The transformative impact of fintech on startup funding in India

Anurag Paul

6th Jun'23
The transformative impact of fintech on startup funding in India | OpenGrowth

Since the beginning of Startup India, 92,683 businesses have been established in India, according to government records. Although many startups search for venture capitalists for capital, some use fintech lending to finance their businesses on their own.

 

These startups have created revolutionary products by using technology, developed health-oriented consumer goods, and made complex tasks easier with their discoveries.

 

Startup businesses need money to get them going and keep them going. This capital is essential for the development of new products, expanding operations into other areas, and fueling their progress towards success. For this reason, founders must constantly look for ways to finance their business.

 

Some startups do not rely on venture capitalists to fund their businesses, instead choosing to use alternative methods of financing in order to get up and running. Balaji Jagannathan, the Co-Founder, and Director of Paycorp.io, shared how fintech lending has been an immensely helpful resource for startups wanting to become self-sufficient by using technology and digital solutions in order to simplify the process of applying for loans as well as making payments on them, instead of relying on capital from venture capitalists.

 

Automatic payments have become popular as a way to make sure bills and installments are paid on time. This method will take the amount due from your account on the date that it is due, so you do not have to worry about incurring late fees.

 

The Paycorp.io cofounder discussed an advanced digital payment system, known as Single Block Multiple Debit, that operates through the Unified Payments Interface (UPI). This technology allows borrowers to secure their required payment amount upfront and then have it automatically deducted when it is due.

 

Fintech can make the process of loan repayment easier, better, and more efficient for both lenders and borrowers. This can help build improved business creditworthiness which in turn will promote growth among them, according to Sadaf Sayeed, CEO of NBFC-MFI Muthoot Microfin.

 

The Indian microfinance market is projected to experience an 11.3% CAGR between 2022 and 2028. This expansion can be largely credited to the rise in the number of entities involved in microfinance, which is crucial for removing poverty and enhancing the lifestyle of people living in economically deprived regions.

 

Praveen Khanna, the Vice President of Alliances, reported that Indian startups acquired $3 billion in the first quarter of 2023, which was a sharp decline from the $12 billion raised during the same time period in 2022. This shows that there is an urgent need to manage finances more efficiently and provide businesses with credit access.

 

The investment of money into startups can be improved with the help of technology-based financial companies, known as fintech. This form of investing has become very popular and allows cash-strapped Indian startups to gain access to credit easier than before. Khanna explained that these companies use analytics based on alternative data, which makes it faster for startups to get loans or other forms of credit compared to traditional financing methods.

 

Gaurav Rastogi, who established and oversaw Kuvera, referred to a report from the World Bank that stated India has almost 190 million people without access to standard banking services.

 

India has a surprisingly low usage of financial products and services in comparison to other countries, but at the same time is seeing an incredibly fast adoption rate for fintech. This makes it one of the top destinations worldwide for investments.

 

Stay tuned and follow us for the latest industry updates and insights.

 

OpenGrowth is constantly looking for innovative and trending start-ups in the ecosystem. If you want more information about any module of OpenGrowth Hub, let us know in the comment section below.

Anurag has been writing content for over eight years, and he is dedicated to it and cannot see himself in any other industry. As a passionate writer, he is interested in business and entrepreneurship. An accomplished technologist and financial expert, he strives to empower others through entrepreneurship, leaving his comfort zone to explore entrepreneurship. Having worked in the Financial sector for more than five years as a full-timer, he also has a keen interest in Corporate Finance ...

Comments