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Angel Tax reforms unlikely to boost funding

Investors backing Indian startups are relieved–the new notification by the CBDT (Central Bureau of Direct Tax) on angel tax regulations has provided them with some flexibility. However, it is unlikely that the proposed amendments will bring capital flowing into the ecosystem.

Angel Tax reforms unlikely to boost funding

Saturday May 27, 2023 , 5 min Read

Hello,

Another week, another markdown.

For the second time in just three months, US-based fund Baron Capital has slashed the valuation of its holding in foodtech startup Swiggy. This is just a week after the Bengaluru-headquartered firm announced that its food delivery business had finally turned profitable since its launch in 2014.

Valuations in the Indian startup ecosystem are tumbling down in recent weeks, with companies such as PharmEasy, Ola, BYJU'S, and Oyo facing markdowns, which could further impact the muted fund-raising season.

Speaking of funding, the last week of May saw some uptick in the venture capital inflow, largely due to the $100 million raised by PhonePe, taking the total to $231 million

Meanwhile, Ola Electric is preparing for a $10-billion public debut, sources familiar with the matter told YourStory. The company is likely to file its draft IPO papers by the end of next quarter.

ICYMI: Elon Musk's Neuralink has finally received the go-ahead from the FDA to run the first-in-human clinical trial for its brain implants. 

Are you ready for a computer chip in your brain?

Lastly, let’s reflect on the Dutch wellness trend of Niksen, which means “doing nothing”.

After all, breaks let our brains focus better.

In today’s newsletter, we will talk about 

  • Angel Tax reforms unlikely to boost funding
  • Info Edge writes off bijnis investment
  • South Goa’s best-kept secret: Casa Jaali

Here’s your trivia for today: What is the rarest blood type?


Investment

Decoding Angel Tax reforms 

Investors backing Indian startups are relieved–the new notification by the CBDT (Central Bureau of Direct Tax) on angel tax regulations has provided them with some flexibility. However, it is unlikely that the proposed amendments will bring capital flowing into the ecosystem.

The fine print:

  • Angel tax was first introduced in 2012 to curb certain practices, as dummy companies were established to route doubtful sources of capital. 
  • The notification by the Central Bureau of Direct Tax (CBDT) encompasses areas such as exemption, valuation, parity for investors, pricing, etc.
  • On the proposed amendments. an investor on condition of anonymity said, “Large foreign investors do not have so many investors in their funds, and this only adds to the confusion.”

<Top Funding Deals of the Week>

Startup: PhonePe

Amount: $100M

Round: Undisclosed

Startup: Chalo

Amount: $45M

Round: Debt

Startup: Hopscotch

Amount: $20M

Round: Undisclosed


News

Info Edge writes off bijnis investment

In its second write-off in as many financial years, Info Edge wrote off its entire investment worth Rs 76.6 crore in Bizcrum Infotech Private Ltd, the parent entity of bijnis.

Info Edge, the largest shareholder in the Delhi-based B2B marketplace, cited the company's continuous cash burn, limited availability of cash in proportion to liabilities considering buyback obligations (including liquidation preference) towards investors, and uncertainty of future capital raise as reasons behind the write-off.

Bidding goodbye:

  • Info Edge wrote off a Rs 276 crore investment in 4B Networks in Q3 of the last financial year.
  • The write-offs bore heavily on the online classifieds conglomerate's Q4 FY23 earnings, with the company reporting a consolidated loss of Rs 503 crore against a net profit of Rs 719.5 crore in the comparable period last year. 
  • It recorded a loss of Rs 107.4 crore in the fiscal year gone by—a sharp fall from Rs 1,276 crore earned as profits in FY22. According to reports, this is the firm's first net loss in six years.
Loss revenue


Leisure 

South Goa’s best-kept secret

Imagine waking up to the sound of waves crashing upon pebbles, in a place far removed from the clamour of the city.

Owned by Kate Abramovitz and Eli David, the resort Casa Jaali is seated on the rocks of the quaint and tranquil Patnem Beach—close to the more famous Palolem Beach—and YS Life got a sneak peek!

Feel the vibe:

  • All the rooms are sea-facing and have a similar set-up. The walls are painted bright pink and green, the furniture is made from wood and bamboo cane, and each room is adorned with plants. 
  • It takes about two hours to drive down to Casa Jaali, about 73 km from Panjim, Goa’s capital city. Sitting at one corner of the Patnem beach, the sea comes to greet guests at Casa Jaali. 
  • Guests can rent a kayak or a boat tour for dolphin trips or drive 30 minutes to the Bhupar waterfall. Also, visitors at the Tanshikar spice farm and bubble lake can opt for a guided tour.
Casa Jaali

The Jaali Kitchen offers a thoughtfully-curated menu


News & updates

  • Turnaround: OpenAI CEO Sam Altman—days after making comments that he might pull out of Europe if he didn’t feel he could meet the EU’s regulations—said he plans to comply with the bloc’s rules. In discussions with EU regulators, OpenAI wants “to make sure it is able to comply,” he said during a speech.
  • Heating up: U.S. consumer spending increased more than expected in April, boosting the economy's growth prospects for the second quarter, and inflation picked up, which could prompt the Federal Reserve to raise interest rates again next month.
  • New besties: Ford Motor will partner with Tesla on charging initiatives for its current and future electric vehicles in an unusual tie-up between the two rivals. Current Ford owners will be granted access to more than 12,000 Tesla Superchargers across the U.S. and Canada starting early next year.


What is the rarest blood type?

Answer: AB negative, found in less than 0.6% of the total population.


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