Financial Services & Education: Potential Areas for Startups

Bejul Somaia ,

Managing Director, Lightspeed Venture Partners.

The areas we invest in India are fairly broad. Currently we focus on four investments— power sector, financial services, education and media. These sectors seem to be reflective of the opportunities set in India. Even though these sectors sound like traditional sectors we have actually invested in the non-traditional segments of these sectors. In these large traditional sectors there are pockets of emerging subsectors that create a lot of opportunity for entrepreneurs. For example, in power we are investing in the Power Exchange and in the financial segment we have invested in a prepaid card company. Then there is technology and technology enabled sectors like the internet and e-commerce, which are seeing a revival of activity. The same is the case with mobile sector with 3G and BWA rollouts.
This is a growing trend. A lot of activities are being registered around the cloud, though it is not generally focused on the domestic market. Areas that are gaining speed more than others would be Internet and e-commerce.

We are also witnessing a lot of activity in the education sector, not just schools but in IP related businesses and content driven businesses. Take a look at education sector, one can see a lot of companies trying to leverage the current teaching or school infrastructure to improve the quality of education. So curriculum services, curriculum products and technology products would be distributed through the existing school infrastructure rather than trying to create an all together new infrastructure. This is an area of new trend.

In financial services, we are seeing increasing opportunity for niche or specialized lending businesses. For example, the banks typically lend to the cream of the crop in any particular area, and a shift from housing finance or construction finance or student finance to microfinance is being seen and at the same time specialized lenders are coming to the market as well. The same trend is beginning to be seen in the Indian market too. Financial service to me is very exciting I read an article recently according to which from $15 billion seven years ago, the bank consumer credit outstanding had become $100 billion a couple of years ago. An increase of this magnitude in five years! and we are just at the beginning. Financial services touch every one’s lives in different ways, unlike a sector that sets a single target market. It is still at the ground floor in terms of innovation, products and services that are provided and so the number of businesses that are going to grow out of this sector will be significant.

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