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Google is shutting down Neighbourly, a Q&A social app that it launched in select parts of India two years, the company has informed users.

The app, developed by company’s Next Billion Initiative, aimed to give local communities an outlet to seek answers to practical questions about life, routine and more.

At the time of the app’s launch, Google told TechCrunch that it believed that an increase in urban migration, short-term leasing and busy lives had changed the dynamic of local communities and made it harder to share information quite so easily.

The app supported voice-based entry for questions and a range of local languages.

In an email, Google said Neighbourly helped users find answers to over a million questions, but it did not get the traction the company was hoping for. The app will shut down on May 12, but users have another six months to download their data.

“We launched Neighbourly as a Beta app to connect you with your neighbors and make sharing local information more human and helpful. As a community, you’ve come together to celebrate local festivals, shared crucial information during floods, and answered over a million questions,” the company wrote to users.

“But Neighbourly hasn’t grown as we had hoped. In these difficult times, we believe that we can help more people by focusing on other Google apps that are already serving millions of people everyday,” it added, pointing users to explore Google Maps’ Local Guide, which also allows sharing of knowledge with local communities.

The app had such low-traction that third-party intelligence services such as App Annie and Sensor Tower don’t have any substantial data about it. But on Play Store, Neighbourly is listed to have more than 10 million downloads.

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Vijay Shekhar Sharma, founder and chief executive of India’s most valuable startup, Paytm, posed an existential question in a recent press conference.

“What do you think of the commercial model for digital mobile payments. How do we make money?” Sharma asked Nandan Nilekani, one of the key architects of the Universal Payments Infrastructure that created a digital payments revolution in the country.

It’s the multi-billion-dollar question that scores of local startups and international giants have been scrambling to answer as many of them aggressively shift their focus to serving merchants and building lending products and other financial services .

New Delhi’s abrupt move to invalidate much of the paper bills in the cash-dominated nation in late 2016 sent hundreds of millions of people to cash machines for months to follow.

For a handful of startups such as Paytm and MobiKwik, this cash crunch meant netting tens of millions of new users in a span of a few months.

India then moved to work with a coalition of banks to develop the payments infrastructure that, unlike Paytm and MobiKwik’s earlier system, did not act as an intermediary “mobile wallet” to serve as an intermediary between users and their banks, but facilitated direct transaction between two users’ bank accounts.

Silicon Valley companies quickly took notice. For years, Google and the likes have attempted to change the purchasing behavior of people in many Asian and African markets, where they have amassed hundreds of millions of users.

In Pakistan, for instance, most people still run errands to neighborhood stores when they want to top up credit to make phone calls and access the internet.

With China keeping its doors largely closed for foreign firms, India, where many American giants have already poured billions of dollars to find their next billion users, it was a no-brainer call.

“Unlike China, we have given equal opportunities to both small and large domestic and foreign companies,” said Dilip Asbe, chief executive of NPCI, the payments body behind UPI.

And thus began the race to participate in the grand Indian experiment. Investors have followed suit as well. Indian fintech startups raised $2.74 billion last year, compared to 3.66 billion that their counterparts in China secured, according to research firm CBInsights.

And that bet in a market with more than half a billion internet users has already started to pay off.

“If you look at UPI as a platform, we have never seen growth of this kind before,” Nikhil Kumar, who volunteered at a nonprofit organization to help develop the payments infrastructure, said in an interview.

In October, just three years after its inception, UPI had amassed 100 million users and processed over a billion transactions. It has sustained its growth since, clocking 1.25 billion transactions in March — despite one of the nation’s largest banks going through a meltdown last month.

“It all comes down to the problem it is solving. If you look at the western markets, digital payments have largely been focused on a person sending money to a merchant. UPI does that, but it also enables peer-to-peer payments and across a wide-range of apps. It’s interoperable,” said Kumar, who is now working at a startup called Setu to develop APIs to help small businesses easily accept digital payments.

Vice-president of Google’s Next Billion Users Caesar Sengupta speaks during the launch of the Google “Tez” mobile app for digital payments in New Delhi on September 18, 2017 (Photo: Getty Images via AFP PHOTO / SAJJAD HUSSAIN)

The Google Pay app has amassed over 67 million monthly active users. And the company has found the UPI pipeline so fascinating that it has recommended similar infrastructure to be built in the U.S.

In August, the Federal Reserve proposed to develop a new inter-bank 24×7 real-time gross settlement service that would support faster payments in the country. In November, Google recommended (PDF) that the U.S. Federal Reserve implement a real-time payments platform such as UPI.

“After just three years, the annual run rate of transactions flowing through UPI is about 19% of India’s Gross Domestic Product, including 800 million monthly transactions valued at approximately $19 billion,” wrote Mark Isakowitz, Google’s vice president of Government Affairs and Public Policy.

Paytm itself has amassed more than 150 million users who use it every year to make transactions. Overall, the platform has 300 million mobile wallet accounts and 55 million bank accounts, said Sharma.

Search for a business model

But despite on-boarding more than a hundred million users on their platform, payment firms are struggling to cut their losses — let alone turn a profit.

At an event in Bangalore late last year, Sajith Sivanandan, managing director and business head of Google Pay and Next Billion User Initiatives, said current local rules have forced Google Pay to operate in India without a clear business model.

Mobile payment firms never levied any fee to users as a strategy to expand their reach in the country. A recent directive from the government has now put an end to the cut they were receiving to facilitate UPI transactions between users and merchants.

Google’s Sivanandan urged the local payment bodies to “find ways for payment players to make money” to ensure every stakeholder had incentives to operate.

Paytm, which has raised more than $3 billion to date, reported a loss of $549 million in the financial year ending in March 2019.

The firm, backed by SoftBank and Alibaba, has expanded to several new businesses in recent years, including Paytm Mall, an e-commerce venture, social commerce, financial services arm Paytm Money and a movies and ticketing category.

This year, Paytm has expanded to serve merchants, launching new gadgets such as a stand that displays QR check-out codes that comes with a calculator and a battery pack, a portable speaker that provides voice confirmations of transactions and a point-of-sale machine with built-in scanner and printer.

In an interview with TechCrunch, Sharma said these devices are already garnering impressive demand from merchants. The company is offering these gadgets to them as part of a subscription service that helps it establish a steady flow of revenue.

The firm’s Money arm, which offers lending, insurance and investing services, has amassed over 3 million users. The head of Paytm Money, Pravin Jadhav, resigned from the company this week, a person familiar with the matter said. A Paytm spokeswoman declined to comment. (Indian news outlet Entrackr first reported the development.)

Flipkart’s PhonePe, another major player in India’s payments market, today serves more than 175 million users, and over 8 million merchants. Its app serves as a platform for other businesses to reach users, explained Rahul Chari, co-founder and CTO of the firm, in an interview with TechCrunch. The company is currently not taking a cut for the real estate on its app, he added.

But these startups’ expansion into new categories means that they now have to face off even more rivals, and spend more money to gain a foothold. In the social commerce category, for instance, Paytm is competing with Naspers-backed Meesho and a handful of new entrants; and heavily-backed OkCredit and KhataBook today lead the bookkeeping market.

BharatPe, which raised $75 million two months ago, is digitizing mom and pop stores and granting them working capital. And PineLabs, which has already become a unicorn, and MSwipe have flooded the market with their point-of-sale machines.

A vendor holds an Mswipe terminal, operated by M-Swipe Technologies Pvt Ltd., in an arranged photograph at a roadside stall in Bengaluru, India, on Saturday, Feb. 4, 2017. (Photographer: Dhiraj Singh/Bloomberg via Getty Images)

“They have no choice. Payment is the gateway to businesses such as e-commerce and lending that you can monetize. In Paytm’s case, their earlier bet was Paytm Mall,” said Jayanth Kolla, founder and chief analyst at research firm Convergence Catalyst.

But Paytm Mall has struggled to compete with giants Amazon India and Walmart’s Flipkart. Last year, Mall pivoted to offline-to-online and online-to-offline models, wherein orders placed by customers are serviced from local stores. The company also secured about $160 million from eBay last year.

An executive who previously worked at Paytm Mall said the venture has struggled to grow because its goal-post has constantly shifted over the years. It has recently started to focus on selling fastags, a system that allows vehicle owners to swiftly pay toll fees. At least two more executives at the firm are on their way out, a person familiar with the matter said.

Kolla said the current dynamics of India’s mobile payments market, where more than 100 firms are chasing the same set of audience, is reminiscent of the telecom market in the country from more than a decade ago.

“When there were just four to five players in the telecom market, the prospect of them becoming profitable was much higher. They were scaling like crazy. They grew with the lowest ARPU in the world (at about $2) and were still profitable.

“But the moment that number grew to more than a dozen overnight, and the new players started offering more affordable plans to subscribers, that’s when profitability started to become elusive,” he said.

To top that off, the arrival of Reliance Jio, a telecom operator run by India’s richest man, in 2016 in the country with the cheapest tariff plans in the world, upended the market once again, forcing several players to leave the market, or declare bankruptcies, or consolidate.

India’s mobile payments market is now heading to a similar path, said Kolla.

If there were not enough players fighting for a slice of India’s mobile payments market that Credit Suisse estimate could reach $1 trillion by 2023, WhatsApp, the most popular app in the country with more that 400 million users, is set to roll out its mobile payments service in the country in a couple of months.

At the aforementioned press conference, Nilekani advised Sharma and other players to focus on financial services such as lending.

Unfortunately, the coronavirus outbreak that promoted New Delhi to order a three-week lockdown last month is likely going to impact the ability of millions of people to use such services.

“India has more than 100 million microfinance accounts, serviced in cash every week by gig-economy workers, who hawk vegetables on street corners or embroider saris sold in malls, among other things. Three out of four workers make a living by working casually for others or at their family firms and farms. Prolonged shutdowns will impair their ability to repay loans of 2.1 trillion rupees ($28.5 billion), putting the world’s largest microfinance industry at risk,” wrote Bloomberg columnist Andy Mukherjee.

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Spotify and Warner Music Group have renewed their global licensing partnership, the two said on Wednesday, confirming that Warner Music Group’s songs will now be available on the Sweden-headquartered firm’s platform in India. 

In a joint statement, the two giants said, “Spotify and Warner Music Group are pleased to announce a renewed global licensing partnership. This expanded deal covers countries where Spotify is available today, as well as additional markets. The two companies look forward to collaborating on impactful global initiatives for Warner artists and songwriters, and working together to grow the music industry over the long term.”

A Spotify spokesperson confirmed to TechCrunch that the two companies have renewed their global licensing deal.

The move comes months after Spotify signed a licensing agreement with Warner Music Group’s music publish arm Warner Chappell in India to put an end to their months-long legal battle.

Warner Music, one of the world’s top three music labels, had sued Spotify days before the music streaming service was to launch in India, one of the world’s biggest entertainment markets. Spotify argued that it was using an Indian rule that permits radio stations to offer songs from Chappell Music.

More to follow…

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Just three months after capping what was the best year for Indian startups, having raised a record $14.5 billion in 2019, they are beginning to struggle to raise new capital as prominent investors urge them to “prepare for the worst”, cut spending and warn that it could be challenging to secure additional money for the next few months.

In an open letter to startup founders in India, ten global and local private equity and venture capitalist firms including Accel, Lightspeed, Sequoia Capital, and Matrix Partners cautioned that the current changes to the macro environment could make it difficult for a startup to close their next fundraising deal.

The firms, which included Kalaari Capital, SAIF Partners, and Nexus Venture Partners — some of the prominent names in India to back early-stage startups — asked founders to be prepared to not see their startups’ jump in the coming rounds and have a 12-18 month runway with what they raise.

“Assumptions from bull market financings or even from a few weeks ago do not apply. Many investors will move away from thinking about ‘growth at all costs’ to ‘reasonable growth with a path to profitability.’ Adjust your business plan and messaging accordingly,” they added.

Signs are beginning to emerge that investors are losing appetite to invest in the current scenario.

Indian startups participated in 79 deals to raise $496 million in March, down from $2.86 billion that they raised across 104 deals in February and $1.24 billion they raised from 93 deals in January this year, research firm Tracxn told TechCrunch. In March last year, Indian startups had raised $2.1 billion across 153 deals, the firm said.

New Delhi ordered a complete nation-wide lockdown for its 1.3 billion people for three weeks earlier this month in a bid to curtail the spread of COVID-19.

The lockdown, as you can imagine, has severely disrupted businesses of many startups, several founders told TechCrunch.

Vivekananda Hallekere, co-founder and chief executive of mobility firm Bounce, said he is prepared for a 90-day slowdown in the business.

Founder of a Bangalore-based startup, which was in advanced stages to raise more than $100 million, said investors have called off the deal for now. He requested anonymity.

Deepinder Goyal, co-founder and chief executive of food delivery firm Zomato, said in January the startup would close a round of up to $600 million by the end of the month. Two months later, Zomato has only raised $150 million.

Many startups are already beginning to cut salaries of their employees and let go of some people to survive an environment that aforementioned VC firms have described as “uncharted territory.”

Travel and hotel booking service Ixigo said it had cut the pay of its top management team by 60% and rest of the employees by up to 30%. MakeMyTrip, the giant in this category, also cut salaries of its top management team.

Beauty products and cosmetics retailer Nykaa on Tuesday suspended operations and informed its partners that it would not be able to pay their dues on time.

Investors cautioned startup founders to not take a “wait and watch” approach and assume that there will be a delay in their “receivables,” customers would likely ask for price cuts for services, and contracts would not close at the last minute.

“Through the lockdown most businesses could see revenues going down to almost zero and even post that the recovery curve may be a ‘U’ shaped one vs a ‘V’ shaped one,” they said.

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Disney said on Tuesday that it will launch its streaming service, Disney+, in India on April 3. The service, available globally in about a dozen markets, will launch in India on Hotstar, one of the most popular on-demand streaming services in the country that is also owned by Disney.

The company said it is raising the yearly subscription price of the combined entity, Disney+Hotstar, to Rs 1,499 ($20), up from  Rs 999 ($13.2). TechCrunch reported last year that Disney+ will launch in India in 2020 and will increase its subscription cost.

Hotstar, which claimed to have amassed 300 million monthly active users during the cricket season in India last year, would continue to offer an ad-supported service that it will offer to users without a charge. But it is increasing the cost of all its premium tiers.

The company is also offering a yearly tier that costs Rs 399 ($5.3) that will include movies from the Marvel Cinematic Universe, access to live sporting events and a wide catalog of movies and shows, and original shows produced by Hotstar. It will not include Disney+ Originals.

The $20 yearly subscription tier will offer over 100 series and 250 superhero and animated titles, including Disney+ Originals and shows from HBO, Fox, and Showtime, the company said. It will also include access to everything that it is offering to customers at $5.3 tier.

More to follow…

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Xiaomi ended 2019 on a high, reporting a 27.1% year-over-year jump in the fourth-quarter revenue aided by overseas expansion, beating analysts’ estimation. 

The Chinese giant said sales in the fourth quarter jumped to 56.5 billion yuan ($8 billion), up from 44.42 billion yuan in the same quarter a year before.

In the fourth quarter of 2019, Xiaomi’s net profit was RMB2.3 billion ($320 million), up 26.5% YoY. Refinitiv I/B/E/S had estimated Xiaomi’s Q4 2019 revenue to be $7.83 billion and the net income at $264 million, it told TechCrunch. 

Xiaomi said its cash reserves had improved and it planned to continue to invest in international regions such as India, its biggest overseas market. Xiaomi executives said on a conference call with reporters that they hope that the 21-day lockdown imposed by New Delhi earlier this month to contain the spread of the coronavirus outbreak, which has put an absolute halt to purchase of non-essential goods, would “show signs of recovery” in two to three months.

The company said its production was already up to 80% of its capacity. The company’s Android-based MIUI operating system now has 309.6 million monthly active users, up from 292 million in September last year.

“Despite headwinds from the Sino-US trade war and global economic downturn, Xiaomi stood out in 2019 with a commendable set of results as our revenue exceeded RMB200 billion for the first time,” said Lei Jun, Xiaomi founder and chief executive.

“While the entire world is still under the dark shadows of COVID-19, we have maintained our keen focus on efficiency to tide over this economic ‘black swan’ with everyone. At Xiaomi, we firmly believe that our long-term business success is underpinned by technological innovations, and to that effect, we plan to invest RMB50.0 billion in the next five years, as we relentlessly focus on technological innovation and user experience to grow our loyal Mi Fan base,” he added.

More to follow…

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Chinese e-commerce firm Pinduoduo said on Tuesday it had raised $1.1 billion in a private share placement that will enable its further expansion and allow it to capture “additional opportunities” during the times of uncertainty.

The Nasdaq-listed firm said some of its long-term investors financed the deal. The investors were granted newly issued Class A ordinary shares of Pinduoduo representing approximately 2.8% of the company’s total outstanding shares.

The capital raise comes weeks after the Shanghai-based company said it was bracing for losses due to the coronavirus outbreak. The firm’s fourth-quarter revenue growth fell short of expectations.

Pinduoduo, which competes with giant Alibaba, has grown rapidly in recent years after gamifying the shopping experience that allows customers to team up to buy anything from smartphones to fruits.

But the firm’s marketing — promotions and discount coupons — has also widened its losses. In Q4 2019, Pinduoduo reported a loss of about $250 million on revenue of $1.5 billion.

“Pinduoduo surpassed 1 trillion yuan in annual gross merchandise value (GMV) in less than five years, and we are confident that we will see robust growth beyond our current 585 million user base,” said David Liu, VP of Strategy at Pinduoduo, said in a statement.

“The extra funding gives us the strategic flexibility to capture opportunities to further benefit our users, as we bring interactive experiences, such as our new live-streaming features, and wider variety of value-for-money products to them,” he added.

As with e-commerce firms in other parts of the world, Pinduoduo in recent months has focused on fulfilling low-cost protective gear and everyday essentials over everything else.

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Ixigo, a 13-year-old travel and hotel booking service in India, said on Monday it is cutting the salary of its entire staff as the firm grapples with severe disruption in its business due to the coronavirus outbreak that has pushed New Delhi to issue a nationwide lockdown.

Aloke Bajpai, co-founder and chief executive of Ixigo, said the leadership at the firm has agreed to take a 60% pay cut while the rest of the staff, about 200 people, have agreed to have their salaries reduced between 20% to 50%. Bajpai and Rajnish Kumar, the other co-founder, have decided to forgo their entire salary until the business is back on track.

“We will reinstate the salaries as soon as the situation improves and we will also convert the accumulated salary deductions over the hardship period into equivalent ESOPs so that everyone benefits from future upside when the going gets better again,” said Bajpai.

The Indian government suspended all domestic flights and other public transportation services earlier this month and ordered a complete lockdown for three weeks to its 1.3 billion people in a bid to contain the spread of the coronavirus disease in the country.

Verteran industry executive Bajpai said the current situation is “the darkest hour for travel.” And it has hit the company at a time when it had just turned EBIDTA positive in the first two months of 2020.

Bajpai said Ixigo’s revenue surged by almost 50% in 2019 and burn rate dropped by almost 85% in the same year. The pay cut has enabled the company to not let go of any individual, he said.

“What the travel industry (and indeed any industry in our nation) faces today is no less than a war. India and the entire world are facing a catastrophe imposed by a microscopic adversary that has forced us to be confined to our homes, taken away our freedom to socialize with others, to roam and travel freely and forced us to give up all those things that help us experience the world and make us more human,” he said.

MakeMyTrip, another travel and stay booking service, announced last week that it was also cutting the salary of its top management level across the company, which includes flight ticketing service Goibibo and bus ticketing service redBus.

Indian news outlet Entrackr reported last week that MakeMyTrip may fire as many as 400 people if the business remains disruptive for long.

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On-demand video streaming service Hooq said on Friday it has filed for liquidation after it failed to grow rapidly and cover its increasing operating costs.

Hooq Digital, a joint venture between Singapore telecom group Singtel (majority owner), Sony Pictures, and Warner Bros Entertainment, said the company sailed through “significant structural changes” in the on-demand video streaming market for five years but is now struggling to provide sustainable returns to investors.

“Global and local content providers are increasingly going direct, the cost of content remains high, and emerging-market consumers’ willingness to pay has increased only gradually amid an increasing array of choices,” a Hooq spokesperson said in a statement.

The Singapore-headquartered firm will hold a meeting with its shareholders and creditors on April 13. In an exchange filing, Singtel said Hooq’s liquidation won’t have any material impact on its business.

HOOQ has amassed 80 million users in India, Indonesia, Thailand, Singapore, and the Philippines. The company counted India, where it entered into a partnership with Disney’s Hotstar in 2018, as its biggest market. The company also maintains a partnership with ride-hailing giant Grab to supply content in its cab.

The disclosure from Hooq comes as a surprise as just two months ago, it was talking about its plans to expand its footprint in the nations where it operated. In an interview with Slator, Yvan Hennecart, Head of Localization at HOOQ, said the company was working to expand its catalog with localized titles and add 100 original titles this year.

“Our focus is mostly on localization of entertainment content; whether it is subtitling or dubbing, we are constantly looking to bring more content to our viewers faster. My role also expands to localization of our platform and any type of collateral information that helps create a unique experience for our users,” he told the outlet.

More to follow…

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During a recent visit, Microsoft chief executive Satya Nadella reiterated his company’s commitment to India and revealed a new fund to help SaaS startups in the country.

And then Nadella and Anant Maheshwari, president of Microsoft India, discussed the success story of B2B platform Udaan in three separate onstage public appearances.

Headquartered in Bangalore, Udaan is a business-to-business e-commerce marketplace founded by former Flipkart executives Amod Malviya, Vaibhav Gupta and Sujeet Kumar. The startup used Microsoft’s free Azure credits to scale in its early days; as in some other markets, Microsoft, Amazon and Google offer free cloud credits in bulk to early, promising Indian startups in a bid to onboard them and see if their solutions could be relevant to other clients down the road.

More often than not, these bets don’t work, but sometimes they pay off. Udaan, valued at about $2.7 billion after raising nearly $900 million from investors like Lightspeed Venture Partners, Tencent Holdings, GGV Capital and Hillhouse Capital, has become one of Microsoft India’s biggest clients in the last three years.

Udaan was founded in 2016 at the tail end of India’s e-commerce frenzy, when scores of startups that had attempted to build business-to-consumer online shopping platforms were conceding defeat.

At the time, very few players — like Power2SME and Moglix (industrial products) and Bizongo (packaging for businesses) — were looking at the business-to-business market in India.

But despite venturing into a road less traveled, Udaan had ambitious dreams. The startup was building its own logistics network, a herculean task that even Flipkart and Amazon avoided to a certain measure for years, yet it was reaching an audience that had never sold online.