PayPal bets big on India’s FinTech boom
Staff Writeron 19 October, 2017 at 12:10
Financial transaction company PayPal has long been a supporter of innovation in India, having set up an incubator programme there to support local start-ups. And now, the company is evolving its partnerships with the start-ups that join the incubator, taking equity in participating firms.
The incubation facility is situated in PayPal’s Chennai office (the company’s largest location, excluding its California head office). PayPal has had a presence in Chennai since 2008, and launched the incubator in 2013. While the programme began with no particular remit, it now focuses 100% on FinTech start-ups.
“At the time of launch, the disconnect was apparent and there was a dire need of mentorship, tech infrastructure, network, and global learnings to help take FinTech start-ups to the next level of maturity,” says Sanchit Vir Gogia, head of research firm Greyhound Knowledge Group.
Digital payments have never been more popular in India; last year, the government demonetised two high-value currency notes, and this year introduced a Goods & Services Tax. According to a report by KPMG: “The sector is driven by young first generation entrepreneurs who are now competing with the largest financial institutions in an extremely tough, cost-conscious Indian market… Therefore, in India, the role of incubators, accelerators, and sponsored innovation labs is critical not just for funding, mentorship and peer connections but also for financial industry exposure and soft skills.”
While benefiting from PayPal’s expertise and network was previously enough to entice entrepreneurs, the fact that they are now expected to relinquish equity means that start-ups will probably begin to demand more from the bargain, like access to PayPal’s customers.
India is one of the key “velocity” markets identified in Ogilvy’s V12 report, which positions South Asia as the epicentre of future middle class growth on a global scale.