In the landscape of business, finance and technology, one thing remains abundantly clear. Change is not just inevitable, it may just be the only constant. The financial and business worlds seem to have undergone seismic shifts. And the humble entrepreneur emerged as a modern-day trailblazer. The road to success for any entrepreneur is seldom a smooth one. And in the world of FinTech, uncharted territories may merge with established financial systems. There are financial intricacies, regulatory mazes and the relentless pursuit of innovation, that test an entrepreneur’s mettle. But, it’s all these trials that forge true entrepreneurs into the formidable force they become. So, what does the boundless spirit of innovation and human endeavour look like?
And what’s the deal with unicorn obsession?
According to Kunal Shah, Founder at CRED, “I think the fact that we’re still talking about unicorns shows the obsession is still there and I don’t think that’s likely to go away. India seems to be a very peculiar country, where we like to make gods and then do a ‘visarjan’ of the same god. Unicorns remain mythical; the only thing that’s true is enduring businesses that make a profit year after year. Until a business makes a profit and proves it can make a profit over a very long period of time, they are going to remain a startup at best. Yet, I think one cannot ignore the change they bring into our lives. A lot of these startups tend to be loss-making. If a bridge is being built, the first decade or so would just look like losses, because the CapEx is being built to construct it. A lot of startups invest a lot of capital in building distribution”.
What about the funding winter?
Shah remarks, “With the funding winter or summer, the good news is that the world’s money has not disappeared. The money in the world keeps growing and what remains an attractive asset keeps changing based on the sentiments of that time. In a market where the interest rate was zero, it made sense to take a lot more risky bets to make money with your wealth. But, now, with interest rates up and assets giving you stable returns, you may not want to take risky bets. Having said that, if the unicorns have managed to cross a certain revenue threshold, they become attractive investments. Very few unicorns breach the 100 million revenue threshold, an even smaller number is 300 million. So, I think capital will always come to high-quality companies. The betting mindset on early-stage companies is not going away. VCs have a lot of capital to be invested”.
“But, the good news is that every disruptor of the unicorn is already born. And that tells you the speed of change we’re going through. AI is just a glimpse of what we’re going to see in years to come and if businesses are not evolving very fast, they all have a risk of not being around… I think the most overrated idea in the startup ecosystem is deciding the fate of an enterprise based on what they do today. The most underrated is the quality of teams that people have, because good companies can completely shapeshift and transform into a completely different entity”, opines Shah.
According to Cyril Shroff, Managing Partner – Cyril Amarchand Mangaldas, “I think the most dominant conversation today is AI. In terms of the conversation today, it’s overrated in the short term, but we’re underrating the impact of it in the long term. I think the change is going to be profound. I think the good news is that I feel that given India’s tech talent, India is going to be a very important part of the global emerging conversation on technology and AI”.
And what about the Indian landscape?
Shah opines, “We’ve scored extraordinary marks on marketing the country. What needs to follow is substance. For our per-capita income to grow, we cannot have less than 10% of female participation in the labour force. Imagining a $5000 per capita nation with just one gender participating in the labour force and one gender declining from the labour force is not going to help. I think some systemic intervention would need to be done for that to change… Plus, building infrastructure in India is going to be a challenge… A lot of people who have some wealth are migrating… I think we need to retain the wealthy of the country by providing the infrastructure… We, also, have to build trust in institutions… What I’ve heard from investors is that they’re worried about investing, because they’re wondering whether there would be stability to operate businesses”.
“There’s no freedom to fail. I think to build an entrepreneurial culture or a Silicon Valley-esque mindset, there needs to be a freedom to fail without there being any kind of malfeasance being associated. Otherwise, you fail and everybody’s jumping all over you. I think the trust between the State and the entrepreneurial class is a critical component of building India”, quips Shroff.
And could AI displace the workforce? Could anything be done about that?
“When it comes to the notion of whether 90% of jobs would be displaced, one would have to go to the nuance of what’s going on… Most people stop learning after they have graduated, they thought that learning was only until they graduated and then, they’re done with it. But, in the world we’re living in right now, you cannot afford to not be constantly learning and connecting the dots. A lot of people say they’re not very good with technology; anyone who says that is definitely going to lose their job. Someone who’s good at tech would be significantly better and I think many jobs will be lost in large cohorts”, states Shah.
Watch the entire interaction here: