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New Delhi: The <keyword id="21833060" type="General" weightage="20" keywordseo="Fintech-ecosystem" source="keywords">Fintech ecosystem</keyword> of the country now cumulatively valued at over USD 100 billion, is at a pivotal stage of evolution, with the potential to create two to three times its current value over the next decade, as per a report by <keyword id="20058186" type="General" weightage="20" keywordseo="BCG" source="keywords" meta.keywordsubtype="org" meta.entityname="BCG" meta.hostid="269" meta.entityid="BCG">BCG</keyword> and Z47. The report highlighted that India remains one of the top three global Fintech destinations, with the ecosystem witnessing exponential growth across all levels. It added that over the past four years, the number of <keyword id="22974213" type="General" weightage="20" keywordseo="Minicorns" source="keywords">Minicorns</keyword> (valuation at least USD 1 million but less than USD 1 billion) in the country has increased by 3.5 times, while the number of <keyword id="19944451" type="General" weightage="100" keywordseo="Unicorns" source="keywords">Unicorns</keyword> and Soonicorns (startup that is growing quickly and has the potential to become a "unicorn" valued at USD 1 billion) has tripled. The report noted that in 2023, the country's Fintech market achieved a revenue size of USD 25 billion, marking a 56 per cent year-on-year growth which is a remarkable contrast to the global Fintech growth rate of just 13 per cent during the same period. However, the report also added that despite generating over USD 100 billion in value within the last decade, Indian Fintechs are still considered to be in the "middle" phase of their development, especially when compared to traditional incumbents who have created USD 600 billion+ in value over 30 to 50 years. The report mentioned that now the growth and the further expansion of the fintech ecosystem in the country is expected to come from the Tier 2 cities where majority of the Indian population resides. "With 63 per cent of the Indian population outside the top cities, huge opportunity exists to serve Bharat with next wave of penetration expected to come from Tier 2 cities" the report added. As Fintechs mature, profitability has become a central focus across the sector, with over 40 per cent of founders and CXOs (Chief Experience Officers) prioritizing unit economics alongside market expansion. Those preparing for or currently undergoing the IPO process are increasingly emphasizing governance, investment in infrastructure, and security. The report noted that in a recent survey of over 60 executives from top Fintechs, the majority cited market share expansion and growth as key priorities, especially for early and growth-stage companies. Post-IPO stage Fintechs, however, are placing greater emphasis on profitability and investments in technology, infrastructure, and security. "Mature Fintechs preparing for or in the IPO journey are emphasizing governance, investment in infrastructure, security Across survey of 60+ Executives of top Fintechs, market share expansion &amp; growth emerged as priorities for early and growth stage" added the report. Notably, the report stated that the profitability outlooks are improving year-on-year across all segments, with Neobank and InsurTech showing the most significant positive shifts since 2022. However, the industry is not without its challenges, particularly in the realm of cybersecurity. Over the past two decades, more than USD 20 billion has been lost to cyber and digital attacks.

Minicorns, Unicorns tripled in USD 100 billion Indian fintech ecosystem: BCG, Z47

Almost one in five of India’s future unicorns drop off the race as funding winter bites

<ul class="summary-list"><li>Some expat Indians are moving back home to launch companies of their own.</li><li>India's booming market size, internet growth, and post-pandemic spending is driving their decision.</li></ul>Nithin Hassan, 41, has always been fascinated with building something of his own.As a child in India, he would get in trouble for dismantling electronics around the house just so he could peek inside.In college, in true <a target="_blank" class="" href="https://www.businessinsider.com/startups-to-bet-your-career-on-in-2024-2024-2">startup</a> fashion, he started working on a small business out of his parent's garage in Bengaluru, assembling computers for friends and family.It was the early 2000s and the internet was not the trove of knowledge it is today — Hassan was relying on books to learn. Finding mentorship and the right guidance was a challenge, too.Everyone around Hassan told him that going to the <a target="_blank" class="" href="https://www.businessinsider.com/resume-tips-google-software-engineer-skills-experience-careers-software-tech-2024-3">US for a master's degree</a> was the next big opportunity. So he did.Over the next 16 years, he put his startup plans on hold and worked at some of the world's biggest companies, including Amazon, Microsoft, and Meta.<div type="image" title="Nithin Hassan" height="2450" width="3266" msid="113831978" hostid="261" sizebytes="215682"></div>But the pandemic felt like a turning point. And its aftermath made India look like a lab-designed business environment: It had just become the world's most populous country, the pandemic had created <a target="_blank" class="" href="https://economictimes.indiatimes.com/news/economy/indicators/private-consumption-continues-to-be-supported-by-pent-up-demand-finance-ministry/articleshow/99069973.cms?from=mdr">pent-up demand</a> for consumer products, and growing internet adoption made commerce more scalable, he said.So Hassan left behind about $500,000 in annual pay at Meta to move back to Bengaluru in December 2023 with his wife and two children. He has since launched two startups.Hassan is part of a group of <a target="_blank" class="" href="https://www.businessinsider.com/i-moved-back-to-india-after-living-abroad-for-decade-2024-9">expat Indians moving back</a> home to venture out on their own. As such, he's also part of a decades-long trend of reverse migration back to India.The trend began in the 1990s and picked up at the turn of the century, driven by the economic collapse in 2008, said Binod Khadria, the president of Global Research Forum on Diaspora and Transnationalism. Many of those who returned to India for work were largely working for multinational companies.Today, the impetus for the move often looks a bit different: It's driven by factors like unstable visa policies and economic recessions, which lead to uncertainty when it comes to jobs and duration of stay in these destinations.Many returnees find work in tech, but the finance, retail, and climate sectors also absorb a large number of expat Indians, Khadia said. And some of the returnees are heading back to India to start companies of their own.India is undergoing a startup explosion. The country reported over<a target="_blank" href="https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2043805"> 140,800 recognized startups</a> at the end of June — nearly 50,000 more than last year — and credited them with creating 1.6 million direct jobs.To be sure, not all of these companies will make it big — and some do still stumble, like <a target="_blank" class="" href="https://inc42.com/features/what-are-the-current-problems-being-faced-by-oyo/">Oyo </a>and <a target="_blank" class="" href="https://www.businessinsider.com/blackrock-hsbc-funds-byjus-startup-valuation-zero-edtech-india-raveendran-2024-6">Byju's</a>. But the chaos, where even established startups are trying and failing, makes India a fair playing field for new entrants, Hassan said.Business Insider spoke to six <a target="_blank" class="" href="https://www.businessinsider.com/india-vc-wants-see-5-traits-new-founders-fundraising-antler-2024-8">first-time founders </a>about why they have recently returned to India after spending several years, or even an adult life, abroad.<h2 id="0e4a3c47-ba19-4690-8b52-c6bfece1c81d">Fastest-growing economy</h2>The health of the economy and interest from investors are fueling the entrepreneurship boom.<a target="_blank" class="" href="https://www.businessinsider.com/india-billionaire-karan-adani-plans-challenge-china-dominance-seaports-2024-8">India's economic growth</a> in 2023 — 8.2% — was the fastest of all large economies worldwide. That's led to greater purchasing power, which lets companies, including startups, sell more.India's inflation rate of about 3.5% is well below its annual wage growth of 9.6%. This makes inflation less of a challenge than it is for slower-growing peers, where consumer-focused businesses have been <a target="_blank" class="" href="https://www.businessinsider.com/economy-jobs-report-sentiment-consumers-elections-recession-inflation-mortgage-rates-2024-9">hurt by high prices</a>.Investors are getting in on the action.From 2015 to 2021, the number of <a target="_blank" class="" href="https://www.businessinsider.com/sequoia-capital-vc-firm-split-china-india-2023-6">unique investors in India</a> nearly quadrupled, though the number is tracking much lower this year, per PitchBook."Other than a slight downturn in 2022 and 2023 due to global macroeconomic factors, VC funding has been consistently growing in India," said Ben Mathias, a managing partner at Vertex Ventures Southeast Asia &amp; India.Besides funding, domestic developments have encouraged founders and VCs too, Mathias said.The Indian government's Universal Payment Interface system has spurred consumers and businesses to pay online, and <a target="_blank" class="" href="https://www.bcg.com/press/2june2022-digital-payments-in-india-projected-to-reach-10-trillion-by-2026">40% of all digital payments</a> globally happen in India today, the partner said.Programs like Startup India, which provides founders benefits like tax exemption, easier compliance, and funding support, have made creating a company smoother.Devyani Parameshwar worked in the microfinance and fintech space in India in the 2010s before heading to the UK and Africa. She returned to India in 2022 to launch a financial management venture."It's changed dramatically. I remember standing in line at various ministries in Delhi trying to get meetings and then trying to get answers and it wasn't easy in the past," she said of her memories of India.Now, she can use an online platform to ask the country's central bank and banking regulator questions.It's easier than ever for foreign companies to invest in India, which means startups have a clearer exit path through acquisition — something VCs think hard about before entering new markets or writing checks.<h2 id="e5dd7b6f-a09f-4ff2-84c1-5907de96dc5e">Market ripe for the taking</h2>For Rohan Bhide, who spent most of his college and professional life <a target="_blank" class="" href="https://www.businessinsider.com/worked-in-big-tech-before-launching-my-own-startup-engineer-2024-9">preparing to launch something of his own</a>, a trip home in 2017 while he was studying in the US was a turning point.Indian telecom giant Reliance had recently launched a cheap unlimited data plan, which spiked Indian internet adoption. India was charting among the countries with the highest online transactions."That really, really drew my attention," said Bhide, who worked at Meta after graduation. "It was my dream come true — a huge market, a huge user base, and at the same time, the ability to adopt technology was incredible."Bhide returned to India in January, leaving behind about $580,000 in total compensation at ticketing platform StubHub. He and a cofounder are working on launching a consumer tech product later this year.<div type="image" title="Rohan Bhide" height="2304" width="3072" msid="113831979" hostid="261" sizebytes="218468"></div>Most Indians grew up wanting to work at a multinational company — but that's changing, Bhide said.Freelancing, running your own business, or working for a startup is much more socially acceptable now, because people see the success of other Indian startups. The country has the third-largest number of "unicorns" — companies worth $1 billion or more — with 64, per PitchBook.<h2 id="7f423804-745b-4e04-a250-839e01663f09">Boom in entrepreneurship culture</h2>A lot has changed since Hassan first wanted to launch his hardware startup in the early 2000s.Tech hot spots like Bengaluru and Gurugram have seen a boom in entrepreneurship culture in the last few years, with meet-ups, networking mixers, and even morning walks with like-minded builders.<div type="image" title="man standing in front of mountains in USA" height="2268" width="3024" msid="113831980" hostid="261" sizebytes="141132"></div>Dhruv Anand, who left Google in the US to move back to India in 2021 to launch an <a target="_blank" class="" href="https://www.businessinsider.com/ai-startups-most-promising-2024-9">AI startup</a>, said that there were lots of other founders and mentors to help guide him."If you want to figure out who's the right chartered accountant to talk to, who's the right lawyer to help you draft agreements, all of that stuff is very easy," Anand said."It's been a really, really supportive community," Bhide said. There are people "telling you about their entire lives just because they want to help you and they're hoping that you pass the favor onto the next person who moves to India and wants to start their own company."<h2 id="3c8bff36-e855-4530-9b44-bcc7f36b0825">Not everything is perfect</h2>Although these founders made the decision to return to India, that doesn't mean they no longer see the benefits of operating in the US.Ruchit Garg founded an agriculture startup in Silicon Valley in 2016, with a focus on supporting farmers around the globe. In 2019, he returned to India, where his late grandfather worked as a farmer.Garg has been building in India ever since, but he says its startup ecosystem cannot yet compete with the Valley's decades of experience."The overall ecosystem was more mature back in Silicon Valley. It's still one of the best places for entrepreneurs. India isn't there yet, although it's growing pretty drastically," he said.Despite efforts to digitalize key processes, many bureaucratic challenges persist.For most founders, after living in US cities where populations are a fraction of those in Mumbai and Bangalore, congested roads and poorer air quality are also everyday annoyances.But India provides some big perks, including affordable domestic help and the appeal of building solutions for problems they witness firsthand."It's a different joy to be able to build for problems that you feel for very personally," Parameshwar, the fintech founder, said. When she worked in Africa, she needed translators. Now, she can speak with her users herself.Bhide said the general sentiment among local founders is shifting from "Build from India" to "Build for India."For some founders, being surrounded by family and the culture they grew up in was another selling point.Niranjan Vemulkar moved back to India in 2015 and later founded a digital legacy planning platform.He said that he never fully felt at home in the US, where he lived for over a decade."For us, it was the fact that we wanted to raise a family in an environment where the children would have access to the grandparents and Indian culture," Vemulkar said. "The fact that you could come back to India, start something of your own and figure things out in an ecosystem which was potentially booming for startups, was just a cherry on the cake."Are you in India and have a story to share about the tech and entrepreneurship landscape? Please reach out at shubhangigoel@insider.com

Some techies are leaving cushy Silicon Valley jobs to launch startups at home in India

Total funding raised by <keyword id="17404081" type="General" weightage="20" keywordseo="mom-and-baby-care-startups" source="Orion">mom and baby care startups</keyword> and companies was $418 million in 2022, a plunge of 80 per cent from $2.1 billion in 2021, a report has shown. <keyword id="17404082" type="General" weightage="20" keywordseo="Mom-Baby-Care-companies" source="Orion">Mom &amp; Baby Care companies</keyword> in the US have raised $5 billion till date, while those in China and India raised $2.8 billion and $1.4 billion, respectively, according to Tracxn, a leading global SaaS-based market intelligence platform. The drop in funding is majorly due to the absence of late-stage investments. Seed-stage funding in Q1 2023 fell 21 per cent as against Q1 2022 but jumped 444 per cent from Q4 2022. Early-stage investments in the first quarter of 2023 rose 158 per cent when compared with Q4 2022, but dropped 64 per cent from Q1 2022, the report noted. The sector attracted investments worth $21 million in Q1 2023, compared with $3.86 million in Q4 2022 and $26.5 million in Q1 2022. "The space is seeing minimal or no activity in terms of unicorns and IPOs. In 2022 and 2023 till date, no new unicorn companies were created in this space," the report mentioned. No IPOs have taken place in 2023 so far, while 2022 witnessed one company and 2021 witnessed two companies going public. In terms of funding, <keyword id="17404084" type="General" weightage="20" keywordseo="Gamified-learning-platforms" source="Orion">Gamified learning platforms</keyword> for Pre-K children is the top-funded business model in the last two years in this space, followed by Online Retailers and Breast Pumps. 500 Global, Techstars and New Enterprise Associates are the most active investors in this space till date. IPV, Angel List and Techstars are the top seed-stage investors and Innoven Capital, Andreessen Horowitz and Sequoia Capital are the top early-stage investors, while Sequoia Capital, General Atlantic and IPGL are the top late-stage investors in the last two years. The pandemic accelerated the growth of the Mom &amp; Baby Care space, giving rise to innovation in this segment. The rise in the working class population with a higher disposable income, is also a supporting factor for growth in this space, said the Tracxn report. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/tata-motors-posts-net-profit-of-5408-crore-in-q4-beats-estimates/articleshow/100189259.cms">Tata Motors posts net profit of ₹5,408 crore in Q4, beats estimates</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/adani-hindenburg-row-sc-hints-at-granting-sebi-extension-on-probe-report-to-decide-on-may-15/articleshow/100185994.cms">Adani-Hindenburg row: SC hints at granting SEBI extension on probe report, to decide on May 15</a>

Funding into mom & baby care companies plunges 80%, no new unicorns

<ul><li>The September quarter of 2023 saw a total of 40 deals valued at $1.7 bn, which is a fall of 30% in value terms.</li><li>A total of 30 private equity deals were executed in the BFSI space, cumulatively valued at $566 million.</li><li>Investors show preference for credit-based financial companies with strong profitability metrics, but are still hesitant to make new investments until they gain more confidence. </li></ul> <keyword id="2023017" type="General" weightage="20" keywordseo="Unicorns" source="Orion">Unicorns</keyword> are likely to become scarcer as the funding winter is nowhere near over. The go-go days of private equity investments may be well behind us going by quarterly data on deals. With two of the biggest private equity players not committing any money to India’s startups this year, both volume and value of deals are on the downswing. The September quarter of 2023 saw a total of 40 deals valued at $1.7 bn, which is a fall of 30% in value terms. Private equity investors are looking at exits rather than investing in new businesses. However, investor interest is holding up in the banking and financial services sector. In the last quarter, a total of 30 private equity deals were executed in the sector, cumulatively valued at $566 million. Among these transactions, fintech claimed the spotlight with a 30% share in terms of deal volumes, even though sequentially value and volume showed a dip. However, banking and non-banks rule the charts with respect to values, contributing a 77% share in overall investments. According to the <keyword id="131240" type="General" weightage="80" keywordseo="grant-thornton" source="Orion">Grant Thornton</keyword> Bharat Financial Services Dealtracker Report, volumes have seen a 23% decline, from 52 deals last quarter. The slowdown is only seen in private markets as public markets continue to shine bright, with India outperforming other emerging markets in the region this year. According to the Dealtracker Report, investors are showing interest in credit-based financial companies with strong profitability indicators, but they are still hesitant to make new investments until they gain more confidence. Vivek Iyer, Partner, National Leader Financial Services Risk Advisory, Grant Thornton Bharat, said, “As we navigate a landscape marked by increasing interest rates and global inflation, the balancing act of central banks becomes crucial to maintaining economic stability. The recent pause in interest rate hikes in India’s monetary policy meetings reflects this cautious approach, especially in the face of global uncertainties and geopolitical factors. What stands out is the evolving investment trend, with private equity funds focusing on primary investments in fintech, banks, and NBFCs, particularly in areas where capital defines growth Strategy.” It is apparent that investors are now looking at profitability and sustainability of the business model. According to Grant Thornton, investors are no longer chasing growth and valuations. Instead they are looking for clear and achievable paths to profitability. Mergers and Acquisitions landscape: The <keyword id="101447" type="General" weightage="20" keywordseo="ma" source="Orion">M&amp;A</keyword> landscape witnessed 10 deals at $1.1 billion. While volumes fell by 9% from the previous quarter, values saw an upsurge of 2047%. Domestic mergers accounted for 60% of the volumes, while cross-border transactions, particularly in the inbound sector, contributed to 60% of the values in the M&amp;A activity. The top deal was Rapyd Financial Networks Ltd.’s inbound <keyword id="30334" type="General" weightage="20" keywordseo="acquisition" source="Orion">acquisition</keyword> of PayU Payments Pvt Ltd for $610 million. Private Equity (PE) landscape: According to Grant Thornton’s report, trends point to a build up of investor interest in fintech, banking, and non-banking financial company (NBFC) sectors. In the last quarter, a total of 30 deals were executed in the PE sector, cumulatively valued at $566 million. This marks a 27% and 76% decline in volumes and values respectively as compared to the previous quarter. Among these transactions, fintech claimed the spotlight with a 30% share in terms of deal volumes. However, banking and NBFC segments took center stage with respect to values, contributing a 77% share. Bain Capital’s investment of $176 million was the top deal in the PE landscape. While private equity funds have been actively involved in exit strategies across various segments, data suggests a renewed interest in fresh investments. Rather than pursuing new acquisitions, most PE funds have been channeling their capital into existing investments, bolstering their positions and financing expansion initiatives in the evolving financial landscape. Initial Public Offering Activity: Two IPOs were launched, collectively valuing a substantial $186 million, marking a change in comparison to the previous quarter when no IPOs were observed. Further, the quarter saw three QIPs amounting to an impressive $1.2 billion. Notably, the banking sector played a dominant role in the QIP market, contributing a significant 54% to the overall QIP values for the quarter. This uptick in IPO and QIP activity shows a growing investor appetite and interest in the sector’s offerings. Global investors are showing increased interest in financial services, particularly lending- focused businesses, due to elevated global interest rates. Key areas for credit growth in India include affordable housing, MSMEs, and education. The insurance sector is also poised for growth with regulatory changes and global standards gaining prominence, although substantial investments are yet to come. Fintech remains attractive to investors, but data privacy, influenced by the DPDP Act, 2023, will significantly impact the financial services sector, particularly fintech companies, prompting a re-evaluation of their operational strategies.

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Minicorns, Unicorns tripled in USD 100 billion Indian fintech ecosystem: BCG, Z47

ANI

Almost one in five of India’s future unicorns drop off the race as funding winter bites

Katya Naidu

Some techies are leaving cushy Silicon Valley jobs to launch startups at home in India

Shubhangi Goel,Charissa Cheong

Funding into mom & baby care companies plunges 80%, no new unicorns

IANS

Deal Tracker: PE investments fall by 30% to $1.7 bn in September quarter, BFSI rules the roost

Malini Bhupta

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