Funding for everyone getting tougher: PayTM's Vijay Sharma on Indian start-up 'bubble'

Sharma also promised to set up India's most sincere bank

FP Staff December 03, 2015 12:32:26 IST
Funding for everyone getting tougher: PayTM's Vijay Sharma on Indian start-up 'bubble'

Is the Indian start-up bubble about to burst? After investors and other experts turned skeptical on whether the high valuations are supported by underlying growth, now a entrepreneur has weighed in on the issue.

Answering questions in a candid Reddit Ask Me Anything on Wednesday, PayTM founder Vijay Shekhar Sharma has said that funding is indeed getting tougher for Indian start-ups.

Funding for everyone getting tougher PayTMs Vijay Sharma on Indian startup bubble

Vijay Shekhar Sharma. PTI

When asked whether he feels the Indian startup bubble is about to burst, he said: "About to" is too short a cycle. That said, next round for everyone is getting tougher. Smart ones raised money in time. May there be more "bubbles, so that we see tide of change agents.

The high valuations demanded by Indian technology startups had recently given rise to suspicion that a bubble has developed in the nascent ecosystem. Many industrialists, investors and experts have already expressed their concern over the valuation bubble.

"It's true that the valuations (of e-commerce) are very high and valuation seems to be driving these companies more than traditional matrix of evaluation," Tata Sons Chairman Emeritus Ratan Tata had said in June. Tata has invested in nearly 20 startups, including PayTM, in his personal capacity.

Nikesh Arora, president Japanese tech giant SoftBank, which has made investments in startups such as OlaCabs and OyoRooms, also has raised concern about the valuations.

"I think they (valuations) have got far ahead and they are probably rivalling China or US at this point in time," Arora told the Economic Times in an interview. The company was planning to invest $10 billion in India over the next few years.

Some of the food technology startups are facing major funding challenges. Sharma's comments in the AMA confirm that there indeed is a squeeze in fund flows, which is likely fuelling consolidation in the segment.

Sharma also explained the rational behind the name One97 Communications, the parent company of PayTM. Answering a specific question, he said he started off One97 as a people search company in 2001. "That time one use to call BSNL / MTNL helpline on 197 to ask for phone number. So One97," he said.

He brushed aside another question about his networth, saying "Who bothers about that?"

He also replied patiently to scores of complaints by the customers.

One customer, irritated with the "horrible" customer care and late deliveries, asked, "What kind of stupid policy is that? Why someone has to waste time to get their money back? Or is this your business model (wink wink): Let the customer buy; Hope seller screws the order; Refund the amount to PayTM wallet; Now buyer is stuck with PayTM forever; Super Profit?"

He apologised for the inconvenience and clarified that the company doesn't make any extra profit from the money in wallet. "We don't make any extra money on this wallet balance. A user can always take that to bank," he said.

Asked what can the customers expect from the PayTM Bank (the company has got payments bank licence from the RBI), he replied: India's most sincere bank.

Read the entire AMA here.

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