Untried SEM Segments Attracting Tech Startups


BENGALURU: Technology startups are deriving innovative ways to tap into the resources of profitable small and medium enterprises (SMEs).

Some of their measures includes, trying to create an efficient payment model to attract the right customers and building strong relationships over a tech startupperiod of time. The drawback to having SMEs is that the cost for obtaining customers is high while the average fee is low. This leaves startups with little room for opportunity if the finance doesn’t come through, reports Economic Times  

"It is a push factor rather than a pull factor. It's like selling insurance; nobody buys it voluntarily, someone has to convince them to. As a result, Indian SMEs are a no-go sector for Indian venture capitalists," said Sharad Sharma, co-founder of iSpirt.

According to IT industry, the market is vast at about Rs 2,300 crore .The interests of venture capitalists will fade away once mega companies like accounting software maker Intuit, German software firm SAP and Microsoft start forcing on these sectors.

However, startups like Maximojo are not giving up easily and are planning to adopted measures that are similar to telecom, in order to keep then hail and functioning.Cash-only payments, whose sources are sometimes questionable, are another worry for startups. Unlike in other countries, credit card penetration is low in India, and the practice of automatically deducting money from customers on a regular basis is not allowed by the Reserve Bank of India.

Moreover, Cash-only payments make have a negative impact on startups as the credit card penetration is low in India. Also Reserve Bank of India does not permit startups to automatically deduct money from clients on a regular basis.

Therefore, need to find a solution like a pre-authorised or like instalments to get payments from the customer's bank account or even an inside sales team to connect to the customers. . "Then it becomes a scalable business model” said Mohan Kumar, executive director, Norwest Venture Partners India. This will result in building the trust in SMEs and will eventually get startups on board to make frequent online transactions.

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