Within India’s ever-evolving business landscape, micro, small and medium enterprises or small and medium enterprises (MSMEs/SMEs) are pivotal drivers in propelling the country’s economic growth.

With a sprawling network of more than 32 million units, the MSME sector serves as a major employer, creating jobs for around 70 million individuals and manufacturing an impressive array of over 6,000 products. The sector’s impact is notable, contributing approximately 45% to the manufacturing output and influencing about 40% of the country’s exports, both in direct and indirect capacities.

As a country that is advancing in MSME financing, there has been a growing concern of inherent security associated with the underlying business-to-business transactions. Trade credit as a tool plays a crucial role in driving these payments for a more flexible and sustainable growth.

The Canvas: How Trade Credit Is Effective In Amplifying Economic Resilience

According to a recent data, there are more than 10 million registered MSMEs and SMEs, which clearly demonstrate the sector’s liveliness. The substantial sway of trade credit becomes evident, indicating that a considerable portion of these businesses actively employ this financial strategy.

The data indisputably illustrates that a noteworthy percentage of companies opt for trade credit, adeptly handling the intricate network of B2B transactions and emphasizing its indispensable role in bolstering economic resilience.

Challenges Ahead: Dealing With Complexity

Nevertheless, behind this tale of achievement, there are obstacles that require careful consideration and well-thought-out remedies. The dynamic nature of the business environment poses challenges for the optimal utilization of trade credit by MSMEs and SMEs.

An evident obstacle is the insufficient understanding among firms on the complexities of trade financing, particularly among smaller enterprises. The lack of knowledge leads to inefficient use and missed chances for expansion.

Another obstacle is in the intricate network of regulations that control trade credit, which presents difficulties for businesses aiming to navigate efficiently. The simplification and optimization of regulatory procedures are essential to enable MSMEs and SMEs to access trade financing without excessive bureaucratic burdens.

Advocacy & Solutions: Charting The Path Ahead

When confronted with difficulties, it is crucial to advocate for and implement proactive solutions that empower firms to fully utilise the potential of trade credit.

Multiple strategic actions can cultivate an atmosphere in which MSMEs and SMEs efficiently employ trade credit to promote growth.

Let’s take a look at them:

1. Knowledge Empowerment Programs: By initiating focused awareness campaigns and training programs, the knowledge gap is narrowed, enabling enterprises to acquire the necessary insights to efficiently utilise trade credit. Partnerships among industrial associations, financial institutions, and government agencies promote the spread of knowledge.

2. Adopting Regulatory Reforms: It is of the utmost importance to encourage various regulatory reforms that would streamline the processes that are related with trade credit. In order for businesses to safely traverse the legal landscape, it is necessary for them to engage with legislatures in order to develop a regulatory environment that is favourable.

3. Embracing Technological Innovation: Technology becomes a transformative force. The digitization and automation of payment processes have several benefits, including boosting revenue, lowering reconciliation expenses, enhancing productivity and efficiency, delivering an enhanced payment experience for clients, and significantly saving time and costs. Moreover, the utilization of a centralized platform allows users to monitor cashflows with greater efficiency.

4. Collaborative Platforms and Networking: Creating platforms that unite enterprises, financial institutions, and trade credit experts promotes an atmosphere conducive to collective knowledge exchange. Networking possibilities offer significant insights and mentorship, facilitating the efficient navigation of complications related to trade finance.

5. Encouraging Financial Literacy: Programs for MSMEs and SMEs help business owners make trade finance decisions. These specialised programs cover trade credit, financing and risk management beyond general training. Practical application and theoretical understanding are emphasised to help MSMEs and SMEs develop sound financial strategies adapted to their needs. These programs improve business owners’ financial literacy, enabling them to trade more confidently. This information infusion helps MSMEs and SMEs thrive and survive in competitive business environments.

In Conclusion: Developing A Strategic Plan For Achieving Economic Stability And Adaptability

India’s MSMEs are currently facing a crucial moment in terms of their economic expansion. The strategic application of trade financing can act as a catalyst for their capacity to endure adversities and attain success. Addressing barriers head-on and advocating for solutions maximises the potential of trade credit in B2B transactions.

It entails developing a well-thought-out strategy that allows companies to thrive and have a substantial impact on the nation’s economic environment. Through the integration of cooperative initiatives, marketing efforts, and strategic planning, trade credit acts as a beacon, guiding micro, small, and medium enterprises (MSMEs) towards sustainable growth and financial resilience.

Note: The views and opinions expressed are solely those of the author and does not necessarily reflect the views held by Inc42, its creators or employees. Inc42 is not responsible for the accuracy of any of the information supplied by guest bloggers.

The post Unlocking Growth: How Tapping Trade Credit Will Enhance Financial Fluidity In B2B Operations appeared first on Inc42 Media.

In recent years, India’s startup ecosystem has undergone a remarkable transformation, securing its place as the third-largest startup hub worldwide.

This burgeoning sector not only revolutionises the country’s technological landscape but also serves as a crucial catalyst for driving employment and economic growth. 

Current State Of The Indian Startup Ecosystem

India’s startup ecosystem boasts over 1,00,000+ startups. The capital invested between 2014 and 2023 surpasses a staggering $146 Bn, signifying a robust financial foundation for innovation and growth. 

Moreover, the presence of more than 20K+ active startup investors and 112 unicorns with a combined valuation of $500 Bn+ solidifies India’s status as a global hub for entrepreneurial endeavours.

The Future of Jobs Report 2023 by the World Economic Forum anticipates positive developments in jobs and skills over the next five years. While most technologies are projected to positively impact employment, about a quarter of jobs are expected to undergo changes, driven by various factors, including the green transition.

Young Firms And Their Crucial Role In Economic Growth

The up-or-out dynamics of young firms are identified as crucial for economic growth. Experimentation with novel business concepts, inherent to startups, contributes significantly to technological advancements. 

Success results in improvements in technology, thereby promoting economic growth. However, failure is an intrinsic part of the experimentation process, and startups disproportionately contribute to this cycle.

Job Creation: Addressing Unemployment Concerns

Tech startups are emerging as powerful engines of job creation in India, directly employing over 10.34 lakh individuals in 2023. This number is expected to soar in the coming years, providing a substantial solution to the nation’s growing unemployment concerns. 

The rapid growth of tech startups generates a plethora of new employment opportunities, particularly benefiting India’s young and tech-savvy workforce. These opportunities span diverse domains, including software development, data analytics, marketing, and customer service.

Skill Development And Upskilling: Nurturing A Future-Ready Workforce

Beyond job creation, tech startups are actively contributing to the development and upskilling of India’s workforce. Engaging in training and skilling programs, startups are equipping their employees with the latest technological advancements and industry-specific knowledge.

This focus on skill development is crucial for preparing India’s workforce to meet the demands of the ever-evolving digital economy.

Innovation And Entrepreneurship: Catalysts For Economic Transformation

Tech startups are at the forefront of innovation, continually pushing the boundaries of technology and introducing disruptive solutions across various sectors. This spirit of innovation is driving economic transformation, fostering the emergence of new industries, and enhancing India’s global competitiveness.

Simultaneously, tech startups are cultivating a culture of entrepreneurship, inspiring more individuals to pursue their ventures and contribute to India’s economic growth.

Global Recognition And Foreign Investment Influx

The success of Indian tech startups is gaining global recognition, attracting significant foreign investment and fostering international partnerships. This influx of capital is fueling the growth of India’s startup ecosystem, enabling startups to expand their operations, reach new markets, and further contribute to the country’s economic development.

Challenges And Opportunities: Navigating The Path Forward

Despite the remarkable progress, the Indian tech startup ecosystem faces challenges such as funding accessibility, particularly for early-stage ventures, and the need for a supportive regulatory environment.

However, the opportunities for growth far outweigh these challenges. Government initiatives, such as the Startup India program, provide crucial support to the sector. Additionally, the increasing adoption of technology across industries is creating a fertile ground for startups to thrive.

Conclusion: Shaping India’s Economic Destiny

In conclusion, tech startups are undeniably playing a pivotal role in shaping India’s economic future. Their contributions to job creation, skill development, innovation, and attracting foreign investment are driving economic growth and transforming the country’s employment landscape.

As India continues its journey towards becoming a global economic powerhouse, the tech startup ecosystem is poised to assume an even more significant role in shaping the nation’s destiny. The collaborative efforts of entrepreneurs, supported by government initiatives, are laying the foundation for a future where innovation thrives, jobs abound, and India stands as a beacon of global technological prowess.

The post Tech Startups In India: A Driving Force For Economic Growth And Employment appeared first on Inc42 Media.

In the changing world of business-to-business (B2B) transactions it is crucial to handle credit risks to maintain stability and foster long term partnerships.

As businesses increasingly rely on credit-based transactions it becomes essential to evaluate and address the challenges that arise from credit risks.

Increased Risks: Financial Fluctuations, Economic Contractions And Market Volatility

The primary concerns are the heightened risk associated with unsecured retail lending, the strain on profit margins caused by funding costs, the growing demand for personal loans, difficulties in monitoring the purpose of funds for unsecured loans, the potential indirect exposure to banks through the NBFC route.

Certainly, managing credit risks in B2B transactions often involves considering contingencies for potential payment failures. One effective strategy is to incorporate terms related to debt or collateral in agreements, providing a layer of security in case payments do not materialize as expected. This can act as a protective measure and help mitigate the impact of non-payment, enhancing the overall risk management approach.

Additionally, there is an increase in the expenses associated with lending to individuals, as well as a quick expansion in the amount of money being distributed. This also pertains to personal loans, which are seeing much greater instances of uncollectible debts, with an anticipated loss rate of 3-5 percent.

Important Monitoring: Credit Ratings, Industry Updates, & Market Movements For Commitment Evaluation

Credit risks in B2B transactions pertain to the losses a business may encounter when their counterparties fail to fulfil their obligations. These risks are amplified by factors such as market volatility, economic downturns, and changes in the counterparty’s health. Efficiently managing credit risks do not safeguard a company’s cash flow and profitability. Also contributes to maintaining a flourishing business environment.

Micro, Small, and Medium Enterprises (MSMEs) at the forefront, which are commonly regarded as the foundation of the economy, frequently encounter significant credit risk difficulties. Due to their limited resources, they are susceptible to the domino effect resulting from delayed or defaulted payments, which puts pressure on their capacity to fulfill financial responsibilities.

Economic Consequences: The aggregate impact of credit risks in the MSME sector transcends individual enterprises, exerting influence on the overall economy. Within a networked company environment, the domino effect can decelerate economic activity, which in turn affects employment and innovation—the fundamental basis of MSMEs’ contributions to economic expansion.
Credit risk mitigation strategies: Perform comprehensive credit screens and due diligence on prospective clients. Gaining insight into the creditworthiness of business associates facilitates the process of making well-informed decisions.
Transparent Credit Terms and Policies: Create explicit credit terms and policies, encompassing specific due dates, consequences for delayed payments, and relevant interest rates.
Customer base diversification: Relying too much on a small number of clients exposes organizations to concentrated credit risks. Expanding the range of customers aids in distributing risk.
Illustrations from actual experiences: Let’s consider a micro, small, and medium enterprise (MSME) operating in the manufacturing sector. This MSME specializes in selling components to a bigger assembly unit. In the event that the assembly unit experiences payment delays as a result of financial limitations, the MSME may encounter difficulties in settling its obligations to suppliers, thereby impacting the entirety of the supply chain.

In a different situation, an MSME operating in the service sector may have difficulties if a corporate customer fails to fulfil their payment obligations, resulting in disruptions to business operations.

Approaches For Optimal Credit Risk Management

Ensuring trustworthiness in financial transactions involves a comprehensive evaluation, examining the counterparty’s credit history, financial documents, and market reputation. Continuous monitoring of counterparties’ financial health is crucial for anticipating and mitigating potential risks. Staying informed about the latest market news, changes in credit ratings, and industry events is essential to gauge a counterparty’s ability to meet commitments.

Diversifying the loan portfolio across businesses and geographical locations is a risk management strategy, considering varying sector responses to economic changes. Determining credit limits and conditions based on each counterparty’s risk profile, whether through negotiations or limiting credit for higher-risk counterparts, is part of the process. Implementing security instruments such as letters of credit, guarantees, or trade credit insurance enhances security if a counterparty can’t fulfil obligations.

Ensuring explicit agreements specify credit transaction conditions, penalties for late payments, and criteria for altering or cancelling credit provides clarity. Utilising technology and automation is key to enhancing precision and effectiveness in monitoring and evaluating credit management risks.

Credit Leadership: Crucial For Gaining Competitive Edge In A Changing Corporate Environment

Ultimately, effectively managing credit risks in business-to-business transactions is essential for the long-term expansion of MSMEs and the overall economy.

Businesses can reduce credit risks and enhance the strength and prosperity of the business ecosystem by implementing strategic credit management procedures, completing due diligence, and promoting transparent communication.

In the current dynamic corporate environment, maintaining a leading position in credit risk management is not only a need but also confers a competitive edge.

The post Dealing With Credit Risks, In B2B Transactions appeared first on Inc42 Media.

Amidst the recent buzz about RBI increasing the risk weights for unsecured loans, one simple fact is hard to ignore. It’s that lending—especially through digital channels—is growing at a rate that’s hard to keep track of. The rise of advanced analytics fuels this along with automated workflows, making it easier for customers and lenders to avail and disburse credit in almost real-time. 

A FACE-equifax report on fintech lending trends reported that Fintechs disbursed loans worth INR 92,267 Cr in the year ended March 2023, a 21% year-on-year increase. The number of loans grew by 49% year-on-year from 47.7 Mn to 71 Mn. At the heart of this tech-propelled growth is pre-underwriting backed by data analytics. 

What Is Pre-underwriting?

Pre-underwriting is the preliminary assessment of the borrower to determine an applicant’s creditworthiness. The process is generally done during user onboarding, as opposed to underwriting, where (a more thorough) assessment is done after KYC to draw the final loan terms. 

Pre-underwriting isn’t new to lenders. However, with the rise of embedded credit in various apps and the proliferation of alternate data, pre-underwriting or pre-qualification has become the differentiator between good lenders and great ones. 

How Does Pre-Underwriting Work Today?

Pre-underwriting in digital lending involves two stages:

Pre-qualification: Data-driven pre-underwriting starts with pre-qualification of potential borrowers. Lenders use readily available data from their database to reach out to potential borrowers across channels like cold calls and SMS. 

Alternatively, applicants can be pre-qualified when submitting their basic details while exploring a loan product. 

The data received at this stage contains essential information, typically furnished by the applicant. They include personal identifiers and estimates of income and obligations.

Pre-approval: A more definitive assessment of creditworthiness, the pre-approval stage sees lenders perform a more thorough check of the applicants’ financials. The process involves checking borrowers’ bank statements, determining their financial prudence using consent-driven device data, and checking their credit history through soft bureau checks. 

It’s important to note that digital pre-underwriting today takes mere seconds to minutes.   

How Has Pre-Underwriting Transformed The Lending Landscape?

Traditionally, loan applications were ridden with paperwork, making the experience time-consuming and cumbersome. But lenders today can disburse loans in minutes to days (depending on the type of credit product). And this is all thanks to advancements in data analytics and AI. 

Here’s how data analytics-based pre-underwriting has shaped the progress of India’s lending landscape:

Customer-friendly onboarding: The adoption of data analytics has made loan products largely paper-free. Moreover, the optimum use of the data furnished at each pre-underwriting stage has cut down onboarding redundancies. This has led to low-documentation onboarding and faster application processing at the back end. 

Accurate assessment: Soft bureau pulls, bank statement analysis and alternate data give lenders a 360-degree view of the borrowers’ financials, leading to more precise lending decisions. Pre-underwriting accuracy also helps lenders catch fraud from the get-go.

Faster disbursals: Although pre-underwriting involves several assessment steps at the back end, the process itself only takes minutes. This means shorter application-to-disbursal cycles. 

Precise customer segmentation: As digital pre-underwriting involves accurate data from several sources, lenders can segment their customers into precise borrower cohorts. This means applicants are offered products that best suit their financial needs, enabling better conversion. 

Efficient cross-sell: Lenders can leverage the borrower data to offer other products that may suit their needs. For example, lenders can assess borrowers’ repayment discipline on existing credit and offer pre-approved products that can step up disbursals or credit product maturity.   

The fuel behind India’s digital credit rocketship is advanced analytics. With the proliferation of smarter modelling and workflows, lenders are set to usher in a new wave of dynamic products that work for the borrower, in a tailored and seamless manner.

The post Future-Proofing Loans: The Crucial Role Of Data Analytics In India’s Lending Revolution appeared first on Inc42 Media.

When it comes to the dynamic landscape of finance, venture capital (VC) and private equity (PE) have emerged as potent tools driving innovation and growth across various industries. 

Navigating the complex terrain of these investment strategies requires not only financial acumen but also a keen understanding of the legal intricacies that can significantly impact the success of ventures. 

A clear knowledge of the essential legal considerations for savvy investors aiming to make informed and strategic choices can be really helpful as well as keep the investors safe from the risks of investment.

Let’s explore the different facets of these two types of funds—VC and PE—and find out some legal must-knows for smart investing and reducing risks:

Venture Capital Vs Private Equity Funds

Before diving into the legal landscape, it’s crucial to understand the diverse nature of VC and PE funds. 

Venture capital funds typically invest in early-stage startups with high growth potential. On the other hand, private equity funds target more mature companies, aiming to drive operational improvements and increase profitability. 

Within these broad categories, there are various specialised funds, such as seed-stage funds, growth equity funds, and buyout funds, each catering to specific investment objectives.

Process Of Investing

The investment process in VC and PE involves rigorous due diligence, negotiations, and strategic decision-making. Legal considerations begin at the outset with the drafting and negotiation of term sheets, outlining key terms and conditions. 

The due diligence phase involves a comprehensive legal examination of the target company, assessing issues such as regulatory compliance, intellectual property rights, and contractual obligations. 

Negotiating definitive agreements, including shareholder agreements and purchase agreements, is a critical legal step in finalising the investment.

Associated Risks and Rewards

While VC and PE investments offer lucrative returns, they are not without risks. Legal due diligence is essential to identify potential legal pitfalls that could impact the success of an investment. 

Regulatory compliance, contractual obligations, and intellectual property-related concerns are among the key legal risks. 

On the flip side, successful navigation of these risks can lead to substantial rewards, including capital appreciation, significant equity stakes, and active involvement in the strategic direction of the invested companies.

Smart Investing With Legal Must-Knows

To ensure smart investing in VC and PE, investors must be well-versed in the legal considerations that underpin these transactions. Here are some crucial legal must-knows: 

1. Regulatory Compliance: Understanding and navigating the regulatory landscape is paramount. Compliance with securities laws and other regulations governing investments is critical to avoid legal complications.

1. Due Diligence: Thorough legal due diligence is non-negotiable. Investors must scrutinise contracts, regulatory filings, and potential legal disputes to assess the legal health of the target company. It is paramount to assess whether the investee companies have complied with the applicable laws related to their business operations.

1. Contractual Agreements: Well-drafted and negotiated contractual agreements, including term sheets, shareholder agreements, and purchase agreements, are the bedrock of successful investments. Clarity on rights, obligations, and dispute resolution mechanisms is vital.

1. Exit Strategies: Developing and understanding exit strategies is integral to the investment process. Whether through an initial public offering (IPO) or a strategic acquisition, legal considerations play a pivotal role in successful exits.

1. Intellectual Property Protection: Safeguarding intellectual property is crucial, especially in technology-driven industries. Investors must ensure that the target company has robust IP protection measures in place.

In the fast-paced world of investments, smart investing goes beyond financial calculations. It requires a comprehensive understanding of the legal landscape that surrounds these investments. 

From regulatory compliance to meticulous due diligence and well-crafted contractual agreements, legal considerations are integral to mitigating risks and unlocking the full potential of VC and PE investments. 

For investors aiming to navigate this intricate terrain, partnering with a reputable law firm with expertise in private equity and venture capital is not just a wise choice; it’s a strategic and legal risk-mitigating imperative. 

With a solid legal foundation, investors can embark on their journey towards smart and successful investments in the ever-evolving world of finance.

The post The Investor’s Handbook: Navigating Legal Landmines In Private Equity And Venture Capital appeared first on Inc42 Media.

Digital banks are reshaping the financial service industry with a promise to make banking more accessible and customer-centric. 

They leverage cutting-edge technology to offer services such as instant account opening and immediate credit approvals, focusing on making them accessible round the clock.

Fee-Based Versus Credit-Based Revenue Models

Digital banks aim to provide banking services that are low in friction and high in transaction volume. They typically focus on generating revenue through credit-based services, fee-based income, or a blend of both. 

Utilising advanced technology, these banks deliver digital services designed for instantaneous fulfilment, such as on-the-spot account openings and rapid credit approvals, intending to make these services accessible at any given time from any location.

Credit-focused digital banks look to serve markets where access to credit is sparse, particularly due to the absence of traditional credit assessment data. To innovate in this space, banks like Biz2Credit in India have devised alternative credit models using non-traditional data sources. 

For example, Biz2Credit assesses micro-SMEs’ working capital requirements through analyses of bank statements and employs AI to develop dynamic credit assessment frameworks.

Conversely, fee-based digital banks earn revenue from high volumes of transactions, especially payment and transaction services. A prime example is Revolut, which offers its customers an FX Debit Card that provides optimal foreign exchange rates without additional fees, charging users a transaction fee only after exceeding a specified free usage limit.

Digital banks and fintech institutions that have a clear focus on target markets, client segmentation, and compelling product value propositions have been able to scale their operations and achieve profitability. Yet a significant number of these ventures have not reached their potential, failing to fulfil their promises to investors.

Among the unsuccessful are digital banks and fintech entities with specialised service offerings but limited scalability. These entities, such as the personal financial management solution Cardeo, which utilises open banking data aggregation, often face the challenge of rapid scaling, which is vital for those dependent on fee-based revenues. 

While Revolut managed to acquire a substantial customer base with its specialized product for a distinct segment, Cardeo and other fintechs tasked with personal financial management like StatusMoney and Mint could not reach the scale necessary for long-term viability, resulting in operational shutdowns due to funding and growth challenges.

Role Of A Parent Company Or Partnership

The advantage of having a robust parent or partner ecosystem cannot be overstated. Early digital banking business models underestimated the costs associated with client acquisition, which are not confined to digital onboarding but extend to marketing expenses and promotional campaigns. 

By leveraging an existing customer base or forging strategic partnerships, banks like Airtel Bank in India have effectively bypassed the hefty costs of standalone customer acquisition. This symbiosis can be seen in Unobank’s partnership with GCash in the Philippines, enabling it to offer streamlined and cost-effective services.

Adjusting To Shorter Funding Horizons

Previously, it was common for digital banks to reach profitability within a 6-7 year timeframe. Today’s investment climate is far less forgiving, with a notable shift towards expecting profitability much sooner, often within two to three years. 

This impacts banks with longer-term growth plans, leading to reduced valuations and sometimes even a dearth of subsequent investment rounds, as demonstrated by the plight of HM Bradley, which faced a down round and had to close its retail division due to funding constraints.

Heightened Competition Amongst Rate Wars And Lending Risks

The race to garner customers by offering attractive deposit rates has resulted in an intense competitive environment, squeezing credit product yields. 

Banks adventurous enough to explore new customer demographics face the added peril of credit risks, particularly if their risk assessment frameworks are untested. 

As witnessed by Yelo Bank’s credit loss debacle in India, delving into new markets requires a granular, methodical approach to piloting financial products, along the lines of Open Bank’s cautious expansion strategy.

Securing A Future Amidst Regulatory Challenges

Digital banks are also contending with an increasingly complex regulatory environment that demands rigorous compliance while navigating technological advancements. The fast pace of innovation comes with the dual challenge of ensuring customer data protection and adhering to stringent financial regulations, which vary significantly across jurisdictions. 

Entities like Monzo in the UK, which have successfully scaled, demonstrate the importance of building robust compliance frameworks as part of their growth strategies. Additionally, integrating new technologies, such as blockchain and cryptocurrencies, presents both opportunities for differentiation and the necessity for prudent risk management. 

Moving forward, digital banks that strategically embrace regulatory frameworks and lead in technological adoption are anticipated to not only survive the fierce competition but also to set new norms for the banking industry’s future. 

With these continual adjustments and a proactive stance on regulatory compliance, digital banking pioneers can lay down a resilient foundation for sustainable growth and industry leadership.

Moving Forward In A Competitive Ecosystem 

Adding to the previous insights, a forward-thinking strategy for digital banks involves calculated risks and continuous evolution. They need to not only introduce disruptive technologies and idiosyncratic financial products but also ensure that their growth is supported by a sustainable customer acquisition model and strategic partnerships. 

Moreover, the agility to respond to market conditions and investment trends, adapting promptly to investor expectations and funding landscapes, is crucial. 

Digital banks must strike a balance between managing risks, especially in providing credit and engaging in competitive deposit rate offerings, all while remaining vigilant to maintain capital health. 

Ultimately, the winners in the digital banking space will be those who maintain a delicate equilibrium between innovation, scalability, and financial resilience in the face of ever-evolving market dynamics.

The post Why Digital Banks Encounter Challenges And Failures? appeared first on Inc42 Media.

India’s economic landscape remains robust, showcasing a GDP growth hovering around 7%. The country’s allure as an investment destination has strengthened, drawing attention from global investors eager to capitalise on the nation’s economic potential.

While 2022 and a significant part of 2023 witnessed a sluggish pace in venture capital activity, recent indicators suggest a positive turn. The robust subscription rates of Initial Public Offerings (IPOs) and the buoyant stock market have injected optimism into the investment ecosystem.

In 2023, Indian venture capital saw a measured deployment of approximately $10 Bn. This slowdown, however, played a pivotal role in instilling discipline within startups, putting an end to the funding bubble that had sustained weak business models. 

The influx of capital in 2020 and 2021 may have exceeded the absorption capacity, leading to a more discerning investment environment.

Capital Crunch For Growth And Late-Stage

The year 2023 experienced a scarcity of capital for growth and late-stage funding, with only 17 rounds exceeding the $100 Mn mark. However, a silver lining emerges in the form of an emerging trend among early-stage founders. 

Those with prior experience in scaling startups are entering the arena with a focus on judicious capital utilization, setting a positive tone for the coming years.

As crossover venture capitalists retreated, domestic VCs and family offices stepped up their involvement. The most promising companies are still receiving competitive bids for their equity, signalling a shift in the dynamics of venture capital funding.

India’s Digital March

The digital transformation in India continues unabated, characterised by a widening internet user base and the rapid scaling of digital transactions. The lingering question of monetization is finding robust answers, especially in the realm of content apps. The burgeoning consuming class in India is enthusiastically embracing new-age brands, resulting in accelerated growth for many startups.

The tipping point has been reached, with well over 50% internet penetration. This milestone paves the way for indigenous models to take centre stage, led by founders seasoned in the crucible of scaled startups.

Diversification In VC Funding

In contrast to the United States, where venture capital funding in 2023 leaned heavily towards sectors like Gen AI, India’s funding landscape has been more evenly distributed across a wide set of sectors. This diversification points towards a balanced and adaptable approach to investment, fostering a more resilient ecosystem.

The Road To 2024

The lead-up to 2024 appears promising. The recent resurgence of the IPO market and the anticipation of global interest rates decreasing set the stage for a favourable investment climate. 

The retrospective view of 2023 suggests a strong vintage has been birthed, with a pragmatic take on building with capital efficiency to eventually list in India.  

The opportunity set in India whether to enable business efficiency or to cater to consumer aspirations continues to grow. 

We expect to see more and more startups building for India from India and also find footing in global markets.  To the venture capitalists, I would only say “Feel the fear and do it anyway.”

The post Venture Capital Trends In India In 2023 And The Outlook For 2024 appeared first on Inc42 Media.

“Games are a serious business”. This was the opening phrase of a 2018 article I wrote on the scale and opportunity in the gaming industry, which since then has more than doubled to a revenue of $396.13 Bn in 2023 as compared to $116 Bn back in 2017 – more than the combined movies, OTT and music industries globally. 

Traditionally the largest contributors to this growth have been the US and China. But over the last five years, India has started to emerge as a key player. With over 568 Mn gamers in FY23 and 15.4 Bn mobile game downloads in the same year, India is emerging as one of the fastest-growing mobile gaming markets in the world. 

Fueled by the country’s burgeoning digital consumption, India has rapidly established itself as a global hub for consuming world-class games. At the same time, we see an increase in monetisation as well. With a market size projected to reach $7.5 Bn by FY28, let’s take a look at some key trends driving monetization in the country.

In-App Purchases And In-Game Ad Monetisation Fuelling India’s Gaming Sector

In India today, $1.1 Bn comes from in-app purchases and ad revenue in casual and mid-core games, and this is expected to grow to $5 Bn by FY28, fueling a substantial upsurge in monetisation. 

In FY23 alone, the Indian gaming market witnessed significant growth in in-app purchases (IAPs) and advertising revenues. Leaving aside the predicted fall in IAPs due to the ban on popular titles pioneering in-game monetisation like BGMI and Free Fire, IAP revenue outside these two games grew a remarkable 37% Y-o-Y. 

This reveals growing experimentation for more diverse IPs by Indian gamers. This IAP revenue will play a key role in revenue growth for the industry with a projected CAGR of 46% CAGR till FY28, especially with the rise in monetisation in casual and mid-core games. 

Advertising revenue also continues to be an important anchor when it comes to the overall growth of the industry. With aggregate e-cpm’s in India now over $1, in-game ad revenue is projected to grow at a steady 23% CAGR to reach $1.7 Bn by FY28. 

User Evolution And Its Impact On Monetisation

In our research, we see a 25% conversion of gamers to paid users. The ARPPU (average revenue per paying user) reached $19.2 in FY23, growing nearly 10x since FY19. 

While we’ve mapped the revenue trends, there is much to talk about the evolution of these users, which has driven monetisation with it. From 2022, the average time spent on gaming has increased by 20%, to 10-12 hours per gamer per week. 

In the Lumikai Annual State of India Gaming report for FY23, in partnership with Google, we also find that there’s an increased affinity towards casual and mid-core gaming especially from non-metro cities which has contributed to the steady increase in monetization in such games. 

In a proprietary Lumikai survey of 2,300 users, 41% of gamers said they now play all kinds of games versus just casual genres, indicating a healthy diversity of play styles. The survey also revealed that 23% of the users who used to play games for free have now started spending money in games. 

UPI has been a game changer for the industry. 62% of gamers surveyed prefer UPI as a payment method, versus 7% for credit cards. The top games that gamers are spending money on include BGMI, Free Fire, Ludo King, Candy Crush, Clash of Clans, Carrom King with MPL, and Dream11 being recent additions to the Play Store. 

These games span various genres, including casual, mid-core, and real money gaming (RMG) indicating that gamers are willing to invest in an increasingly diverse range of gaming experiences. 

This combination of macro-tailwinds around gaming usage, ease of payments, growth in in-app purchases, and an increasingly diverse and engaged user base continue to drive monetisation upside across gaming in India and indicates significant headroom for growth ahead for the sector.

The post India’s Gaming Landscape: Monetisation Trends And Evolving User Dynamics appeared first on Inc42 Media.

The journey to globalise your startup brings forth an array of prospects and complexities. From regulatory landscapes to nuanced compliance requirements, the pathway to international business expansion demands a meticulous understanding of legal frameworks. 

The allure of reaching foreign markets is undeniable, yet it hinges on addressing pivotal compliance considerations adeptly. 

In this article, we will delve into understanding whether your startup is ready to step onto the global platform and what that entails. 

International Investment Regulation Compliance

Ensuring adherence to diverse investment regulations and bilateral agreements forms the cornerstone of venturing into foreign territories. Understanding the legal frameworks, bilateral and multilateral agreements, and foreign investment policies is crucial. 

For instance, exploring the nuances of regulations that promote and safeguard foreign investments, such as the Foreign Direct Investment (FDI) policies in various countries, becomes imperative. An in-depth analysis of how different governments incentivise or regulate foreign capital inflow is vital for startups eyeing international expansion. 

Recent directives, such as India’s allowance for public listings in foreign markets, spotlight the pivotal role of compliant investment structuring. The case of CapOne Research underscores the significance of leveraging alternative ecosystems for seamless growth.

Intellectual Property

Protecting intellectual property demands a nuanced comprehension of patents, trademarks, and copyrights across different jurisdictions. Startups must comprehend the intricate landscape of patents, trademarks, and copyrights, which often vary significantly between countries.

Initiatives like trademark incorporation in North America by renowned startups exemplify the strategic leverage of international recognition, as well as setting an example for pre-empting and protecting against potential IP infringement claims which can arise when entering new markets and jurisdictions. 

For example, while you may have registered your IP in India and even become a known brand name in your industry, you may find that a similar business is operating with a similar brand name in your country of choice while globalising. 

This makes IP diligence and trademark registration an early step in globalization which can save a lot of time and expense down the line.

Data Protection And Policy 

Data protection is a paramount concern in today’s interconnected world. Navigating varying data protection regulations across borders mandates a vigilant approach. 

Embracing cutting-edge technologies like blockchain and AI for payment systems necessitates stringent adherence to global privacy standards, epitomised by the EU-GDPR. 

The strides taken by Indian startups like Paytm underscore the pivotal role of data welfare in international ventures.

Human Resources And Labour Law Compliance 

Expanding into new markets necessitates a deep dive into local labour laws and cultural nuances. Crafting meticulous employment contracts and embracing anti-corruption policies are pivotal. 

Additionally, acknowledging and adapting to cultural differences in communication and working styles is pivotal for fostering a productive work environment. 

The utilisation of ‘floating employee’ arrangements – a network of consultants and independent contractors – echoes the adaptability required to align with diverse labour regulations. 

Tax Obligations 

Navigating through multifaceted tax landscapes underscores the need for astute management and engagement with legal experts. Understanding tax laws, deductions, and compliance obligations specific to foreign markets is crucial. 

Maximising tax structuring opportunities and timely compliance with varying taxation methods is imperative for sustainable global operations. These help reduce tax obligations while scaling their international operations, benefitting the startup. 

Acquisition Opportunities, Joint Ventures, And Cooperative Relationships 

Exploring collaborations or acquisitions in foreign markets can be instrumental in navigating regulatory complexities and establishing a foothold. 

Examining how strategic acquisitions within similar industries facilitate global expansion provides insights into leveraging existing market expertise and overcoming regulatory hurdles. 

The strategic acquisitions by Indian startups exemplify the strategic advantage of tapping into existing market expertise. 

Summing up 

The realm of international business expansion beckons with promise but demands meticulous planning. Each of these facets underscores the intricate legal landscape that startups must navigate when considering international business expansion. Understanding and adeptly addressing these legal considerations are pivotal for startups to thrive in global markets and mitigate potential risks.

The post Is It Time To Put Your Startup On The Global Stage? appeared first on Inc42 Media.

The Data Protection and Privacy Act 2023 (DPDP Act 2023) emerges as a crucial milestone in India’s regulatory framework in the fast-expanding world of data privacy and protection. This comprehensive law can potentially change the way Personally Identifiable Information (PII) is shared, processed, and protected. 

We go into the intricate aspects of the DPDP Act 2023 and examine its potential to bring about transformational changes in the landscape of PII information sharing in India.

Understanding The DPDP Act 2023

The DPDP Act 2023 represents a holistic approach to data protection, outlining stringent measures to ensure the privacy and security of individuals’ personal information. Envisioned as a response to the increasing digitisation of services and the surge in data-driven activities, this legislation is poised to introduce a paradigm shift in the way organisations handle and share PII.

Key Provisions Impacting PII Information Sharing

Explicit Consent Mechanism

One of the fundamental principles of the DPDP Act is the emphasis on obtaining explicit consent for the collection and processing of PII. This explicit consent mechanism places control firmly in the hands of individuals, requiring organisations to seek permission before processing or sharing any personal information with a third party.

Data Minimisation And Purpose Limitation

The DPDP Act advocates for data minimisation, urging organisations to collect only the necessary information for specific, predefined, and legitimate business purposes. This principle not only enhances the efficiency of data processing but also restricts the unnecessary collection and sharing of PII.

Right To Data Portability 

A revolutionary inclusion in the DPDP Act is the Right to Data Portability, which empowers individuals to seamlessly transfer their data between service providers. This provision aims to foster competition and innovation while allowing users greater control over their data.

Data Localisation Requirements

The DPDP Act introduces stringent measures concerning the storage and processing of sensitive personal data, necessitating certain categories of data to be exclusively processed within the country. This provision seeks to enhance data sovereignty and bolster the security of PII.

Mandatory Data Protection Impact Assessment (DPIA)

Organisations engaging in high-risk data processing activities are obligated to conduct a Data Protection Impact Assessment (DPIA) under the DPDP Act. This systematic evaluation helps identify and mitigate potential risks associated with PII information collection, processing, and sharing.

Appointment Of Data Protection Officer (DPO)

To ensure compliance with the act, organisations are mandated to appoint a Data Protection Officer (DPO). This dedicated professional is responsible for overseeing data protection activities, including PII information collection, processing, and sharing in line to collect data within the organisation, as well as engaging with any third parties.

Assessing The Impact On PII Information Sharing

The DPDP Act 2023 is poised to bring about transformative changes in the PII information sharing landscape, with several implications for organisations and individuals.

Heightened Accountability And Transparency

Organisations handling PII are now required to adopt robust data protection measures, fostering a culture of accountability and transparency. The explicit consent mechanism ensures that individuals are informed about the purpose and extent of PII sharing, promoting a transparent data-sharing ecosystem.

Empowerment Of Individuals

The act significantly empowers individuals by granting them greater control over their personal information. The explicit consent model, coupled with the Data Subject Rights, including the Right to Data Portability, allows individuals to make informed choices about how their data is shared, thereby fostering a sense of empowerment and privacy.

Streamlined And Secure Data Flows

While the act introduces restrictions on cross-border data transfers, it also encourages the adoption of mechanisms such as Standard Contractual Clauses (SCCs) and binding corporate rules. This ensures that international PII information sharing is conducted securely and in compliance with the prescribed standards.

Innovative Data Processing Practices

The DPDP Act’s data minimisation and purpose limitation principles encourage organisations to adopt innovative and responsible data processing practices. By restricting the collection and sharing of only necessary information for predefined purposes, organisations can streamline their operations and build trust with users.

Enhanced Data Security Measures

Mandatory DPIAs and the appointment of DPOs underscore the act’s commitment to enhancing data security. Organisations are now compelled to assess and fortify their data protection measures, particularly concerning PII information-sharing activities, minimising the risk of breaches and unauthorised access. This also helps organisations build a resilient framework to deal with the risks and issues arising from any data breaches.

Challenges And Considerations

While the DPDP Act 2023 presents a progressive stance on data protection, several challenges and considerations need attention:

Compliance burden: Organisations may face initial challenges in adapting to the stringent compliance requirements of the act, necessitating investments in infrastructure, training, and technology to ensure adherence.

Impact on cross-border business operations: The data localisation requirements may pose challenges for businesses with extensive cross-border operations. Striking a balance between data sovereignty and global business interests will be crucial.

Implementation of the consent mechanism: Implementing a robust explicit consent mechanism requires organisations to revamp their data collection and sharing practices. Ensuring seamless integration and user-friendly interfaces will be essential for successful implementation.

Investment for technological upgradation: Organisations may need to upgrade their technological infrastructure to accommodate the Right to Data Portability and implement secure data-sharing mechanisms, potentially incurring additional costs.

The Way Forward

To help ensure that this act achieves its intended purpose, it is necessary to establish a governance body at the country level that guides organisations and individuals as well as enforces the protection of PII across the country. 

This could be similar to the European Data Protection Board, which oversees the implementation of the General Data Protection Regulation (GDPR) and ensures that Data Protection Law Enforcement Directives are consistently applied in EU countries.

The DPDP Act 2023 stands as a monumental leap forward in India’s commitment to data privacy and protection. Its impact on PII information sharing is poised to be transformative, ushering in an era of heightened accountability, transparency, and individual empowerment. 

While challenges exist, the act’s potential to reshape the data-sharing landscape is undeniable. As organisations and individuals navigate this new path, a collective commitment and a statutory governance body for responsible and ethical data practices is required to realise the benefit of DPDP Act 2023.

The post Will DPDP Act 2023 Change The Way Personal Information Is Shared In India? appeared first on Inc42 Media.

In the rapidly changing landscape of the automotive industry, aftermarket services emerge as pioneers in adapting to consumer needs. The recent findings from the Automotive Component Manufacturers Association (ACMA), in its pioneering study on the ‘Indian automotive aftermarket,’ shed light on the sector’s significant valuation at INR 33,000 Cr for ‘on-road’ vehicles. This huge amount of data underlines the pivotal role of aftermarket services in the automotive ecosystem.

The traditional landscape of routine repairs and maintenance is undergoing a significant shift, compelled by an automotive market that is increasingly shaped by the expectations of a tech-savvy and environmentally-conscious consumer base. 

Modern consumers seek more than just a fix for their vehicles; they demand a holistic experience that aligns with their fast-paced lifestyles and a commitment to sustainability. 

As the automotive industry witnesses these changing demands, aftermarket services are adapting, embracing innovation, personalisation, and eco-friendly practices to cater to the diverse needs of today’s drivers.

Usage Of  Digital Tools For Better Services

In the fast-evolving landscape of automotive aftermarket services, the embrace of digitalisation signifies a pivotal leap in meeting consumer needs. Departing from traditional paper-based processes and extended service timelines, the industry is witnessing a significant change toward a more connected and efficient ecosystem.

Advanced technologies like IoT, AI, and blockchain are being leveraged to simplify the aftermarket service chain. From predictive maintenance to real-time diagnostics, these digital solutions empower consumers to stay ahead of potential issues and address them proactively. 

The beginning of digital technologies has introduced the days of lengthy service processes, marking a pattern that places the aftermarket industry at the front line of technological innovation.

Personalised Customer Experience

Consumer expectations have gone beyond the traditional one-size-fits-all model. The industry is in the leading position of a revolutionary shift toward personalised aftermarket services, accepting that current drivers desire more than routine fixes for their vehicles.

By utilising the abilities of data analytics and machine learning algorithms, businesses delve into the fine points of individual driving patterns, maintenance histories, and specific preferences. 

This data-driven approach enables the creation of meticulously tailored service packages, ensuring that each consumer receives a tailored experience aligned precisely with their vehicle’s requirements. 

This not only minimises downtime but also maximises satisfaction, representing the industry’s dedication to delivering a detailed, personalised, and highly effective service model.

The Rise Of Subscription Models

Amid the growing era of subscription-based services, the automotive aftermarket smoothly combines into this trend. Acknowledging the natural benefits, the industry appreciates the convenience and cost-effectiveness of subscription models. 

This innovative approach offers customers an effortless and hassle-free experience, covering routine care, necessary repairs, and even possible improvements, all at a fixed monthly cost. 

Beyond providing predictability in expenses for consumers, this subscription model nurtures long-lasting connections between service providers and customers. It reflects a strategic evolution in the industry, where the embrace of subscription-based services not only meets modern customer choices but also establishes a foundation for enduring and mutually beneficial partnerships within the automotive aftermarket.

Teaming Up For Better Results

Collaboration emerges as the linchpin for success. The industry places a premium on forging strategic partnerships with manufacturers, suppliers, and fellow service providers to cultivate a seamless and integrated ecosystem. 

Through united teamwork, businesses use each other’s strong points, resulting in a better range of services for discerning consumers. This cooperative mindset not only fosters innovation but also serves as a proactive measure, ensuring that the industry remains at the front position in meeting the ever-evolving needs of customers. 

In the fast-paced landscape of automotive aftermarket services, this collective approach not only drives each business forward but also underlines the industry’s commitment to remaining flexible and responsive to the demands of the modern automotive landscape.

In conclusion, automotive aftermarket services are witnessing a transformative evolution driven by consumer-centric innovation. From the integration of digital technologies for efficiency to customised services for your specific needs, the industry is reshaping itself. 

The rise of subscription models and collaborative partnerships further solidified its adaptability. As leaders in Innovation in meeting consumer demands, automotive aftermarket services are not just responding to change; they are proactively shaping a future defined by innovation, sustainability, and collaborative excellence.

The post Shifting Gears: The Future Of Automotive Aftermarket In A Tech-Driven Era appeared first on Inc42 Media.

In the intricate fabric of the Indian startup ecosystem, where variability in value is as unpredictable as the shifting winds, the choice between venture debt and equity financing transcends mere fiscal considerations. It delves into the realms of intrinsic value, the underlying asset that can be marketed and traded, shaping the destiny of burgeoning enterprises.

As the Indian startup landscape burgeons, witnessing the rise of innovative ventures across diverse sectors, the presence of over 110 unicorns and a projected surge to 180K+ new-age startups by 2030 underscores its vibrancy. For entrepreneurs, irrespective of their experience levels, securing ample capital is paramount, particularly during the initial operational phases. 

The influx of funds stands as a direct linchpin to the prosperity of startups, with each venture demanding a distinct funding approach based on its unique requirements.

Venture Debt Fuels Growth While Retaining Equity

In the larger context of a startup’s journey, the thread of ownership remains intact, as venture debt allows for the preservation of the founder’s elementary vision and conservation of the firm’s larger mission without any prejudice or influence.

Venture debt, an amalgamation of interest payments, harmonises with the entrepreneur’s need for capital without yielding the soul of the enterprise. The need for repayment schedules aligns with the unpredictable nature of a startup’s journey, offering profuse financial flexibility.

Yet the challenge lies in servicing the debt, a relentless campaign that demands attention even when the organisation falters. The shadow of default looms, a reminder that even the most promising firms are not immune to missteps. 

Equity Financing Offers Investor Expertise But Dilutes Ownership

With equity financing, the promise of capital injection brings forth a grandiose prospect of expansion and innovation. The equity investor, a conductor of experience and insight, adds strategic guidance to the entrepreneur’s vision. 

The shared risk in this arrangement fosters collaboration, turning the financial partnership into a shared journey. But, dilution, the byproduct of equity, is the price paid and is often the harbinger of exit pressures that may not align with the entrepreneur’s opus.

Not to mention the elaborate process of securing equity funding unfolds slowly, a testament to the intricate nature of this arrangement.

Aspects For Final Decision 

The stage of development influences the choice between debt and equity, and the founder’s risk appetite. As these businesses grow, vulnerability leaps with success, a paradoxical where with each step forward, the vulnerability diminishes and simultaneously rises. The startup ecosystem thrives on the resonance of product-market fit.

In the services business, where human capital is the primary, the solution is composed through the technological boom, merging the symphony of services with the precision of science. In the fickle startup world financing, venture debt, and equity play distinct notes. 

Debt, a teacher of financial discipline with its covenants and reporting, guides the entrepreneur through the intricate steps of fiscal responsibility. Equity, an expensive capital with high risks and returns, conducts the entrepreneur through a thrilling yet challenging process.

As the entrepreneur contemplates the composition of their financial opus, the choice between venture debt and equity should be a well-crafted blend, so that it does not barter the soul of the startup to buy into the body of the market. In this journey, financial wisdom shall guide the entrepreneur towards a symphony of success.

The post Navigating The Funding Landscape: A Comparative Analysis Of Venture Debt And Equity Financing For Indian Startups appeared first on Inc42 Media.

The ecommerce sector is ever evolving, and in 2024, expect a new wave of changing customer expectations at every touch point and creative strategies and technologies to meet these changes. 

Ecommerce businesses witnessed intensified competition in marketplaces. They had to navigate through crowded marketplaces and also struggle with an increase in ad costs on these platforms. 

The surge in customer acquisition costs added another layer of complexity, pushing businesses to reevaluate their strategies for sustainable growth. So, 2023 was more about retention and loyalty than customer acquisition. There was also a noticeable uptick in overall marketing costs for ecommerce businesses. 

Amidst all the competition, a significant shift occurred—more and more brands started adopting an omnichannel approach. This strategy has proven instrumental in boosting conversion rates, recovering abandoned carts, and garnering positive word-of-mouth from satisfied customers.

Expanding presence was not limited to digital platforms only; ecommerce brands also took bold strides in crossing borders. This allowed brands to go beyond geographical boundaries and tap into diverse consumer bases. This strategic move widened the reach of these brands and set the stage for a more interconnected and globalised ecommerce ecosystem. 

The narrative of 2023 wasn’t entirely defined by external challenges, internal transformations also left a great mark. More and more brands recognised the power inherent in data as they increasingly turned to analytics for informed decision-making. 

Descriptive and predictive analytics, which were once cutting-edge, became mainstream tools for making ecommerce decisions and creating new strategies. Businesses use the insights derived from data to optimise everything from inventory management to personalised marketing efforts. This helped ecommerce brands stay a step ahead of those not using data. 

It’s also impossible to overlook how artificial intelligence evolved drastically and started transforming ecommerce in 2023. ChatGPT and many other generative AI technologies got great acceptance in the ecommerce ecosystem. They took centre stage to improve the way customers interacted with ecommerce businesses. 

Many brands used ChatGPT to provide better customer support and a more personalised and efficient interface for addressing customer queries. Integrating generative AI into ecommerce operations brought a new era of efficiency, creativity, and customer engagement. 

Looking at how 2023 has shaped, one thing is clear — how the ecommerce ecosystem shapes up in 2024 will depend heavily on technology. Here are some trends expected to shape up and gain significant traction in 2024.

Trends That’ll Shape Ecommerce Ecosystem In 2024 

Spotlight Will Be On GenAI: AI and Machine Learning are set to play even more essential roles in ecommerce. Expect these technologies to be crucial for retailers, helping predict demand, optimise inventory, and enhance marketing campaigns through proactive use of data.

Beyond conventional applications, the spotlight will be on Generative AI, a technological trend that’s already making waves. Brands like Myntra already use this technology to allow shoppers to ask specific outfit questions and receive suggestions from across categories. 

In 2024, more brands will implement generative AI to change how customers discover products and make the shopping experience more intuitive and personalised. 

Social Media Platforms Will Act As Marketplaces: Social media platforms will become spaces for socialising while also acting as full-fledged marketplaces. Integrating shopping features into social platforms will redefine the online shopping experience, allowing users to make purchases seamlessly while scrolling through their feeds. People still buy via social media with ads, but 2024 might be the year when you won’t have to leave the app to buy. 

Live Stream Shopping To Gain Traction: Live stream shopping, where influencers and brands showcase products in real-time, will gain immense traction. The immediacy and interactivity of this format create a sense of urgency and connection, making it a powerful tool for boosting sales and engaging audiences in a way that traditional ecommerce struggles to match. 

Aldo, a Canadian retailer, teamed up with two celebrity stylists to deliver a social shopping spectacular. On the stream, the celebrities shared their favourite style tips. With this shoppable live stream, Aldo saw a 308% engagement rate and registered 17,000 pageviews on its website. 

Immersive Shopping Experience To Gain More Adoption: As technology advances, immersive shopping experiences will gain more adoption and prominence. More customers will be trying clothes on virtually or visualising furniture in the living space before making a purchase. 

While AR is not entirely new, its integration into the ecommerce space is set to reach new heights in 2024. This trend is about enhancing the customer’s understanding of the product, reducing uncertainties, and ultimately driving conversion rates. 

If executed effectively, AR can bridge the gap between the online and offline shopping experiences, creating a more engaging and informed customer journey. 

Challenges Ahead For Ecommerce Ecosystem In 2024

It’s not all rosy in 2024. Ecommerce brands will have to deal with the challenge of margin pressures. Rising costs in various aspects of operations, from advertising to supply chain logistics, will require a strategic rethinking of business models. 

Brands will have to be innovative—finding ways to enhance operational efficiency, exploring alternative revenue streams, and embracing technologies that optimise costs without compromising customer experience. 

Also, a deep understanding of customers is no longer a luxury reserved for enterprise-level businesses; it’s a basic requirement if you want to stay in ecommerce. 

In 2024, Customer Data Platforms (CDPs) will transition from being an option to a must-have for retailers and brands. 

These platforms aggregate customer data from various touchpoints, providing a unified and comprehensive view. The insights derived from CDPs empower businesses to deliver highly personalised experiences, anticipate customer needs, and build lasting relationships. 

As we step into the year, the future of ecommerce is defined by a convergence of cutting-edge technologies and evolving consumer preferences. From the seamless integration of AI to the immersive experiences of augmented reality, businesses that adapt to these transformative trends will thrive. And businesses that fail to keep up with these trends will most likely be left behind.

The post How Will The Ecommerce Ecosystem Shape Up In 2024? appeared first on Inc42 Media.

Imagine our world as a ship navigating turbulent waters. The captains? A blend of tenacious entrepreneurs and venture capitalists, both equipped with a compass of innovative climate tech solutions. As the waves of climate change grow stronger, their union becomes more crucial.

One doesn’t have to look too far back in history to see how essential innovative technology backed by capital has been in resolving our world’s challenges. The way Apple revolutionised communication, or how Jonas Salk, with the aid of funding, eradicated polio – such transformations are well documented. Today’s challenge, however, is not just of a single disease or a tech revolution but of the very planet we inhabit.

The COP27 in Sharm El Sheikh, Egypt, painted a vivid picture of this challenge. But amid the voices of urgency, there rose a beacon of hope – venture capital investment in climate tech. The marriage between venture capital and climate tech innovation has proven instrumental in shaping a sustainable future. 

Much like how the Medici family funded the Renaissance, breathing life into art and science, modern-day VC firms are now the patrons of a new, greener Renaissance.

Venture Capital And Climate Tech: Not Just Investors but Visionaries

Beyond being mere financiers, VC firms play the role of ‘sage mentors’ to fledgling startups. They are the architects of change and the discerning champions of innovation. 

For instance, picture Yoda and Luke Skywalker from “Star Wars” – with startups as the young Jedis and VC firms as the wise Yoda, guiding them in their quest to combat climate change.

A Glimpse Into The Multifaceted Impact

VC investments in climate tech are a linchpin of our sustainable future, yielding a plethora of benefits. At its core, VC funding catalyses technological innovation, pushing the boundaries of what is possible.

A case in point is Tesla. Before becoming the behemoth it is today, Tesla was on the brink of bankruptcy in 2008. Just as Tesla was getting ready to close a $100 Mn Series E in the Summer of 2008, the global economy crashed, sending the company spiralling toward bankruptcy by the end of the year. An investment round led by Elon Musk and joined by prominent VCs gave it a lifeline. Today, Tesla isn’t just a car company; it’s a torchbearer for sustainable transportation.

Climate tech is not limited to electric vehicles. As Mark Twain famously said, “Buy land; they’re not making it anymore.” However, with the recent advancements in hydroponic agriculture, we might not need as much land as we thought. 

In India, amidst concerns over volatile tomato prices, hydroponic startups such as Nutrifresh Farm Tech India Pvt Ltd, backed by venture funding, are now enabling year-round tomato cultivation, stabilising prices, and significantly reducing the carbon footprint.

Global Stakes And Local Tales

As per PwC’s State of Climate Tech 2022 report, climate tech funding in 2022 represented more than a quarter of every VC dollar invested in 2022. Concurrently, India’s streets buzzed with electric two-wheelers and three-wheelers, marking a transition to eco-friendly transport. 

Additionally, India celebrated for its culinary traditions, stands on the brink of a foodtech transformation. Merging biotech and foodtech, the aim is broader than merely meeting hunger sustainably. The fusion of biotechnology and foodtech, powered by cutting-edge technology, promises a revolution in food production and consumption.

A Surat-based startup, Zero Cow Factory, leverages precision fermentation to lead in A2 beta casein production worldwide. Pursuing global endorsement for its easily digestible protein, it targets an unprecedented production cost of $20/kg by 2025. 

With a strong sustainability ethos, ZCF aims to scale globally, championing health and eco-friendliness, with a vision to nourish 10 Bn people by 2050.

The Renaissance 2.0

The original Renaissance was an era of flourishing art and science. Today, technology has ushered in a second Renaissance, one rooted in sustainability. Aided by venture capital, climate tech startups are not just challenging the status quo but reshaping it.

In Conclusion

In the narrative of tackling climate change effectively, venture capital emerges as the unsung hero. Venture capital’s role in climate tech isn’t just about funds; it’s about faith – faith in a vision of a greener future. 

As we stand at this crossroads, it’s imperative to remember that every monumental journey in history, from man’s first steps on the moon to the digital revolution, was backed by a blend of vision and capital. 

As we write the story of our planet’s future, let’s champion the unsung heroes and recognise that our collective prosperity lies in unity, innovation, and strategic investment.

The post The New Renaissance: Venture Capital Fuels Climate Tech Innovations appeared first on Inc42 Media.

I recently had the opportunity to work with a D2C brand that was facing challenges in converting Facebook ad leads into actual sales. Despite generating a significant number of ‘Add-to-Cart’ actions, their overall conversion rate remained disappointingly low. 

Upon closer examination, it became clear that their ad optimisation efforts were primarily focused on attracting exploratory users rather than actively seeking out potential buyers.

This realisation spurred me to share this cautionary note with you, highlighting the importance of carefully considering the nuances of ad targeting and aligning optimisation goals with the actual behaviour of your target audience.

The Challenge With High-Value D2C Brands

Direct-to-consumer (D2C) brands that offer high-value products often find themselves facing a tricky situation. 

With conversion rates typically lower than desired, many opt to focus on optimising for softer conversions such as “Add-to-Cart” or “Checkout Initiated.” However, this strategy can sometimes lead to unexpected changes in funnel behaviour.

The Optimisation Paradox

Focusing on softer conversions, such as adding items to carts, can sometimes lead to a surge in that particular action. However, this doesn’t always translate into actual purchases. 

The reason behind this lies in Facebook’s algorithm, which tends to target users more likely to add items to their carts but not necessarily those who complete the purchase. 

These users, often referred to as ‘explorers,’ generally require a longer period of engagement before making a buying decision.

Understanding The Audience Behavior

This audience, while valuable, behaves differently. They are in the exploration phase, not the commitment phase. They might fill their carts, but the journey from cart to purchase is a longer and more complex one. It requires a different approach, one that nurtures and guides them through the decision-making process.

Striking The Right Balance

The art of optimisation lies in striking a delicate balance between capturing the attention of potential customers and gently steering them towards a purchase decision. This requires a more sophisticated approach that encompasses targeting, content, and follow-up strategies.

Your Role In Navigating This Challenge

As a marketer, you’re not just interested in what users do; you also want to understand why. By unravelling the motivations behind their actions, you can craft strategies that not only pique their interest but also lead to meaningful outcomes.

In conclusion, the journey from a click to a customer is not a straight line but a winding path filled with insights and opportunities. It’s about understanding the subtle art of digital persuasion, where every click, every add-to-cart, is a conversation with a potential customer. 

Our role as marketers is to be the guiding light on this path, turning curiosity into commitment, and interest into investment.

As we continue to navigate the ever-changing digital marketing landscape, let’s remember that the true measure of our success is not in the quantity of leads, but in the quality of conversions. 

The post A Guide D2C Brands’ Guide To Facebook Ad Leads Transformation appeared first on Inc42 Media.

In the rapidly evolving Indian startup ecosystem, decision-makers face a critical choice when making a capital decision. Just like any other business, startups also need to choose between equity or debt as a source of finance (or a compound of both). 

This decision profoundly impacts the company’s valuation and strategic direction. While equity financing, a prevalent method, offers substantial funds, it often leads to dilution of control. 

In contrast, venture debt has emerged as a compelling option for those seeking capital without relinquishing ownership. With approximately 50 venture debt funds actively shaping the landscape and contributing to a notable portion of the $5.4 Bn raised by Indian startups, understanding the regulatory nuances of venture debt is critical for any startup. 

This shift in financing methods prompts a vital question: What are the opportunities and challenges and how can startups navigate the regulatory environment to ensure consistent growth?

What Is Venture Debt: The Opportunities, Pros, and Cons

Venture debt, a form of debt financing for startups, offers a strategic alternative to equity funding. It allows startups to secure funding while maintaining equity control. This option is particularly appealing for companies with high growth potential but not ready for equity dilution. 

The main advantage of venture debt lies in preserving ownership and control, while the funds can accelerate growth, fund working capital, or extend a company’s runway. 

However, it also comes with risks, as it requires repayment regardless of a company’s success, posing potential cash flow challenges. Venture debt’s rising popularity in India’s vibrant startup scene underscores its growing relevance in diverse financing strategies.

Understanding The Regulatory Framework Of Venture Debt In India 

The regulatory landscape primarily consists of two regulators: RBI and SEBI along with directives of FEMA (Foreign Exchange Management Act) in case overseas funding is included. The Securities and Exchange Board of India (SEBI) Act, 1992, and SEBI (Venture Capital Fund) Regulations, 1996, dictate that companies or trusts seeking to operate as Venture Capital Funds (VCFs) must obtain certification from SEBI. 

The framework also delineates eligibility criteria and investment norms for VCFs, including the mandate that a significant portion of the funds must be invested in unlisted equity shares or equity-linked instruments.

The Reserve Bank of India (RBI), through the Foreign Exchange Management Act (FEMA), details how investments by people resident outside India in debt instruments are treated, which includes venture debt. 

These regulations govern the acquisition, holding, or transfer of securities or units issued by a person resident in India and define investment vehicles, including Venture Capital Funds.

The journey of raising venture debt in India typically encompasses a streamlined process, often faster than securing venture capital. The venture debt penetration rate is 17% (and 19% by deal count) as per BCG Report. However, with simplification in the regulatory environment, this rate can only go up. 

The regulatory landscape for venture debt in India is evolving, with increasing interest from domestic investors, including family offices and founders with liquidity. This shift from a niche market to a more mainstream financial instrument indicates a maturing ecosystem and a growing recognition of venture debt’s role in the financial landscape for Indian startups.

Summing Up

Venture debt offers a strategic blend of capital access and equity preservation, resonating with the needs of the burgeoning entrepreneurial sector. 

While the regulatory framework adapts to accommodate this novel funding avenue, the challenges it poses are matched by its potential to reshape the start-up economy. 

As venture debt becomes increasingly integrated into India’s financial tapestry, it stands as a testament to innovation and adaptability in the dynamic world of startup finance.

The post Regulatory Landscape For Venture Debt In India: Opportunities And Challenges appeared first on Inc42 Media.

For years, India’s ecommerce landscape was dominated by a few major players, with most of the action concentrated in the country’s metros. However, in recent years, a new wave of ecommerce startups has emerged from Middle India, challenging the status quo and reshaping the online retail landscape. 

These startups are catering to the growing demand for ecommerce in Middle India, where internet penetration is increasing rapidly, and consumers are becoming increasingly comfortable with online shopping. 

They are also benefiting from several factors, including the rise of smartphones, the increasing availability of affordable data plans, and the growing popularity of cash-on-delivery (COD) payments.

As a result of these factors, Middle India is now one of the fastest-growing ecommerce markets in the world. In fact, according to a recent report by Morgan Stanley, ecommerce in Middle India is expected to grow at a CAGR of 50% over the next five years, reaching $150 Bn by 2025.

Successful Investments In Middle India’s Ecommerce

Several successful investments have been made in Middle India’s ecommerce space in recent years. These investments have helped to fuel the growth of the market and have also provided valuable insights into the needs and wants of Middle Indian consumers.

One example of a successful investment is that of BuyEazzy, an ecommerce platform that focuses on beauty and personal care products. BuyEazzy has been growing by 100% over the last six months and is currently completing over 10,000 orders per day. 

The startup is operational in ten cities in Karnataka and Tamil Nadu: Mysuru, Hubli-Dharwad, Belagavi, Coorg, Hassan, Davangere, Tumkur, Erode, Salem and Coimbatore. It claims to have boarded over 2,50,000 first-time online shoppers while working with more than 5,000 neighbourhood stores. About 50% of BuyEazzy’s orders come from remote towns and villages tagged to these cities.

How Middle India Startups Are Reshaping Online Retail

Middle Indian ecommerce startups are reshaping online retail in several ways. They are:

Catering to the needs of Middle Indian consumers: Middle Indian consumers have different needs and wants than consumers in metros. For example, Middle Indian consumers are more price-sensitive and more likely to prefer COD payments. Middle Indian startups are catering to these needs by offering a wide range of products at competitive prices, as well as COD payment options. They understand the importance of affordability and trust in these markets.

Using technology to reach rural consumers: Middle Indian ecommerce startups are using technology to reach rural consumers, who are often underserved by traditional retail channels. For example, some startups are using mobile apps to reach rural consumers, while others are using WhatsApp to communicate with customers and process orders. This tech-savvy approach allows them to connect with even remote customers and provide a convenient shopping experience.

Building strong logistics networks: Middle Indian ecommerce startups are building strong logistics networks to ensure that they can deliver products to customers in rural areas. This is a major challenge, as rural India needs a better infrastructure network. However, some startups are solving this problem by using innovative solutions, such as using bicycles and drones to deliver products. They are thinking outside the box to overcome logistical challenges.

Challenges And Opportunities

Despite the strong growth of ecommerce in Middle India, there are still several challenges that need to be addressed:

• Low Internet penetration: Internet penetration in Middle India is still relatively low, which limits the number of people who can access e-commerce platforms. While this challenge persists, the expanding internet infrastructure promises growth opportunities in the future.
• Lack of infrastructure: The infrastructure in Middle India is poor, which makes it difficult to deliver products to customers in rural areas. This poses a significant logistical challenge for ecommerce companies operating in this region.
• Lack of awareness: Many consumers in Middle India are unaware of ecommerce or hesitant to shop online due to lack of trust and awareness. Educating and building trust among consumers remains a challenge.

However, despite these challenges, there are also several opportunities for ecommerce in Middle India:

Growing Internet penetration: Internet penetration in Middle India is expected to grow rapidly in the coming years, which will increase the number of people who can access ecommerce platforms. As more consumers gain access to the internet, the potential customer base expands.

Increasing disposable incomes: Disposable incomes in Middle India are increasing, which is leading to more demand for ecommerce. With more spending power, consumers in Middle India are increasingly looking to shop online for convenience and choice.

Rising urbanisation: Urbanisation is increasing in Middle India, which is creating more opportunities for ecommerce startups. As more people move to urban areas, the demand for online shopping is likely to rise.

In Conclusion

Middle India’s ecommerce market is booming, and it is poised for continued growth in the coming years. Middle Indian ecommerce startups are reshaping online retail by catering to the needs of Middle Indian consumers, using technology to reach rural consumers, and building strong logistics networks. 

Despite the challenges that remain, there are several opportunities for ecommerce in Middle India, and the market is expected to continue to grow rapidly. The success stories of startups like BuyEazzy, along with the investments pouring into Middle India’s ecommerce sector, paint a promising future for this emerging powerhouse in the world of online retail.

The post Middle India’s Ecommerce Revolution: A New Wave Of Startups Redefining Online Retail appeared first on Inc42 Media.

The Indian financial ecosystem has seen significant growth and digital transformation in the last decade. Traditional financial services are now accessible through robust and integrated digital channels. On the global stage, the country’s Digital Public Infrastructure (DPI) is grabbing eyeballs. Many countries are taking inspiration from India’s digital prowess to enhance their own financial ecosystem. 

NBFCs have been an important part of the BFSI industry in India. NBFC credit is around INR 18.6 Lakh Cr in retail lending as of July 2023. Digitalisation has penetrated the entire spectrum of the financial services sector and new-age NBFCs are leading this wave of tech and digital adoption. 

Harnessing the power of India’s expanding digital ecosystem, implementing AI/ML-based lending models for intelligent data-based decision-making are key advancements powering digital NBFCs, especially in the MSME credit domain. 

The customer-focused approach of a digitally enabled NBFC ensures timely credit to MSMEs and empowers borrowers with an end-to-end digital loan journey. Traditional NBFCs, with limited use of technology in their operations, are faced with challenges of customer acquisition, speedy disbursals, continued customer engagement, risk-reward decisions, etc. 

Tech and digital enhance multiple aspects of the business for the New Age NBFCs. 

Embracing Data Analytics For Credit Decisions

Traditional NBFCs are highly dependent on the customer documents available to them, credit history, and the bureau report to make judgement-based assessments.  

As the financial ecosystem gets interconnected, digital lending NBFCs have started considering a wide range of data sources, including digital financial transactions to assess creditworthiness. 

The availability of data and its intelligent use sets new-age digital lending NBFCs apart from their traditional counterparts. Digital NBFC lenders use machine learning algorithms to capture interactions between numerous explanatory variables. With data analytics, digital NBFCs are segmenting their customers into cohorts based on the risk associated with each, and offering cohort-based pricing, targeted communication, and collections efforts to manage delinquencies. 

With the granular level of analysis and valuable insights into customer risk profiles, the availability of data and the use of data analytics are enabling NBFCs to make more informed lending decisions. This results in reduced processing time and enhances overall operational efficiency.

Enhancing Customer Experience with Digital 

Traditional NBFCs rely on offline channels such as physical branches and paper-based documentation, restricting their ability to reach and expand their customer base. Loan applications are lengthy and require multiple documentation from the customer for credit assessment, thereby, increasing the overall time to take a credit decision. 

Account Aggregator ecosystem, e-KYC, e-NACH and e-signatures automate the processes to make the loan journey faster by leveraging digital mediums and offering flexible repayment models through digital payment modes. 

Digital lenders integrate various open APIs at each step of the loan journey – right from onboarding to credit underwriting, loan fulfilment and loan collection. This facilitates faster, paperless transactions, and workflow automation. 

This reduces errors, results in efficient utilisation of man-hours in other critical processes and offers an overall seamless journey at both the backend and the frontend customer-facing operations.

By removing the inherent challenges faced by a customer in the first step of the loan application process, digital NBFCs are enhancing the customer experience and customer stickiness. 

Improving Organisational Efficiency With Data 

Customer data can be used to build scorecards, which help in objective decision making and customer segmentation. This also facilitates customer value management by identifying eligible customers and offering them a loan with fast-track digital underwriting, enhancing customer experience, and reducing turnaround time. 

This also improves operational efficiency by reducing processing time. Digitization allows simplifying tedious processes such as evaluating credit risk scores and reviewing all applications with manual effort. It also allows using past data intelligently for quicker decision making.

Collections teams too are now segregating customers into early delinquency, mid-delinquency, and defaulters, and channelling their efforts accordingly. Digital loan applications, partner management portals, and customer-focused apps have made sales teams more efficient and responsive, reducing the overall loan lifecycle process.

Data is a productivity enabler for NBFCs, and data science has permeated almost every backend process, resulting in objective decision-making and assessment. Today, digital NBFCs can use key data points in a candidate’s resume to assess the candidate’s skill set and fitment in the organisation. 

With the integration of analytics tools, the HR teams can easily predict the longevity of a candidate within the organisation, resulting in a crisper selection process and a reduction in time spent by HR and hiring managers on interviewing candidates. 

Traditional NBFCs, however, are faced with the limitations of legacy infrastructure, accessibility challenges, risks associated with manual handling of data, and restrictions on capacity building, resulting from a lack of data and the systems required to nurture it. 

Unlocking New Frontiers For NBFC Lending With Data & Digital

NBFCs have embraced technology for faster loan approvals, reducing processing time from weeks to days and hours. Digital lending NBFCs, for example, offer their customers a seamless digital experience through end-to-end digital loan processing and repayment options using digital modes, unlike the predominant traditional modes of repayments. 

By harnessing the power of data, NBFCs have gained a competitive edge in identifying and assessing creditworthiness. Early warning systems are used to identify borrowers at risk of default, while predictive analytics helps in predicting which borrowers are likely to default. 

Finally, India’s expanding digital ecosystem provides the necessary impetus to India’s NBFCs as they future-proof themselves digitally while ensuring the highest levels of governance.

The post Data & Digital: Building Blocks Of India’s NBFCs Ecosystem appeared first on Inc42 Media.

As small businesses and merchants embrace the digital payment options to stay competitive in an evolving landscape, online payment aggregators and gateway providers are bracing up to facilitate convenient, simplified, and efficient payment experiences. 

But in view of increasing cyber-security frauds, a surge in demand for payment gateway infrastructure, and rising applications for establishing payment aggregator operations, industry regulators proposed stringent guidelines for PAPGs in March 2020.

While payment gateway providers are mandated to have a licence from the RBI to acquire merchants and enable digital payment acceptance solutions, payment aggregators are necessitated to meet the following criteria to acquire in-principle authorization – 

• A net worth of INR 15 Cr by March 2021
• A net worth of INR 25 Cr by March 2023
• A net worth of INR 25 Cr by the end of third financial year after obtaining licence 

The implementation of these capital requirements imposed on non-bank payment aggregators will ensure that only authentic entities with a sustainable business model operate in the Indian market. 

Besides these requirements, there are other regulatory and statutory measures that fintech startups need to comply with. Here is an overview of some of them.

Statutory Measures Fintech Firms Need To Comply With

Established as a legal entity: To become a payment aggregator, it is essential for the company to understand and comply with local regulations. This includes being established and registered as a legal entity in India, like a company or Limited Liability Partnership (LLP), in accordance with the Indian law. 

Obtaining licences: To thrive as a payment aggregator, securing approvals and required licences from the Reserve Bank of India (RBI) and other regulatory bodies is indispensable. Depending on the business model, the fintech firm may need to apply for a Payments System License or tie-up with a player that holds one.

Developing a technical infrastructure: Developing a secure, efficient, scalable, and reliable technology infrastructure is essential for a payment aggregator’s success. This involves investing in robust data security measures to ensure seamless payment transactions with capabilities to manage high volumes for merchants and third-party platforms. 

Compliance with RBI regulations: Payment aggregators must be wary of mitigating fraud risks and maintaining capital adequacy standards in the interest of both, the business, and merchants. Implementing risk management practices and adhering to regulations laid down by the RBI, Payment and Settlement Systems Act, 2007, and Payment Card Industry Data Security Standard (PCI DSS),s will help establish security, protect sensitive financial data, and preserve goodwill in the payment ecosystem.

Initiating partnerships with banks: The payment aggregator space is competitive – but establishing partnerships with banks, financial institutions, and technology providers can help to enhance services. 

Setting up adequate systems for onboarding merchants: An advanced technology infrastructure and a streamlined onboarding process for merchants can instantly differentiate a payment aggregator from its competitors. Aggregators must educate merchants with respect to the integration of their infrastructure into their applications or websites and equip them with the necessary tools like APIs, SDKs, and documentation. 

Complying with data privacy regulations: Irrespective of the country the payment aggregator is operating from, it is crucial to comply with local data privacy regulations for safeguarding user and transaction data. 

Round-the-clock transaction monitoring: As a payment aggregator, it is imperative to implement real-time transaction monitoring systems and fraud detection tools. These insights help businesses gain valuable data on customer behaviour and payment trends, and secure payment transactions.  

Marketing and business development: Growing as a payment aggregator demands curating well thought-out marketing, sales, and business development plan. By developing a strategy, players can attract new merchants, expand their customer base, and improve the potential for business growth. 

Employing a legal and compliance team: Payment aggregators must stay abreast of industry trends and regulatory changes to ensure compliance with RBI regulations and other relevant laws. For the same, it is important to conduct internal, as well as external audits periodically. 

In Conclusion

After meeting all the regulatory and technical requirements, fintech firms can officially launch their payment gateway or aggregator service in India. But given that the payment industry in India is highly regulated and the regulatory environment constantly evolves, it is crucial to stay updated on the latest guidelines and requirements to ensure ongoing compliance.

Additionally, seeking legal and financial advice from experts with experience in the payment industry is highly recommended.

The post What It Takes To Be A Payment Gateway Or Payment Aggregator? appeared first on Inc42 Media.

The rise of fintech has been a game changer, especially in the realm of finance. By carving a distinctive niche in the financial landscape, fintech companies have opened new avenues for seamless consumer lending, challenging the traditional lending models. 

With the unparalleled advantage of delivering more efficient, cost-effective and personalised financial services, fintechs are actively dominating the consumer lending area. 

While fintechs have enabled consumers from individuals to small businesses to access credit and investors to earn higher returns, recent developments in the industry have significantly impacted the growth of consumer lending. 

RBI’s decision to tighten norms for personal loans and credit cards in the form of higher capital requirements for banks and NBFCs will take a disruptive toll on fintech platforms, hindering their loan disbursal capabilities. 

Analysing The New Norms 

RBI’s directive to banks and NBFCs to increase the risk weight on unsecured personal loans to 125% from the previous 100%, whilst excluding education, vehicle, housing loans etc is hard-hitting. 

However, it is a significant move to stimulate lenders to tighten their internal surveillance mechanisms. The norm to tighten the nozzle is not a fast-forward decision but a meticulous thorough directive that aims to curb the exponential rise in unsecured lending, specifically small-ticket personal loans.

Specifically targeted towards first-time borrowers, which increases fraud and risk probability, such unsecured retail loans that do not need any collateral have grown at a CAGR of 47% from the quarter ending March 2021 to March 2023. 

Since, many NBFCs and banks have partnered with fintech lenders which has proved to be a fruitful endeavour for both parties, but in the light of recent events with the surge in risk weights for bank credit to NBFCs, the cost of funds for the latter will go up, thereby hampering fintech lender’s ability to disburse loans due to scarcity of lending capital. 

Understanding The Impact 

The most pivotal concern among digital lenders is the cost of loans which is expected to rise at a surging rate, because of the 25% increase in risk weight, higher demand on capital, and stricter standards by which NBFCs will operate. 

Despite the new stringent standards, fintechs will be benefitted, given the fixed First Loss Default Guarantee (FLDG) rate at 5% by RBI, which will continue to help fintech partners in securing digital loans.  

NBFCs offer fintechs a fixed rate of interest for unsecured retail loans, but with the banks’ accelerated rate on loans to NBFCs, the same higher cost will be passed down to consumers, further translating to an escalated cost of acquisition. 

Additionally, as fintechs rely on a blend of equity and debt financing to fund their lending activities, the rise in weightage on credit card and personal loans will increase the cost of debt financing, significantly impacting the profit margin as they will have to pay higher rates on the funds borrowed from banks and NBFCs. 

Redefined Consumer Lending Model 

Moving forward, fintech lenders and platforms must make ‘Wise Lending’ their mantra, taking proactive measures to curb unsecured lending. With the strengthening of risk control, fintechs will be unable to deliver loans to the lower credit score consumers as well as underserved segments, which would critically affect inclusive and equitable access to financial services. 

Thus, fintechs need to adopt and implement a well-balanced holistic approach that takes into account both the new norms and the effect on the underserved sectors.

There is no doubt that this is a great transformative opportunity for fintech platforms, to reshape their business model to integrate and implement new directives. By incorporating advanced risk assessment systems or a diversification approach into myriad financial services, lenders can reduce reliance on credit card and personal loan revenue. 

Given the technological advancements, fintech needs to invest in cutting-edge tech innovations embedding ML and AI algorithms that can help assess borrower risk paving the way for enhanced efficiency, low operational cost, informed decisions and improved risk management. 

Bottomline 

Given the sheer number of citizens attracted to easy credit for non-productive purposes being gigantic, RBI intervention is a critical step in the long-term lending space. 

By curbing lenders that may have followed lenient practices in loan appraisal in the past, this measure has opened up the space for fintechs to introspect and re-evaluate frivolous lending habits, making it possible to make a pronounced shift towards a more secure lending ecosystem.

The post Navigating The Impact Of Increased Bank Rates On Fintech Consumer Lending appeared first on Inc42 Media.

The blockchain technology has captivated tech enthusiasts’ interest right from its inception. Several industries, including banking, finance, supply chain, and healthcare have embraced blockchain technology.

From transforming finance to revolutionising education, blockchain has redefined the digital experience across various sectors.

With 2024 around the corner, let’s take a look into what this fascinating technology has in store for us!

Top Blockchain Trends to Watch Out for in 2024

From being an innovative technology, blockchain is now seeing greater adoption across different industries and sectors. Here are some top blockchain trends that are likely to dominate 2024:

Enterprise Blockchain Solutions

Forward-thinking businesses are streamlining their operations using enterprise blockchain solutions. These solutions significantly help them build trust and enhance security. They record each piece of data or transaction in a tamper-proof block. Thanks to this transparency, they face lower risks of fraud. Enterprise blockchain solutions are transforming sectors like supply chain management, healthcare, and finance.

In 2024, these solutions will further drive the growth and enhanced use of smart contracts. These are self-executing contracts that businesses will be using to reduce costs, simplify operational processes, and reduce the need for intermediaries. These solutions will be largely used in food safety, real estate, payment solutions, and supply chain management.

Decentralised Finance (DeFi)

Decentralised finance or DeFi holds tons of promises to revolutionise the banking system. The Total Value Locked (TVL) of DeFi was projected to cross the $100 billion mark by October 2023. The disruptive nature of decentralised finance, along with AI-backed risk management systems will take it to the mainstream. With reduced vulnerabilities and better security, it will support cross-chain integrations.

Besides, emerging protocols are likely to broaden the accessibility of DeFi. Institutional recognition and the advent of insurance protocols further strengthen this trend. Banks and investment funds will adopt DeFi extensively in 2024.

Blockchain In Education

Blockchain is all set to transform the education industry significantly in 2024. Globally, the focus has shifted to courses and workshops backed by blockchain. Besides, the technology has made online resources more accessible, which explains why institutions are heavily dependent on blockchain.

Currently, many startups are developing new services and products using the technology. With certification programs and qualifications gaining limelight, professionals have a competitive edge. Gaining hands-on training in blockchain can enhance problem-solving skills. Getting trained in blockchain technology will open the doors for professional development in 2024.

AI-Integrated Blockchain Technology

Tech enthusiasts are eagerly waiting to witness the integration of AI and blockchain, two of the most promising technologies. Algorithms driven by AI will further boost the efficiency of blockchain networks in 2024.

The integration of these technologies will enhance decision-making, while genetic algorithms will be necessary for evolving strategies. On the other hand, nuanced decisions are to be handled through fuzzy logic. 

This will significantly enhance scalability, efficiency, security, adaptability, and decentralisation. For data-driven decisions, this combination of AI and blockchain will be a game-changer.

Tokenization Of RWAs

Real World Asset (RWA) tokenization is gaining traction in India as an innovative application of blockchain technology. RWAs are exploring the use of blockchain to tokenize real-world assets, such as real estate properties.

This involves representing physical assets as digital tokens on a blockchain, allowing for fractional ownership and more accessible investment opportunities. In India, where real estate is a significant asset class, RWA-led tokenization initiatives aim to democratise investment access, enable liquidity, and reduce traditional barriers to property ownership. 

This forward-looking approach by RWAs underscores the potential for blockchain to revolutionise the real estate landscape in India, making it more inclusive and liquid.

Conclusion

As we explore these trends, 2024 is likely to be both transformational and promising for blockchain technology. An exciting trend likely to emerge in 2024 is applications based on the fusion of AI and blockchain. The rapidly rising number of startups in this space are coming up with solutions for the existing pain points, making blockchain ever more useful and secure. In the coming year, blockchain adoption is likely to pace up.

The post Top 5 Trends That Will Shape Blockchain Industry In 2024 appeared first on Inc42 Media.

Think about it: in today’s digital world, SaaS businesses are like globetrotters with endless possibilities. For Indian SaaS companies, the whole world is a playground waiting to be explored.

Now, they’re stepping up as global game-changers, ready to take on the world’s best.

Choosing The Right Markets: Precision Over Spread

Assuming that the product was conceived and its use cases were chosen with global applicability in mind, smart global expansion starts with pinpointing the right markets.

It’s about digging into the nuances of each potential market and finding where your product can shine brightest. Think of this as a treasure hunt where the prize is a market ripe for your offering.

Market Research: The First Step

Begin with comprehensive market research. Understand the local business environment, consumer behaviour, and existing competition. This groundwork is not merely academic; it’s a practical blueprint that guides your entry strategy.

Assessing Market Fit

Next, evaluate how well your product fits into the chosen market. Does it solve a local problem? Can it outshine local competitors? This fit is crucial – a misstep here could mean squandered resources and lost time.

Just keep in mind that the most sought-after market, which is the US, might not be the best stepping stone for you outside India. It could be the GCC countries, South East Asia or, Say Japan.

Choosing The Right Go-To-Market Approach

Establishing the face of your company and the go-to-market channel for overseas markets is always key.

Different SaaS ventures have had success with different approaches and you will need to think of what will work best for you.

• Feet-On-Street Approach: In this case, your first hire in any new market should be a sales leader. They’re the ones who can take your product and weave it into the local fabric. They need to be more than just good at sales; they need to be great at adaptation and understanding the local business pulse.

This approach works very well if you can find the right Sales leader and they start clicking for you. But this might not always be the case. While you might do all the diligence while hiring this leader, there are many many reasons why it will be challenging, at least in the beginning. The cost of failure is also very high if you take 2-3 quarters to notice that it isn’t working out.

• Reseller Approach: Many SaaS companies are finding success with this. There is an advantage if you can strike an arrangement of rev-share rather than retainership with the channel partner. This way it is more success-oriented and brings in accountability from the partner.Look for channel partners who have experience selling/servicing the domain of your target customer profile.

Having a good channel partner does not take away the need to have your sales team/head getting involved in closing the deals. Be ready to make multiple trips to the new geography to support your channel partner. Initially, you will have to enable them to be successful in selling your product.

• Marketing-Led Sales: This works very well when you are selling to small and medium businesses. The right kind of targeted marketing efforts bring your customers to sign up for the product and then a PLG approach converts them to paid customers and later growth within the customer base. This is not effective if the product is targeting large enterprises or is having significant efforts while onboarding the customer to the product. But the good thing is this approach can be started while still in India.

Embracing Cultural Diversity: The Key To Getting Quick Customers

Every market has its own rhythm and rules.

Adapting to these cultural nuances can make or break your global venture. What flies in India might flop in France. In the US, aggressive sales tactics might be the norm, but in Japan, it’s all about building trust and relationships.

So, if you’re to follow any mantras — follow these:

• Tailor your marketing and sales approach to each culture.
• Understand and respect local business etiquette and practices.

Localisation: Tailoring Your SaaS for the World

It’s all about making your SaaS solution feel homegrown in every market.

This goes beyond translation — make your product feel like it was built for that market from the ground up.

Customisation: From user interface to customer support, every aspect should speak the local language, metaphorically and literally.

User Experience: Ensure that the product experience aligns with local preferences and expectations.

For example, in Germany, integrating data privacy features aligns with the stringent GDPR laws, while in India, accommodating diverse languages within your platform can be a game-changer.

So, to localise effectively:

• Research local user behaviour and preferences,
• Adapt your user interface and customer support to local languages and customs,
• And ensure compliance with regional laws and regulations.

Building Robust Support Systems

As you enter new markets, robust customer support becomes your backbone. This isn’t just about being available; it’s about being accessible in the way your new customers expect.

• Multilingual Support: Offer support in local languages. This is where your product starts speaking your customer’s language, quite literally.
• Time Zone Coverage: Ensure that your support team is available when your customers need them, irrespective of time zone differences.

Pricing Strategy For Diverse Markets

In international markets, pricing can be a tightrope walk.

It’s a mix of perceived value, market demand, and local economic conditions. A one-size-fits-all approach won’t work; pricing needs to be as dynamic and varied as the markets you enter.

Develop pricing models that are flexible yet competitive. In some markets, your product might warrant a premium price, while in others, a more cost-effective approach might be necessary to gain a foothold.

Analyse how local markets perceive value and set prices that reflect that while maintaining competitiveness. Be open to adjusting your pricing models to suit different market dynamics.

Forging Partnerships And Alliances

Sometimes, the fastest way to expand globally is to join hands with those who already know the terrain. Strategic partnerships can be a game-changer.

• Local Partners: Collaborate with local businesses that complement your offerings. This could be the key to unlocking market potential.
• Global Alliances: Form alliances with global players to enhance your market reach and credibility.

Navigating Regulatory Landscapes

Different countries mean different regulations.

Navigating this regulatory labyrinth is crucial. It’s about more than compliance; it’s about understanding how these regulations affect your product and your business.

• Legal Expertise: Invest in legal expertise to navigate the complex web of international laws and regulations.
• Data Privacy: With regulations like GDPR in Europe, data privacy can’t be an afterthought. It’s central to your operations.

And, What About A Global Brand Presence? 

As you expand, your brand needs to resonate globally. This is about crafting a narrative that aligns with your global aspirations and is relatable across cultures.

• Consistent Messaging: While adapting to local markets, ensure your brand’s core message remains consistent and strong.
• Global-Local Balance: Strike the right balance between maintaining a global brand appeal and local relevance.

Expanding your Indian SaaS company globally is a mix of art, science, and a lot of ground reality checks. It’s about understanding where your product fits in the global puzzle, finding the right people to take it there, adapting to every new cultural landscape, localising your offering to perfection, and pricing it right. This is more than expansion; it’s about making your mark on the global SaaS map.

The post Indian SaaS And The Art Of Going From Local To Global appeared first on Inc42 Media.

Have you ever felt like you’re throwing everything at your Facebook ads, but they just don’t stick? I’ve been there. It’s like shooting arrows in the dark, hoping one hits the bullseye.

But here’s the good news: mastering Facebook ads for your D2C business isn’t about luck; it’s about strategy. 

Let me share some insights that turned my campaigns around.

Start With Your Best Sellers

When you’re at the starting line, it’s all about reducing variables. Your best sellers are your secret weapon. They have proven appeal, giving you a head start. If you’re starting from scratch with no sales data, focus on the product category with the highest sell-through rate. Use this as your ad’s star player, then iterate based on performance.

Messaging Over Design

It’s tempting to get caught up in design details. Pink or yellow? Bold or subtle? But here’s the thing: it’s the messaging that drives buying behaviour. What position does your product hold in the customer’s mind? Your goal is to become the go-to product for their specific needs. While design can optimise the buying experience, it’s the messaging that will drive the sale.

Capturing Attention The Right Way

Ads are your spotlight. They’re there to grab attention and lead customers to checkout. Focus on how your product fits into their life, the problems it solves, and the ‘wow’ factor it brings. But remember, attention should be rooted in value, not gimmicks. Authenticity wins the race.

The Power Of The Offer

Attracting visitors is one thing, but converting them is another. If your traffic is high but conversions are low, it’s time to revamp your offer. How can you present it more compellingly? Consider:

• Comparing with other products
• Offering discounts
• Highlighting customer reviews

These strategies can enhance perceived value and nudge visitors towards making a purchase.

Your Role In This Journey

As a marketer, your role is to guide potential customers through a journey where each step feels natural and inevitable. It’s about creating a narrative that resonates, engages, and ultimately convinces.

Let’s embrace these strategies and transform our Facebook ads from shots in the dark to targeted arrows hitting their mark. 

The post Mastering The Art Of Creating Impactful D2C Facebook Ads appeared first on Inc42 Media.

You’ve crafted the perfect ad campaign, traffic is flowing in, but the conversions? They’re just not happening. It’s a marketer’s nightmare, isn’t it? This scenario is all too common in the digital marketing world, where the focus is often heavily skewed toward creating ads and driving traffic.

The Overlooked Half of Marketing: Conversion Rate (CR)

While attracting users is a crucial part of marketing, it’s only half the battle. The real challenge, and arguably the most critical aspect, lies in converting these visitors into customers. It’s not just about bringing them to the platform; it’s about making them stay, engage, and ultimately, convert.

Key Questions for Effective Conversion

To enhance your conversion rate, consider these pivotal questions:

• Ad and Landing Page Harmony: Does your ad speak the same language as your landing page? Consistency in messaging is key to not lose the user’s interest.
• Meeting User Intent: Is your landing page addressing the user’s intent? Understanding and answering their needs can significantly boost conversions.
• User Actions: Are visitors engaging in the way you intended on your page? Analyzing user behavior can provide insights for optimization.
• Content Strategy for Different Users: How does your content cater to new versus returning users? Tailoring the experience can lead to better engagement and conversions.

The Competitive Edge Of A High-Converting Landing Page

In today’s market, a landing page or product that converts better is not just an asset; it’s a competitive advantage. It’s the difference between a potential customer and a loyal one. The focus should be as much on converting the traffic as it is on generating it.

Your Role In The Conversion Journey

As a marketer, your role is to guide the user through a seamless journey from the ad to the landing page, ensuring each step is aligned with their expectations and needs. It’s about creating a cohesive experience that not only attracts but also convinces and converts.

Let’s shift our focus and redefine marketing success not just by the number of visitors, but by the quality of conversions. Together, we can bridge the gap between traffic and conversions, turning potential into profit.

Looking forward to hearing your thoughts and strategies on conversion optimization.

The post Beyond Ads and Traffic: Learning The Art of Enhancing Conversion Rate appeared first on Inc42 Media.