The venture capital industry has been in turmoil for the past couple of years, having an adverse effect on newly launched startups as they enter into the funding years. Notably, we forecast an overall positive outlook for the venture capital (VC) industry as the funding has been southward bound in the country, domestic angel investors have played a crucial role at this juncture by coming forward and acting as drivers for the growing startup funding ecosystem.
During 2023, the country’s top 10 angel investors have induced funding into the startup ecosystem and have made as many as 101 investments in Indian Startups, according to data by Venture Intelligence. This number is significantly lower than last year’s 207 investments made by Indian angel investors.
In the early week of Oct’2023, investors and entrepreneurs splurged the startup ecosystem by launching their own investment funds. Below, we have provided a detailed description of these highlighted funds, shedding light on their unique attributes and investment strategies.
VSS Investment Funds
Launched by Vijay Shekar Sharma (Founder & CEO, Paytm)
Total Fund Size: Rs. 30Cr.
Industry Overview: Artificial Intelligence (AI) and Electric Vehicle (EV)- related startups, incubated in India.
Launched by Nikhil Kamath (Founder & CEO, Zerodha)
Total Fund Size: Rs. 80L
Industry Overview: An initiative to invest in startups launched by budding entrepreneurs under the age of 22 years.
Additionally, Industry pioneers and investors such as Rohit Bansal (Co-founder, Snapdeal) and Nithin Kamath (Founder & CEO, Zerodha) also have a future outlook to infuse their investments into the startup ecosystem through the investment entities owned by them.
Zerodha-owned investment arm Rainmatter Capital has allocated a fresh capital of Rs 1,000 crore in a unique structure that has no exit mandates to investors in order to benefit founders. Set up in 2016, Rainmatter has partnered with over 80 startups and has invested close to Rs 400 crore, the investments focus on sectors like health, education, and climate change.
Whereas, Titan Capital (Rohit Bansal’s Investment Arm) screens more than 4,000 inbound proposals from investors every year, making Bansal one of the most active angel investors in the Indian Startup World. Considering the bets taken by him through his investment firm, Bansal has invested in 17 startups, with his portfolio companies including Ola, Pepper, Urban Company, Mamaearth, and Credgenics.
In conclusion, India’s Startup story for the foreseeable future looks promising, we believe that rising funding opportunities from domestic angel investors and VC firms and the country’s growing young entrepreneurial generation will lead India’s economy to compete with the world’s strongest economies.
As startup funding landscapes evolve rapidly, it is imperative that entrepreneurs and investors alike maintain a sophisticated grasp of the contractual agreements and economic trade-offs underpinning various financing options. SAFEs pose as viable option for budding entrepreneurs to not lose on equity right from the start.
Our objective here is to analyze Simple Agreements for Future Equity (SAFEs) and priced equity rounds, two alternative instruments that have grown in popularity yet remain not fully understood by many. The aim is to foster well-informed decision making that appropriately balances risk, reward and long-term strategic objectives.
SAFEs: A Streamlined Early Option
SAFEs (Simple Agreements for Future Equity) provide an appealing option for early-stage companies seeking to raise small amounts quickly with minimal legal overhead. However, their flexibility comes at the cost of greater dilution for founders down the road. The objective is to exhibit how SAFE provisions could be utilized by start-ups and how their contingent equity conversion can significantly dilute founders compared to priced equity rounds.
SAFEs offer a streamlined mechanism for startups to raise small seed amounts quickly with minimal legal fees. Investors provide funds in exchange for a future equity stake contingent on a later equity financing. This flexibility enables fast access to capital during early stages.
However, SAFEs’ contingent conversion comes at the cost of greater dilution risk. The longer a company waits for a subsequent priced round, the larger the stake investors will receive relative to founders. Additionally, without established share prices, it can be difficult to determine fair valuation in future financings.
It is imperative to remember that even though SAFEs provide less amounts for legal fees upfront, their contingent equity conversion means founders face greater dilution risk the longer a company waits to do a priced equity round.
Priced Rounds: Less Dilutive but More Complex
Alternatively, priced equity rounds establish share prices upfront and give investors preferred stock, limiting dilution risk for founders. However, negotiated preferred stock terms like liquidation preferences introduce new complexities that must be carefully considered.
While preferred stock terms like liquidation preferences safeguard investors to an appropriate degree, excessive preferences could hinder a startup’s strategic flexibility down the road. High preferences may make it difficult to pursue an acquisition or raise additional capital if facing challenges.
Additionally, preferred negotiations introduce complex contractual issues requiring experienced counsel. Improperly structured terms could undermine either party’s interests. Early-stage companies in particular must weigh these challenges against priced rounds’ dilution certainty.
One key consideration with priced rounds highlighted is the role of liquidation preferences. A higher liquidation preference protects investors but could make it more difficult for a company to be acquired or get subsequent investors if facing financial difficulties. Founders must weigh these trade-offs based on their specific strategic goals and risk tolerance.
Ultimately, the optimal instrument depends on a startup’s unique circumstances and risk profile at different growth phases. SAFEs serve as a flexible bridge for seed-stage ventures, while priced rounds better support scale-ups needing long-term strategic clarity.
Founders must understand trade-offs to determine the best structure aligning with their vision. Investors too must evaluate provisions within the context of a company’s goals. With open communication and sophisticated analysis of options, parties can craft financing solutions meeting mutual objectives.
Overall, both SAFEs and priced equity rounds play an important role in funding ecosystem. For very early-stage companies, SAFEs provide a low-friction way to raise seed capital. But as startups mature, the added certainty of a priced round often better suits their needs – if founders can successfully negotiate preferred stock terms to an appropriate level of protection for all parties. The optimal choice depends greatly on individual company circumstances.
As alternative tools proliferate, maintaining a nuanced grasp of modern instruments grows increasingly important. Our article aimed to cut through complexity and illuminate core economic considerations of SAFEs versus priced equity. With well-informed decisions based on comprehensive comparisons, startups and backers can jointly design optimal capital solutions.
By understanding these modern instruments and their economic trade-offs, founders and backers can make financing decisions aligned with long term strategic goals. Our role is to provide the sophisticated analysis that empowers success. Overall, one size does not fit all – the optimal choice depends on each company’s unique circumstances and risk appetite at different stages.
As regional tensions flare, Israel has requested a substantial expansion of its military capabilities through a new $10 billion assistance deal with its key ally the United States over the next decade. The proposed package seeks advanced weapons “tailored for the evolving threats” facing Israel, according to reports.
If approved, this multi-billion dollar proposal would significantly enhance the strategic military partnership between the two nations. It underscores Israel’s ongoing efforts to maintain a qualitative edge amid a shifting balance of power in the volatile Middle East. Sources indicate Israel has prioritized precision-guided munitions like laser-guided bombs and loitering drones well-suited for urban combat scenarios.
These capabilities could help address Israel’s most pressing challenge – asymmetric conflicts against heavily entrenched militias in densely populated areas. Urban warfare drones able to seamlessly perform intelligence and surgical strikes could help minimize civilian harm while enhancing effectiveness, a continued priority for Israeli defense planners. However, such weapons also raise ethical concerns and risks of disproportionate force allegations.
The Geopolitical Context of Israel
From a geopolitical perspective, strengthening Israel’s military dominance reinforces its value countering Iran’s destabilizing influence across the region. Yet providing increasingly advanced arms also risks an arms race that further undermines stability. As the dominant supplier to both Israel and many Arab allies, the US must carefully consider impacts on alliances.
Some experts warn that “excessive reliance on military force alone risks exacerbating conflicts over the long run.” All sides would benefit from revitalized diplomacy complementing security cooperation. But for now, Israel’s bid to modernize its capabilities underscores the volatile challenges facing policymakers amid protracted regional tensions. The request also highlights the ongoing strategic necessity of US-Israel defense cooperation, though diplomatic efforts remain essential to resolving underlying conflicts.
While it seeks to maintain its military edge, the proposed package risks further straining its relationship with some regional allies and exacerbating tensions. Several Arab states like Saudi Arabia and Egypt already express private concerns over Israel’s growing military dominance out of proportion to its size. The sale of increasingly advanced weaponry like precision-guided missiles and combat drones could fuel an arms race that undercuts cooperation on shared threats like Iran.
At the same time, the request underscores the ongoing value Israel provides to broader US strategic interests. Israel’s military serves as a testbed and proving ground for American-made weapons in real-world conditions, helping improve US capabilities.
The Implications of Israel’s Request
Located at a crossroads connecting Europe, Africa and Asia, Israel also enhances US influence and access in the vital Middle East amid challenges from Russia, China and Iran seeking greater footholds. However, Washington must balance reinforcement of this important partnership against potentially destabilizing impacts and political backlash from disproportionate military aid.
Overall, the request highlights Israel’s strategic calculus that offense remains the best defense, even as political solutions prove elusive. However, excessive reliance on military force alone risks exacerbating conflicts over the long-run. All sides would benefit from revitalized diplomacy to complement continued security cooperation. But for now, Israel’s bid to modernize its forces underscores the volatile reality confronting policymakers in a region with no shortage of challenges.
As climate change and social inequities intensify worldwide, there is a growing recognition that the global economy needs to transition towards greater environmental and social sustainability. While public funds alone are insufficient, sustainable finance (SF) offers a means to mobilize vast private capital towards financing this transition. By systematically integrating environmental, social and governance (ESG) factors into investment decisions, sustainable finance aims to align economic activity with long-term sustainability imperatives.
Our aim is to showcase the growing role of SF in catalyzing the shift towards a greener, more equitable and inclusive economic model. It explores the key drivers and opportunities presented by this emerging paradigm. The report also outlines policy and regulatory developments supporting its mainstreaming. Overall, the adoption of sustainable finance approaches presents strategic opportunities for businesses and investors seeking to future-proof operations amidst rising sustainability challenges.
Historically, normal business activity has concentrated on for-profit enterprises striving to maximise profit at the expense of society and the environment. For instance- just 9% of all plastics produced are actually reused or recycled.
It’s true that everyone on Earth depends on the production, distribution and exchange of goods and services, as well as the enforcement of contracts, to survive and prosper. Increased ESG reporting rules will be implemented by the SEC in the near future.
What is Sustainable Finance?
SF refers to the process of taking environmental, social and governance (ESG) criteria into consideration in investment decisions and practices. It involves channeling capital towards businesses and projects that have positive sustainability outcomes.
The core principle of SF is to link financial returns with positive impacts. It seeks to identify and manage material ESG risks and opportunities in order to enhance long-term investment returns and outcomes for both investors and society. Sustainable finance promotes transparency around ESG performance and impacts.
There are 575 investors controlling $54 trillion who are part of the Climate Action 100 project. The 167 corporations in these investors’ portfolios are responsible for 80 percent of industrial climate emissions worldwide.
Rationale for Sustainable Finance
The business case for sustainable finance is strengthened by several factors:
Risk Management: ESG issues like climate change pose risks to operations, supply chains and markets that traditional approaches fail to capture. Sustainable finance helps identify and address these emerging risks to safeguard long-term returns.
New Markets: The transition to renewable energy, green infrastructure, sustainable products and supply chain solutions is creating sizable new markets. Sustainable finance allows tapping the growth potential of these future-oriented sectors.
Competitive Advantage: Adopting sustainable practices helps attract investment, talent and gain an edge over peers, especially as policy and stakeholder expectations evolve rapidly on ESG performance.
Policy Support: With the EU, UK and others introducing regulations on ESG disclosures, taxonomy and green asset labeling, sustainable finance is gaining mainstream traction backed by policy tailwinds.
Future Proofing: By focusing on long-term ESG factors rather than short-term gains, sustainable investments are better equipped to generate durable returns in a resource-constrained world facing climate change and social instability.
Mobilizing Capital at Scale
While public funds are limited, sustainable finance can mobilize the vast pools of private global capital towards financing sustainability. For example, the EU aims to mobilize €1 trillion in sustainable investments through its Sustainable Finance Action Plan using various policy tools:
Taxonomy: The EU Sustainable Finance Taxonomy provides a classification system delineating environmentally sustainable economic activities. This provides clarity for investors regarding ‘green’ investments.
Disclosures: The Sustainable Finance Disclosure Regulation (SFDR) mandates transparency around sustainability risks, impacts and products to empower investors with comparable ESG data.
Benchmarks: The EU Climate Transition and EU Paris-aligned Benchmarks allow channeling investments towards climate-friendly solutions through standardized low-carbon indices.
Green Bonds: With a dedicated Green Bond Standard, the EU is promoting the issuance of use-of-proceeds bonds for financing eligible green projects and assets.
These measures help overcome information gaps and mis-selling risks, directing capital at scale towards transition-enabling solutions like renewable energy and green infrastructure. Multilateral development banks are also increasingly prioritizing sustainable investments.
Why is Sustainable Finance Important?
There are several compelling reasons why the adoption of sustainable finance is gaining importance:
Mitigating financial risks: ESG issues like climate change, resource depletion, and social inequities pose growing risks to businesses and investments. A sustainable finance approach helps identify and mitigate such risks, protecting long-term returns.
Tapping new opportunities: The global shift towards a low-carbon, inclusive economy is creating new business opportunities in areas like renewable energy, green technology, and sustainable supply chains. Sustainable finance allows capturing these opportunities.
Meeting stakeholder expectations: Investors, customers, and employees increasingly expect companies to address ESG issues and transparently report on sustainability performance. Adopting sustainable finance practices helps meet these rising stakeholder expectations.
Future-proofing investments: Sustainable finance orientations investments towards long-term sustainability outcomes, ensuring their continued viability and returns in a resource-constrained world increasingly impacted by climate change and other environmental and social challenges.
Regulatory tailwinds: With policymakers mainstreaming sustainability through regulations on ESG reporting, disclosures, and taxonomy, sustainable finance is gaining policy support worldwide. Early adopters gain competitive advantages.
Mainstreaming Sustainable Finance
Recognizing its importance, policymakers and regulators are taking steps to mainstream sustainable finance through new rules and guidelines:
The European Union has introduced several regulations like the Sustainable Finance Disclosure Regulation (SFDR) and EU Taxonomy to reorient capital towards sustainable activities.
Stock exchanges are launching ESG segments like Euronext’s segment for sustainable securities.
The UK, Canada, Japan and other countries are also bringing in disclosure guidelines and sustainability-linked regulations.
Multilateral development banks are increasingly prioritizing green and sustainable investments.
Financial institutions are establishing dedicated sustainable banking windows and green investment funds.
Stock exchanges like Euronext are launching dedicated sustainability segments to promote sustainable investments.
Central banks are exploring ways to incorporate sustainability into monetary policy operations and financial stability mandates.
Halving is a term that refers to a periodic event that reduces the supply of new coins or tokens generated by a blockchain network. The blockchain records and verifies every transaction that occurs on the network, ensuring security and transparency. However, maintaining the blockchain requires a lot of computational power and energy, which is provided by the participants who run special software called mining. Miners compete to solve complex mathematical problems and earn rewards in the form of new crypto coins for each block they add to the blockchain. Halving affects the economics and security of blockchain networks, as well as their price and adoption.
We will use Bitcoin as a reference, as it is the most well-known and widely used cryptocurrency. However, halving is not exclusive to Bitcoin, and other blockchain projects may have similar or different mechanisms to regulate their supply and reward their participants.
What is halving?
Halving is an event that occurs every 210,000 blocks, or roughly every four years, on the Bitcoin network. It reduces the reward for mining new blocks by 50%, making it harder and less profitable for miners to create new bitcoins. The halving process ensures that the total number of bitcoins that will ever exist is limited to 21 million, as designed by the anonymous creator of Bitcoin, Satoshi Nakamoto. The last halving occurred on May 11, 2020, reducing the block reward from 12.5 to 6.25 bitcoins. The next halving is expected to happen in April or May 2024, when the block reward will drop to 3.125 bitcoins
The main purpose of halving is to control the inflation rate of Bitcoin and preserve its value over time. By decreasing the supply of new bitcoins entering the market, halving creates a deflationary pressure that increases the demand and price of Bitcoin. Halving also ensures that Bitcoin remains a scarce and finite resource, unlike fiat currencies that can be printed endlessly by central authorities. Halving also incentivizes miners to secure the network and process transactions, as they rely on transaction fees as well as block rewards for their income.
Halving is necessary for Bitcoin to function as a sound and sustainable form of money that can compete with traditional currencies and payment systems. Halving also ensures that Bitcoin remains decentralized and resistant to manipulation, as no one can alter or inflate the supply of bitcoins without consensus from the network.
The results of halving are often unpredictable and depend on various factors such as market sentiment, mining difficulty, hash rate, and network activity. However, some general trends can be observed from the past halvings. For instance, halving tends to have a positive impact on the price of Bitcoin in the long term, as it creates a supply shock that drives up the demand and value of Bitcoin. Each halving has triggered a new bull market cycle for Bitcoin that lasted for several months or years after the event. However, halving can also have some negative effects on the network security and efficiency in the short term, as it reduces the profitability and incentives for miners to participate in the network. This can lead to a drop in the hash rate and mining difficulty, which can make the network more vulnerable to attacks or congestion.
The Global Blockchain Market
The global blockchain technology market size was valued at $11.14 billion in 2022 & is projected to grow from $5.85 billion in 2021 to $469.49 billion by 2030, exhibiting a CAGR of 82.8% during the forecast period.
Blockchain Market Ecosystem
The Blockchain technology ecosystem encompasses of three core categories of providers that enable its continued advancement. They are –
These are the visionaries and developers who create blockchain-based applications. They design and build solutions tailored for specific use cases, such as decentralized finance (DeFi), supply chain management, or identity verification.
Application providers leverage the underlying blockchain infrastructure to deliver real-world solutions, often using smart contracts to automate processes.
Infrastructure providers are responsible for maintaining the technical backbone of the blockchain network. They include: Developers, Nodes and Miners/Validators
Infrastructure providers ensure the network’s security, scalability, and reliability.
Middleware bridges the gap between applications and infrastructure. It includes tools, APIs, and protocols that enhance interoperability and communication within the ecosystem.
Middleware providers offer services like data integration, identity management, and communication protocols to facilitate seamless interactions between applications and infrastructure.
The infrastructure and protocol segment is leading the market, dominating for over half of global revenue. There is growing demand for blockchain standards like Hyperledger, open chain, and Ethereum, fueling growth in this space. These protocols allow for secure sharing of information across crypto networks, meeting user needs. As a result, the benefits of infrastructure and protocols contribute significantly to segment expansion.
The middleware segment is projected to experience rapid expansion in the coming years. Middleware assists developers in building applications more efficiently. Rising investment in healthcare is anticipated to spur middleware growth. Middleware tools also track performance metrics during testing, another driver of segment gains.
Blockchain market by Application
The above diagram highlights the areas where blockchain is often used as of the latest trend. Thanks to blockchain’s ability to be used in almost any field, the trend will continue for years to come. By 2023, supply chain management and cross-border payments had emerged as blockchain’s leading application sectors. Major logistics operators such as FedEx and UPS invested strategically to evaluate integration. Using blockchain technology, companies have the ability to monitor products throughout the supply chain process. They can identify potential issues that may occur during transit, such as signs that products have been tampered with, exposure to extreme environmental conditions, or improper handling.
Future prospects in Blockchain
Over the past decade, blockchain has evolved from an intriguing concept to a technology poised to revolutionize numerous industries globally. Areas like cryptocurrency payment systems and decentralized finance have realized significant growth by leveraging blockchain’s ability to facilitate secure value exchange without centralized intermediaries. As more traditional financial institutions explore integrating blockchain into their operations, it may help drive further mainstream adoption of cryptocurrencies.
Internationally, blockchain holds promise for transforming trade by streamlining cross-border transactions and tracking the provenance of goods through transparent, shared ledgers. Several pilot projects demonstrate its power to simplify complex supply chains and reduce inefficiencies. Widespread use of blockchain in areas like trade, finance, and value chains will depend on coherent global standards and regulations that address issues like taxation and provide legal framework for new business models to thrive.
While technical and regulatory hurdles remain, the growing number of innovative blockchain applications indicates its technology is maturing. In the coming years, as protocols advance and governance models evolve with stakeholder input, blockchain may emerge as the foundation for a more decentralized, transparent global economy. Its impact will likely expand exponentially if barriers to adoption are reduced through collaborative regulation by nations. There is still work to be done, but the future looks bright for realizing blockchain’s transformational potential.
India is poised to become a global digital leader, riding on the back of rapid digitization across sectors supported by various government initiatives. With a population of over 1.3 billion and more than 650 million internet users, the size and growth of India’s digital economy presents a trillion dollar opportunity.
As per reports, India’s digital economy is projected to reach $1 trillion by 2025 driven by widespread smartphone and internet penetration. The government aims to digitally empower every citizen through programs like Digital India, boosting e-governance, digital payments, online education and telemedicine. BharatNet is creating digital infrastructure in rural areas while initiatives like Startup India are fostering innovation and digitization.
Transformation of Digital India
As India’s Digital Economy prepares to realise its $1T value potential, a number of factors will push this digitization transformation:
Ubiquitous Digital Consumption: As India’s under-35 population continues to grow and disposable incomes rise, more and more consumption will shift online, boosting the value potential of digitally native and digitally enabled enterprises. A surge in online spending has also been seen due to digitization.
New Business Opportunities: Indian entrepreneurs will continue to innovate business models that fulfil particularly Indian requirements, tapping on infrastructure such as WhatsApp and other social media platforms, leading to an upward curve in digitization.
Public Market Hunger: The investment ecosystem is seeing robust public investor appetite, as seen by the first IPO of an Indian unicorn, Zomato, which was 38 times oversubscribed on listing day, resulting in a valuation of over $13 billion. In addition, the $1 billion initial public offering (IPO) of Freshworks on the NASDAQ is a clear signal of the capacity of Indian enterprises to take the lead on global platforms for digitization.
Strong Private Market Presence: Furthermore, we anticipate that out of the 250M firms already valued at > $100M, approximately 10052 new unicorns will be established in the next 5 to 7 years, helped by the growing interest of global financial investors. This further pushes the digitization process. To benefit on this wealth creation potential, investors will require a combination of extensive networks, local on-ground presence, technical competence and multi-cycle/stage investing experience.
The IT/Business Process Management sector already contributes over 7% to India’s GDP and employs millions. However, the real transformation is occurring in sectors like e-commerce, edtech, fintech, healthcare and agriculture which are being disrupted through technology. Major global tech companies have expanded operations in India to tap the market. Indian startups are also at the forefront of driving innovation, receiving over $73 billion in funding since 2016. The amounts that are disbursed after linking of Aadhar with under-privileged individuals showed an upsurge after the digitization of various e-portals.
E-commerce is a $200 billion opportunity by 2040 with digital payments growing exponentially. The pandemic accelerated digitization adoption – grocery, pharmacy and education saw 4-5x growth. Fintech is revolutionizing banking, insurance and wealth management through offerings like UPI, digital loans and robo-advisory. Edtech and online learning saw 10x growth with the shift to virtual classrooms. Telemedicine and digital health records are improving access to quality care.
5G rollout, blockchain, AI/ML, IoT, cloud computing and data analytics present new avenues in the digitization process. Emerging areas like virtual reality/augmented reality, robotics, drones and cleantech also offer prospects. India’s talent pool of engineers and developers is a major strength to develop these technologies. Partnerships with leading global companies will aid transfer of knowledge.
To fully realize this opportunity, India needs to focus on aspects like data privacy, infrastructure development, skilling workforce for digital jobs and fostering entrepreneurship which will in turn help in the growth of digitization. Continued policy support can help establish India as a global digital powerhouse.
Key enablers of India’s digital success and how they are valued:
India is the second largest smartphone market in the world with over 750 million users. This was made possible by the availability of affordable smartphones under $150 from manufacturers like Xiaomi, Samsung, Vivo etc.
Cheap data plans have also boosted adoption, with 1GB of mobile data costing around $0.25 on average in India.
Smartphones account for over 90% of total internet usage in India. This widespread availability of low-cost smartphones is valued at over $50 billion and has been instrumental in introducing hundreds of millions to digital services.
India saw a spike in digital payments during the pandemic, growing from $59 billion in 2019 to $3 trillion in 2021.
UPI processed over 5 billion transactions worth over $1 trillion in FY23 alone. Major payment platforms like Paytm, PhonePe and Google Pay are also hugely popular.
Digital payments have boosted e-commerce by providing safe, convenient options for both buyers and sellers. They also encourage financial inclusion by allowing access to banking services even in remote areas. This cashless ecosystem is valued at over $500 billion currently.
Initiatives like BharatNet have laid over 1.5 million km of optical fibre, connecting over 250,000 panchayats digitally.
Digital India program aims to provide broadband access to every citizen. Over 1 billion Indians now have access to high-speed broadband internet.
Public WiFi projects under Digital India have created over 10,000 hotspots across India. This expanding digital infrastructure is valued at over $50 billion and helps connect both urban and rural populations online.
India’s rapid transition to a digital-first economy
India is transitioning from a cash-dominated to a digital-first economy at a rapid pace. The pandemic accelerated digitization shift as more citizens adopted digital services for work, education, entertainment and payments out of necessity. Sectors like e-commerce, fintech, edtech saw 4-5x growth. This massive digital adoption will allow India to leapfrog stages of development and establish itself as a global digital powerhouse.
How India and China benefited from their large populations
Both India and China had a key advantage – huge internal markets provided by their large populations. This allowed digital entrepreneurs in these countries to focus on serving domestic demand first, achieving scale. They did not need to look abroad initially for users and customers. Digitization of multiple services will help foster good relations with neighboring countries.
This large captive market acted as an incentive for private companies and the government to invest heavily in digital infrastructure and services. It also attracted global tech giants to prioritize these markets.
How India and China have “leapfrogged” the West
India and China largely skipped establishing traditional landline telephone networks and desktop computer markets. Instead, they moved directly to widespread adoption of more advanced mobile phones and internet on phones.
Mobile phones provided an easy way for their large populations to access the internet and digital services anytime, anywhere. This helped digital and mobile apps flourish in these countries before the West fully transitioned to smartphones, leading the path toward digitization.
Younger populations more receptive to new technologies
The young demographics of India and China made their populations naturally more receptive to new technologies compared to older Western nations. Students and young professionals drove digital adoption through their enthusiasm for the latest apps and gadgets.
This early and rapid adoption of digital technologies among their youth helped India and China develop very vibrant digital ecosystems in a much shorter time frame than the multi-decade transitions seen in the West.
India’s trillion dollar digital economy presents massive investment and partnership opportunities for global digitization and businesses. As a financial consulting firm, we recommend our clients strategize early entry to tap into India’s growing consumer base and talent pool. Investing in digital infrastructure projects and partnering with Indian startups will help gain first-mover advantage in this rapidly transforming market. With continued policy support, India is well positioned to emerge as one of the top global digital economies, delivering high returns for early investors.
The New York Stock Exchange and NASDAQ have strategically expanded their reach in recent decades. NYSE has grown its footprint in Europe, Middle East, and Africa through acquisitions like Euronext. It now facilitates over $2 trillion daily trading volume across listed companies with a combined $28 trillion market capitalization.
NASDAQ similarly diversified its brand through international listings and joint ventures. Though it remains strongest in technology stocks, NASDAQ now links over 50 marketplaces in over 50 countries. Both American giants have thus strengthened their first-mover advantage while adapting to a more globally integrated financial landscape.
In Asia, the Tokyo Stock Exchange stands out as the world’s third largest with a domestic market capitalization over $6 trillion. However, with Japan’s stagnant population and economic growth, other Asian hubs have gained ground. The Shanghai Stock Exchange, for instance, now ranks fourth globally with $5.4 trillion in listed companies as China rapidly industrializes.
Meanwhile, the Hong Kong Stock Exchange has emerged as a major gateway between East and West. It lists over 2,300 companies from China and other emerging markets seeking international investment. With a market cap exceeding $4 trillion, HKEX has become particularly influential as China continues opening its financial sector to global capital.
Beyond the exchanges already discussed, others have also grown their influence in recent decades. Euronext, formed from the merger of several European stock exchanges, now facilitates over $4.7 trillion in listed company market cap. It has strategically expanded beyond its origins in Paris, Amsterdam, Brussels and Lisbon through acquisitions of exchanges in countries like Ireland and Norway.
In the Middle East, Saudi Arabia’s Tadawul exchange has emerged as the dominant market for the region. It facilitates daily trading volume exceeding $2 billion as Riyadh leverages its oil wealth to diversify industries and attract greater foreign investment.
Meanwhile, Brazil’s B3 and Mexico’s Mexican Stock Exchange have strengthened their positions as Latin America’s largest stock trading platforms. B3 now lists over 400 companies with a market cap over $1.5 trillion as Brazil transitions to a more market-oriented economy. These global exchanges will likely continue adapting through strategic partnerships, new listings, and product innovation to remain competitive. The healthy rivalry they foster helps optimize capital allocation worldwide and promote greater financial inclusion across borders over the coming decades.
The Union Finance Ministry’s Annual Economic Review 2022-2023 is a helpful resource since it provides an in-depth evaluation of the economy’s performance in the prior year and a projection for growth in the next year, 2024. This affects the macroeconomic aspect of multiple countries.
The Bureau of Labor Statistics report paints a picture of steady but slower economic growth through 2024. GDP is expected to expand at an average of 2.3% per year, a more modest pace than the pre-Great Recession period. This still signifies the economy will continue growing, but at a healthier, sustainable rate rather than the rapid gains seen earlier.
Economic Outlook Remains Positive but Uncertain
The unemployment landscape will gradually transform as well. Nearly 5 million more jobs will be added over the projection period, sending joblessness down to just 5.2% by late 2024. This decline will be gradual as employers bring on staffing in tune with demand. Those still seeking work may find new opportunities emerging in fields like technology, healthcare, education and business services.
Manufacturing is projected to achieve stability after massive cutbacks in the 2000s, holding around 12.5 million jobs. Though factory employment won’t surge, the sector is expected to at least maintain current worker levels. This provides reassurance for communities dependent on manufacturing. Countries’ macroeconomic opportunities increase as more jobs are added in this particular segment.
Our analysis of a different report shifts the attention on the euro area’s fiscal situation & brings it to sharp focus. Deficits are forecasted to shrink in 2023 but stay above pre-COVID highs, a sign of ongoing public support needs. Debt loads will plateau at historical ceilings, raising debt sustainability worries in heavily indebted nations.
Fiscal policy guidance calls for targeted measures to soften inflation and energy price blows on households and businesses. But the Board also advises fiscal tightening where inflation and debt risks are most threatening. This balanced approach aims to aid macroeconomic situations while maintaining hard-won debt control.
Labor Markets Transition with New Technologies
Additionally multiple shifts in trends can be seen in the employment industry. Professional and business services are expected to see strong gains of 1.9 million jobs as the economy increasingly relies on technical, administrative and consulting work. Healthcare and social assistance will add 2.3 million positions thanks to population aging trends driving demand. Leisure and hospitality also stands to benefit from continued consumer spending with 1.1 million new jobs projected in food services, accommodation and entertainment.
Manufacturing employment holds potential for upside surprises too. While the sector is forecast to remain steady at 12.5 million workers, emerging technologies like 3D printing, robotics and advanced materials could spur unforeseen factory job growth. Sectors involved in producing such innovations like computers, electronics and transportation equipment may see hiring outpaces projections. Overall, the manufacturing landscape is poised to transition toward more high-tech, specialized production roles, leading to a macroeconomic spur.
The European Fiscal Board report sheds light on how debt sustainability concerns vary across euro area members. While all countries saw debt ratios spike during the pandemic, nations like Greece and Italy entered the crisis with much higher pre-existing debt loads. The EFB recommends Greece, Italy and others with elevated debt risks prioritize fiscal consolidation to safeguard against future economic shocks or interest rate rises.
Meanwhile, countries like Germany and the Netherlands entered the pandemic from positions of fiscal strength and maintain debt ratios well below most peers. The report suggests these low-risk nations have more flexibility for supporting their economies through targeted measures if needed. A balanced, country-specific approach to fiscal policy aims to aid growth while preventing debt crises down the road.
Fiscal Stewardship Aids Stability
Looking beyond 2024, many experts anticipate technology’s ongoing impacts on jobs and growth. Automation may displace some roles but also create new opportunities across sectors as innovation accelerates. Demographic shifts like population aging in Europe and developing nations will shape future labor markets and economic drivers. Evolving trade relationships, climate policies and geopolitical dynamics present unknown variables that could influence projections. Overall, steady expansion appears likely through 2024 if current conditions hold.
While steady progress is anticipated based on current economic fundamentals, numerous uncertainties remain that could impact projections and require adaptive policymaking. Global events like Russia’s war in Ukraine, ongoing trade tensions, and geopolitical realignments pose risks to growth assumptions. Domestically, future pandemic waves or other public health crises may disrupt activity in hard-to-predict ways.
Financial markets and commodity prices demonstrate high volatility in the current environment, leaving open the possibility of sudden shifts that filter through to output and jobs. Inflation has also proven more stubborn than expected, necessitating nimble central bank response. If price pressures intensify or persist, consumption and business investment could be dampened.
Given such unpredictable macroeconomic and geopolitical variables, maintaining flexibility to adjust fiscal and monetary stances proactively will be key. Continued close monitoring of incoming economic data on production, spending, hiring and prices permits calibrating projections and policies accordingly. Country-specific circumstances like debt levels must also guide policy tailoring.
Overall, while the baseline outlook is positive, numerous Black Swan risks cloud the horizon. Agile, evidence-based approaches can help economies navigate an uncertain landscape to maximize stability and prosperity through short and long-term economic cycles.
Metaverse, a concept named by now “Meta” previously known as Facebook. The term metaverse refers to the concept of three-dimensional virtual spaces put together to form a universe in itself. It involves a combination of multiple platforms that allow users to socialize, game, meet and work in a three-dimensional space.
Metaverse, powered by Augmented Reality (AR) is gaining traction in various domains. The video gaming industry is said to be in its clooney years as it experiences major transformational shift due to the emergence of metaverse. Amid the rapid growth in the gaming industry post COVID-19 outbreak its basic drivers are still the fundamentals of the industry- faster processors, improving graphics and enhancement of overall gaming experience worldwide.
In addition, the advancement in global communication networks will accelerate the uptake of cloud-based games creating entirely new ways for users to interact and socialize while driving revenue for the gaming companies.
According to a survey by Amsterdam-based industry tracker Newzoo, the worldwide games market is projected to earn about $188 billion in sales in 2023, up 2.6 percent from this year.
The Metaverse Gaming Impact, Explained!
With the concept of a fictional universe becoming reality there is a significant upsurge with the number of early adopting gaming companies experimenting with a metaverse presence. For instance- the widely played Minecraft and Fortnite games, as well as the popular Roblox game platform, have incorporated many aspects of the metaverse, including virtual worlds where players meet to play games and use social features such as in-game chats.
As the gaming industry matures, the metaverse will continue to incorporate various technologies, such as VR, AR, and 3D functionality. Tim Stuart, CFO of Microsoft’s Xbox Unit stated, “Within the gaming space, competition for engagement makes our business grow. It creates innovation and new ideas. This market is growing because there are new entrants, there are new game players, and there is a flow of new content unlike anything we’ve seen in the past.”
It is observed that an estimated 2.9 billion people – more than one out of every three people on the planet played a video game in 2021, when global revenue for the industry exceeded $193 billion. In addition, from 2016 to 2021, gaming grew at a compound annual growth rate of 15.6%
With customer expectations rising dramatically, a key pillar of success for the gaming companies will be continuous innovation and product differentiation. While companies across every sector are still imagining business possibilities the metaverse offers, gaming executives already see growth potential and have a positive outlook for this industry in the near future. By 2025, the global gaming market is predicted to be worth $211 billion, with mobile gaming accounting for $116 billion of that.
A company is said to be in distress as and when it’s unable to meet its financial obligations or faces a significant cash crunch to its creditors due to some contingent events, business downturns, high operating expenses (mainly fixed cost), and/or inability to manage businesses changing scenarios. This causes troubles when financial analysts are formulating strategies of valuation for that said company.
Distress can be broadly categorized into economic and financial distress. Economic distress can be classified as financial uncertainties arising from contingent events, events such as supply deficits, natural calamities, and labor union strikes. Financial distress can be said to be a subset of economic distress considering not every time a company undergoes financial distress it is caused due to economic factors but by factors such as asset divestitures, lack of confidence in management, falling margins, etc.
Additionally, the inability to repay the debts or meet financial commitments does not reflect the company’s insolvency as the value of the company is tied to the assets owned by the company. The valuation of distressed assets allows the company to make a sound decision as to its operating activities whether it should continue its operations for the foreseeable future or shut down its operations minimizing its variable cost.
The approaches to the valuation of distressed assets are very stringent and based on economic principles of price equilibrium, anticipation of benefits, or substitution. The main valuation approaches that are to be discussed are as follows:
The market approach provides an indication of the value of distressed assets by comparing the asset with identical or comparable (that is similar) assets for which price information is available. The Market Approach Method comprises various valuation methods such as:
Comparable Transaction Method: This method is used when information regarding several transactions of a similar nature is available, and those transactions shall be carried out near the valuation date.
Guideline Publicly Traded Comparable Method When the distressed asset subjected to valuation is publicly traded and its comparable asset has a meaningful valuation, the above-pertaining method is used for deriving the value of the distressed asset.
The Income Approach valuation method values a distressed asset by discounting its future cash flows to its current value. Under the income approach, the value of an asset is determined by reference to the value of income, cash flow, or cost savings generated by the asset.
The various methods of valuation of distressed asset used in the Income Approach method comprises the following:
DCF Method: Values adistressed asset by discounting its forecasted future cash flows to its net present value.
Explicit Forecast Method: Mainly used if the distressed asset has a short life span as it involves a projection of the asset’s forecasted future cash flows.
The cost approach devises the value of a distressed asset on the mechanism that the buyer of the asset will not be able or willing to pay more than the amount which is incurred to acquire the asset of equal utility. Further, the valuation methods used in this approach comprise the following:
Replacement Cost Method: This method offers an equivalent utility indicating value by calculating the cost of a similar distressed asset.
Reproduction Cost Method: In this method, value is calculated by estimating the cost to recreate a replica of a distressed asset. Summation Method: This is a two-step method in which firstly the value of separate component parts is calculated and then the same is added to arrive at the value of the distressed asset.
XYZ Airlines is a distressed company that operates domestic and international flights across the world. The company has been severely affected by the COVID-19 pandemic, which has reduced the demand for air travel, disrupted the supply chain, and increased health and safety costs. The company has breached its debt covenants and is facing liquidity problems. The company’s lenders have hired a valuation expert to estimate the value of the company’s assets and liabilities, and to determine the recovery rate for each class of creditors.
The valuation expert collects the following information from various sources:
The company has total assets of $10 billion, consisting of $1 billion in cash and equivalents, $4 billion in aircraft and equipment, $3 billion in intangible assets (such as brand name and landing rights), and $2 billion in other assets (such as inventory and receivables).
The company has total liabilities of $15 billion, consisting of $5 billion in secured debt, $8 billion in unsecured debt, and $2 billion in trade payables and other current liabilities.
The company’s revenue for the last fiscal year was $8 billion, with a gross margin of 20% and an operating margin of -5%. The industry average gross margin and operating margin are 25% and 10%, respectively.
The company’s revenue is expected to recover gradually over the next five years, reaching $12 billion by year 5, as the pandemic subsides, and travel restrictions are lifted. The company’s gross margin is expected to improve to 22%, but its operating margin is expected to remain negative at -2%. The company’s capital expenditure is expected to be high, at 15% of revenue per year, as it needs to upgrade its fleet and comply with new regulations.
The company’s weighted average cost of capital (WACC) is estimated to be 12%, based on its capital structure, risk profile, and market conditions. The WACC reflects the required return for both debt and equity investors.
The company’s terminal value is estimated to be $15 billion, based on a perpetual growth rate of 3% and a terminal WACC of 10%.
The valuation expert identifies a set of comparable companies that operate in the same industry as XYZ Airlines, have similar size, growth, profitability, and risk characteristics, and have recent market prices or transaction values available.
The valuation expert selects four multiples to value XYZ Airlines: enterprise value (EV) to revenue, EV to earnings before interest, taxes, depreciation, and amortization (EBITDA), EV to earnings before interest and taxes (EBIT), and EV to net assets. The valuation expert calculates the median multiple for each metric from the comparable companies and applies it to XYZ Airlines’ corresponding metric. The results are shown below:
Conclusion: The valuation expert takes the average of the four values as the market value of XYZ Airlines’ enterprise. The average value is $2 billion. To obtain the equity value, the valuation expert subtracts the total debt of $13 billion from the enterprise value. The equity value is -$11 billion, which implies that the equity holders have no recovery potential.
The valuation expert estimates the net realizable value of each asset category by applying appropriate discounts or premiums based on their liquidity, condition, marketability, and obsolescence. The results are shown below:
Conclusion: The valuation expert subtracts the total liabilities of $15 billion from the net realizable value of the assets to obtain the equity value. The equity value is -$8.8 billion, which implies that the equity holders have no recovery potential.
The valuation expert projects the free cash flow (FCF) of XYZ Airlines for the next five years, based on the revenue, margin, and capital expenditure assumptions. The FCF is calculated as EBIT*(1-tax rate) + depreciation – capital expenditures – change in net working capital. The valuation expert assumes a tax rate of 25% and a depreciation rate of 10% of aircraft and equipment.
The results are shown below:
Conclusion: The valuation expert discounts the FCFs to present value using the WACC of 12%. The present value of the FCFs is -$4.4 billion. The valuation expert adds the present value of the terminal value of $15 billion, discounted at the terminal WACC of 10%, to obtain the enterprise value. The enterprise value is $9.8 billion. To obtain the equity value, the valuation expert subtracts the total debt of $13 billion from the enterprise value. The equity value is -$3.2 billion, which implies that the equity holders have no recovery potential.
The valuation expert compares the three approaches and concludes that the income approach is the most reliable and relevant for valuing XYZ Airlines, as it reflects the company’s ability to generate cash flows from its operations and its risk profile. The market approach and the cost approach may not capture the company’s specific circumstances and challenges and may be influenced by market conditions and assumptions that are not applicable to XYZ Airlines.
The valuation expert reports that the enterprise value of XYZ Airlines is $9.8 billion and the equity value is -$3.2 billion, based on the income approach. This means that the company’s assets are worth less than its liabilities and that the equity holders have no recovery potential.
India has shown tremendous economic growth over the past few decades and is well positioned to achieve the ambitious target of becoming a $30 trillion economy by 2050. Currently the fifth largest economy globally with a GDP of $3.5 trillion, India has consistently grown at an average rate of 6-7% annually over the past 10 years.
Key Priority Areas for Sustained Growth
To achieve sustained high growth, India must focus on key priority areas. Job creation will be vital to maximize productivity and incomes of the large workforce. Labor-intensive manufacturing and infrastructure development can generate massive employment. However, skills training will be needed to match industry demands. National programs are being implemented to upskill over 400 million Indians by 2022. Continued vocational training initiatives ensuring skills match the needs of a digital, globalized economy will be essential.
Projections from institutions like the IMF and World Bank estimate India’s GDP will expand to $8-10 trillion by 2030, driven by strong domestic demand and increasing digitalization across sectors. For India to reach the $30 trillion target by 2050, it needs to sustain a real GDP growth rate of over 8% annually for the next 25+ years. This seems achievable given India’s strong economic fundamentals and ongoing policy reforms.
Demographic Dividend and Economic Prospects
India’s growing population, currently at 1.4 billion people with 65% under the age of 35, provides a huge talent pool to fuel future growth. As the world’s largest workforce by 2027, India’s demographic dividend will power the economy. Rapid urbanization is also increasing consumption expenditure – the middle class is projected to rise from 30 crore currently to over 50 crore by 2030.
The government’s initiatives such as Make in India, Digital India, and Startup India are helping develop world-class infrastructure and an innovation-driven entrepreneurial ecosystem. These efforts have attracted significant foreign investments across sectors like digital, manufacturing, renewable energy, and infrastructure. Sectors offering immense growth potential include digital economy, renewable energy, agriculture, healthcare, and tourism.
India’s Role as a Global Manufacturing Hub
Geopolitical factors and China’s declining workforce make India an attractive alternative manufacturing hub globally. To achieve its $30 trillion goal, India must focus on job creation, skill development, ease of doing business reforms, self-reliance in strategic industries, and ensuring widespread benefits of economic growth. Continued reforms and political stability will also be important supporting factors.
Agricultural Modernization and Infrastructure Development
Agriculture modernization presents opportunities to raise farmer incomes and productivity. The sector currently engages over 50% of India’s workforce but contributes only 15-20% to GDP. Adopting advanced techniques, expanding cold storage and food processing infrastructure, developing private markets, and providing access to credit and insurance can boost agricultural growth. This will support rural consumption and structural transformation away from agriculture over time.
Infrastructure development across transport, digital connectivity, energy and urban development is a major government priority. Trillions of dollars will be invested in highways, railways, ports, airports, renewable energy, smart cities, and digital infrastructure under the National Infrastructure Pipeline. Completing infrastructure projects on schedule while ensuring transparency and sustainability can accelerate growth across sectors.
According to the National Manufacturing Policy of 2011, the share of manufacturing in India’s GDP has stagnated at 15-16% since 1980 while the share in comparable economies in Asia is much higher at 25 to 34%. However, the government has taken several initiatives to promote the manufacturing sector, including the introduction of Goods and Services Tax, reduction in corporate tax, interventions to improve ease of doing business, FDI policy reforms, measures for reduction in compliance burden, policy measures to boost domestic manufacturing through public procurement orders, and Phased Manufacturing Programme (PMP)
Promoting Manufacturing and Digital Economy
According to Statista, in 2021, the manufacturing sector’s share of GDP in India was around 14%. The report by NITI Aayog shows that the manufacturing sector’s share of GDP was 16.1% in 2011-12 and 16.2% in 2017-18. The India GDP sector-wise report by StatisticsTimes.com shows that the manufacturing sector’s share of GDP was 25.8% in 2021.
Overall, the manufacturing sector’s share of GDP in India has been stagnant for several years, but the government has taken initiatives to promote the sector. The exact share of manufacturing in India’s GDP varies depending on the source, but it is clear that there is room for growth in this sector.
The digital economy’s potential is immense given India’s young demographics and improving internet access. A target of achieving a $1 trillion digital economy by 2025 is being pursued through initiatives like Digital India. Sectors like IT/business services, digital payments, e-commerce, online gaming and edtech are growing exponentially. Developing AI, 5G networks, blockchain and other emerging technologies presents opportunities for India to become a global innovation hub.
Achieving a $30 Trillion Economy by 2050
If India utilizes its demographic dividend, policy initiatives, and sectoral opportunities effectively while sustaining high growth rates, becoming a $30 trillion economy by 2050 seems very achievable and will cement its place among the world’s largest economies. Careful planning and execution will be crucial over the coming decades.
Enhancing Geopolitical Influence and Foreign Policy
India’s rising consumption and manufacturing base also enhances its geopolitical influence as a strategic partner. Continuing trade and investment deals while reducing reliance on any single country strengthens India’s position. Pursuing self-reliance in critical areas alongside cooperation and capacity building with friendly nations will be a key foreign policy objective.
Challenges and Adaptations in Global Infrastructure Initiatives
As we enter the second decade of large-scale international development projects, it has become clear that both opportunities and challenges exist for all parties involved. When first announced in 2017, China’s Belt and Road Initiative promised new trade routes and infrastructure development across Asia, Africa and beyond. While ambitious in scope, the economic and strategic rationale for such connectivity was sound.
However, a combination of factors from unforeseen global events to financial and environmental sustainability have tested the limits of what was initially envisioned. As with any long-term undertaking, flexibility and course corrections are expected over time. As consultants with experience across multiple sectors and regions, we have observed both successes and areas for improvement.
Impact of Global Events on Infrastructure Initiatives
According to a report by the Green Finance and Development Center at Shanghai-based Fudan University, yearly involvement under the BRI dropped to $63.7 billion in the first year of the global health crisis, from a peak of more than $130 billion in 2018.
It is prudent to acknowledge that global circumstances have shifted markedly since the onset of the Covid-19 pandemic and more recently, inflationary pressures and rising energy costs. recipient nation budgets now face greater constraints. Meanwhile, lending institutions have rightly strengthened due diligence on risk exposures. Going forward, a balanced approach focusing on bankable projects with clear public benefits and oversight seems most viable.
Smaller, targeted investments in renewable energy, digital infrastructure and skills training could provide outsized impact. Public-private partnerships also show promise in sharing costs and expertise. With open channels of communication, all stakeholders stand to gain from open yet constructive discussions on modifying strategies as needed.
The Evolving Landscape of Infrastructure Investments
As a result, China is focusing on “little but beautiful” initiatives that improve people’s standard of living. Chinese investments abroad have included an enhanced water facility in Botswana and a technological cooperation with a seed company in Costa Rica, according to the state-run People’s Daily this month.
According to the Fudan analysis, the average size of a BRI investment contract dropped by 48 percent from its 2018 high to around $392 million in the first half of this year. Value of Chinese-funded and Chinese-equity-invested construction projects are also tracked in this report.
While infrastructure connectivity initiatives can spur valuable development, geopolitical realities must also be acknowledged. That spending spurred the US and European governments to expand engagement with some developing nations to counter China’s influence. But while Western rivals have pledged billions of dollars, many of their projects have been slow to get off the ground.
Geopolitical Realities and the BRI
China’s credit lines will indeed be tested when Kenya requests $1 billion to finance stalled projects, as leaders balance economic and strategic priorities. A major new railway investment in Africa, as alluded to by Chinese officials, could signal Xi’s commitment to the BRI’s core mission. However, as your insightful comment notes, even bolder spending may not fully reverse the program’s shifting scale after a decade of implementation and changing global headwinds.
Sustainable Partnerships for Future Success
Sustainable partnerships and open communication between all involved will be key to achieving shared goals over the long run. With renewed focus on targeted projects offering clear community benefits, initiatives like the BRI have potential to aid development for years to come through difficult periods. I appreciate you raising this complex issue and hope our discussion provided some thoughtful perspective.
Reaffirming the Vision of Connectivity
Overall, the vision of facilitating trade and development connectivity remains valid. With good faith on all sides, we are confident that the goals of the Belt and Road Initiative and other such programs can still be advanced in a sustainable, mutually beneficial manner. Ongoing cooperation in a spirit of flexibility and understanding holds the best hope of long-term success.
We have all begun preparation for Saturday afternoon’s most hyped event, yes you guessed it right. We are talking about the India Vs Pakistan World Cup match. According to some reports, the resale of tickets has seen sky-high prices. As per an article in Business Standard “a 32-year-old Mumbai native, who now works at a fintech company, in August bought a 2,500-rupee ($30) ticket for Saturday’s match. After a change of plans, he decided to resell the ticket on X, the platform formerly known as Twitter, scoring 22,000 rupees for it.”
This might let us think that the cricket governing body must have earned the majority of its combined revenue of Rs 27,411 crore over the past five fiscal years (FY18-FY22) through ticket sales. But that doesn’t even come in the top 5 sources of their revenue.
The business model of BCCI has made it the richest cricket governing board out of all the cricket-playing regions in the world and is one of the major boards of cricket, alongside the England and Wales Cricket Board and Cricket Australia. So, it obviously made us curious about what makes BCCI swim in cash. Here are the Top revenue sources of BCCI
1) Media Rights
One of the massive sources of income for the BCCI is through their broadcasting media rights. The board grants the media broadcasting rights of the matches that feature the Indian cricket team to the networks for a huge sum of money. The advertisers of different marketing agencies know this to be the best time to showcase their advertisements to a large, worldwide audience. This makes each and every broadcast of the game very valuable, thus the BCCI charges a lot of money for the media rights to broadcast the games.
2) Title Sponsorship
The second spot on the topic of how BCCI earns money is the title sponsorship. One of the biggest spots for advertisement is surely attaching the company’s name to one of the biggest cricket championship titles in the country. Yes, the spot of title sponsorship is a massive source of income for the BCCI in recent years. The company that sponsors the title of a cricket event, receives the most exposure, meaning more space for advertisement, a bigger logo, an enhanced time slot, the name and logo of the company over the trophy area, and a lot more. To achieve this spot, which is a golden opportunity for companies in terms of advertisement, they have to pay a huge sum of money to the BCCI.
3) Team Sponsorship
Another huge contribution to the revenue model of the BCCI is through their official team sponsorship. Remember the Sahara logo at the center of the Indian national cricket team, worn by legendary players while representing the country on the international stage of cricket? Imagine the amount of publicity and marketing benefit it does for the company. Hence being able to sponsor that is another golden opportunity for these types of companies, eventually paying a huge sum of money to the BCCI for its rights.
4) Official Kit Sponsors
The company that sponsors the official kit of the team has to pay a massive amount to the BCCI for their logo placement on the jersey. Nike was the previous kit sponsor for the team and had to pay about 12.13 Million USD to the board each year. In the five-year deal, Nike had to pay nearly 60.6 Million USD at the end of the term to the BCCI. The contract ended with Nike back in 2020 and since then, MPL has taken the charge of the official kit sponsors for the Indian cricket team, paying the base price of INR 65 lakhs per match and a total of INR 3 crore each year as the official merchandise partner. Thus, in the question of how BCCI earns money, you can check kit sponsorship on the list as a major part of it.
5) Revenue Earned via Bilateral Series
The ICC or the International Cricket Council is responsible for hosting various international cricket series between the cricket-playing countries. You have definitely heard about the India Tour of Australia, or the New Zealand Tour of India, etc. where a large amount of revenue is collected by the cricket boards of the participating countries. Similarly, whenever team India plays a bilateral series with a country, the BCCI get a part of the revenue earned from the events. The BCCI is among the big three cricket boards in the world, and due to their huge associated viewership of millions of Indian cricket fans, they earn a major share. Just accounting for the 2019-20 cricket series, the BCCI had earned around INR 950 crores in revenue.
6) Revenues from the Indian Premier League
Coming at the sixth spot on the topic of how does BCCI earn money, is the contribution of the IPL. The Indian Premier League is the biggest domestic T20 cricket tournament in the whole world. The IPL is one of the most attended, marketable and viewed sports events in the whole world. So it is natural for the BCCI-created IPL to generate massive amounts of revenue for the board throughout the years. Apart from title sponsorship, tournament sponsorship, media rights and the other previously mentioned sources of the tournament gaining money, there are a lot more things that produce revenue for the BCCI through IPL. Like other forms of advertisement throughout the events, stadium tickets, percentage of earnings from the franchises, and other things. All of these come into the massive picture of the total revenue earned by the BCCI through just their IPL brand.
We are all gearing up for the highly anticipated event on Saturday afternoon – the India Vs Pakistan World Cup match. Reports suggest that ticket resale prices have skyrocketed. According to an article in Business Standard, a 32-year-old Mumbai resident, who now works at a fintech company, purchased a 2,500-rupee ($30) ticket for the match in August. However, due to a change of plans, he decided to resell the ticket on X (formerly known as Twitter) and managed to sell it for 22,000 rupees.
Surprising Revenue Sources for BCCI
One might assume that ticket sales contribute significantly to the cricket governing body’s revenue, considering the exorbitant prices. However, ticket sales do not even rank among the top five sources of revenue for the Board of Control for Cricket in India (BCCI).
The BCCI’s business model has made it the wealthiest cricket governing board globally, alongside the England and Wales Cricket Board and Cricket Australia. Naturally, this piques our curiosity about what enables the BCCI to amass such wealth. Let’s explore the top revenue sources of the BCCI:
Media Rights: One of the primary sources of income for the BCCI is the sale of broadcasting media rights. The board grants networks the rights to broadcast matches featuring the Indian cricket team for a substantial sum of money. Advertisers from various marketing agencies recognize this as an opportune moment to showcase their advertisements to a vast global audience. Consequently, each broadcast of the game becomes highly valuable, allowing the BCCI to charge a significant amount for media rights.
Title Sponsorship: Another major source of income for the BCCI is title sponsorship. Attaching a company’s name to one of the country’s most prominent cricket championships offers immense advertising opportunities. The title sponsor receives extensive exposure, including more advertising space, a larger logo, an enhanced time slot, and the company’s name and logo displayed prominently in the trophy area. To secure this coveted spot, companies must pay a substantial sum to the BCCI.
Team Sponsorship: Official team sponsorship also contributes significantly to the BCCI’s revenue model. Remember the Sahara logo at the center of the Indian national cricket team’s jersey, worn by legendary players representing the country on the international stage? The publicity and marketing benefits for the sponsoring company are immense. Thus, sponsoring the team presents a golden opportunity for companies, leading them to pay a substantial amount to the BCCI for the sponsorship rights.
Official Kit Sponsors: The company that sponsors the official kit of the Indian cricket team must pay a substantial amount to the BCCI for logo placement on the jersey. Nike, the previous kit sponsor, paid approximately 12.13 million USD annually to the board in a five-year deal, totaling nearly 60.6 million USD. Since 2020, MPL has taken over as the official kit sponsor, paying a base price of INR 65 lakhs per match and a total of INR 3 crore annually as the official merchandise partner. Kit sponsorship, therefore, plays a significant role in the BCCI’s revenue generation.
Revenue from Bilateral Series: The International Cricket Council (ICC) hosts various international cricket series between cricket-playing countries, such as the India Tour of Australia or the New Zealand Tour of India. These events generate substantial revenue for the cricket boards of the participating countries. When Team India plays a bilateral series, the BCCI receives a share of the revenue earned from the events. With millions of Indian cricket fans as viewers, the BCCI, being one of the big three cricket boards globally, earns a significant portion of this revenue. In the 2019-20 cricket series alone, the BCCI earned approximately INR 950 crores in revenue.
Indian Premier League (IPL) Revenues: The Indian Premier League (IPL), the world’s largest domestic T20 cricket tournament, occupies the sixth spot in terms of revenue generation for the BCCI. The IPL is highly attended, marketable, and viewed worldwide, making it a lucrative source of income for the board. In addition to title sponsorship, tournament sponsorship, and media rights, the IPL generates revenue through various other means, including advertisements during the events, ticket sales, a percentage of earnings from franchises, and more. All these factors contribute to the substantial revenue earned by the BCCI through the IPL brand.
Rising Income Tax Payments by BCCI
Income tax payments made by the Board of Control for Cricket in India (BCCI) during the fiscal year 2021-22 increased by 37% year over year, reaching a total of Rs 1,159 crore.
Indian business news has been filled with M&A and restructuring activity in the past few months. We saw the country’s largest private bank HDFC Bank and the Largest housing finance company HDFC (Housing Development Finance Corporation) making it the third largest market capitalization as of April 2023 just behind the behemoth reliance industries and Tata Consultancy Services.
Reliance Industries has been on an acquisition spree in 2023, acquiring majority stakes in companies involved in sectors ranging from Retail to Gaming tech. Following are some of the major acquisitions made by Reliance
The epic acquisition of Air India by Tata group, Zomato acquiring Grofers in May 2023, Paytm founder and CEO Vijay Shekhar Sharma will buy a 10.3% stake (worth $628 million) in the fintech firm from China’s Ant Financial (known as Ant Group now) in a no-cash deal. These are just a fraction of the headline acquisitions that we have witnessed this year.
This trend has been carried forward from 2022, as per Deloitte M&A Trends 2023 The M&A market in India crossed USD 160 Bn during 2022.
Key Factors Driving M&A Growth
The rise in M&A activity is attributed to strong domestic demands at a time when global demand was stagnant with uncertainty and interest rate hikes in the U.S. Corporates had healthy cashflows which allowed them to make strategic acquisitions at a time when markets were on low with little activity giving corporates the required headspace to engage in such activities.
Technology, media, and telecom saw the greatest activity with 330 overall delas in 2022. As we saw in the beginning 2023 has witnessed a greater activity in terms of overall value and no. of deals.
However, in an environment where global demand has subsumed due to a variety of factors, the Indian private economy is relatively in a stable and healthy situation. The Indian firms with relatively healthier cashflows have identified the global economic crunch as an opportunity to make strategic acquisitions. This has allowed them to get attractive valuations and work towards increasing their margins with backward integration.
Successful acquirers are increasingly looking towards the creation of “Ecosystem Clusters” which can help them to expand their business base and penetrate deeper into the market. It is obvious that big corporations with healthy balance sheets hold a competitive edge wherein using their financial and operational capability they can integrate much faster and effectively with their strategic acquisition. The government policies have also contributed to the growth in M&A that we are witnessing. As part of the government’s continued emphasis on easing the process of doing business, there have been several regulatory and administrative changes of note. These include a push towards digitization in addition to foreign exchange regulations for inbound and outbound investments continuing to be relaxed. Meanwhile, the judicial system has adopted virtual court technology, thereby increasing accessibility and reducing cost and litigation time.
Future Investment Trends
With all such factors coming together, the opening up of several sectors & investor-friendly reforms brought in, an increase in the quantum of investments is anticipated. Investments in key sectors such as pharmaceutical, technology, telecommunication, and infrastructure (including roadways and ports) are expected to continue to attract both domestic and foreign investors and dominate the M&A market. ESG investments and conducive government policies may also result in increased investment.
As the world progresses towards a more digital future, distributed ledger technologies have emerged as an important area of innovation. Both Hedera Hashgraph and blockchain aim to decentralize record keeping through distributed networks, but they approach the challenge in different ways. With new technologies vying for adoption, it is prudent to examine the relative merits and applications of each approach.
Who To Vote for The Best-Distributed Ledger Technology?
At their core, both Hedera Hashgraph and blockchain seek to distribute trust through consensus-based networks instead of centralized authorities. This allows for transparent, immutable records without single points of failure. However, they diverge in their technical implementations. Blockchain utilizes a linear chain of blocks containing sequential transaction records. Each new block requires proof of work or stake validation from nodes across the network. This process can become computationally intensive at scale.
In contrast, Hedera Hashgraph employs an asynchronous Byzantine fault tolerant algorithm called gossip about gossip. Through this, nodes can validate transactions and reach consensus in parallel rather than serially. Proponents argue this allows Hashgraph to process thousands of transactions per second compared to tens for blockchain. The asynchronous nature also removes mining incentives, prioritizing fairness over competition.
Consensus Mechanisms and Validation Processes
The consensus mechanisms employed by Hedera Hashgraph and blockchain are a key point of differentiation between the two distributed ledger technologies. Blockchain relies primarily on proof-of-work or proof-of-stake to validate transactions and reach network-wide agreement.
Proof-of-work involves miners competing to solve complex cryptographic puzzles, with the first to solve it gaining the right to validate the next block of transactions. However, this process consumes vast amounts of energy as the puzzles increase in difficulty. Proof-of-stake instead selects validators based on their holdings in the native cryptocurrency. While more efficient, there are concerns it could become centralized if ownership is highly concentrated.
Hedera Hashgraph takes a novel approach called gossip about gossip. Rather than competing, nodes communicate approved transactions and timestamps to their peers in the network. Through this asynchronous process, nodes can validate transactions and order them based on virtual voting from across the entire network simultaneously. Proponents argue this results in a fairer, more decentralized consensus without wasteful mining incentives.
Performance and Scalability
While speed and efficiency advantages are compelling, blockchain currently enjoys far broader adoption thanks to its open governance model. As a patented technology, Hashgraph is controlled by its governing council of major corporations. For some use cases, the centralized oversight may discourage participation. Blockchain’s decentralized nature better enables grassroots innovation and independent development.
Both technologies show promise, but their strengths suit different applications. Public, transparent records like digital currencies currently find blockchain a more natural fit. However, as distributed systems assume more vital private sector roles, Hedera Hashgraph’s performance characteristics could make it preferable for supply chain management, IoT networks, or other performance-critical services.
The performance implications of these different mechanisms are also notable. Blockchain’s sequential validation process can currently only handle a limited number of transactions per second depending on the implementation. In contrast, Hedera Hashgraph’s parallel gossip-based approach has demonstrated throughput in excess of 10,000 transactions per second in testing.
Additional Analogous Notes
Hedera Hashgraph offers significant performance advantages over blockchain-based networks like Bitcoin in terms of transaction throughput. Where Bitcoin can only handle 3-7 transactions per second maximum, Hedera has demonstrated over 10,000 transactions per second in testing. This level of scalability could make Hashgraph more suitable than blockchain for applications requiring high volume.
The energy efficiency of Hedera is also a major benefit, with estimates that a single transaction uses over 5.8 million times less energy than Bitcoin. This significant reduction in carbon footprint has implications for sustainability, especially as transaction volume grows.
Compared to other blockchain platforms, Hedera achieves its high performance without relying on power-intensive mechanisms like proof-of-work. Instead, its gossip-based consensus protocol and acyclic graph structure allow for rapid, distributed validation in a more streamlined manner.
Potential Applications Based on Attributes
For use cases like supply chain management or micropayments, this level of scalability could give Hashgraph a clear advantage. However, blockchain has established a first-mover advantage through the popularity of cryptocurrencies, and proof-of-work remains the most stress-tested model to date. Overall, continued development of both technologies promises to drive further innovation in distributed systems going forward.
While Hedera has clear advantages in these areas, it is still in earlier stages of deployment and adoption compared to major blockchain networks. Further real-world testing will still be needed, especially as network size increases, to fully validate the scalability and security of its consensus approach. Continued development on both technologies promises ongoing innovation in distributed ledger solutions.
Overall, healthy competition between the approaches will drive continued progress in distributed ledger technologies for the benefit of businesses and consumers. Further real-world use and development will determine which model proves most versatile.
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