Back in August of 2014, when the Indian government announced Jan Dhan Yojana, its ambitious plan to modernize the way Indians handle money, it was met with a fair amount of skepticism. Even government leaders were cautiously optimistic: a manager at a state-run bank told the BBC that “For the common man, the opening of a bank account is a Herculean task.”
Three years in, the initiative has seen strong progress. The goal of Jan Dhan Yojana is to get more people using banks to save or borrow money, make payments, and earn interest. In the past seven years the Indian government has issued 1.19 billion high-tech identification cards and rolled out online services that have made it easier to do business — whether that’s the business of selling a widget or just paying for your groceries. More than half of the 300 million people who have opened new bank accounts are women.
This is just the foundation for a much larger and more ambitious vision. Most financial transactions in India are still carried out in cash, and many small businesses are still hungry for flexible, affordable financial products: Indian small businesses still have a $334 billion credit gap.
That’s where startups come in. At Village Capital we believe that entrepreneurs have an important role to play in solving the world’s biggest problems. This often involves complementing the important work of government, philanthropy and big corporations — finding a way to fill in the gaps created by major changes in the market.
In the case of India, the early success of Jan Dhan Yojana has created a demand for financial products that help Indians save money, find new credit options, access insurance, build their credit scores, or finance basic needs such as health and education. Entrepreneurs have stepped up to the challenge in a big way — last year investors poured $1.7 billion into Indian fintech startups.
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Last month in Bangalore we closed out a three-month investment program, FinTech: India 2017, for eleven early-stage Indian startups that are innovating around financial health. Our programs are focused on building bridges for entrepreneurs, and creating an open, transparent environment for early-stage businesses when they need it most. Here’s a quick recap:
Peer-selected investment: Village Capital programs incorporate an element of peer review — the top two entrepreneurs in each program, selected by their peers, receive offers of investment from VilCap Investments. The two startups to receive investment offers were Impact Micro Ventures, which uses big data to help unbanked micro-enterprises access financing and improve their cash flow; and mPokket, which provides micro-loans via a mobile app.
Advice from investors, mentors and potential customers. Big corporations and small startups are the yin and yang of any innovation ecosystem. We collaborated on this program with PayPal, BlackRock, and FMO. They provided valuable connections as well as mentorship during the more than 20 hours of mentor interaction that the entrepreneurs held with investors, industry experts and potential customers.
Guidance through Village Capital’s VIRAL curriculum. Every entrepreneur received training on the VIRAL (Venture Investment Readiness Awareness Level) curriculum, which is designed to help entrepreneurs set and surpass specific milestones to make them competitive when raising capital.
The full list of startups that participated in the program can be found here.
We’ll be running our next financial health program in India later this year; reach out to Perry Nunes at perry.nunes@vilcap.com if you’d like to learn more about partnering or mentoring.