-evaluating what startups might be worth is now the foremost concern of all India’s VC firms.

In response to the tougher environment, costs are being cut. @Inc42 counts 20,500 #layoffs over the past year. Edtech has been especially hard hit, with @BYJUS sacking 2,500 employees.

Startups have seen other problems too. Byju was accused of aggressive accounting and sales policies. @bharatpeindia, @TrellApp and @Zilingo saw #founders quit after fraud accusations.

Recently, @gomechanicindia accepted deliberate financial misreporting, leading to a 70% workforce cut. These tribulations have brought the role of backers into question. Were firms sufficiently monitored? Were valuations credible?

@sequoia has acknowledged the governance issues in its holdings and wants to provide stricter oversight. Other foreign VC firms are rethinking how they approach India, too.

How companies come to market is also set to change in response to the losses from public offerings. India’s stock market regulator, @SEBI_India, made changes in September that will enable far greater scrutiny.

It will force firms to provide information on private transactions and the key data used to derive valuations. Though, these changes may not head off the carnage to come.

For all the concerns about the immediate future, the scene is still not pessimistic about the long-term for startups. The Indian economy is growing strongly and India is good at nurturing entrepreneurial talent.

This suggests that the storm ahead will be followed by a resumption of growth, eventually.

You can read the unrolled version of this thread here: https://typefully.com/peeyushjain2020/tLjahW3

Time and money are running out for Indian startups. Really?

What VCs want from #budget2023 ?

A thread 🧵

➡ Parity on #taxation for listed and unlisted shares ⚖

Currently, the Long Term Capital Gain (LTCG) on investment in private shares is taxed at 20%, while the taxation on publicly listed shares is at 10%.

➡ Increase ease of #investment ⏳

After heavy lifting by the founder to clear due diligence, it often takes 60 - 90 days for the investment to come through.

➡ Resolve taxation of #ESOPs 💲

While Budget 2020 ensured that employees did not have to pay taxes in the year they exercise the options, ESOPs continue to be taxed twice.

➡ Clarity on taxation of #AIF 🔎

Treatment of gains for investors vs fund managers is not still clear which makes it unremunerative for the fund managers.

You can read the unrolled version of this thread here: https://typefully.com/peeyushjain2020/rjYQdJ0

What VCs want from Budget 2023?

Layoffs in the tech sector are all over the news.

@ShopeeSG has executed a few rounds of cuts, affecting as many as 7,000 employees globally. Then there are other large-scale re-org i.e., @Meta (formerly @facebook) and @amazon, both cutting 10,000+ jobs.

But why is this happening?

Tech companies were not as efficient as you think. Here's how 🎯

➡ Blocker strategy i.e., pay above market rate and hand out multiple benefits to hoard talent

➡ Throw more people at a problem instead of solving the fundamental issue

➡ Low GMV per employee during the growth phase

➡ Involution i.e., people may be working hard but the effort does not translate into tangible value

But all is not lost.

Ultimately, some tech companies will become more agile and adapt faster to a more volatile environment.

The question is, when the next boom happens, are employers and workers prepared to seize it?

In this week’s Weekly Olio, we take a look at the factors behind the recent layoffs as well as some of their consequences.

Read here to find out more - https://weeklyolio.substack.com/p/weekly-olio-9

The newsletter also includes:

💭 Quote from Karen Lamb on Today

🐦 @Twitter thread by @mrjasonchoi on @FTX_Official

💹 Graphic arguing the decoupling of Indian markets (via @livemint)

📝 Short read by @ajh3_ on @neuralink Demo Day (via @Stonks_dot_com)

📜 Long read by @timmerman91 on the environmental and social devastation in Indonesia (via @restofworld)

You can read the unrolled version of this thread here: https://typefully.com/peeyushjain2020/5gZUoKr

Weekly Olio #9

In April 1961, Yuri Gagarin became the first person in #space. That marked the beginning of the obsession human beings have with the stars, but it wasn’t the pinnacle.

In September 1962, John F. Kennedy gave a speech announcing the U.S.’s focus on sending people to the moon.

A thread 🧵

@SpaceX was built to address a singular problem - the cost of a launch is the biggest barrier to increased access to space. And with its rockets capable of reflight (Falcon 9), it opens up a world of possibilities.

SpaceX’s value proposition is reliability at a low cost. The cost of its first rocket, Falcon 1, was 1/3 the cost of the 1980s Space Shuttle. As time went on, SpaceX’s launch costs continued to decrease.

SpaceX has several different revenue streams.

1. Launches provide long-term contracts from organizations such as @NASA. For e.g., in April 2021, NASA - National Aeronautics and Space Administration awarded SpaceX a $2.9 Bn contract to transport astronauts to the moon in 2024.

2. @SpaceXStarlink generates revenue through individual subscriptions to the internet service. It is a capital-intensive business, as SpaceX had to launch thousands of satellites into orbit. However, it will soon become self-sustaining once the satellites reach a saturation point

SpaceX has done an excellent job of taking advantage of economies of scale to reduce costs. Its strategy to vertically integrate, reuse rockets, and build for sustainability has positioned the company for future success.

You can read the unrolled version of this thread here: https://typefully.com/peeyushjain2020/orBRLHY

Startup Central: SpaceX

Living costs are high, budgets are squeezed, and consumers are looking for the support, resources and tools to make the future more hopeful.

Here are some key insights into the world of #finance and #fintech - knowing your buyers and what they want.

➡ Fintech isn’t being used to its full #potential Digital banks are growing quickly, but adoption remains low.

This means that large numbers of those struggling with money aren’t getting a helping hand from fintech just yet.

➡ Consumers often struggle to keep to their #budget Most of us follow a budget either consistently or at intervals.

But the perks of budgeting apps are little-known among low earners, many of whom still see them as a tool for techies.

➡ Confidence is generally higher than financial #literacy rates

Consumers are at least somewhat confident when it comes to #investing their money. At the same time, consumers with advanced financial knowledge are hard to find.

➡ Banks have room to grow their financial #learning material

Banks and financial institutions are seen as relatively trustworthy. Despite this, they’re not the go-to source for improving financial literacy. Banks fall behind online financial tools, blogs & websites.

➡ #Finfluencers are making waves with younger consumers

Gen Z & millennials are more likely to cite social media #influencers as their ideal source to learn about financial management. Accounts on platforms like @TikTok have already gained a huge following.

You can read the unrolled version of this thread here: https://typefully.com/peeyushjain2020/GMEDdZ7

World of finance and fintech - knowing your buyers and what they want

Can investors ever be friends with founders? Rather, should they be?

A thread 🧵

There was a time when @sequoia was all gaga about @SBF_FTX. It published a 73-page-long profile of SBF with a hyped-up dialogue. The piece even argued that SBF may become the world’s first trillionaire.

Fast forward ⏭️

@FTX_Official has filed for bankruptcy; SBF has been arrested for a fraud case filed in the US and Sequoia has taken down the above-mentioned article.

But it's important to ask why Sequoia decided to not just invest in FTX, but celebrated its founder like a breathless fan.

Some say, they wanted to showcase themselves as “founder-friendly” investor. Essentially, an ally than a mentor.

Or, if I may, a comrade like a Ron or a Hermoine to the founder Harry. But not a mentor, like Dumbledore. 😀

We all know there is a key difference between the two roles. Friends can support without critiquing, but mentors don't let obvious flaws slide.

And when mentors become friends, stories often twist themselves, like in this case.

You can read the unrolled version of this thread here: https://typefully.com/peeyushjain2020/fg4NBbG

Why investors can’t really be friends with founders?

Last month, the @RBI went live with a pilot of the #digital rupee.

The intent is to reduce dependence on cash, lower transaction costs, and enable an efficient transfer of money digitally, using a QR code.

But this begs the question, “Am I not doing all this using UPI already? Why would I ever want to use this?”

In this week’s Weekly Olio, we take a look at the recent pilot of the digital rupee, a Central Bank Digital Currency (#CBDC), by RBI.

Read here to find out more - https://weeklyolio.substack.com/p/weekly-olio-8

The newsletter also includes:

💭 Quote from Hal Borland on New Year

🐦 @Twitter thread by @thedankoe on digital wealth transfer

💹 Graphic showing the state of global #energy prices (via @VisualCap

📝 Short read by Carolynn Levy on the emergence of SAFE (via @mercury

📜 Long read by @contrarycapital on the past and future of metallurgy

You can read the unrolled version of this thread here: https://typefully.com/peeyushjain2020/SXrHzuo

Weekly Olio #8

In 2023, there’s one country which could make a global #recession much worse. That country is Japan. 🗾

A thread 🧵

Japan is the third largest #economy. Its financial sector is intertwined with that of the rest of the world.

It holds trillions of dollars of assets overseas, which means what happens here has the potential to affect the world’s financial markets.

In recent years, Japan’s central bank, the @Bank_of_Japan_e  (BoJ) has been reassuringly predictable keeping interest rates low. Interest rates only have to go up when #inflation rises, and that just hasn’t happened.

Even in the face of the #pandemic and the #energy crisis, @Bank_of_Japan_j held fast.

That was, until now.

As interest rates have risen elsewhere in the world, Japan has found itself exposed. This has affected the Yen, making it less attractive to international investors.

The reason is simple. If you buy the yen and invest in the Japanese bond market, you’re getting a lower interest rate and lower return vs the US Treasury market.

As a result, the yen has fallen against the dollar, making imports more expensive for Japan which pushed up the rate of inflation.

So at the end of 2022, the BoJ did something unexpected. It increased the cap on the yield of its ten-year bonds from 0.25% to 0.5%.

It might seem a relatively small move but it was enough to destabilise the markets. Global markets were jolted overnight.

And it was also an indication that in 2023 the BoJ might go even further.

The question is, how much further?

It could ditch the cap completely. Or it could start to increase short-term interest rates too, as other central banks have done already.

Any climb in interest rates in Japan will be concerning.

The reason is its high level of public debt. While interest rates were low, high public debt was manageable.

But if interest rates rise, investors will start to worry that Japan might not be able to service its debt. They will start selling Japanese bonds, causing bond yields to further go up.

And if there’s a dramatic repricing in rates, that can be quite destabilising for the economy.

And because Japan is so intertwined with the rest of the world, this destabilisation could spread to other financial markets.

This means what the BoJ chooses to do in 2023 could make any global recession much worse.

You can read the unrolled version of this thread here: https://typefully.com/peeyushjain2020/mr35umT

Japan and the recessionary fear 📉

VCs have played a crucial role in the global economy by financing high-growth start-ups. They’ve backed @amazon, @Apple, @Meta, @Google, and more.

But we know very little about what VCs actually do and how they create value. 💰

Let's try to understand the same.

At the highest level, they bring supply-demand equilibrium.

On one side are #entrepreneurs who have good ideas but no money.

On the other side are #investors who have money but no ideas.

#VCs connect the two and fill a crucial market gap while making money on the side.

There are four broad aspects to this process:

1. Hunting for Deals

The first task is to connect with start-ups that are looking for funding — a process known as “generating deal flow.” And how do you get high-quality deal flow?

Almost 30% are generated by VCs initiating contact with entrepreneurs. The rest comes from the network - trusted investors, entrepreneurs, and former colleagues.

Best opportunities don’t always walk into VC offices. VCs identify and research megatrends and proactively reach out to those entrepreneurs who share a vision of where the world is going.

This also suggests that it can be quite difficult for entrepreneurs who are not connected to the right social/ professional circles.

2. Narrowing the Funnel

Even for entrepreneurs who do gain access to a VC, the odds of securing funding are exceedingly low. For each deal a VC firm eventually closes, the firm considers, on average, 100+ opportunities.

Though VCs reject far more deals than they accept, they can be very aggressive when they spot a company they like. So, what factors do VCs consider as they go through the winnowing process?

The quality of founders tops the chart by far. The business model, the market, and the industry follow.

The best start-ups with inspiring entrepreneurs have intense competition to fund them. For VCs, having a clear message about what you will and will not do, and how you approach bold visions is the key to decide on opportunities.

Wait, no DCF/ NPV? 😮

Few VCs use standard financial-analysis techniques to assess deals. However, instead of DCF, the most commonly used metric is the cash returned from the deal as a multiple of the cash invested.

3. After the Handshake

This is where it gets tricky. To aspiring entrepreneurs, a typical VC #termsheet often seems to be written in a foreign language. 😀

In general, deals are structured so that entrepreneurs who hit milestones keep control and reap monetary rewards. If they miss those milestones, however, the VCs can bring in new management and change direction.

Yet, many VCs try not to focus too much on financial terms and give equal emphasis to how the company fits into their portfolios. They focus on how their experience and expertise can help the founding management team.

To attract the best entrepreneurs, it’s important to have a clear point of view beyond just making money. What's equally important is whether the entrepreneurs’ vision alings with what the venture firm is trying to do.

4. Finding Alpha

Once VCs have put money into a company, they roll up their sleeves and become active advisers. They provide strategic guidance, open connections to other investors/ customers, and help to hire employees/ board members.

But how do VCs deliver an 'alpha'?

There is no definite explanation. Though, VCs feel deal selection coupled with the right kind of post-investment interaction holds the key.

VCs put a huge amount of work into helping its companies - assisting with hiring to acting as the founder’s psychologist. But in the end the real success or failure of a venture comes from the founders.

Link to the article here: https://www.linkedin.com/pulse/how-do-venture-capitalists-vcs-operate-peeyush-jain

You can read the unrolled version of this thread here: https://typefully.com/peeyushjain2020/tK32u4Z