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Honeymoon over! What Paytm's 'exit' as sponsor for Indian cricket implies for start-ups

Honeymoon over! What Paytm's 'exit' as sponsor for Indian cricket implies for start-ups

Mastercard is set to replace Paytm as the title sponsor for all of BCCI’s international and domestic cricket matches till 2023

Honeymoon over! What Paytm's 'exit' as sponsor for Indian cricket implies for start-ups Honeymoon over! What Paytm's 'exit' as sponsor for Indian cricket implies for start-ups

Start-ups are cutting back on their advertising spends, especially big-ticket cricket sponsorships, as they have been forced to tighten their belts by profit- and revenue-focussed venture capitalists in a tough investment climate in the country.  

E-commerce, FinTech and EdTech were the biggest advertising spenders among start-ups because they attracted the most funding, according to Naresh Gupta, Co-founder and Chief Strategy Officer of media communication company Bang In The Middle.  

Data from Venture Intelligence shows that $35.18 billion private capital flowed into Indian start-ups in 2021, with E-Commerce, Fintech and EdTech emerging as three most funded start-up sectors. A record 44 unicorns were created during the year. Flush with cash, start-ups spent aggressively on advertising and hiring last year.  

But those kinds of advertising spends are not happening anymore, Gupta says, adding that he expects a 20-30% drop in mass media spends of start-ups. “All EdTech companies have pulled back on advertising spends. Now, only fantasy gaming start-ups like Dream11 and MPL are spending money. Everybody else has walked away.” 

Credit card firm Mastercard is reportedly set to replace payments company Paytm as the title sponsor for all of BCCI’s international and domestic cricket matches till 2023, after the latter is said to have requested a withdrawal from the deal a year before its completion.  

In August 2019, Paytm parent One 97 Communications had renewed its title sponsorship rights for BCCI international and domestic matches for Rs 326.80 crore for the 2019-23 season, or Rs 3.8 crore per match. This was at a 58% premium compared to the Rs 2.4 crore per match deal it had with BCCI between 2015 and 2019.  

Meanwhile, IPL official partners edtech start-up Unacademy and digital brokerage start-up Upstox have also decided not to continue their sponsorship in 2023. Unacademy’s founder Guarav Munjal tweeted on July 11, 2022, that their focus had changed. The firm’s contract ended with the 2022 season. Upstox, which got into a multi-year partnership for the tournament in 2021, reportedly told another publication that it has already achieved its business targets from the IPL sponsorships. Its valuation has crossed $3.5 billion and that the brand doesn’t need IPL anymore to reach a new audience.   

Edtech firm Byju’s, which took over from handset maker Oppo as the official Team India sponsor from September 5, 2019, to March 31, 2022, reportedly owes BCCI Rs 86.21 crore as of July 21, 2022. The two parties are reportedly in the process of renewing the sponsorship, which includes the company’s logo appearing on the team jerseys.  

In response to the allegations, Byju’s Co-Founder Divya Gokulnath posted a link to an article on her LinkedIn page which had an anonymous source saying that the dues were for the matches after the contract expired. The new contract hasn’t been signed and the pending money can be released only after it is signed, it said. 

Byju’s is the BCCI’s Team Sponsor, while MPL Sports is the Kit sponsor and Dream 11, Hyundai and Ambuja Cement are the Official Partners. Sports, especially cricket, are an expensive proposition. In terms of advertising, cricket IPL is the most expensive, followed by the T20 World Cup. ODIs garner a lot less money and there is hardly any advertising interest in Test cricket, says Gupta.  

“Start-ups were doing all of cricket sponsorships because they were focussed on growth.” Now, a lot of VCs are seeking to exit and want start-ups to list on the stock exchanges. After seeing Zomato and Paytm shares take a beating, each one of them is looking at strengthening their business before moving to IPOs. That’s why they are pulling back on advertising spends quite a lot, he adds.