 "Extra caution to ensure fintechs don't function beyond rule: Peak XV MD")
Investors will have to be extra cautious to ensure fintech companies do not operate beyond the ambit of the regulatory framework, said Rajan Anandan, managing director, Peak XV Partners (formerly Sequoia Capital India).
“As investors, you would have to be extra cautious and make sure that you’re not doing something that is outside the regulations. That has always been the case with us. Some things are not regulated yet, there are regulations where the rules are reasonably clear, and then there are things that are completely regulated,” Anandan said.
Anandan was speaking at the India Digital Summit 2024.
Sections of India’s fintech ecosystem have been facing the heat amid regulatory scrutiny on Paytm Payments Bank.
The regulator said the comprehensive system audit report and subsequent compliance validation report of external auditors revealed persistent non-compliance and continued material supervisory concerns in the bank, warranting further supervisory action.
He explained that India needs to have a culture of research and development (R&D) with more deeptech innovators and founders at startups,
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“We just don't have enough research and development. We don't have enough, deeply technical founders who are starting up. As a nation, we don’t have the culture for R&D, and we need to invest a lot more into it,” he added.
With over six weeks into the calendar year 2024, Anandan said seed funding continues to be ‘very vibrant’ whereas the bar has been set high for series A funding.
“The series A market is back, but the bar is very high. But it's back to the scenes even in our portfolio. I think the growth market (series C and beyond) is still going to take some time,” he said.
Funding for Indian technology startups declined 72 per cent in 2023, making it the lowest-funded year in the past five years, Business Standard reported in December 2023.