Government figures show that from the inception of the Startup India program, the Department for Promotion of Industry and Internal Trade (DPIIT) has formally recognized 92,683 organizations as startups as of February 28, 2023.
These firms have been crucial in presenting cutting-edge items that make use of technology, creating FMCG (Fast Moving Consumer Goods) offers that are health-focused, and undertaking well-researched inventions to streamline daily activities.
Startups must invest their first capital, just like any company, and further funds are usually needed to keep up growing momentum or expand operations to fresh, more remote places. These firms’ founders frequently search for innovative ways to obtain capital since they depend on it to grow rapidly.
While many now favor venture capitalists as a source of investment, some still bootstrap their businesses using traditional forms of financing.
Fintech lending, which uses technology and digital solutions to streamline the loan application and repayment process, has grown to be an important resource for startups looking to bootstrap their companies rather than seeking funding from venture capitalists, according to Balaji Jagannathan, Co-Founder & Director at Paycorp.io.
In the meanwhile, recurring auto-debit systems have become the best way to guarantee on-time payments. These methods assist prevent late fee costs by automatically deducting the installment payment on the due date.
The founders of Paycorp.io went on to discuss Single Block Multiple Debit, another cutting-edge digital payment method that is accessible through the Unified Payments Interface (UPI) and enables borrowers to set aside the appropriate payment amount to be taken out on the due date.
According to Sadaf Sayeed, CEO of NBFC-MFI Muthoot Microfin, fintech may improve the loan repayment experience for both lenders and borrowers, creating favorable company creditworthiness and supporting their growth.
The Indian microfinance industry is expected to grow at a compound annual growth rate (CAGR) of 11.3% over the course of the forecast period (2022-2028). Sayeed continued, “This significant expansion is mostly related to the rise of microfinance organizations, which are crucial in reducing poverty and enhancing the standard of living for poor populations in developing countries.
Indian startups raised $3 billion in Q1 2023, down 75% from the $12 billion raised in Q1 2022, according to Praveen Khanna, Vice President of Alliances, demonstrating the need for greater cash flow and access to loans.
This startup finance issue may be resolved by collaborations with fintech firms. These forward-thinking financial technology firms have had a significant impact, attracting investments at previously unheard-of levels, and they can aid credit-starved Indian entrepreneurs. The procedure for traditional funding choices has been improved by technology-based analytics used by fintech businesses, making it easier for startups to get loans and credit lines, according to Khanna.
According to the World Bank study, India is home to almost 190 million unbanked people who are excluded from traditional financial services, according to Gaurav Rastogi, founder, and CEO of Kuvera. He made this statement in reference to the World Bank research.
India is one of the most appealing locations for investments worldwide because of its relatively low penetration of financial goods and services and rapid adoption of fintech, the author continued.
