Time Ripe For Innovation In Fintech Space, Says Sequoia Capital India MD

Investments in financial technology (fintech) ventures rose sharply in most major markets in 2019, led by gains in the US and the UK and emerging economies such as India and Brazil, according to Accenture analysis of data from CB Insights, a global venture finance data and analytics firm.

Fintech investments in India nearly doubled to $3.7 billion in 2019, from $1.9 billion the previous year, making India the world’s third largest fintech market. In this context, BusinessLine caught up with GV Ravishankar, Managing Director of Sequoia Capital lndia LLP, for his take on the prospects for fintech start-ups in India in FY2020-21.

What were the major inflection points in the fintech start-up space in India in FY2019-2020? What are the prospects for FY2020-21?

Several things have come together nicely over the last few years, which has generated a lot of interest in fintech.

First is the growth of the smartphone and penetration, which is widely understood — the last few years have seen accelerated adoption, thanks to data prices falling significantly post Jio launch. Second is the digital infrastructure that has gotten built thanks to the India stack, with both authentication through Aadhaar/eKYC and payments through UPI allowing for seamless delivery of financial services.

Finally, we have seen the emergence of experienced founders who bring their technology prowess to deliver better-quality financial solutions for the consumer or small enterprise in this field. The time is ripe for significant innovation to be unleashed in an industry that has so much impact on the economic activity of the country.

How many fintech start-ups has Sequoia invested in India to date?

Sequoia India has invested in more than 45 fintech companies — BankBazaar, BharatPe, Capital Float, Citrus Pay, CRED, Finova Capital, Freecharge, Funding Societies, Groww, Khatabook, KredX, MobiKwik, MoneyTap, Pine Labs, Prizm Payments, Razorpay, Rupeek, smallcase, Turtlemint and Ujjivan, to name a few.

There are a variety of fintech start-ups — from wallet firms, payment gateway players, lending firms, POS and supply chain financing firms, online tax filing and insurance tech firms. What are the most promising fintech verticals that will emerge in 2020-21 and which of these verticals is Sequoia India placing its bets on?

Given that there is so much innovation that is possible and so many real problems of scale to solve, we are excited by what we see across the spectrum and the possibilities that can can emerge from it. Some of the themes that have captured our attention are:

*The possibility of enabling profitable delivery of credit access to under-addressed parts of both personal and small enterprises. Examples like Rupeek (tech-enabled gold-backed lending), Progcap (supply chain), MoneyTap (personal lines of credit) and Drip Capital (advances to exporters) come to mind.

*Expanding insurance reach through technology-enabled distribution models like Turtlemint and potential online-first insurance plays.

*Enabling consumers to participate in savings and investments through low-cost and personalised solutions. Examples are Groww and smallcase.

*Continuing to deliver cheaper and reliable payment solutions to customers to power commerce and micro-payments.

*Re-imagining what small, business-friendly banking could look like through the use of simple software apps that allow the ‘new to smartphone’ users, familiar with apps like WhatsApp, YouTube and Facebook, to easily adopt digital banking solutions.