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April 27, 2016Image by Pankaj Jain

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Introduction To Indian FinTech

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//Since July 20101,500+ investments2

500 Startups Is the Most Active Seed Investor in Silicon Valley and Aims to be Largest in the World1

The various geographies highlighted in the map result from investments we have made across all 500 Startups funds.1. The Silicon Valley Tech Venture Capital Almanac, Fall 2013 and TechCrunch Article May 5, 2015, “500 Startups Aims To Be The Largest VC Shop In The World” http://techcrunch.com/2015/05/05/500-startups-aims-to-be-the-largest-vc-shop-in-the-world/2. Approximated as of 2/23/2016 and includes first and follow-on investments from all 500 Startups funds.

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/ Pankaj Jain

• 12+ Years in Finance

• Founded 1 startup in India

• Founded 2 non-profits in India

• Investing in Indian startups since 2012• Led or managed 70+ investments in India, Jordan, Finland and

the U.S. at 500 Startups and prior

1. LinkedIn: http://www.linkedin.com/in/pankajjain2. AngelList: http://angel.co/pjain

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Long-Term Capital Management

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Legal review Partner approvalTwo+ investment team members

review opportunityPartner approval

“India is poised to become the world’s fastest growing major economy” – E&Y 2015 India Attractiveness Survey 1

India is a very young, *mobile* and fast growing market.• $2.1T (nominal) economy 2 ; 7.7% GDP growth10

• 7th largest economy in the world by nominal GDP 3• #2 in Internet Users with 317M Indians (209M urban + 108M rural) 4

• > 990M mobile phones 5

• 200M+ smartphones (19.2% penetration) in India 6• India attracted $34B in FDI in 2014, up 22% from 2013 7

• Median age of 27.3 yrs 8

• 68% of the population (850M people) is under 35 years old 9

• Labor force of 502M people, 51% of which are in industry or services jobs 8

India Overview

1 http://www.ey.com/IN/en/Issues/Business-environment/EY-india-attractiveness-survey-20152 http://en.wikipedia.org/wiki/Economy_of_India3 http://en.wikipedia.org/wiki/India#Economy4 http://www.medianama.com/2015/11/223-317m-internet-users-india/5 https://en.wikipedia.org/wiki/Telecommunications_in_India6 http://en.wikipedia.org/wiki/List_of_countries_by_smartphone_penetration7 http://unctad.org/en/PublicationsLibrary/wir2015_en.pdf8 https://www.cia.gov/library/publications/the-world-factbook/geos/in.html9 Goldman Sachs: India Internet Report – May 201510 Reported estimate by Citigroup in Economic Times

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/ Digital Landscape Overview

1 Only 15% of the Indian users buy online

vs 56% of users in China. The gap

represents the massive opportunity in

merely catching up with China.1

2

Better security, payment and

remittance infrastructure will be

required to meet the next wave of

growth from rural and semi-rural India.

• On track to be the 2nd largest

smartphone market1

• 55% Smartphone subscription

growth 2

• Mobile accounts for 65% of the

total internet traffic in India.2

• Deutsche Bank estimated

FinTech market to reach $16B by

2020 from $3B in 20161

1. Deutsche Bank Report on India Internet Sector –November 20152. Internet Trends 2015 Report by Mary Meeker

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/Global Investors in India

Others

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China

US

Ecosystem Activity in India

The Companies and Firms listed herein have not confirmed the information set forth on this slide. Additionally, certain investors invested using other entities as opposed to investing via the venture funds or companies represented here.

Japan

Europe

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Mobile FinTech

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435M Internet enabled smartphonesby 2019 2

79

114

142

178

222

256

0

65

130

195

260

325

2014 2015 2016 2017 2018 2019

Projected annual smartphone sales India, in millions1

1. KPMG India Media and Entertainment Report – March 20152. Deutsche Bank Report on India Internet Sector – November 2015

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Smartphones

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• 3G/4G services + lower cost/better quality smart phones spurring online usage.

• Apps are the new Value Added Services

• Payment banks, initiatives by traditional banks, and startups will increase digital

payments through mobile devices.

• Mobile allows for cheaper costs for conducting business operations for SMB’s.

1. KPMG India Media and Entertainment Report – March 20152. Deutsche Bank Report on India Internet Sector – November 2015

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Mobile Services

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SMBs have been chronically underserved by the traditional banking system in India.

1. RBI is the Reserve Bank of India

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Mobile Banking

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/ This is FinTech in India

Unmodified image by Dipankar Dutta under CC license

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2

Photo Credit: blog.beam.co.in

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• Indian government pushing to move to cashless society. UPI (“Unified Payments

Interface”) is one initiative

• E-wallets, social payments & payment banks, will boost the e-payments market

significantly.

• In 2008-09, India overtook Mexico as the world’s foremost remittance market; The

remittance market has consistently surpassed FDI coming into India, and the

current annual inflows stand at > $70B.4

160MRupay users conducting 20M transactions a day 1

80%Users of ages 21-35 use e-channels to make rent payments 2

1. PwC Report on Electronic Payments in India 20152. PwC Report on Electronic Payments in India 20153. Goldman Sachs India Internet Report – May 20154. Wall Street Journal

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Fintech$5B Size of digital

payments by 2030 3

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/ • Transaction volume and ARPU are

increasing

• Banking, lending and accounting are

antiquated industries that need to

modernize at a rapid pace

• Indian regulations create a strong barrier

to entry for global players - fintech

innovations will be created by Indian

companies

Payment Mediums India China USA

Number of people with bank accounts (per 100) 58 70 92

Number of bank branches(in millions) 1.1 0.8 3.6

Number of ATM’s (in millions) 1.14 3.07 13.76

PoS Terminal (per million) 684 5,425 17,120

Total Cards (per 1,000) 283.6 2,604 3,699

Financial Medium Comparison

Deloitte Report on Payment Bank - Opportunities and Challenges, World Bank Report on Remittance Market in India

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Fintech – Trends

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/ Areas of Opportunity

• Lending• Payments• Remittance• Personal Finance• Banking• Equity Funding• Infrastructure – Security/Analytics/etc• Cryptocurrency• Insurance• SMB Solutions• Trading Solutions (Order routing, portfolio

management systems, analytics libraries, etc)

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/ Thank You

Pankaj JainPartner, 500 StartupsTwitter: @pjain