The Economic Times has published new findings that suggest that investment funds are now most interested in business-to-business (B2B) fintech startups due to their strong foundational metrics such as profitability, unit level of economics and customer acquisition costs.
Fintech startups apparently understand the tightening requirements for those with funds to invest, and that investors no longer are willing to pump capital into big ideas, but are looking for more solid business fundamentals, so have tweaked themselves to cater to these requirements.
In the past two years, significant investments have been made into B2B fintech and now, more are looking to tap into that type of funding. Online credit startups have been the big winners since mid-2018, but there are now others in the sectors of treasury management, supply chain as well as corporate pay roll.
This urgent need for startups to scale up are also timely, as the non-banking financial crisis (NBFC) in India creeps into online lending companies, while digital payment solutions eat up into fundings without clearing a way to profitability.
According to treasury management firm IBSFintech‘s founder CM Grover, Indian B2B startups take longer to scale, have niche business sectors and do not grow exponentially, but are very attractive to investors because they have taken the time to develop strong technology platforms, can scale faster globally and can turn profitable with less funding than consumer startups:
“Within the B2B space, fintech is transforming into a lucrative area for the investors community and Indian startups are attracting global funds.”
Others like NiYO Solutions CEO Vinay Bagri echo these sentiments, saying that fundamental metrics are what pulls investment now, which B2B startups are typically good at:
“Venture capitalists and other investors are focused on the rate of addition of new businesses, revenue growth from existing clients and their stickiness.”
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