It’s the middle of the festive season but unfortunately we bring bad tidings today, as India’s startup and investor communities lost two bright minds in two days.

Also in this letter:

• Industry welcomes chip policy but concerns remain
• Coinswitch Kuber looks beyond crypto to stocks, MFs
• WhatsApp Pay turns to Bharat to win ePay race

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Startup world mourns the loss of Narendra Gupta and Pankhuri Shrivastava

Narendra Gupta, 73, who cofounded Nexus Venture Partners, one of India’s oldest venture capital firms, passed away on December 25, a day after Pankhuri Shrivastava, who founded women-focused social community platform ‘Pankhuri’.

Pioneer: Gupta was an early mover in the global venture capital and startup ecosystem, and among the first generation of Indian American tech entrepreneurs.

Gupta held a BTech degree from the Indian Institute of Technology (IIT), Delhi; an MS from the California Institute of Technology and a PhD from Stanford University.

Based in Silicon Valley, he began his career in technology by cofounding a software company called Integrated Systems Inc in 1980. He was its CEO for about 15 years.

In 1990, he took ISI public and merged it with Wind River Systems. He remained on that board until it was acquired by Intel.

He launched Nexus Venture Partners in 2007, when Indian tech startups were still in their infancy, Today it is among the top of VC firms, with investments in companies such as Delhivery, Unacademy, Postman and Snapdeal, among others.

He was until recently chairman of the board at Red Hat before IBM acquired it for $34 billion.

Tributes: Kunal Bahl, Snapdeal cofounder and CEO, said, “Naren was a father figure to a generation of venture capitalists and founders. He embodied everything positive that a founder looks for in an investor, always backing founders unconditionally, especially when they were in a tough spot. He leaves behind an immense legacy and will be greatly missed.”

Subrata Mitra, partner at venture capital fund Accel, said, “I had known Naren since my days as a Silicon Valley entrepreneur in 1998. In the mid 2000s, he was early to spot cross-border venture investing and had very successfully established Nexus as a founder. Notwithstanding all his accomplishments, he was humble and down to earth and always willing to help.”

Pankhuri Shrivastava, founder of Pankhuri and Grabhouse

Pankhuri Shrivastava: On Sunday, venture capitalists and executives at private equity firms mourned the passing of Pankhuri Shrivastava on December 24. Before founding the social community platform ‘Pankhuri’, she had founded home rental startup Grabhouse in 2012, which was backed by Sequoia Capital, Kalaari Capital and India Quotient. It was sold to online classifieds platform Quikr in 2016.

Vani Kola, founder of Kalaari Capital, tweeted on Sunday, “It came as a shock to me when I found out that @pankhuri16 is no more. I remember her as a vivacious bright woman full of ideas and full of life. She was confident. That was something you noticed about her immediately.”

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Industry welcomes semiconductor policy but concerns remain

Executives and experts from India’s semiconductor industry have largely welcomed the government’s new semiconductor policy, the fine print of which was released last week.

Yes, but: Some concerns remain. These have to do with the government taking stake in projects in exchange for subsidies, and the gradation of incentives for semiconductor fabrication plans – fabs – of different sizes.

Under the policy, companies may need to shell out only 30-35% of the total project cost to set up a semiconductor fab and display fab as the union government will provide 50% and states have been allowed to offer incentives as well.

Concerns remain: The main concern pertains to the gradation that the government has provided in the policy. It said it would provide up to 50% fiscal support for fabs building chips with 28 nanometre (nm) technology or below, up to 40% for 45 nm technology chips and 30% for 65 nm chips.

• Jargon check: In chip design, “nm” refers to the length of a transistor gate – the smaller the gate the more processing power that can be packed into a given space. One nm is a billionth of a metre.

Ajay Jalan, founder and managing partner of Next Orbit Ventures, said, “This is something strange, because economic viability across the board requires support. “The only logic I can see is that they only want only 28nm digital fabs and want to discourage 65 nm or 45 nm fabs. It will not be an ideal situation,” Jalan said.

He added that another concern was that the government’s incentives could be against an equity share. “The whole purpose of subsidies will be lost if an equity stake is taken to the extent of 49% against the fiscal support. Then it is not support; it is like a joint venture with the government.,” he added.

$10 billion package: The government notified the Rs 76,000 crore ($10 billion) package on December 21, saying it would invite applications for 45 days starting January 1. It is looking for companies to set up more than 20 semiconductor facilities over the next six years to turn India into an electronics hub.

Tweet of the day

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Coinswitch Kuber aims to become a one-stop investment shop

Ashish Singhal, founder and CEO, CoinSwitch

Coinswitch Kuber, which in October became the second Indian cryptocurrency platform to turn unicorn, now plans to go beyond just crypto.

One-stop investment shop: The company will diversify into a wealth tech startup that deals in Indian and US stocks, mutual funds, fixed deposits and bonds to offer more investment options to its more than 15 million users, its founder and chief executive Ashish Singhal told us.

“We will help our users on their investment journey with crypto as the basis of the company. Our young users’ needs will evolve over time, and they will diversify their investments as long as crypto remains a high-risk, high-reward asset class, ” Singhal said.

Why pivot? Is this an attempt by CoinSwitch to reduce risk in the face of regulatory uncertainty? Singhal said it wasn’t, and that Coinswitch would remain a crypto-first company.

“Our users put their risk capital into crypto, but they also have a separate packet of investment income. We want to help our users across asset classes… Our fortunes are tied to crypto. If crypto dies, we die,” he said.

A problem to solve: Because of a lack of financial knowledge and the proper pre-purchase and post-purchase support, less than 1% of Indians look beyond fixed deposits, Singhal said. “Coinswitch is looking to solve that problem. We want to help users gain access to different asset classes, educate them on the investment process and then help grow their money in a safe environment, ” he said.

Crypto regulations in 2022? India’s crypto bill was listed for both the budget and winter sessions of Parliament this year but was not tabled either time. Singhal said while the government was taking its time in crafting rules for the industry, the need for them was growing more urgent.

“We obviously don’t want any rushed decisions. But we also stand at a point where these rules are very important, because [they] would help entrepreneurs build new crypto companies, ” said Singhal, who is also co-chair of the Blockchain and Crypto Assets Council (BACC).

So, when is the industry expecting the government to come up with the regulations?

“We are expecting something to come out during the budget session that would give us clarity. It’s an evolving space, so it can be a phased approach, not that the entire set of regulations is released in one go,” he said.

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WhatsApp Pay turns to Bharat to win ePay race

WhatsApp Pay is betting on rural consumers to get ahead in the digital payments game, a senior executive told us. The messaging platform, which has only recently joined the Unified Payments Interface (UPI) ecosystem, is looking to capture the next 300 million UPI users by focusing on the first-time consumers from rural India. UPI currently has more than 100 million active users.

Quote: “We know that there’s going to be a portion of the digital-savvy urban users that will eventually, hopefully, choose the WhatsApp experience. But there’s a lot of upside for us to invest in rural, new-to-digital [customers],” said Abhijit Bose, head of India at WhatsApp.

Last month, the National Payments Corporation of India (NPCI), which runs UPI, allowed WhatsApp to double the number of users on its payments service to 40 million, which is still about one-tenth of its more than 400 million users in India.

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Startups, firms provide extended paid breaks in runup to New Year’s

As the pandemic winds into another year amid rising Omicron cases, some startups are trying to ensure that, in these stressful times, the New Year starts on a relaxed note for employees.

Fresh unicorns such as Eruditus and The Good Glamm group, older ones such as InMobi Group, and smaller startups including Rippl, Dhurina, Raaho, AdYogi and Mesh are giving their entire workforce extended breaks of 4-15 days this year-end, to prioritise employee wellbeing and mental health and have them back refreshed in 2022.

Beauty unicorn The Good Glamm Group has announced a week-long paid leave for its workforce, while Mumbai-based edtech unicorn Eruditus has given its 2,000-odd employees a holiday for the last fortnight of the year to spend time with friends and family. At the InMobi Group, almost the entire 2,500-strong workforce will be on leave from December 25 to January 2.

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Rapid digitalisation drives B2B ecommerce during pandemic

Riding the digital wave, B2B ecommerce companies have nearly doubled their books since the pandemic.

As traditional supply chains that served Indian businesses dried up amid Covid-imposed restrictions, well-capitalised B2B ecommerce players grabbed the market by coming to the aid of businesses starved of raw materials. Companies such as Bizongo, Udaan, Medikabazaar, Moglix, Ofbusiness and Inframarket are seeing 100-300% growth in order volumes and revenues since April 2020.

These firms are also attracting considerable investment interest from institutional investors at high valuations. In 2021, B2B ecommerce players raised a record $2 billion (about ₹15,000 crore) across 60 rounds, according to data from Tracxn.

Quote: “Growth in B2B ecommerce will have an impact on the overall economy; it will reduce inefficiencies and ensure better quality and pricing for everyone present in the value chain,” said Sujeet Kumar, co-founder of Udaan, a unicorn B2B platform with operations across staples, fruits and vegetables, FMCG, electronics and lifestyle.

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Other Top Stories By Our Reporters

The fight is on to get the next blockchain geek: India is facing a shortage of talent skilled in blockchain technologies. Large IT services firms, global tech companies, crypto bourses and startups are battling it out to onboard a small pool with skills in blockchain technology.

Blockchain’s survival code: As governments worldwide move to tether the spread of cryptocurrencies, questions about the future of the blockchain—technology platform that underpins it—are also growing more insistent amid the brouhaha surrounding the decentralised currency.

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Global Picks We Are Reading

• Facebook lost a bunch of talent in 2021 — here are the most notable departures (CNBC)
• Russian court fines Alphabet’s Google and Meta Platforms (Reuters)
• EV stocks soared on hype in 2021 — investors are betting 2022 will bring actual revenue (CNBC)