India isn't just catching up in the fintech race; it's leading the pack. With a staggering fintech adoption rate of 87%, towering above the global average of 64%, the subcontinent is redefining how we view digital finance. Couple this with a thriving market projected to hit $100+ billion by 2025 and regulatory reforms, it's clear why this sector is coming back in focus. But as we look at these numbers, the real question is: What does it take for a fintech company to transition from being a market disruptor to becoming IPO-ready?
To shed some light on this, Kunal Bajaj of Blume Ventures sat down with Dhirendra Mayavanshi, Co-Founder & CEO at Turtlemint; Abhishek Bhagat, Managing Director at JM Financial; and Sreevathsa Prabhakar, Founder and CEO at Servify. They dwelled into multiple areas during this insightful session, aptly titled "Fintechs and IPOs," at the Blume Fintech Summit 2023.
Dhiren kicked off the conversation by advocating for a simplified approach to Profit and Loss (P&L) statements. According to him, P&L could be boiled down to just four pivotal lines—revenue, contribution, gross profit, and Profit Before Tax (PBT)—to make it less complex.
Abhishek Bhagat chimed in, stressing that profitability isn't just a milestone but a recurring theme for companies preparing for an IPO. He added that aligning your projections accurately is crucial for a successful transition to the public markets.
An often-overlooked aspect of transitioning from a startup to an IPO-bound company is internal communication and operations. With more than 3,000 employees across 800+ locations for Turtlemint, smooth communication is not just an operational aspect; it's critical to aligning company-wide efforts towards a profitable P&L.
The market responds positively to a company when its operational metrics are in sync, further emphasizing the importance of having your house in order before going public.
Sreevathsa reiterated the importance of corporate governance for companies planning to go public. Implementing global ERP systems and having a CFO with extensive experience are all steps in the right direction.
Dhirendra talked about the challenges of transitioning from a startup to a structured organization, emphasizing that being a regulated entity makes certain procedures necessary. Balancing speed with structure requires forming cross-functional committees for decision-making—a process that has worked well for Turtlemint.
Abhishek brought the discussion back to market trends, pointing out that despite the fintech sector cooling off over the past two years, he is optimistic. Companies like Paytm and Pb-Fintech are turning profitable, underlining the industry’s potential. While compliance adds layers to the business strategy, it also instills investor trust and proves to be an asset in the long term.
Concluding the session, Kunal talked about the evolution of startups. In the early days, it was all about growth, but as a company matures, systems become the bedrock on which growth is built. He brought out the importance of adaptability, especially in a landscape that’s continually changing due to regulations and technology dynamics.
So, the takeaway? If you're a fintech company gunning for an IPO, streamline your operations, focus on profitability, and embrace a public company’s rigor, all while keeping an eye on the ever-changing market and regulatory landscape.
For those who want to dive deeper, you can check out the full episode from the Blume Fintech Summit to hear firsthand from these industry titans.