What ecommerce sector wants from Budget; The $1B AI opportunity in Vertical SaaS

Hello,

The US tech ecosystem has a few dramatic days ahead.

Meta, Microsoft, and Tesla–companies that have poured billions of dollars into AI infrastructure and have written cheques for NVIDIA’s chips–are likely to report quarterly results on Wednesday. 

DeepSeek is also shaking up the markets. According to reports, DeepSeek’s R1 model demonstrates capabilities comparable to OpenAI’s GPT-4, Meta’s Llama, and Google’s Gemini, but with significantly lower development costs.

Where does this leave NVIDIA and the companies that have spent money on its chips? Only time will tell. For now, investors will keep a close eye on tech firms’ AI plans.

Meanwhile, US tech stocks made modest gains after the rout sparked by China’s AI push as Wall Street opened on Tuesday. 

OpenAI CEO Sam Altman has called the R1 AI model from DeepSeek—the chatbot that wiped $1 trillion from Nasdaq Composite on Monday—“impressive”. 

Elsewhere, the race to harness nuclear fusion has just got hotter. 

Helion, which has a deal to supply Microsoft nuclear energy by 2028, has secured $425 million in a Series F round. Venture capital firm Lightspeed and SoftBank’s second Vision Fund have joined OpenAI boss Sam Altman in backing the Seattle-based startup.

Here’s what else is happening in the nuclear fusion space. 

Interesting times ahead!

In today’s newsletter, we will talk about 

• Decoding ecommerce sector’s Budget asks
• The $1B AI opportunity in Vertical SaaS
• Tracing Sridhar Vembu’s journey

Here’s your trivia for today: Odysseus was the king of which island in the Mediterranean Sea?

Union Budget

Decoding ecommerce sector's Budget asks

With the Union Budget around the corner, founders, investors, and analysts in India’s burgeoning ecommerce sector expect Finance Minister Nirmala Sitharaman to announce proposals to improve regulatory and physical infrastructure for the sector’s growth. 

Stakeholders are seeking more tax liberties for consumers to boost spending, and investments in infrastructure to improve logistics networks.

Boosting consumption:

• According to Grant Thornton, a centralised GST registration for ecommerce operators, enabling them to operate across all states with a single registration number, will simplify compliance and reduce administrative costs.
• Rahul Garg, Founder and CEO of Moglix, adds, “Simplifying processes for electronics imports while promoting domestic manufacturing is essential for innovation and competitiveness in high-tech industries.” 
• “Investment in dedicated ecommerce import terminals with advanced customs processing technology and greater capacity for handling small parcels could reduce congestion and improve turnaround times,” says Grant Thornton Bharat. 

Funding Alert

Startup: Atomicwork

Amount: $25M

Round: Series A

Startup: Ambak

Amount: $7M

Round: Seed and Series A

Startup: Mukka Proteins

Amount: Rs 60 Cr

Round: Debt

SaaS

The $1B AI opportunity in Vertical SaaS

Vertical SaaS (VSaaS) is software built specifically for certain industries, providing tools that meet the needs of sectors like healthcare, retail, fitness, or finance. Unlike broad SaaS platforms, VSaaS is built for specific businesses, helping them run more effectively with industry-focused features.  

The VSaaS industry has been scaling once again in recent years, but now it’s struck gold in a different avenue: artificial intelligence. 

On the horizon:

• Vertical SaaS offers more specialised features–deeper integrations, and workflows that fit the industry’s needs. This approach is called a “layer cake” strategy, which includes building additional products to sell into their core vertical market.
• The first wave of Vertical SaaS revolved around the cloud, bringing core services online for specific industries. The second wave introduced fintech into the cloud mix. a16z’s Andreessen Horowitz now points out the onset of a third wave of vertical SaaS—which includes cloud + fintech + AI.
• EY has estimated that two-thirds of vertical SaaS companies are focused on showcasing hyper-growth, compared to just one-third of horizontal SaaS companies. “Other sectors like hospitality and fintech also have great opportunities for founders looking to build,” explains Sabarinath Warrier, Co-founder, Healspan. 

Entrepreneur

CEO to chief scientist: Sridhar Vembu

Unlike many tech leaders focused on scaling their businesses in urban centres, Zoho’s Sridhar Vembu has prioritised setting up offices in smaller towns and supporting talent from underprivileged backgrounds—all the while steering clear of hefty VC funding.

Now, after nearly three decades of scaling Zoho from a small entity to a global $1-billion tech behemoth, Vembu has decided to give up the front-facing role to get down and work behind the scenes. 

Through the ages:

• In 1996, his brothers Kumar Vembu and Shekhar Vembu, along with Tony Thomas, set up AdventNet—a software development firm catering to network equipment providers—which was later renamed Zoho. “In 1998, our sales crossed $1 million and only in mid-1998, we started paying ourselves modest salaries,” said Vembu. 
• In an exclusive interaction with YourStory in 2023, Vembu shared that Zoho’s R&D team is working on multiple projects. He likened the entire journey to carving a path through an “unknown territory”. 
• In 2021, he was honoured with the Padma Shri and was appointed to India’s National Security Advisory Board. Recently, he was appointed the co-chair of an apex committee to oversee the implementation of AI centres of excellence in healthcare, agriculture, and sustainable cities.

News & updates

• In the red: Boeing reported an annual loss of $11.83 billion, its largest since 2020, as it grappled with problems at its commercial and defence units and the fallout from a crippling strike.
• TikTok deal: US President Donald Trump has said Microsoft is in discussions to acquire TikTok and that he would like to see a “bidding war” over the sale of the social media app. 
• Everything app: Payments giant Visa and Elon Musk’s X are partnering to offer direct payment solutions to customers of the social media app, Reuters reports. The deal comes as the billionaire continues his efforts to transform the X platform into an “everything app”, aiming to offer a wide range of services, including messaging, social networking and payments.

Odysseus was the king of which island in the Mediterranean Sea?

Answer: Ithaca.

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