Why Flacon India
In India, credit penetration in most living expenditure categories is less than 5% for households. MSMEs lack access to formal credit, with more than 60% relying on costly informal sources of credit. This funding gap is expected to provide strategic opportunities for fintechs. The first half of 2022, saw conservative funding of $4.2 billion. The years 2021 and 2022 saw more than $19 billion of fintech funding and the addition of 18 fintech unicorns. Investors like myself are always hoping to land a Unicorn in their portfolio and this market has a track record. Today, I will share on why I invested in Fintech Startup Falcon based in India.
India is home to more than 7000 fintech startups, the highest number in the region and the front runner in the fintech landscape in Asia. India has a strong addressable market (TAM) similar to Nigeria in Africa . Fintech firms in both countries focus on financial inclusion, use mobile-centric solutions, collaborate with the traditional financial institutions/banks, and seem to have policy support from the Central Banks (RBI of India).
However, India’s fintech industry is more mature and diverse, macro-fundamentals, such as low financial services penetration and increasing digital adoption, along with strong consumer demand for better product propositions and customer journeys are driving fintech and digital adoption in India FS.
The Magic of Emerging Markets
My alluring growth of emerging and frontier markets drew me to India. When those markets get it right, growth can be explosive, your goal becomes to back the winners. Indian fintechs witnessed record investment and deal activity, receiving approximately $10 billion in funding across more than 580 deals in FY21, which was three times the $3.5 billion received in 2020. Then funding of $4.2 billion in first half of 2022. Let’s follow the Funding( Money) !
Experts forecast growth in Indian fintechs, also a lower penetration of most financial products and services. One of the trends to shape the future of fintechs in India include: Fintech infrastructure with the rise of Banking as a service (BaaS) providers Flacon plays in the fintech infrastructure space.
Market Fit
Falcon is deploying a unique value proposition at scale, the quality of the leadership/team shows a founder market fit for me. They seem to have a clear path to profitability. Their ability to collaborate with fintechs and stakeholders in the industry is a winning sign e.g. Partnering with Yes Bank of India, or with QubeHealth to provide healthcare payment products for employees in India. I have seen that happen with Interswitch in Nigeria, it is always a good recipe for success in such industries where traditional institutions still have a strong hold and other adjacent growth sectors also can help drive growth. Their modular system operation model (BaaS/API connectivity) is a plus.
There other factors I cannot predict like how they are able to drive a favorable regulatory environment, or if they can raise adequate capital to scale but the team looks solid.
The Team and Its Expertise
Established by the entrepreneurs Priyanka Kanwar and Prabhtej Bhatia Falcon’s BaaS platform enables non-fintechs to become fintechs in a day! They in a modular fashion enable Tech companies to o integrate cutting-edge fintech products to boost average revenue per account (ARPA) and reduce customer acquisition cost (CAC). Providing a future-proof stack for building bespoke cards, accounts, payments, and lending products to financial institutions and tech firms. The leadership team of the company include Talents from the world’s largest financial players such as RBL Bank, Housing Development Finance Corporation (HDFC), Zeta, and Mahindra Comviva.
Wondering how a Nigerian based in Europe was able to invest in the Asian Market? I was able to access such deal flows via Hustle Fund’s Angel Syndicate. Want to talk about angel investing or give it a go? Free to reach out.
You can read more about other Startups I invested in here.