The Indian startup ecosystem has witnessed an unprecedented surge, with a multitude of entrepreneurs emerging to address real-world challenges. However, for first-time founders, securing early stage funding can be an overwhelming endeavour. 

In such circumstances, angel investors play a crucial role. These high-net-worth individuals (HNIs) provide financial backing to startups in their nascent stages in exchange for equity. Here, we will demystify the intricacies of early-stage funding and provide invaluable insights and strategies to help Indian entrepreneurs attract angel investors.

Angel Investors & Raising Angel Funding

Angel investors are wealthy investors who invest in promising early-stage startups in exchange for ownership equity in the company. These individuals actively seek opportunities to support innovative ventures and are willing to take calculated risks. Collaborating with angel investors offers several advantages to startups, including financial backing, mentorship and access to extensive networks.

In today’s startup landscape, securing angel funding can make or break a startup. Attracting the attention of angel investors can be tricky, as these HNIs take unproven investment risks with their wealth, funding unprecedented startup models, while some angel investors are selective towards certain sectors.

One critical trap to avoid is the lack of a strong value proposition. Angel investors want to see what sets your startup apart from the competition and why they should invest. Failing to clearly articulate your unique value proposition can significantly diminish your chances of securing funding.

Equally important is conducting thorough market research. Investors need assurance that there is a realistic product-market fit for the innovation. A deep understanding of your target market and its potential can help gain investors’ interest. Financial planning and projections also play a pivotal role in investor confidence. Investors want to see a well-defined plan for using their funds. If your financial projections are inaccurate or overly optimistic, you risk losing credibility. 

Another crucial aspect is delivering an effective pitch. Your pitch serves as the first impression on potential investors. Investors wish to seek clarity on the business model and the vision of the founding team based on which they gauge the execution capability of the founder. Covering these aspects is crucial for founders while pitching.

Moreover, targeting the right investors is paramount. Not all investors have the same interests or specialise in your industry. Founders need to spend time on research and target the right investor who can align with the sector and growth potential.

Recognising the importance of networking must not be overstated. Building a strong network within the investor community can help tap the right individuals to support your startup. Networking opens doors to potential investors who may have otherwise remained undiscovered.

With the global angel investment market projected to reach $500 Bn by 2025 and significant investments being made in startups worldwide, navigating these challenges becomes important. In the US alone, angel investors contributed $29 Bn to startups in 2021, with an average deal size of $250K. Angel investors typically focus on seed or early stage startups, making their support instrumental for innovation and entrepreneurial success.

Founders need to be persistent and resilient throughout the fundraising journey. Securing funding often takes time and setbacks are common. Giving up too easily can hinder your ability to secure the funding necessary for your startup’s growth.

The post Demystifying Early Stage Funding: A Guide For First-Time Founders To Raise Angel Funding appeared first on Inc42 Media.

In recent years, the healthcare industry has witnessed an explosion of startups promising innovative solutions to revolutionise patient care, improve accessibility, and reduce costs. However, amid the buzz and excitement, many of these ventures failed to achieve their goals.

The reasons behind the downfall of these healthcare startups are multifaceted, but a critical analysis reveals common mistakes that can serve as valuable lessons for entrepreneurs and investors alike.

Typical Mistakes Healthcare Startups Make

While technology has the potential to transform healthcare, some startups have fallen into the trap of developing solutions solely for the sake of innovation, rather than addressing the needs of patients, providers and payers. 

Ignoring user-centric design principles and failing to conduct comprehensive market research often results in products and services that fail to gain traction or align with existing workflows, hindering adoption and scalability.

Healthcare startups also fail to comprehend the complexity of the industry and neglect establishing partnerships with established healthcare providers, regulatory bodies and medical professionals. Ignoring the valuable insights these stakeholders bring to the table often leads to a disconnect between the startup’s vision and the realities of healthcare delivery, resulting in unsustainable business models.

Further, many healthcare startups rely heavily on venture funding while innovating endlessly, without a clear path to profitability. Such startups struggle to identify and implement viable revenue models and are at a high risk of capitulating. Sustainable business models should consider factors such as reimbursement mechanisms, pricing structures and strategic partnerships to ensure long-term viability.

Healthcare is also a highly regulated industry and startups must navigate the complex legal frameworks to ensure compliance with privacy, security and data protection regulations. Neglecting these crucial aspects can lead to significant setbacks, loss of trust and even legal ramifications.

Further, ethical considerations, such as maintaining patient confidentiality, respecting consent and ensuring equitable access, must be ingrained in the startup’s core values.

Bouncing Back From Failure

The rise and fall of healthtech startups can be put down to any number of mistakes, but the lessons derived from these failures are invaluable. Entrepreneurs and investors must understand the intricacies of the healthcare industry, collaborate with established stakeholders and prioritise user needs and market research.

By doing so, they can foster a culture of innovation and build startups that truly transform healthcare, benefiting patients, providers, and the industry. The future of healthcare entrepreneurship depends on our ability to acknowledge past failures and embrace a more informed, collaborative and user-centric approach to building and scaling startups in the healthcare landscape.

The post The Rise And Fall Of Healthcare Startups: Learning From Mistakes appeared first on Inc42 Media.

India’s booming startup landscape comprises over 90,000 startups, with only 10% securing funding. A majority of founders have to approach over 12 VCs resulting in them spending over 33% of their bandwidth on these efforts.

To address this challenge, we have identified common fundraising mistakes and good practices to improve the chances of securing funding and avoiding pitfalls. Ultimately, fundraising is both an art and a science.

When To Raise, What To Raise

Timing is of the essence while fundraising. When you need money, many investors may not be interested in investing. However, when you don’t need money, you can raise funds on your terms, without the pressure of urgency.

Sticking with the timing aspect of fundraising, the process takes time, sometimes even 12-18 months, and it is essential to budget for it and start early. Planning ahead will ensure that you have sufficient time to communicate your vision and business plan to potential investors and secure funding.

With the right funding, a startup can disrupt the competition, change its orbit and gain dominance in its market. Therefore, the stage and type of fundraising often dictate the fate of a startup. For example, raising a Series A/B without any early indication of product-market fit (PMF) can be detrimental to a company’s success. In such cases, opting for a Seed or Angel round would be a more suitable alternative.

Factors To Consider While Fundraising

First and foremost, it is important to understand your customer’s perception of your product in the market, as well as your strengths. Keeping a close eye on competitors can help a startup refine its positioning and communicate its unique value proposition to investors more effectively. 

Investors often evaluate numerous startups across multiple sectors, therefore, it is essential to identify your moat or unfair advantage over peers and articulate it clearly in your story and positioning.

Choosing an investor is like choosing a life partner. Maximum success is achieved when the minds of the founder and investor meet for a common vision. Occasionally, the match may not be perfect, however, it does not imply that the founder or the investor is inadequate. 

Speaking to other founders for feedback, tracking deals done by a VC and learning about their investing ethos are basic diligences that a founder should do ahead of the fundraising.

Once you have shortlisted a few VCs, wooing them even at the expense of valuation, effort, or time, is worth it. Working on feedback received by investors and sharing periodic updates on your progress are some examples of how you can engage effectively. 

Remember, VCs are equally keen on chasing like-minded founders and many times need that comfort which is possible through effective communication.

Sizing the market is critical, and it is essential to have a clear understanding of your TAM, TOM and SOM. Without this understanding, even remarkable products/brands often encounter difficulties when attempting to expand. 

The Importance Of Telling A Good Story

The importance of storytelling cannot be overemphasised. A typical VC evaluates 3-5 deals every day and the hit rate is usually less than 1%. A useful exercise is to try explaining your business to your friends or family – if you can convey your message to them effectively, then you likely have your story and logic in order.

Early stage startups have limited resources at disposal. In order to get the most out of these resources, it is important to focus and prioritise excelling in one area rather than being a jack-of-all-trades and master of none. 

Pitching shifts the focus from the sheer ‘quantity of revenue’ generated to the ‘quality of revenue’ and unit economics. For example, a company with 10 SKUs selling in a few markets via few distribution channels is far better than growing faster with 100 different SKUs or channels.

These tips can help craft a winning pitch and steer the startup towards securing timely capital and sustainable business growth.

The post Mastering The Art Of Fundraising: Tips For Raising Your Startup’s First Institutional Cheque appeared first on Inc42 Media.

A funding winter is a period of reduced venture capital (VC) funding during which investors become cautious and risk-averse, resulting in a lack of funds for startups. The global economic meltdown has had some knock-off effects on the Indian fintech industry as well.

However, the adoption rate of Indian fintech is on the rise. Per the Economic Survey 2022-23, Indian fintech companies witnessed an 87% adoption rate across varied user bases, beating the global average by 2300 percentage points. 

With 2,100+ fintech startups, India is the third-largest fintech ecosystem in the world. Indian fintech startups attracted investments worth $800 Mn in Q2 2023, a decline of 38% compared to $1.3 Bn raised in Q1 2023, according to data compiled by Inc42.

However, the total funds raised were 57% lower than the $1.8 Bn raised in Q2 2022. While the number of funding rounds in Q2 2023 experienced a jump of 20% in Q2 2023 compared to Q1 2023, the funding deals fell 56% compared to Q2 2022.

Despite the challenges, the fintech ecosystem has remained resilient, promoting innovation, improving operational efficiency and prioritising regulatory compliance to succeed.

Fintechs Modifying Business Model

In the Indian financial services industry, partnerships have played a vital role in sustaining operations and generating cash flow. To adapt, startups have adjusted their models, forming alliances and collaborations.

Fintech startups often collaborate with banks, NBFCs and insurance firms, leveraging their customer base and accessing resources, enabling them to expand their offerings.

Such startups also try to conserve cash by scaling back on activities like marketing and prioritising cost-effective approaches. By aligning expenses with revenue streams, startups can aim for sustainable growth and attract investor interest.

Innovation also extends to business models. Entrepreneurs often get funding in a 12 to 18-month period. As such, those who don’t secure consecutive funding rounds may have a limited runway. As a result, fintechs must run a sustainable and open-to-adaptation business. 

Overspending on client acquisition and other unnecessary areas could be fatal for the growth and sustenance of the business. Fintechs must keep the focus on improving unit economics and being conservative with the initial funding.

Enhancing Operational Efficiency

Beyond innovative business models, Indian fintech startups also recognise the importance of optimising operations to save money and exhibit profitability potential. Leveraging technology to increase operational efficiency is a key strategy for fintechs. 

By automating manual processes, implementing AI and ML algorithms, and utilising big data analytics, fintech startups can streamline their operations and reduce costs.

Additionally, chatbots can provide customer service around the clock, freeing up staff time for more complex tasks. These innovations lower operational expenses and improve the consumer experience, attracting a wider user base. 

Fostering Innovation

Innovation has been a driving force for Indian fintechs to attract investors and differentiate themselves. These startups have embraced cutting-edge technologies and developed innovative solutions to address the evolving needs of Indian consumers. 

For instance, many fintech startups have leveraged AI, ML and blockchain to create secure and efficient financial services platforms.

Furthermore, innovations such as differentiated banking and insurance licenses, the introduction of Central Bank Digital Currency (CBDC), Account Aggregator (AA),  the Open Credit Enablement Network (OCEN), DigiLocker, and the Open Network for Digital Commerce (ONDC) are set to fuel continuous progress in the sector.

Credibility & Regulatory Compliance

Fintech startups in India face a complex and evolving regulatory environment, as the government has moved consistently to end regulatory arbitrage in the segment. 

Compliance requirements now include obtaining licenses, adhering to data protection rules, complying with AML and KYC regulations, ensuring secure technology infrastructure, maintaining accurate records, submitting reports to regulators and undergoing audits. With data breaches and privacy concerns on the rise, startups have prioritised data security measures while maintaining transparency and responsibility in their operations.

Further, forging solid alliances with banks, financial institutions and regulatory agencies boosts the legitimacy of the whole ecosystem. Collaborative efforts to build regulatory frameworks encourage responsible lending practices and defend consumer interests to foster a trust and confidence ecosystem.

Way Forward

The future of the Indian fintech industry is in a position for growth and resilience, overcoming the challenges posed by the funding winter. To attract investor interest, fintech companies should adapt their business models, forge strategic partnerships and prioritise sustainable growth. 

Innovation will remain a crucial factor in setting fintechs apart from competitors with a focus on building scalable and profitable enterprises while optimising operational efficiency through technology integration. Upholding credibility and regulatory compliance has become paramount, including data security, transparency and responsible practices.

By collaborating with banks, financial institutions and regulatory bodies, fintech startups can create a reliable ecosystem. With government support and regulatory initiatives, the future looks promising for the Indian fintech and payments industry as it continues to drive financial inclusion and digital transformation in India.

The post Surviving Funding Winter: How Indian Fintechs Are Thriving Via Innovation & Competition appeared first on Inc42 Media.

If venture creation is a two-stop journey, then product-market fit (PMF) is the first stop, and unlocking scale and value for customers and shareholders is the destination. 

Today, we’ll focus on the first one as it is more immediate and relevant in a new start-up’s journey. PMF is a much-used, quite-misused term that declares a solution has “arrived,” and reaching PMF means coming together multiple variables:

PMF = function (market, idea, team, execution) 

In the current economic climate, startup founders need to be laser-focused on getting to PMF in the most capital-efficient manner. Venture studios can help founders reach PMF faster and cheaper than the status quo. This is possible due to their institutional knowledge or ‘playbooks,’ experienced internal teams that have successfully guided multiple companies to PMF, and access to sector specialists, advisors, potential buyers, and partner organizations. 

Before we dive into the ‘how’, let’s get the definition of a venture studio out of the way. 

“A Venture Studio is an organisation that identifies opportunities or problems, develops solutions along with founders, launches new companies, and provides them extensive operational and strategic support until the companies achieve product-market fit.” 

As a process, this is what they do from ideation to execution:

To better understand how these stages work, let’s take a closer look at them through a few examples.

Part 1: Ideation

An analysis of 100+ failed startups reported that 42% attributed their failure to misunderstanding market need, 17% attributed it to poor product solutioning and another 17% confessed to not having a successful business model. A startup founder needs to know all the pitfalls in advance and then know how to solve them. Studios are slightly better placed to understand markets and design exhaustive solutions as they learn from documented mistakes. Following is the step-by-step process in the first leg of company creation:

• Market research: Venture studios conduct detailed market research to identify a large unsolved pain point faced by consumers (for example, by patients, doctors, hospitals, or other stakeholders). The Studio then builds a view on a 10x better solution – leveraging insights from business and physician leaders, patients, published research, and global trends. Each short-listed concept goes through a stringent validation process involving hundreds of conversations with doctors and patients, clinical studies, and go-to-market experiments to arrive at a prioritized solution. Typically, 90% of ideas are killed ‘with conviction’ before a single dollar of equity funding is deployed. The goal is to look for large, untapped opportunities where a disruptive solution can be built in a capital-efficient manner.
• Talent identification: At this stage, a venture studio brings on board passionate founders with 0-1 and scale experience for the specific idea under consideration. The founders (or Entrepreneurs-in-residence) further validate the concept and build a business and operating plan.  
• Independent validation: Advisory board and network of experts help verify the concept and business plan. Studios also conduct mass surveys, observational studies, and social media experiments to gather opinions and learn from them.

Part 2: Execution

Ideas are a dime a dozen, but an idea is only as good as the execution. The transformative idea and experienced founders need to be super-charged with capital, resources, and tools to boost the chances of success. Next steps in nurturing start-ups: 

• Investment: Next, studios fund companies in two ways:
• • Provide capital for the first 12-18 months of operations for newly incubated companies based on:
    • Nature of business (care delivery intensive vs D2C products vs SaaS – all have different cost structures)
    • Estimated timeline to prove MVP success at a unit level (e.g., for a clinic it could be the number of patients for breakeven)
  • Human capital through a large team of in-house experts across multiple business functions. Early-stage start-ups can’t afford senior, experienced executives. For functions like marketing or product, these create fundamental set-up mistakes that can be harder to undo or redo. Studios solve this by bringing the best talent to the start-up on day 0.
• Studio support through Playbooks: Usually, Studios build three types of ‘playbooks’ that form their institutional knowledge or IP: 
• Functional playbooks: These deal with functional skills like marketing, product, talent, and legal. Central studio teams build these with experience over time, perfecting it to the granular detail. Help new companies already be smart about questions like – how to get to the first 1000 paid customers; best practices for building the best customer onboarding experience. 
• Strategy playbooks: Outside siloed business functions lie more significant strategic and multifunctional questions about decision-making in given constraints and timelines. When to hire senior leadership? When to launch a new city? When to pivot? – these questions are well-built within the Studio’s collective intelligence.  
•  Innovation playbooks: This encompasses multiple daily, tactical improvements like automation, experiments, tinkering, etc., for internal and external tasks that keep the innovation quotient high. These include scrappy web-scraping code snippets, Excel macro workbooks, and even large institutional mental models for determining the R&D budget, starting new revenue lines, and defining mandates for new EIRs. 

In summary, Venture Studios bring structural certainty and repeatability to venture creation. The step-by-step process will change, evolve, and improve with time, but what will remain constant is the continuous endeavor to maximise the chances of success while optimising for time, cost, and resources. And then do this not once, but again and again.

The post From Ideation To Execution: A Step-by-Step Guide To Nurturing Startups In A Venture Studio appeared first on Inc42 Media.

The startup landscape has disrupted several business models, the impact of which we see on the operations of several businesses today. This is largely attributed to the rapid development of technology, especially in the fields of blockchain, AI-based platforms, robotics, and machine learning, in addition to the development of virtual reality and augmented reality applications. 

As a result, valuing these startups and their innovative technology platforms that defy conventional valuation wisdom has become a critical challenge for appraisers and investors. That said, certain tools and methodologies help better comprehend the art of startup valuation and the technology factors that drive value.

Fundamental Approaches Of Valuation 

Traditionally, businesses have been valued using three fundamental approaches: the market approach, the income approach, and the cost approach. 

The market approach essentially benchmarks valuation multiples derived from financial metrics such as revenue or EBITDA to that of publicly listed companies as well as recent transactions for comparable businesses. The income approach (discounted cash flow) leverages the projected future cash flows discounted for their riskiness to conclude an enterprise’s value. The cost approach determines the value of a company’s assets based on the cost to recreate or replace them.

These traditional valuation approaches have limitations when assessing the potential of startups with disruptive innovations. Valuers should consider several key factors in assessing the potential of startups:

Analysing The Potential Of Disruptive Innovation Or Startups

• The scalability of the technology is important, i.e. to determine if the technology can be easily expanded to meet the demands of a large market.
• Understanding the competitive landscape and assessing whether the technology is difficult to replicate.
• The market opportunity should be thoroughly analysed, including assessing the market’s size and growth. 
• Evaluating the management team’s composition, expertise, ability to think innovatively, and potential for forming strategic partnerships.
• Testing for the long-term focus of the company when evaluating startups, as they may involve higher risks but also hold the potential for significant long-term returns.
• Ascertaining if the laws and regulatory conditions are favourable for the technology to thrive.

Let us consider a case study of Airbnb, an online marketplace that allows people to rent out their properties to travelers. To assess the potential of Airbnb, we need to understand its business plan and platform. Airbnb developed a robust and scalable technology infrastructure that could handle a large volume of listings, bookings, and transactions.

Due to Airbnb’s significant investment in technology and infrastructure, including advanced algorithms and data analytics, it becomes challenging for competitors to enter their market and diminish their market share. These investments have enhanced the user experience, provided personalized recommendations, and increased customer engagement. 

As a result, it is difficult for competitors to replicate Airbnb’s success and make a significant impact in their competitive space. Airbnb has an experienced management team with Brian Chesky, Nathan Blecharczyk, and Joe Gebbia as its cofounders. They founded the company in 2008 and under Chesky’s leadership, Airbnb grew from a small startup to a multi-billion-dollar company. 

The platform has expanded globally, offering millions of listings in over 200 countries and regions. Furthermore, the team has a long-term focus on introducing sponsored listings and an advertising network as potential avenues to generate additional revenue for the company.

Transcending Conventional Metrics: Embracing An Innovative Approach

For companies in their early stages, it is difficult to predict future cash flows accurately, accounting for both specific and systematic risks, and capture the changing risk-return profile as time goes on. To resolve this, certain methods that heavily rely on operational indicators, such as customer count or click rates, aim to compensate for the lack of information or readiness regarding the operational business model of a startup, including its organizational and cost structures. 

Methods based on financial indicators, such as revenue and EBITDA, face the challenge of no/low revenue or negative earnings during the initial phase of losses as startups focus on developing and refining their products or services. In other words, the unique innovation brought by a particular startup cannot be adequately captured by comparing it with other companies using price multiples, as their business models are inherently distinct. 

Furthermore, startups/early-stage companies lack historical financial data, making it challenging to evaluate their financial performance and growth potential. These challenges collectively make it crucial for investors and stakeholders to employ innovative approaches and adapt valuation methodologies to accurately assess the worth of startups.

Emerging Alternative Startup Valuation Methods

1. Scorecard valuation method: The scorecard valuation method, also known as the Bill Payne valuation method, involves comparing the target startup with other similar startups that have received funding based on various factors such as their stage of development, market segment, and geographic location. 
2. Berkus method: The Berkus method is a valuation approach that emphasizes the potential rather than the current performance of a startup. First, an estimate is made of the total cost incurred in developing the startup’s product or service. Next, the value of the startup’s intellectual property is assessed. This encompasses any patents, copyrights, or trademarks that the startup possesses and adds value to its offerings. Finally, the two values of development cost and intellectual property value are combined to determine the overall value of the startup.
3. Incorporating non-financial metrics and intangible assets: Valuation models should include non-financial metrics and intangible assets to capture the unique value of startups such as user engagement, website traction, intellectual property, team experience, brand recognition, and regulatory environment. These metrics may include user bases or customer-related factors such as the number of active users, customer acquisition costs (CAC), customer lifetime value (CLTV), churn rate, or average revenue per user (ARPU). These metrics may include product-related factors such as product usage rate, customer satisfaction score (CSAT), net promoter score (NPS), or product development cycle time.
4. Venture capital exit method: This method is based on the valuation that a company could command after a few years of business scale-up. Market-based valuation metrics such as EV/revenue and EV/EBITDA are used to value the business. The future value is then discounted back to the present based on the VC rate of return to arrive at enterprise value.
5. Venture capital rate of return: When evaluating the potential returns on investment and considering the risks associated with startups, venture capitalists investing in early-stage companies often rely on polls to estimate the expected rates of return. Academic research and empirical evidence can provide valuable insights into relevant discount rates. These rates vary depending on the development stage of the company. Notably, these discount rates may seem high but reflect the substantial failure rates often experienced by early-stage companies. The table below offers a summarized overview of selected studies, outlining the expected returns for each development stage.
6. Reverse option pricing approach (Backsolve approach): The method is considered a reliable indicator of fair value since it benchmarks the original issue price (OIP) of the company’s latest funding transaction. This is based on the premise that the OIP is a result of rational negotiations and comprehensive due diligence by sophisticated financial investors, inherently making it a fair market valuation.

On Concluding Note

In times of technological disruptions, since every startup is unique, valuing a startup poses challenges. Therefore, to appropriately determine the worth of these startups, a dynamic and flexible strategy is required, and it necessitates readiness to embrace innovative valuation methods that can accurately represent the promise and risks involved in these ventures.

[Contributed by Ankita Poddar, Manager – Valuation and Advisory, Aranca]

The post Valuing Disruptive Startups: 6 Alternative Startup Valuation Methods appeared first on Inc42 Media.

With “Tax Havens” and Startup Arenas opening up worldwide, why should India be far behind? Imagine a cutting-edge metropolis meticulously crafted to become a global financial hub, brimming with opportunities for private equity investors. Thinking Dubai? Think again! Being hailed as India’s first operational greenfield smart city and international financial services centre. The GIFT City is an unprecedented ecosystem for crucial economic activities with globally benchmarked regulations, taxation, policies – et al! 

Being hailed as the epicentre of Global Finance and IT, GIFT City could be considered a frontier for private equity investments. It has been set up to provide financial incentives, regulatory freedom and world-class infrastructure with unparalleled connectivity and transportation access.

The Promise Of GIFT City

Envision a domain where financial services claim centre stage, inspired by renowned global financial centres like London and New York. With a vision to become a global hub, GIFT City aspires to become a thriving ecosystem for private equity investors, venture capitalists, and financial institutions. 

With its strategic location and world-class infrastructure, GIFT City is poised to revolutionise India’s financial landscape, albeit with a much-needed streamlined set of regulations and procedures.

Special Economic Zone Status

GIFT SEZ or GIFT City possesses an added advantage—an esteemed Special Economic Zone (SEZ) status. This designation presents a plethora of advantages for private equity investors. Think tax incentives, relaxed regulatory processes, and a business-friendly environment. 

These perks have successfully enticed numerous domestic and international firms to establish their presence, fostering a melting pot of investment opportunities.

The International Financial Services Centre (IFSC)

Now, let us cast the spotlight upon the pulsating heart of GIFT City—the International Financial Services Centre (IFSC). This hub is where the magic happens. It stands as a sanctuary for global investors and businesses, offering extensive financial services. From banking and insurance to capital markets and asset management, the IFSC boasts an impressive repertoire. With international currency transactions permitted, it is no surprise that investors are flocking to this financial playground.

Smart City, Smart Investments

But wait, there’s more! GIFT City transcends the realm of mere monetary pursuits — it is also dedicated to sustainability and intelligent living. By integrating advanced technologies and digital infrastructure, the city aims to optimise energy consumption, reduce waste, and enhance the quality of life for its residents and investors alike. It is a win-win scenario: you can make shrewd investments while contributing to a greener and more sustainable future.

Opportunities For Investors: A Look Through The Recent Developments 

Whether you are a private equity investor, venture capitalist, or an astute individual with an eye for financial opportunities, GIFT City holds immense potential. It is time to explore this new frontier, seize its boundless possibilities, and become part of India’s remarkable journey towards financial excellence. Prepare to leave your mark on GIFT City, where the future of finance eagerly awaits your participation!

GIFT City, acknowledged as an international finance centre, is opening up new avenues of investment for High Net Worth Individuals (HNIs) and Ultra High Net Worth Individuals (UHNIs) in India. The recent transformation of SGX Derivatives into GIFT City has been a significant development in this regard, attracting portfolio management services (PMS) providers to establish their presence in the city and offer inbound and outbound investment services.

Global portfolio management services offered by firms like PhillipCapital and Marcellus have created opportunities for Indian investors to access international markets. These services require a minimum investment of $150,000 and are subject to the Liberalised Remittance Scheme (LRS) limit of $250,000 per year. Investors can engage with international brokers or invest through mutual funds operating outside India to access global investment opportunities. GIFT City’s regulations allow PMS managers to invest in global securities, providing an avenue for Indian investors to diversify their portfolios internationally. By setting up a unit in GIFT City, these managers can offer international investment services to Indian citizens without establishing funds outside India.

The funds managed under GIFT City are regulated by the IFSCA (Fund Management) Regulations, 2022, and enjoy certain benefits. Portfolio managers in GIFT City can claim a tax deduction for 100% of their income earned for ten years, providing a significant incentive to operate within the city. Additionally, investors are not required to open a bank account in GIFT City, and taxation varies depending on residency status.

Several funds are already available in GIFT City, such as the Philip Ventures IFSC and Marcellus Global Compounders Portfolio. These funds provide opportunities for investors to access offshore products and invest in overseas stocks while leveraging the expertise of experienced fund managers.

However, investors need to conduct thorough research and assess the expertise of fund managers in international markets before investing through PMS in GIFT City. Understanding the background of the managers and their products is crucial to make informed investment decisions.

In conclusion, GIFT City’s offerings for private equity investors extend beyond domestic opportunities. The availability of PMS services, global funds, and tax benefits creates a favourable environment for HNIs and UHNIs to explore international investment avenues. However, investors should exercise caution and conduct due diligence before committing their capital to ensure alignment with their investment goals and risk appetite.

The post Decoding GIFT City: A New Frontier For Private Equity Investors appeared first on Inc42 Media.

Venture capital is an exhilarating yet risky asset class offering tremendous upside for limited partners (LPs) that pursue it. It allows LPs to be part of the next biggest innovation that could disrupt existing products and businesses. 

However, along with the thrill of investing in the next big thing and supporting innovation, it is also plagued by the lack of liquidity in the initial years deterring several from pursuing it. 

The LPs who pursue it often invest in experienced fund managers with a demonstrated history of returning capital. Nevertheless, a set of new first-time fund managers and solo GPs have emerged globally in the last few years, bringing differentiated views to the table.

Prominence Of Domestic LPs In The Rapidly Expanding Venture Capital Industry

Traditionally, the LP investing space in India has been a closed network characterised by exclusivity, discretion, and loyalty. These LPs typically include UHNIs, HNIs, family offices, and leading institutional investors. The limited number of LPs in India is primarily due to lower awareness, regulatory challenges and risk perception among conservative investors. 

Access to low-quality opportunities and cultural preferences for direct investments or traditional asset classes like stocks, real estate, and gold also prevent many from entering in this arena. Nevertheless, as awareness increases, regulatory frameworks evolve, and the startup ecosystem matures, the number of LPs in India is expected to grow, unlocking more domestic capital in alternative asset classes like venture capital.

However, as the number of LPs increases, most pursue the same experienced fund managers. According to a report on family offices by SVB, several potential family offices surveyed had yet to invest in diverse GPs, and some showed no interest in doing so. This preference for proven fund managers and established relationships highlights the emphasis placed by LPs on accessing trending deals and avoiding complexities while diversifying their investments across different asset classes.

Despite the potential for higher returns, most LPs are concerned with certain challenges that first-time fund managers and solo GPs face. These challenges include a lack of track record in the relatively young Indian alternative investment market, potentially higher risk appetite, limited fund size, less favourable fund terms, and concerns about solo GPs carrying the full responsibility of managing the fund. Additionally, LPs may need to be reassured about the manager’s commitment to the fund, which might hurt the investment performance of a VC in many ways.

Growing Presence Of Solo GPs and First-Time Fund Managers

Solo GPs have become increasingly notable in the startup ecosystem in recent years. Their unique characteristics bring remarkable advantages to the investment environment, and founders often appreciate their investment style. According to a report created by AngelList, solo GPs were involved in about 51% of all top-tier, early-stage deals in the United States in 2020. 

Furthermore, seven out of the top twenty external co-investors on the AngelList platform in Q3 2021 were solo GPs. The ability of these solo VCs to compete with traditional VC firms on such a scale underlines their increasing relevance and value in the investment landscape.

One significant advantage of solo GPs is their ability to make unilateral decisions. This helps improve execution speed which often equates to winning a competitive deal in the market. Traditional venture capital firms can be delayed by internal protocols and decision-making structures; in contrast, solo VCs can move more quickly and come to a final discussion in a shorter period of time.

Personal branding also plays a critical role in the value proposition of solo GPs. The personal brands built by solo GPs through social media and other content platforms are generally far more than multiple GP firms. This allows solo GPs to enter at lower valuations in early-stage companies within areas of expertise.

First-Time fund managers and solo GPs typically can be categorised across four different personas based on their backgrounds and skill set:

• (i) CXO/banker turned fund managers
• (ii) Operator turned fund managers
• (iii) Angel investor turned fund managers
• (iv) Those with specialised expertise or unique investment strategies learnt from their previous franchise. Successful fund managers possess a combination of expertise, experience, and a strong network, enabling them to identify and support promising investments.

What Do LPs Look For In First-Time Fund Managers?

In today’s highly competitive LP capital landscape, despite a strong network and expertise, first-time fund managers face the challenge of differentiating themselves from their peers. Hence, they need to ensure that they have the critical items that LPs are looking for:-

• Team and the General Partner with prior experience in managing funds, operating skillset and industry knowledge.
• Deep market understanding and solid investment thesis backed by primary and secondary due diligence. 
• Precise portfolio construction and management strategy to deliver strong returns while managing risks.
• Alignment of interest and “Skin in the game” to show long-term commitment to the fund and LP interests. 

The enthusiasm and fresh perspective that first-time fund managers bring to the table is unparalleled. They have a hunger for success and a passion for identifying game-changing startups driven by the desire to make a mark in the industry. They are willing to go the extra mile to unearth the next unicorn by building strong networks and adopting a founder-friendly approach. Moreover, they tend to be agile and flexible without the burden of legacy systems and processes, adopt differentiated strategies, and bring speed to execution, similar to the startups they invest in. 

Hence, investing in first-time fund managers and solo GPs in India offers a unique chance to participate in the growth of the startup ecosystem while supporting innovative approaches in deal-making. In fact, as per Pitchbook, first-time fund managers between 2012-14 vintages were able to generate ~40% higher returns than follow-on funds. With careful evaluation and due diligence, LPs can strategically allocate capital, support innovative startups, and achieve higher financial returns by supporting new-age fund managers.

The post What LPs Seek In First-Time Fund Managers And Solo GPs? appeared first on Inc42 Media.

As the market for cryptocurrencies continues to grow, businesses are finding that accepting crypto payments can provide several advantages for their ecommerce operations. 

In this article, we will explore the key benefits that businesses can experience by embracing cryptocurrency payments.

The Benefits

One significant advantage of accepting cryptocurrency payments is the opportunity to expand your customer reach.

With over 420 Mn global cryptocurrency holders, businesses can tap into a large user base of individuals who prefer using digital currencies for their transactions. By catering to this growing segment, businesses can access potential customers who might not have traditional bank accounts, thus extending their potential customer base even further.

Another notable benefit of cryptocurrency payments is the reduction in transaction costs compared to traditional fiat payments. 

When processing payments with fiat currencies, businesses often encounter various fees, including interchange fees and transaction fees. On the other hand, cryptocurrency transactions typically only incur minimal gas fees associated with processing the transactions on the blockchain. This reduction in transaction costs can lead to increased profit margins for businesses in the long run.

Fast & Secure Transactions

Cryptocurrency transactions offer a level of speed and security that is unparalleled by traditional payment methods. By utilising blockchain technology, cryptocurrency transactions are transparent, secure, and quick. The transactions are encrypted, ensuring that customer payment information remains secure throughout the entire process. 

Additionally, cryptocurrency transactions can be processed within seconds or minutes, depending on the specific blockchain being used. This efficiency is particularly advantageous for international transactions, as it eliminates the inefficiencies and delays typically associated with cross-border payments.

Control And Ownership Of Funds

Accepting cryptocurrency payments also empowers merchants with greater control and ownership over their funds. 

Unlike traditional payment methods where banks or third-party intermediaries are involved, cryptocurrency payments allow merchants to directly receive and hold their funds. 

Merchants can choose to store their digital assets in custodial wallets, giving them complete control over their finances without the need for any intermediaries. This direct control can provide added flexibility and convenience for business owners.

Market Differentiation & Innovation

Early adoption of cryptocurrency payments sets businesses apart from their competitors and positions them as forward-thinking and tech-savvy. 

By embracing innovative technologies and offering customers the option to pay with digital currencies, businesses can demonstrate their commitment to staying ahead of the curve. This can attract tech-savvy consumers who actively seek out businesses that are responsive to technological advancements.

Cross-Border Transactions

By accepting cryptocurrencies, businesses can participate in global commerce with ease. Traditional payment methods often come with limitations, such as lengthy processing times, currency conversion fees, and the need for intermediary banks.

Cryptocurrencies, on the other hand, operate on a global scale without the need for intermediaries. This enables businesses to seamlessly conduct cross-border transactions, reaching international customers without the hurdles and costs associated with traditional payment systems.

Diversification Of Payment Options

Offering multiple, diverse payment options is crucial for catering to the preferences of a wide range of customers. 

By adding cryptocurrencies to the list of accepted payment methods, businesses can accommodate individuals who prefer digital currencies over traditional forms of payment. This, in turn, opens up new avenues for customer acquisition and generates additional revenue streams.

Lower Risk Of Identity Theft And Fraud

Cryptocurrency payments reduce the risk of identity theft and fraud for both customers and merchants. With traditional payment methods, consumers often need to share sensitive personal and financial information, making them vulnerable to data breaches and potential theft. 

Cryptocurrency transactions, however, utilise cryptographic protocols that ensure secure and tamper-proof transfers of funds without disclosing personal details. This heightened security helps protect both parties involved in the transaction, fostering a safer and more trustworthy ecommerce environment.

The Final Word

In conclusion, accepting cryptocurrency payments provides numerous advantages for ecommerce businesses. 

From expanding customer reach and lowering transaction costs to enjoying secure and fast transactions, increased control over funds, reduced fraud, and differentiation in the market, cryptocurrencies offer a unique value proposition. 

Business owners who embrace this new payment technology position themselves for long-term success in an evolving digital landscape, appealing to tech-savvy consumers while providing added convenience and security in their transactions. 

As the industry continues to develop and integrate cryptocurrencies into existing payment infrastructures, businesses can stay at the forefront of innovation and leverage cryptocurrencies’ benefits.

The post How Ecommerce Startups Can Cash In On Crypto Payments  appeared first on Inc42 Media.

What started as mere buzzwords have transitioned into the most critical components of a successful business strategy. Diversity and inclusion act as a very vital necessity in contributing to the overall growth and success of an organisation.

The ideal definition for “unity in diversity” for any organisation that wants to excel is the harmonious coexistence of the different elements of the people, where everyone brings something unique to the table, and the uniqueness is not only respected but also valued equally.

An organisation should constantly strive to ensure that everyone, from distinct cultural backgrounds, ethnicity, experiences, gender, sexuality, tenure, work experience as well as job positions has the opportunity to reach their highest potential. This can be achieved by creating a sense of belonging towards the organisation. 

Certain sincere initiatives that play a crucial role in promoting diversity and inclusion are:

A Diverse Hiring Policy

A policy that effectively ensures that an organisation is attracting and hiring candidates from varied backgrounds. Organisations should not consider this diversity as an obstacle but as an opportunity which leads to collaboration as well as creativity, resulting in business outcomes.

In addition to the recruiting efforts, companies should also have a wide-ranging interview panel. This means that candidates are interviewed by individuals from multifaceted backgrounds and with varying perspectives, which helps to ensure that the selection process is fair and unbiased. 

Organisational Development Initiatives

Since the inception of the organisation, a dedicated team for organisational development to help employees achieve their fullest potential is a must. 

These teams conduct training which helps gain a better understanding of the other employee’s background which result in empathy, thereby resulting in improved interpersonal relationships. 

Recognition Of The Unique Needs Outside Work

Each and every organisation should aim to provide a flexible work environment that fosters growth for employees to find the perfect balance between their personal and professional responsibilities.  

In today’s fast-paced and ever-evolving business landscape, organisations are realising the significance of diversity and inclusion (D&I) as a catalyst for innovation and a driver of overall business success.

Varied Perspectives 

Diverse teams benefit from a wide range of viewpoints, enabling them to tackle challenges by assessing multiple angles and arrive at innovative solutions. 

When individuals with diverse experiences and expertise exchange their thoughts and collaborate, they present a broader set of ideas, leading to better problem-solving capabilities and more informed decision-making.

Meeting Customer Needs

In a world which is divided by borders but united by technology, customers come from diverse backgrounds with their own preferences and needs. To effectively cater to the same, it is essential to have a workforce that projects the diversity of the market. 

Inclusive organisations understand the role of representing different demographics and perspectives within their teams. By embracing diversity and inclusion, companies gain valuable insights into what their customer base is seeking, cultural nuances, and emerging trends, enabling them to develop products and services that relate and cater to their target audience.

Increased Employee Retention & Engagement

Diversity and inclusion play a vital role in creating a sense of belonging and ensuring that everyone can reach their highest potential. By truly fostering an inclusive workplace culture, an organisation can attract and retain talent, and create a workplace where everyone feels valued and respected. 

Through diverse hiring policies, employee training programs, and employee resource groups, organisations should be committed to creating an inclusive workplace environment that supports the success of all employees.

The Road Ahead

As we advance and move forward in dynamic business ecosystems, embracing diversity and inclusion will remain a vital pillar for organisations and serve as a powerful catalyst for their growth and success. 

By recognising the immense value that diverse perspectives bring, businesses can tap into a wealth of innovative ideas and problem-solving approaches. Moreover, inclusive organisations are better equipped to understand and meet the needs of their diverse customer base. They can develop products and services that resonate with different demographics, harnessing cultural nuances and emerging trends to stay ahead in the market.

In conclusion, diversity and inclusion have evolved from mere buzzwords to essential elements of a successful business strategy. By embracing unity in diversity, organisations can unlock the full potential of their workforce, drive innovation, better serve their customers, and create a workplace where everyone thrives.

The post How Diversity & Inclusion Can Act As Catalysts For Innovation & Startup Success appeared first on Inc42 Media.

The financial services industry encompassing banking, financial institutions, and insurance (BFSI), has long been a pillar of the global economy. However, in recent years, the sector has experienced a rapid transformation driven by the integration of new modern technologies. 

From artificial intelligence and blockchain to cloud computing and advanced analytics, these innovations have revolutionised the way financial services are delivered and experienced. In this article, we will explore the driving forces behind these innovations and examine how new technologies are reshaping the BFSI sector.

AI & Machine Learning: Transforming Processes & Customer Service

From the genesis of online banking to the advent of mobile payments, the industry has continuously embraced innovation to enhance customer experiences and streamline operations. And since then, the pace of technological transformation has only accelerated, courtesy of the application and implementation process of emerging technologies such as AI, blockchain, and the Internet of Things (IoT), among others. The adoption of these technologies led to reshaping traditional business models, redefining customer engagement, and eventually unlocking new avenues for growth.

One of the most significant advancements in the BFSI sector is the application of AI and machine learning (ML) algorithms. It not only revolutionised processes such as fraud detection, risk assessment, and customer service, but the  AI-powered chatbots and virtual assistants enabled banks and insurance companies to provide personalised and efficient support to their customers around the clock. 

By analysing vast amounts of data, AI algorithms can identify patterns, detect anomalies, and make accurate predictions, enabling financial institutions to make informed decisions and mitigate risks.

Blockchain Revolution: Secure Transactions & Disintermediation

Another groundbreaking technology that is transforming the BFSI sector is blockchain. Initially developed for cryptocurrencies like Bitcoin, blockchain has emerged as a secure and transparent method for recording transactions. 

Its decentralised nature aids in eliminating the need for intermediaries, reduces costs, and enhances trust between parties. In the financial services industry, blockchain is being utilised for various roles, including smart contracts, cross-border payments, and identity verification. By leveraging blockchain, financial institutions can streamline complex processes, improve efficiency, and enhance security and thus the role of game changer.

IoT’s Impact On Personalisation & Proactive Customer Engagement

Furthermore, the IoT is playing a significant role in revamping the BFSI sector by assisting financial institutions in collecting real-time data on customer behaviour, preferences, and financial transactions. 

This data can be utilised to develop personalised financial products and services, improve risk assessment models, and enable proactive customer engagement. For example, insurance companies can use IoT-enabled devices, such as telematics devices in vehicles, to assess driving behaviour and offer personalised insurance premiums based on individual risk profiles.

But the integration of these new technologies does come with its share of challenges. Financial institutions must continuously address concerns around data privacy, security, and regulatory compliance, and therefore investing in talent development and cultivating a culture of innovation to fully harness the potential of these technologies is imperative.

Enhanced Customer Experience Is Pivotal

One of the critical areas where new technologies have made a significant impact is in improving the customer experience. With the advent of mobile banking, customers can now perform a wide range of transactions at their convenience. 

Mobile apps and digital wallets have simplified payment processes, enabling seamless transactions with just a few taps on a smartphone. Additionally, personalised services powered by AI algorithms allow financial institutions to offer tailored recommendations and financial planning advice, enhancing customer satisfaction and loyalty.

Data-Driven Decision Making Became Efficient

Data has become a valuable asset for financial institutions and, further coupled with technology has played a vital role in harnessing its true potential. Advanced analytics tools enable banks and insurance companies to process vast amounts of data in real-time, uncovering valuable insights and patterns. 

These insights help in risk assessment, fraud detection, and underwriting processes, leading to more accurate decision-making. Furthermore, the assimilation of machine learning algorithms has significantly improved credit scoring models, allowing financial institutions to extend credit to a broader range of customers.

Cybersecurity And Fraud Prevention

As technology advances, so do the threats posed by cybercriminals. The BFSI sector is a prime target for hackers due to its sensitive customer information and financial data. To combat this, innovative technologies such as biometric authentication, multi-factor authentication, and behaviour analytics are being employed to fortify security measures. 

AI-powered systems can detect suspicious activities, prevent fraud, and provide early warning signals in real-time. The use of encryption and tokenisation techniques ensures that customer data remains secure throughout the financial ecosystem.

Regulatory Compliance

The BFSI sector is subject to stringent regulations and compliance requirements. New technologies have made it easier for financial institutions to navigate these complex regulatory landscapes. 

For instance, regtech, a combination of regulatory technology and AI, assists in automating compliance processes, monitoring transactions, and ensuring adherence to regulations. Machine learning algorithms also aid organisations in proactively addressing compliance issues, reducing costs, and minimising risks.

Conclusion

The BFSI sector is undergoing a remarkable transformation driven by the integration of new technologies. These innovations are revolutionising financial services by enhancing the customer experience, enabling data-driven decision-making, leveraging blockchain technology, fortifying cybersecurity measures, and streamlining regulatory compliance. 

As the industry continues to embrace these advancements, it is essential for financial institutions to stay agile and adapt to the evolving technological landscape. By driving innovation, the BFSI sector can unlock new opportunities, further improve operational efficiency and deliver superior financial services to customers in an increasingly digital world.

The post Changing The Game: How Emerging Tech Is Driving Innovation In BFSI appeared first on Inc42 Media.

Valuing a business has long been regarded as a combination of art and science, as Warren Buffett once famously stated.  Traditionally, valuations relied on assessing a company’s present financial performance and projecting its future success. 

Enterprise Value (EV) was commonly determined using multiples of economic metrics like EBITDA and revenue, where higher metrics and lower net debt translated to more favourable market valuations. However, the landscape of startup valuations has undergone a significant shift, due to the prevalence of limited or negative revenues associated with such companies.  

This has led to non-financial metrics taking centre stage in determining startup valuations, challenging the conventional dependence on financial indicators. 

The Shift To Non-Financial Metrics

While the business ecosystem continues to evolve, the traditional reliance on financial metrics for establishing valuations has shifted. Companies are now placing greater emphasis on non-financial indicators, such as the number of subscribers, conversion rates, user retention rates and probable customer lifetime value. 

This is especially evident in the case of startups with minimal or negative revenues, which are increasingly relying on non-financial metrics. These metrics provide insights into user engagement, customer acquisition, and market potential, offering a holistic view of a startup’s growth prospects. 

By emphasising these metrics, startups analyse and understand their ability to attract and retain customers, even if their financial performance is not yet substantial on paper. However, this change has allowed startups to project returns that may or may not materialise, potentially affecting their long-term sustainability and profitability.

Assessing Market Interest & Potential

In an increasingly competitive and fast-paced world powered by innovation, financial performance metrics only tell part of the story. Non-financial metrics allow startups to gauge market interest and potential, providing valuable insights into the scalability and sustainability of their business models. 

It’s a paradigm shift that empowers startups to move beyond the confines of traditional financial metrics, enabling them to truly connect with their target audience and build long-lasting relationships. Metrics like customer acquisition cost (CAC) and customer lifetime value (CLTV) enable startups to assess the effectiveness of their marketing and sales strategies and determine if they can generate sufficient revenue from long-term customer relationships. Additionally, metrics related to user engagement and product usage patterns help startups understand the value they deliver to customers and identify areas for improvement.

Navigating A New Set Of Challenges

While non-financial metrics offer valuable insights into a startup’s growth potential, they also present challenges that have to be navigated. Startups may face difficulties in accurately measuring and predicting these metrics. 

For instance, companies could promise investors that 60% of their subscribers would become customers. To back up their claims of successful conversion rates of their subscribers into paying customers, they will most likely offer free trials and heavy discounts, attracting the desired number of subscribers and driving up their valuation. 

However, the crucial aspect here lies in retaining these customers, as initial sign-ups don’t always guarantee long-term loyalty. In order to achieve this, they will further offer additional incentives with expanded services and manage to retain around 40% of the initial client base. 

With this achievement, they seek higher valuations, asserting that despite a reduced number of loyal customers, the value of their product has increased significantly. The argument therein is that this enhanced product value will lead to greater sales, leveraging the concept of customer lifetime value, which in turn will generate profits in the long run.

The Unicorn Complex

While this approach has allowed startups to secure funding, it has also led to challenges for high-profile companies that were once hailed as trailblazing unicorns. 

These companies, previously considered revolutionary disruptors, have also struggled to achieve profitability or deliver on promised financial returns. Relying heavily on valuations based on non-financial metrics, which are highly variable, creates an environment where funds are obtained without a guaranteed path to sustainable financial success. 

The allure of unicorn status may overshadow the reality of financial viability, raising concerns about the long-term prospects of these companies.

What The Game Of Multiples Means For Startups

Undeniably, startups must confront the intricacies of precisely measuring and forecasting metrics.  It is a delicate balance that startups must master to ensure their metrics reflect the reality of their growth potential. 

While non-financial metrics provide a vision of market interest and potential, financial metrics such as revenue growth, profitability, and cash flow act as the anchor of stability. It is the fusion of science and art—the financial and non-financial metrics, that unlocks a more comprehensive and accurate assessment of a startup’s value and potential.

The post The Game Of Multiples: Analysing Startup Valuations appeared first on Inc42 Media.

The global automotive industry is shifting significantly towards electric vehicles (EVs) to combat climate change and reduce carbon emissions. 

India, too, is steadily moving towards electrification. In 2022, as per Vahan, EV sales in India hit the mark of 10,23,735 units, and until March 2023, the number was already hitting an impressive milestone of 11,65,057 units. This substantial jump in the numbers indicates the readiness of consumers to embrace the EV alternative to high petrol and CNG charges. 

Furthermore, with the government announcing an ambitious target of 30% electrification of the country’s vehicle fleet by 2030, the supply is more likely to tilt in favour of EVs. 

However, while the growth is incredible, the EV market in India is still nascent, and the transition toward electric mobility presents unique challenges for the retail sector.  One of the recent challenges is the reduction in the FAME II subsidy, which is now being talked about across the industry. It is just one among many other blockers for EV retailing which require immediate action. 

Financing Challenges

One of the significant challenges in retailing is financing. EVs are still relatively expensive in India, and customers may not be willing to invest a considerable amount of money upfront. Moreover, unlike conventional vehicles, EVs require a significant upfront investment in the battery, the vehicle’s most expensive component. 

To overcome financing challenges, EV retailers must work closely with banks and financial institutions to develop innovative financing solutions that address customer concerns. This could include offering attractive loan schemes with low-interest rates, long repayment periods, and a buy-back guarantee. 

Service Unavailability

Another significant challenge in EV retailing is the unavailability of service centres. EVs require specialised equipment and trained personnel for servicing and repairs. However, India currently needs more such service centres, making it difficult for customers to get their vehicles serviced and repaired.

To overcome this challenge, EV retailers must invest in setting up service centres and training personnel in EV technology. They could also partner with existing service centres to provide training and certification programs to their mechanics.

Limited Competency

The industry is upcoming and always innovating which mandates the need to include more expertise in EV technology. In addition, many customers may need to be more familiar with the features and benefits of EVs, which can lead to confusion and a lack of confidence in the product.

To overcome this challenge, EV retailers must invest in educating customers about EV technology and the benefits of electric mobility. This could include organising workshops, roadshows, and test drives to educate customers about the product.

Community Awareness About The Product

Mechanics are the backbone of the automotive service industry, but there needs to be more awareness among mechanics about EV technology. In addition, many mechanics may need to be equipped to handle EV repairs, which can lead to delays and a lack of trust among customers.

To overcome this challenge, EV retailers must invest in training and certifying mechanics in EV technology. This could include collaborating with technical schools and institutes to provide training and certification programs for mechanics.

Range Anxiety

Range anxiety is one of the most significant concerns among potential EV customers. Moreover, customers may need to be reassured about the vehicle’s range and charging infrastructure availability, especially in rural areas.

To overcome this challenge, EV retailers must invest in a robust charging infrastructure network. This could include setting up charging stations at strategic locations, including highways, public parking lots, and commercial centres. Retailers could also offer customers home charging solutions to address range anxiety.

Unfamiliarity

The traditional Indian mindset when it comes to purchasing vehicles is still prevalent, and many customers may need to be more familiar with the features and benefits of electric mobility. In addition, customers may also be sceptical about the reliability and durability of EVs.

To overcome this challenge, EV retailers must educate customers about electric mobility’s benefits. This could include organising workshops, roadshows, and test drives to familiarise customers with the product.

Safety Concerns

Safety is a critical concern for customers, and EVs present unique safety challenges due to their high-voltage batteries. Customers may also be concerned about the safety of charging infrastructure and the risk of fires.

To overcome this challenge, EV retailers must invest in ensuring the safety of their products and charging infrastructure. This could include implementing strict safety protocols and standards for EVs and charging stations. Retailers could also provide customers with safety training and information on handling EVs safely.

Life Of The Product

The market’s novelty also comes with limited product life information. Customers may be hesitant to invest in an EV due to concerns about the durability and longevity of the vehicle.

To overcome this challenge, EV retailers must invest in providing customers with information on the product’s life. This could include providing warranties and guarantees on the battery and other components of the vehicle. Retailers could also conduct research and studies on the durability and longevity of EVs to provide customers with accurate information.

Push Marketing

EV retailers must adopt effective marketing strategies to promote their products and services. Traditional marketing methods may need to be more effective in promoting EVs due to the unique challenges of electric mobility.

To overcome this challenge, EV retailers must adopt push marketing strategies that educate customers about electric mobility’s benefits. This could include social media campaigns, influencer marketing, and content marketing, providing customers with accurate and relevant EV information.

EV retailing presents unique challenges in India. However, by investing in innovative solutions and adopting best practices, EV retailers can overcome these challenges and drive the growth of electric mobility in India. In addition, EV retailers can help accelerate the transition toward a cleaner and more sustainable future by providing customers with education, safety, and reliable products and services.

The post Driving Electric Mobility: How EV Startups Can Tackle Competency & Awareness Hurdles appeared first on Inc42 Media.

It has been a few years since those of us in the industry realised that AI and machine learning (ML)  have transformed agriculture and the way we think about farming. In India, we are seeing the use of ML models in everything from grocery delivery to banking. And we are on track to see the potential of AI and ML in farming explode, revolutionising the sector, particularly in a largely agrarian economy like India. 

The adoption of AI and ML in Indian agriculture will have far-reaching consequences, ranging from increased productivity, lower costs, and better decision-making to businesses being able to deliver fresh produce that meets their customers’ needs and specifications. 

To illustrate, consider the recent trend of consumers ordering fruits and vegetables online. It is unlikely that fresh produce, 12-15 hours post-harvest, will be delivered to you when you order something that is not native to a place or is from afar. The produce you receive is most likely from stored stock. 

One solution is to harvest and take customer orders almost simultaneously, allowing only the freshest produce to arrive at your door. A powerful AI-powered prediction engine forecasts the demand for each type of produce for the following day, regulating harvesting, wastage (which is about 30-40% in traditional methods, about 3% with precision-modelled prediction engines), and eventually production. 

These ML models allow for a super-efficient way of working that puts the producer, the farmer in this case, as well as the customer at the centre of this experience. 

Precise Farming With AI & ML

A plethora of opportunities await Indian farmers as the use of AI and ML models becomes more widespread. One of the primary benefits of using these models in agriculture is that they allow for more sustainable and precise farming methods. From soil health, crop yields, and weather patterns to pest and disease management, this is the direction to take when considering not only ML models but also AI-powered tools. 

Farmers’ traditional wisdom occasionally fails them in a world of rapid climate change and disrupted rain patterns. In this case, AI and ML models can assist farmers in optimising planting patterns, determining the appropriate amount of fertiliser and irrigation, and detecting issues before they become major issues. AI and ML models can be used to empower farmers, allowing them to make more informed decisions that will lead to healthier ways of increasing productivity and profitability. 

Building Healthier And More Profitable Crops With Precision Data

Today, AI and ML models are most useful to farmers in the pre-harvest stages. Agriculture, as an activity and an industry, is dependent on a variety of factors in order to be successful. On the farming side, obvious factors such as irrigation, soil type, fertiliser requirements, seed quality, sowing time, disease manifestation, nutrient deficiency, and so on are critical for crop production. Farmers judge and decide on all of these factors based on wisdom and skills passed down to them or their own experience. 

According to research, many of these methods and conclusions are incorrect, and there are large gaps between this traditional knowledge and what is actually happening on the ground. So, if this data is collected and analysed and cause and effect are established, it will improve crop productivity and production in the country. 

In fact, you may already be seeing fresh produce that has been grown using data-driven methods such as hydroponics and aeroponics. The data in these methods tell you when to increase moisture and when to boost with nutrients. The precision with which AI and ML can lay out this data helps build a healthy product as well as an efficient, economical, and profitable crop. 

Another aspect is fertilisers. Today, the push to use fertiliser is so strong that farmers do not even consider whether the crop requires it, how much is required, and so on. It is de rigueur to dump fertiliser on a plant for a better yield. This practise has several negative consequences, including unsustainable crop production and soil degradation.

Bridging The Gap In Consumer Demand & Supply

Furthermore, having measures on the supply side is insufficient. On the demand side of the equation, there are consumers who want one thing and growers who produce something else. Today’s consumer buys what is available rather than what they actively want, and this information or data is rarely passed down to producers. A massive chasm that harms both consumers and producers! 

Closing this gap would entail learning about consumer behaviour — when they prefer to buy, what price point works best for them, in-season and off-season demand, and so on. The granularity of this data, when built into an AI model, aids in determining demand and making a full crop projection, which, when shared with farmers, assists them in growing new varieties of plants with minimal water waste. 

According to experts, the next major global crisis will be water scarcity. Agriculture, as we all know, is water-intensive, with hundreds of litres often going to waste on each farm every day. If ML models could predict how much water would yield the best yield and when we would be looking at not only the judicious use of precious water but also produce that is as it should be.

Predicting Demand & Reducing Waste

The stark contrast between India’s severe hunger issue and its significant problem with wasted fresh produce is one of the country’s biggest puzzles. India is one of the world’s top fruit and vegetable producers, but due to inadequate storage and transportation systems, a sizable portion of the produce is wasted. 

In order to predict demand, optimise logistics, enhance supply chain management, reduce food waste, and ensure that fresh produce reaches the market, data-rich AI and ML models should be thoroughly tested.

Overcoming Challenges: Fragmentation Of Landholdings

But like all technological progress, this too has challenges. A significant challenge facing Indian agriculture is the fragmentation of landholdings. Most farmers in India own small plots of land, making it difficult to adopt modern agricultural practices. 

AI and ML can help farmers make more informed decisions by providing them with data on weather patterns, soil conditions, and crop yields. This information can be used to optimise planting patterns, select the right seeds, and determine the appropriate amount of fertiliser and irrigation required. By leveraging this technology, small farmers can improve their productivity and profitability.

What About The Farmers?

However, the use of AI and ML in agriculture in India also raises concerns about the impact on employment. Agriculture is a labour-intensive industry, and the adoption of AI and ML could result in job losses for farmers and farm workers. 

This can have a significant impact on rural communities, where agriculture is the primary source of employment. It is crucial to ensure that the benefits of AI and ML are shared equitably and that measures are taken to mitigate the impact on employment.

Another concern is the cost of adopting AI and ML in agriculture. The high cost of technology and the lack of access to financing can be significant barriers for small farmers. It is essential to develop affordable and accessible solutions that can be easily adopted by small farmers. Government subsidies and support will play a crucial role in facilitating the adoption of AI and ML-driven tech in agriculture.

The post Striking The Balance: Can AI & ML Be The Answer To Indian Farmers’ Woes? appeared first on Inc42 Media.

Let’s talk about something that has been at the forefront of marketing for over two decades — personalisation. As visionary D2C founders, you’ve probably heard the buzz and the endless possibilities it brings. 

Yet, we can’t help but notice that very few brands have truly harnessed their game-changing power. The reason? Many tackle personalisation as an outcome of technology and not vice versa.

Having worked with over 50 digital brands, I’ve gathered a perspective on personalisation that might help you too.

Stop Treating Them Like They’re Here Today And Gone Tomorrow

Your customers are more than just transactional entities; they are individuals with unique preferences and needs. 

Embracing personalisation means going beyond the standard post-purchase flows and creating engaging experiences that make them feel seen and valued.

The Power Of Post-Purchase Personalisation

Imagine a customer recently purchased a diaper from your website. Instead of immediately pushing them back to the checkout, how about following up with personalised advice on parenting? 

Help them understand how to handle different phases of child growth. By nurturing their parenting journey, you’ll foster lasting habits that increase their lifetime value exponentially.

Cultivate Your Brand Lovers

Every D2C brand has those die-hard fans, the “Brand Lovers” who can’t get enough of what you offer. These individuals crave a more personal touch, so ditch the flashy graphics and opt for simple emails from the founder or marketing manager. 

Treat them like VIPs, offering early access, invites to focus groups, and involving them in product development. Make them feel valued, and they’ll become your most loyal advocates.

Harness The Power of Community

If you haven’t considered building a community, now’s the time. A thriving community becomes the pulse of your brand, connecting customers and fostering a sense of belonging. 

Offer them a peek into what’s happening within, making it easy for them to join and worthwhile to stay. The bonds formed within a community can multiply the customers you retain, driving customer lifetime value through the roof.

Personalisation Done Right

Lose the mass-marketing and sales emails! Instead, focus on building authentic connections with your audience. Personalisation isn’t just about driving sales; it’s about creating a meaningful persona for your brand. 

Invest in tailored post-purchase flows, cultivate your Brand Lovers, and foster a thriving community to unlock the true potential of personalised marketing.

Let’s embrace personalisation and revolutionise the D2C landscape together. Remember, your customers are more than just numbers; they are the heartbeat of your brand. Make it personal, make it real, and watch your customer’s lifetime value soar.

The post How D2C Brands Can Elevate Customer Experiences With The Right Personalisation Strategy appeared first on Inc42 Media.

I’ve had the privilege of engaging in insightful discussions with over 30 successful founders who generate monthly revenues ranging from INR 5,00,000 to 3,00,00,000 Cr a month. Today, I want to address a crucial question that often plagues D2C brand owners — Should you hire a freelancer or an agency?

When your D2C business is facing challenges, you have three options: figure it out on your own, hire an agency, or hire a freelancer. But how do you decide which path to take? Let’s delve into the considerations for each option.

Firstly, no one can make this decision for you. The right time to hire an agency is subjective and depends on your unique circumstances. Every business needs one thing: traffic and sales. These are the fundamental pillars of any successful enterprise.

Understanding The Challenges: Marketing And Copywriting Overwhelm

Many D2C owners feel overwhelmed by the marketing and copywriting aspects of their business and hastily decide to hire an agency. However, the key is not to choose the cheapest option available. Hiring a $20/hour freelancer to run your ads may not align with your business goals, as their primary focus is often acquiring as many clients as possible rather than truly caring about your brand.

In my opinion, owned channel marketing, including email, WhatsApp, and SMS, should ideally be handled in-house until your D2C business reaches around INR 8,00,000 per month in revenues. 

Outsourcing Paid Ads: When Is The Right Time?

Paid ads can be outsourced slightly earlier at around INR 5,00,000 per month. When partnering with a marketing agency, it’s crucial to have clear expectations regarding marketing planning, execution, creatives, copywriting, campaign setup, reporting, and analytics. Establish an alignment of expectations and invest time to understand each other’s processes.

Additionally, consider a payout structure that incentivises your agency partner’s commitment and growth with your brand. A combination of fixed and performance-based incentives ensures mutual success and prevents them from seeking alternatives within the same team.

Of course, this approach may not suit everyone. If your team can dedicate just five to ten hours per week to marketing planning and setup, it is a low-time investment with a potentially high return. Founder involvement is essential during this phase as it helps to gain a deeper understanding of your product-market fit.

Making the Right Decision For Your D2C Brand

Remember, if owned channel marketing does not contribute at least 30% of your total revenue, you may be overcomplicating it. Strive to reach this benchmark and focus on refining your strategies accordingly.

I hope these insights guide you in making the right decision for your D2C brand.

The post Freelance Vs Agency: How D2C Brands Can Make The Right Choice To Optimise Marketing appeared first on Inc42 Media.

After the startup world witnessed a triumphant funding season in 2021, the second half of 2022 brought about a rude awakening for many entrepreneurs and investors alike. Inc42’s data states February 2023 as the worst month for funding since August 2019, with startups raising only about $251 Mn. As a result, year-over-year (YoY) funding amount and deal count both fell by 81% and 59%, respectively. 

As the cold winds of the financial slump froze the river of venture capital investments, one thing became crystal clear — the Indian startup funding winter has officially set in.

What Is A Funding Winter?

For the uninitiated, funding winter refers to an extended period where the inflow of venture capital is lower than expected, making it particularly difficult for startups to raise funds. A funding freeze is often followed by employee layoffs, delays in capital allocation decisions, departmental budget cuts, lower valuations than past funding rounds, and more. 

Many believe a funding winter to be a battle for survival. However, it is an opportunity in disguise for startup founders to test their mettle against fluctuating market factors and for investors to identify solid investment opportunities.

What Prompted The Indian Startup Funding Winter?

The Indian startup funding winter is in no way an isolated event; macroeconomic challenges and geopolitical tensions acted as catalysts in its decline. Investment cycles, like other economic patterns, go through peaks and troughs. 

In this case, rising energy and living costs created strong inflationary pressures. The Russia-Ukraine war added a sense of sudden upheaval and instability that initiated a global economic slowdown, the aftermath of which impacted large parts of the world, including India. The uncertainty prompted investors to reinvest in their existing portfolios, which have proven to be dependable, scalable, and profitable.

The Short Tale Of Startup Deflation

According to the ASK Private Wealth Hurun India Future Unicorn Index 2023, only 24 startups from the list became unicorns (startups with a valuation of $1 Bn) last year, indicating a slowdown in India’s startup ecosystem. Additionally, 8 gazelles (startups that are most likely to go Unicorn in the next three years) were demoted to cheetahs (startups that could become unicorns in the next five years) and another 19 dropped out of the index entirely.

Does this mean the Indian startup and investment ecosystems’ pursuit of wealth creation and innovation is put on hold? Absolutely not.

The temporary deflation of the Indian startup ecosystem acted as an impetus for companies to adopt a balanced approach towards growth and profitability. For large startups with larger teams, the funding winter was a lesson in re-structuring— building a leaner and optimised workforce that focuses on recreating more efficient and effective business models. Early-stage startups witnessed better growth in this period since larger startups redirected their resources from aggressive marketing to customer acquisition.

The funding slowdown of the first quarter of 2023 prompted early-stage startups to grow beyond the ‘proof-of-concept’ stage and pushed larger startups to prioritise profitability in order to become unaffected by future external market conditions. As per Inc42’s data, the startup ecosystem witnessed a reassuring ascent from the February stats, reaching 15% month-on-month (MoM) to $1 Bn in May ’23 compared to $900 Mn in April ’23.

For investors, the funding winter acted as a litmus test, identifying clear emerging winners in the startup ecosystem. In the fast-paced world of innovation, the funding freeze allowed investors the opportunity to leverage lucrative deals in early-stage startups.

Navigating The Funding Winter

While the funding slowdown is expected to gradually come to a halt in 2023, good companies with strong business models will keep attracting investors all year round.

• To weather the funding winter, startups need to adopt cash optimisation strategies in their business operation processes, such as working capital management, limited research and development, and utilising proven marketing strategies to their utmost advantage.
• Startups that raised funding in the past year must explore ideas to extend cash runway as much as possible, including but not limited to putting large capital commitment decisions on the back-burner and revisiting debt repayment terms.
• Founders must focus on revenue generation by keeping track of key metrics such as lower customer acquisition costs, higher lifetime value for customers, and high customer retention via a value-added product that solves a core market problem.

For investors, the funding winter will result in more realistic valuations to match market realities, making this an opportune time to invest.

• Investors need to identify ambitious and talented founders that exhibit a strong aptitude for business and invest in companies that demonstrate passionate ideation with sound execution.
• Due diligence, especially in a funding crunch, is non-negotiable. Investors must build an ironclad filtering process that ensures only the most qualified companies with maximum potential for success make it into their portfolios.
• Investing is not a siloed activity anymore. Investors should seek avenues to build a network of fellow investors to support their portfolios.

Final Words

All investment cycles have their ups and downs. It is important for startups to undergo a period of funding slowdown in order to have a period of massive growth. 

As the third largest startup ecosystem in the world, India will soon recover from what is going to be a short funding winter. After all, if winter comes, can spring be far behind?

The post Embracing Resilience: How Startups & Investors Can Thrive In The Funding Winter appeared first on Inc42 Media.

UPI’s popularity continues to grow, as reflected in its monthly volumes exceeding 9 Bn transactions for the first time in May 2023, a 58% YoY volume growth and value growth not too far behind. 

The volume growth of UPI peer-to-merchant (P2M) payments continues to trend significantly higher than that of peer-to-peer (P2P) payments, and for May 2023, P2M payments constituted 57% of total monthly UPI transaction volume. On a monthly run-rate basis, UPI payment volumes now exceed 75% of all digital payments made in the country, despite the fact that it has only been in use for about seven years.

Expanding Use-Cases & Account Types Driving UPI’s Success

While a key driver of this growth has been higher penetration as the use of UPI percolates into rural India, a major factor has also been the expanding set of account types that UPI supports, covering savings accounts, current accounts, wallets, prepaid cards, and more recently Rupay Credit Card accounts and credit lines hosted by banks. 

This has also meant that the use-cases for UPI are expanding, which is driving further growth. UPI payments continue to be free of charge for the end customer for a vast majority of transactions, and this makes for a very attractive mode of payment for most. 

Going back in time, more stringent regulations around know-your-customer, top-up, and payment restrictions imposed on the then preponderant digital wallet accounts triggered a pivot by various payment apps to start to focus on UPI as a preferred means to pay. 

The large user base and reach of these apps were key drivers for the growth acceleration of UPI and created a wave that has not subsided since. As one can see today, PhonePe, GooglePay, and Paytm are the largest UPI PSPs, and the expansion of their user bases has been key to the growth of UPI. 

UPI’s Value Proposition & Unique Features

UPI’s value proposition, which has made it so successful, has been a combination of the power of instant payments and its great end-user experience. Starting with first-time activation and on to transacting, be it merchant payments or P2P payments, the ease of use and speed is not something that any other payment mode can offer today. 

Its QR-code-based scan-and-pay capabilities at merchants have been a key contributor to the preference for UPI for merchant payments. The inherent capabilities of smartphones, which support enhanced authentication during payment initiation, while at the same time supporting non-repudiation, have been at the heart of making UPI an easier way to pay. 

It is estimated that UPI will record 1 Bn transactions per day by FY 2026–2027, according to a recent report by PwC. To promote digital transactions through UPI, the government had increased the allocation of financial incentives provided to acquiring banks from INR 1,300 Cr in FY 2021–2022 to INR 2,600 Cr in FY 2022–2023. 

UPI’s growth has not just led to the displacement of cash for payments in a significant way but also displaced other digital payment methods. For instance, the use of Debit Cards for merchant payments has been declining year on year, and UPI has also changed how prepaid wallets are accessed today. 

The Power Of Choice: UPI’s Open Service Provider Model

Another key design element has been to offer the customer a choice in their service provider for UPI, irrespective of which bank or financial institution hosts the customer’s account. The power of choice meant that customers could choose their preferred payment apps to access UPI for payments, versus being forced to use the service of the bank where the account was hosted. 

Many of these apps offered a lot more than just payments and were truly super-apps that offered a variety of services, be it shopping, investments, multi-media content, or even messaging. A single-user interface fulfilled a range of needs for an end-consumer, including the need to make payments. Their impact cannot be overlooked when analysing the success of UPI. 

Future Projections & Government Support

Jan Dhan Yojana and similar programmes rolled out by the government laid the foundation for expanding financial inclusion and access to the formal banking system for citizens. While benefits delivery objectives were a big part of this push, the rollout of UPI leveraging the mobile device was a force-multiplier that democratised a key element of financial inclusion, viz. payments. 

It is estimated that UPI has over 260 Mn users today, and this will continue to increase as smart devices further displace feature phones. The UPI 123PAY and UPI Lite services to support UPI for feature phones are also helping expand adoption, especially in rural areas, as per PwC’s analysis

Impact On Digital Payments Landscape

The success of UPI domestically has been a stepping-stone for international expansion, with the first stop being countries with a significant Indian diaspora. There are two dimensions to be looked into here, the first being the acceptance of UPI as a payment mechanism for the Indian diaspora and travellers. 

In this regard, countries such as Singapore, the UAE, Mauritius, Oman, and Indonesia have established or are in the process of establishing mechanisms to enable this, while many more countries have expressed interest in having bilateral arrangements in place. The benefits of international acceptance of UPI for Indians cannot be over-emphasised and this can have a transformative impact not just in terms of convenience and fund access but also in terms of economic benefits to countries that have a large number of travellers and diaspora from India. 

UPI As A Standard For In-Country Instant Payments

The other dimension is the use of UPI standards and technology to roll out in-country instant payments Countries such as Nepal and Bhutan have started programmes for this in cooperation with India. 

While India has made significant strides with UPI, many other countries across the world have their own standards and success stories around instant payments, and it is to be expected that there will be a large number of such systems that will co-exist and inter-operate. 

For ‘laggard’ countries that are yet to establish domestic real-time payment systems, it may be an option to consider adopting the well-proven and scalable UPI standard and technology. India and the NPCI have taken a proactive approach here and have kicked off outreach to key countries that may have a need. 

Unprecedented Journey & Transformative Impact

From a standing start seven years ago, UPI’s phenomenal adoption and acceptance today is a one-of-a-kind story that is unmatched when it comes to its scale and impact. Its transformative impact on citizens, consumers, merchants, and the various players in the banking and payments ecosystem is highly visible and has significantly changed the behaviour of each of them. 

With smartphone penetration continuing to increase and rural adoption of UPI taking off, it is still some distance away before its usage growth will start to plateau. NPCI has demonstrated an outstanding entrepreneurial spirit in working with stakeholders and the broader ecosystem to bring it to where it is today, and UPI has become one of the most significant achievements of the current administration.

The post The UPI Effect: How UPI Is Reshaping India’s Payment Industry appeared first on Inc42 Media.

The 2023 Budget prioritised green technology, with the government highlighting the need to build momentum to reach India’s Net Zero targets by 2070. The ‘Lifestyle for Environment’ or ‘LiFE’ movement is its proposed vehicle for this.

It would begin with a number of government initiatives, including a Green Credit programme under the Environment Protection Act, a Green Hydrogen Mission, and other initiatives. These measures demonstrate that green technologies are no longer viewed solely as necessary to protect the environment, but also as economically beneficial. 

The government’s emphasis on sustainability could not have come at a better time. India has a fantastic opportunity to become a dominant force in green technologies. It is crucial for the government to provide substantial support to foster the growth of green tech startups. 

These startups will develop technologies to capitalise on the potential of India’s manufacturing sector, which is currently on the rise. This trend contrasts sharply with the recent wave of layoffs at major IT companies such as Amazon, Microsoft, and Accenture. 

A recent survey by FICCI showed that 70% of manufacturing capacity is being utilised, suggesting sustained economic activity in the sector. More importantly, 40% of respondents indicated plans to increase capacity. This stands in stark contrast to the recent layoffs in 2023. Tech layoffs in the first three months of 2023 have already surpassed those in the entire year of 2022. 

India can leverage the potential of its thriving tech startup ecosystem to establish globally competitive industries in electric vehicles (EVs), alternative energy, carbon capture, energy efficiency, and other critical technologies by making the right strategic decisions.

Focusing On Startups And R&D

Particular attention needs to be paid to tech startups in this endeavour as well as overall efforts to improve research and development (R&D) capacity. This dual track will help India meet its green targets for net zero, EV adoption, and renewables. 

Innovation is the need of the hour. It is not enough for products to be Made in India; they must also be Designed in India. This will ensure that the sector’s value creation is entirely captured on Indian soil. More importantly, a robust R&D pipeline will shift Indian manufacturing from being reactive and executing the designs of others to being proactive and setting the pace of innovation.

The recent budget announcement has provided a boost to existing government schemes targeting tech companies and startups, such as Production-Linked Incentives (PLIs) and sector-specific schemes like the Faster Adoption and Manufacturing of Electric Vehicles II (FAME-II) for EVs. 

The emphasis on supporting startups in logistics, infrastructure, and financial services is a welcome addition to the existing framework. Green credit programmes are also a step in the right direction, encouraging businesses to adopt sustainable business and construction practices that will result in increased energy efficiency.

Navigating Challenges In Funding & Government Programmes

However, startups face challenges that prevent them from fully utilising these schemes. PLIs, for example, are geared towards larger companies and have minimum investment requirements that may be out of reach for startups.  The government must take a more nuanced approach to ensure that these programmes are accessible to startups while also remaining effective. 

Ultimately, it is a chicken and egg problem. Startups lack the scale to invest but frequently struggle to find funding until they reach scale because traditional lenders are often hesitant to invest in early-stage companies. The budget announcement of an INR 10,000 Cr fund for startups is a positive step in this direction, but more needs to be done to ensure that funding is available to all startups, regardless of size or stage of development.

When it comes to R&D, one major challenge that startups face is competing with the resources of established companies. Often, startups lack the resources to invest in R&D, which is critical to their long-term success. 

The government can assist startups by providing funding and partnering with academic institutions and research centres. The announcement of three Centres of Excellence for AI research is a step in the right direction. Hopefully, more such centres will open with different areas of specialisation.

Despite these challenges, the potential of tech startups to drive economic progress and establish competitive local industries cannot be ignored. More support in critical areas will be required to fully realise the sector’s potential. Ensuring that funding is accessible to all startups, regardless of their size or stage of development, and providing support for R&D will be pivotal right now. The government will need to take a nuanced approach to ensure that existing schemes are made more accessible to startups without compromising their effectiveness. With the right support, India’s tech startups can be a driving force for economic progress and local industries.

The post Decoding The Growth Potential Of India’s Green Tech Startups appeared first on Inc42 Media.

Cryptocurrency is a digital or virtual currency that uses cryptography for security. Transactions are recorded on a decentralised ledger known as the blockchain, which makes it virtually impossible to tamper with or manipulate. 

The development of this technology has created a new world of financial opportunities, including the ability for businesses to accept cryptocurrency payments from their customers. In this article, we will explore the basics of integrating cryptocurrency payments into your business model and how to do it effectively.

Understanding The Cryptocurrency Landscape

Before diving into the nitty-gritty of integrating cryptocurrency payments into your business, it’s important to understand the basics of cryptocurrencies and blockchain technology. 

Cryptocurrencies like Bitcoin, Ethereum, and USDC (USD Coin) operate in a decentralised manner, which means they are not controlled by a central authority like a bank or government. Instead, all transactions are validated by a network of computers running the blockchain software.

One of the primary benefits of cryptocurrencies is the enhanced security they provide. Transactions are encrypted and stored on the blockchain, which makes it very difficult for hackers to manipulate data. 

This level of security also protects businesses and their customers from fraud and chargebacks.

Why Use Crypto Payments?

Cryptocurrencies offer a range of advantages that make them a more versatile and innovative payment option for businesses.

Firstly, cryptocurrencies operate in a decentralised manner and are not controlled by any government or financial institution. This means that there are no middlemen in the transaction process, and transactions are validated by a network of computers running blockchain software. This results in faster transaction processing times, lower transaction fees, and increased security.

Secondly, cryptocurrencies offer a global reach. Cryptocurrencies can be used to transfer money across borders without the need for exchange rates, conversion fees, or other intermediaries. With an increasing number of businesses operating on a global scale, cryptocurrencies provide an opportunity for them to broaden their customer base and strengthen their competitive edge by offering innovative payment options.

Selecting The Suitable Cryptocurrency & Payment Gateway

When incorporating cryptocurrency payments into your business model, it is critical to select the appropriate offering. While Bitcoin and Ethereum are popular choices, their price volatility can pose significant business risks. Stablecoins like USDC are tied to stable assets like the US dollar, which reduces the risk of price fluctuations.

Choosing a reliable payment gateway is equally important. These platforms facilitate cryptocurrency transactions and provide the convenience of managing various cryptocurrencies through a single interface. They also offer ‘on-ramps’ and ‘off-ramps’ for smooth conversion between cryptocurrencies and traditional fiat currencies. 

Navigating Technical Integration & Security

The technical integration of cryptocurrency payments involves incorporating the payment gateway APIs into your checkout process, followed by thorough testing to ensure a seamless user experience. 

One of the most crucial things to consider here is the security of API communications, which means securely storing API keys and using HTTPS for all communications.

Implementing A Pricing Strategy & Promotion

Given the volatility of certain cryptocurrencies, developing an effective pricing strategy is important. Accepting stablecoins like USDC can help mitigate the risks associated with price volatility. Pricing strategies could include automatic conversion of the stablecoin to local currency upon transaction completion.

Along with an effective pricing strategy, promoting cryptocurrency payments across all communication channels is critical to raising customer awareness. This could include social media, email marketing, and in-store promotions.

The Final Word

As with any new technology, integrating cryptocurrency payments into your business operations requires continuous monitoring and adjustments to ensure maximum effectiveness. Adapt to evolving trends and regulations and be prepared to adjust strategies accordingly to ensure your business remains current in the dynamic cryptocurrency landscape.

In conclusion, integrating cryptocurrency payments into your business operations may seem daunting initially, but with proper planning, education, and implementation, it can pave the way for significant growth and customer engagement. Take the time to understand the basics of cryptocurrencies and blockchain technology, choose the right payment gateway, and implement an effective pricing strategy with proper promotion. Finally, monitor and adjust your strategy continuously to ensure your business remains ahead of the curve in this rapidly evolving world of finance.

The post How Startups Can Integrate Cryptocurrency Payments  appeared first on Inc42 Media.

The Indian digital lending industry is undergoing a major transformation due to its unprecedented pace of growth. According to recent statistics, more than 200 Mn people have taken out retail loans in a year, with the number growing at a 20% CAGR. The significant rise in the disbursement volume not only exhibits the uptick in the number of borrowers but also demonstrates the emergence of digital lending players in the market.

Many fintech companies are overshadowing brick-and-mortar lending institutions by digitising every aspect of the lending process. This can be attributed to the rapid adoption of Artificial Intelligence (AI) and Machine Learning (ML) models that expedite and enhance the lending process. Given the scenario, new-age lenders are moving from traditional risk models to a data-backed approach to be more relevant in the market. 

A Major Step Towards Addressing Gaps In The Lending Ecosystem

Data is the most critical element for any AI or ML model. In lending, credit bureau data and alternate data become the base for any propensity model for loan origination, preparing scorecards for underwriting, or even creating early warning signals on an existing portfolio.

Hence, data becomes the most powerful and significant force that drives the digital lending industry. In the present ambiguous scenario, the Indian lending industry has flagged several concerns about the dynamics of the data distribution of borrowers among lenders.

India has more than 1.2K active lenders, out of which only 1% have access to advanced data and analytics tools. This creates a significant gap on the supply side as small and mid-sized lenders lose out on the data-driven lending race. The new-age loan origination and underwriting tools, which are accessible only to large-sized lenders, create a huge disparity in data intelligence. Consequently, these lenders have to incur high acquisition and underwriting costs, ultimately leading to high-interest rates for borrowers.

Grappling with an unregulated lending scenario, the Reserve Bank of India (RBI) planned to put a guardrail on the ecosystem. The apex bank announced the appointment of a new set of fintech companies as ‘Specified Users’ of Credit Information Companies (CICs) under the Credit Information Companies (Amendment) Regulations Act, 2021, based on stringent eligibility criteria. These Specified User fintechs get access to credit data, run analytics and help digital lenders make data-driven decisions. 

The appointment of Specified User fintech players has not only regulated credit data distribution but also resulted in more streamlined and secure digital loan processing. 

AI Underwriting Models 

Every year, over 15 Mn ‘New to Credit’ borrowers enter the credit ecosystem. This makes loan underwriting a tricky process for lenders under the existing conventional models. Every customer or borrower has unique financial circumstances, which bring uncertainty many inches closer to making credit decisions.

If an underwriting practice is not backed by data and analytics, it can lead to economic meltdowns for lenders. And that’s where Specified User fintechs come to the rescue, providing lenders with the ability to interpret enormous amounts of data much faster and more accurately than conventional underwriting practices. It equips lenders with AI and ML-backed underwriting models, adding an extra layer of better oversight on how data sets can be used strategically to come up with personalised solutions for each borrower.

Fintech players are among the early adopters of technology. The advent of Specified User fintechs helped lenders to venture into segments that were deemed high-risk by conventional lenders. Simply put, they have been successful in bridging the accessibility gap for underserved lenders, making them ride the wave of AI. 

Predictive Algorithm To Streamline The Lending Process

In practical terms, AI works in an intuitive manner, like predicting defaulted or paid loans. Specified User fintech combines AI algorithms with ML classification mechanisms to create probability models for lenders to have better credit decision abilities. The technologies are applied to improve credit approval, risk analysis and measure the borrowers’ creditworthiness, which further helps small and mid-sized lenders scale with ease. 

Fintech companies that are recognised as Specified Users have competencies to store huge amounts of credit data and build AI and ML models on structured and unstructured data sets. This provides more streamlined and better insights for borrower segmentation, predicting loan repayment, and building better collection strategies. Besides this, Specified User fintechs are helping lenders to be on top of automation whether in loan underwriting or pricing for personalised offerings. 

Similarly, lenders’ ability to recognise early warning signs proves to be extremely beneficial for credit risk management. Recognised by the RBI, lenders can be certain of the credibility of Specified User Fintechs in terms of data and analytics. 

Specified User fintechs rely on intuitive but data-backed behaviour that detects any suspicious borrower and flags it as fraud. Unlike traditional tools of analysis, it can alleviate the possibility of human errors arising from biases, discrimination, or exhaustive processing practices. By utilising NLP (Natural Language Processing), lenders can accurately generate warning signals instantly. 

Final Thoughts

The landscape of digital lending in India is evolving. Lenders can benefit from data hygiene performed by AI and ML infrastructure established at the end of the Specified Userfintech. 

Lenders are empowered to improve customer experience, leverage predictive analysis, improve risk assessment, improve credit decisions, and break down sales bottlenecks by automating and centralising all significant practices.

The post How Specified User Fintechs Are Bridging The Data Gap To Accelerate AI Adoption In Lending appeared first on Inc42 Media.

D2C brands across the world are born with a mission — a desire to supply today’s tech-savvy consumers with hard-to-source goods and trend-focused designs. When one opens social media today, we are thrust into the world of targeted sponsored ads that truly speak to our souls. But how does one trust a new brand and separate the wheat from the chaff?

We tend to rely on the information on the ‘buy now’ page. We look at details like EDD, returns policy, customer reviews, and even, in some cases, the embedded Instagram feed to check the ‘real-life’ appeal of the product. Clearly, the pre-purchase experience is important to us. Post-purchase experience equally, if not more so.

I recently procured two beautiful bedspreads from a long-running D2C brand and was quite excited about the purchase. I couldn’t wait to receive the package. Unfortunately, the brand provided little to no visibility into the shipment’s progress.

The predicted 3-4 days did not really stick, and I was left wondering if I had been conned. This is a critical moment, a churning point, in consumer psychology. Vexed, I decided never to re-purchase from that brand. The only solace was that I did receive the beautiful bedspreads a week later, but the post-purchase experience had been so marred that it completely threw me off the brand.

What Makes The D2C Customer Tick?

Over 95% of online shoppers track their orders. Nearly half of them check the order tracking page every day until they receive their package. About 20% check the status of their purchases multiple times a day.  Yes, this points to delivery anticipation and post-purchase excitement, but 7 out of 10 shoppers also said they would rather check tracking status for updates than reach out to customer care in case of delays.

Consumers today are attuned to an ‘instant’ lifestyle. They are no longer used to the speed of dial-up internet and scheduled TV programmes. They are accustomed to having answers right here and now. This trait is evident in their desire for visibility on packages. The state of the ‘restless shopper’ psyche can be a good thing for D2C brands.

And Then There Was Vision…

The crux of superior post-purchase experiences boils down to the quality of two things — communication and visibility. 

When combined, they form a formidable force for establishing customer trust and loyalty. Here are some key features that every D2C brand needs in their bandanna to get their board on the visibility wave.

Tracking Page 

A personalised tracking page is a must for every D2C brand. It is such a simple offering, but it does so much to elevate the brand’s positioning in the eyes of the shopper. Consumers used to be fine with going to a courier page to check the status of their airwaybill number. This unnecessary rigmarole can be safely stowed away thanks to the spectacular range of shipping software currently available.

The trick is to make the tracking page clean, detailed, and tasteful and design it per the brand’s theme and style. Kushal’s, Plum Goodness, Wow Science, and The House of Rare — all offer a clean tracking page in line with their branding, ensuring customers never need to look elsewhere for information.

Real-Time Alerts

When the phone pings saying the package is out for delivery, it better be! More often than not, shoppers receive their packages days after receiving this message that’s ripe with false promises. Should they stay home? Should they head out? Should they give a heads-up to their partner, neighbour, or security person? 

Real-time alerts via SMS, IVRS, WhatsApp, or Email should suffer no lag, nor should they jump the gun. It’s time to chat with the best-in-biz service providers to ensure you don’t pitch your customer into a fit of anxiety. Decathlon has perfected the art of providing real-time status updates.

Holistic Brand Experience

How many times have shoppers become wildly disoriented seeing the abbreviated name of a courier company in their SMS list? Especially considering most shoppers shop for multiple products from various online brands at a time. White-labelling is a genuine no-brainer.

When it comes to visibility, it’s time to stop hiding behind third-party doors and display your brand name loud and proud in all forms of communication. When I purchased a watch from Fire-Boltt, I received accurate tracking information from a white-labelled WhatsApp brand account.

Automated Resolutions

If there is one thing a shopper despises more than being confronted with a strange name, being told their order is ready for delivery when it isn’t, and having to visit a courier page to track their purchase, it is this — Non-Delivery. It could happen for multiple reasons, none of which is the customer’s problem.

Set up an automated resolution flow to instantaneously resolve non-delivery reports. Reach out to customers with an automated communication flow to sort out any issues ranging from ‘customer unreachable’ to ‘incomplete address’, and ensure that shoppers get their goods on their doorstep right on time. Kapiva and Plix Life recently sorted out their NDR issues with a well-structured communication flow and successfully brought down their RTOs.

Conclusion

It’s time this best practice of offering visibility became standard practice. By providing transparency in delivery, you can expect to see an immediate reduction in customer churn and a spike in brand trust and loyalty. And these are good armaments for any D2C brand that desires to become a household name.

The post How D2C Brands Can Master The Art Of Visibility appeared first on Inc42 Media.

The Startup20 initiative has recently gained traction as India assumes the presidency of the G20 nations, a group comprised of 19 countries and the European Union, representing both the Global South and the Global North. Member countries are actively working on formulating and modifying their own national startup policies to capitalise on emerging global startup opportunities in the post-pandemic scenario. 

It is worth noting that no common definition of a startup exists across the member countries, and efforts are being made to develop one that includes parameters such as size, revenue, and innovation, among others. Currently, the global startup economy is worth nearly $3 Tn, accounting for a sizable portion of the world’s total economy, which is worth $90 Tn.  

The expansion of the startup ecosystem is producing mixed results, highlighting the critical need for capital, technology, resources, capacity building, and streamlined global supply chains to address the various challenges confronting the G20 countries.  As part of Startup20, ongoing discussions are underway to establish a common policy framework or communiqué for governing startups across member countries with a $1 Tn commitment.  

Walking On Thin Ice

During 2022, global startup funding fell by about 30%. This decrease may or may not be related to the pandemic’s aftermath, which may have resulted in increased funding for startups by various nations. 

The software and data industry captured the largest share of startups (31.95%), followed by the healthcare sector (12.83%) and the fintech sector (10.43%). When it comes to unicorns, there has been a slowdown of approximately 8.49% compared to the previous year. More than half of the world’s unicorns are at risk of losing their status. Unicorns primarily operate in the software, data, and fintech sectors at the global level. 

Considering these trends, it becomes crucial to seek solutions to support the global startup ecosystem, and the emerging Startup20 initiative can potentially contribute as one of them. 

A Shot In The Dark

Each member country has its own policy initiatives to foster the growth of startups, including startup visas, venture capital investments, and technological advancements, among others. 

While every country is actively developing its startup ecosystem, countries such as Russia, Turkey, South Africa, Saudi Arabia, and Brazil are still in the process of expanding their policy frameworks in order for their startups to have a greater global impact. Other member countries like Argentina, Canada, and Germany are on the verge of accelerating their startup growth but face the challenge of identifying additional financial opportunities to sustain startups amidst global geo-political turmoil. 

The representation of the G20 member countries in regard to the sector-specific priorities indicates that China, Argentina, Russia, and South Africa have a strong focus on promoting startups in the edtech industry, while countries like the UK and Brazil prioritise the fintech sector. Interestingly, Australia, Germany, Italy, and the European Union prioritise the growth of the energy and environmental sectors. Japan, South Korea, and to some extent, Australia, are notable for their emphasis on digital and hardware growth through their policy landscapes. Mexico, the USA, and Italy place a greater focus on the ecommerce and retail sectors. 

Based on these observations, it is evident that the major focus areas for startup growth among the G20 countries revolve around certain priority themes, which can serve as indicators of core strengths for each country, guiding their path to globalisation based on existing trade relations and geopolitical networks. Furthermore, it is crucial to establish effective and unique channels for the cross-border scaling of startups, especially among the G20 member countries, while establishing special trade buffers.

Sweet Spot

When suggesting a roadmap for the startup ecosystem connecting the G20 and other global corridors, it is important to recognise the connection between startups, the economy, and ultimately the achievement of the UN’s Sustainable Development Goals (SDGs). 

There is empirical evidence that supports this connection. With this in mind, it is suggested that global sustainable priorities be aligned with economic development, thereby fostering the growth of the startup ecosystem. Each country can have its own local customisation while working towards the SDGs. 

For instance, the Indian city of Bhopal has emerged as an example of solving the challenge of SDG achievement through the implementation of the Voluntary Local Review (VLR) approach. This is just one example that can be extended to other regions in their pursuit of achieving the SDGs.

Secondly, connecting startups with the SDGs may require a common framework where G20 member countries can collaborate by sharing policy insights and establishing specific grants, dedicated green budgets, awards, and recognition standings. The development of carbon trading can play a significant role in this context, allowing donors to allocate their carbon credits within this forum, thereby promoting climate-smart developments. 

In addition to facilitating financial transactions, this common platform should also emphasise the development of a knowledge management platform to foster the evolution of good startup practices. This approach would establish a common benchmark for evaluating the startup ecosystem across countries and link it with the SDGs.

Thirdly, the suggestions put forth by the International Monetary Fund (IMF) regarding the adoption of the Organisation for Economic Cooperation and Development (OECD) framework for regulating labour and product markets across borders should also be taken into consideration for G20 members. 

On the labour front, several countries from the Asian and European continents have positively emphasised reducing costs, leading to improved employment prospects. Notably, G20 economies such as Australia, Canada, Indonesia, Italy, Korea, Mexico, Russia, and South Africa have formulated plans for product market reforms that align with the OECD guidelines.

In addition to fostering the growth of unicorns and globally recognised startups, there should also be a focus on facilitating cross-border trade reforms, particularly within the G20 framework. This would enable member countries to benefit from cross-border trade advantages while addressing bureaucratic barriers. 

Moreover, this initiative should extend beyond the current presidency of India and continue through Brazil and South Africa, at least to reflect later on its impact evaluation, providing further impetus and achieving sustainable outcomes within the context of the present global narrative.

The post How Startup20 Is Uniting G20 Nations For Global Startup Opportunities appeared first on Inc42 Media.

Prior to the 2000 dot-com bubble, companies went public in about five years; today, companies take 8 to 12 years, depending on region and global or regional economic outlook. That is quite a shift. 

One must also note that along with the time shift, there has been an increase in the valuations of companies when they go public (IPO). The median valuation has increased, especially in the technological segments where we see the 1-billion-dollar mark being crossed often. 

The Big Shift?

Let’s look at it from a founder’s perspective – the founder can raise private capital even to the tune of a billion dollars, and while this is not easy money, it does not come with the rigour of an IPO process. So, the founders are in no hurry to ring the bell on the stock exchange. 

Added to this is the fact that when you are privately held, you are answerable to a set of people who are aligned with the broad goal that the company has to grow and give returns. While in the case where the company goes public; the scrutiny is much wider – financial numbers, the right team, and the analysts. The emphasis shifts abruptly from managing growth to ensuring your earnings per share are in line with Wall/Dalaal Street.

Also, any public listing will open the books for all (including competitors) to read into the secret sauce — where is your spending for that phenomenal growth? The other side of going public is the macroeconomic factors that can directly impact your share price, which is a new space for startup founders to deal with. Given the heightened merger and acquisition activity, many startups are being absorbed by larger companies without reaching their dream of going public. 

But the advantages of going public are manifold, one of which is access to a permanent pool of capital without having to keep pitching your growth story to investors in coffee shops. Most important is the ability to provide liquidity to investors, employees and the founders themselves. Furthermore, the image of a public company is different – stable, regulated, and trusted. Going public also improves the overall M&A game for companies. For any successful startup, the ultimate litmus test is going public. 

So, with the newfound appetite for private financing to write billion-dollar checks and other factors weighing in, the average time for a startup to go public has increased by 4-6 years in the last two decades. 

Valuations Under The Scanner

Another intriguing aspect contributing to this delay is that the investors (or the bankers) in the public markets have a different lens for arriving at the value of a company compared to the venture capitalists. 

Many startups that have gone public in the last five years have had to list at a valuation well below their previous private valuation. Now, if I were the VC who wrote a large check in the last valuation, I would not like the IPO to be listed below that number! 

This difference between public and private valuations, along with the global headwinds during various economic cycles have not only delayed IPOs for startups but also made such a move towards public listing even more demanding. Now, you have multiple stakeholders with differing agendas (remember, the early-stage investors are already impatient), making the decision-making complex. 

The Middle Path

All this has led to the following outcomes and thoughts on how we can be better off:

• Private money enjoying the growth: Because of these delays, the venture funds that invested in these startups (especially later) can ride the wave longer and reap great returns. But these hyper-growth cycles get snapped suddenly before and during the listing because of valuation reductions. So public investors are missing in action because of the delayed IPOs. There are mutual funds that invest public money just before an IPO today, and we may see more of this activity as IPO sizes have increased by multiples. 
• Private vs. public valuations: One would think that the difference in valuations of privately held vs. public companies that have been in business for 8-10 years would be minimal. But, guess what, the gap is growing by the day. This calls for the late-stage funds to ensure their valuation process imbibes the rigour of public listings. 
• Ease the regulatory burden: I appreciate that the regulations of the stock exchanges are in place for a reason, but they need to evolve to meet the needs of the market. Multiple developed countries have taken steps in this direction to ensure new-age startups can get listed without spending inordinate time on the process. This might also bridge some of the gaps discussed in the two points mentioned above. 
• Better companies in the making: Another amazing aspect of a startup going public is that the thoughts of growth at all costs will be replaced with let’s look at the overall financial health of the company. This can be a positive shift for the ecosystem – scale vs unit economics is an important balance, and the market can bring that into the picture. 

Startups are fueling innovation and are an important part of the new-age economy. It is crucial that this gap between startup and IPO does not keep increasing. Otherwise, we risk creating startups that grow quickly without regard for their bottom line, while public markets miss out on the growth that innovation can fuel.

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